2 Printed on paper containing at least 30% postconsumer recovered fiber. 
U.S. Environmental Protection Agency 

Office of Water (4303T) 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460 

EPA-821-B-03-002
Economic and Environmental Benefits Analysis Document For The
 


Final Effluent Limitations 
 


Guidelines and Standards 
 


For The 
 


Metal Products & Machinery 
 


Point Source Category
 


EPA-821-B-03-002 
 


Christine Todd Whitman 
 


Administrator
 


G. Tracy Mehan, III
 


Assistant Administrator, Office of Water
 


Geoffrey H. Grubbs
 


Director, Office of Science and Technology
 


Sheila E. Frace
 


Director, Engineering and Analysis Division
 


Nicolaas Bouwes
 


Chief, Economic and Environmental Assessment Branch
 


William Anderson
 


Technical Coordinator
 


Lynne Tudor 

Economist 

James C. Covington, III
 


Economist
 


February 2003
 


U.S. Environmental Protection Agency
 


Office of Water
 


Washington, DC 20460
 

ACKNOWLEDGMENTS AND DISCLAIMER
 


The Agency would like to acknowledge the contributions of William Anderson, 

James C. Covington, III, Lynne Tudor, Lynn Zipf, and Nicolass Bouwes to development of 

this Economic and Environmental Benefits Analysis document. In addition, EPA 

acknowledges the contribution of Abt Associates, Westat, Eastern Research Group, and 

Science Application International Corporation. 

Neither the United States government nor any of its employees, contractors, 

subcontractors, or other employees makes any warranty, expressed or implied, or assumes 

any legal liability or responsibility for any third party’s use of, or the results of such use of, 

any information, apparatus, product, or process discussed in this report, or represents that its 

use by such a third party would not infringe on privately owned rights. References to 

proprietary technologies are not intended to be an endorsement by the Agency. 

Questions or comments regarding this economic document should be addressed to:
 


Mr. James C. Covington, III.
 


Economist
 


Engineering and Analysis Division (4303T)
 


U.S. Environmental Protection Agency
 


1200 Pennsylvania Avenue, N.W.
 


Washington, DC 20460
 


(202) 566 - 1034
 


covington.james@epa.gov
 

MP&M EEBA Table of Contents 

Table of Contents
 


EXECUTIVE SUMMARY 

ES.1 Overview of Facilities Evaluated for Regulation under the MP&M Point Source Category and Its Effluent
 


Discharges ................. ................. ................. ................. ............... ES-1
 


ES.2 Description of the Final Rule ................. ................. ................. ................. ES-3
 


ES.3 Economic Impacts and Social Costs of the Final Rule ................. ................. .............. ES-3
 


ES.3.1 Economic Impacts ................. ................. ................. ................. ... ES-4
 


ES.3.2 Social Costs ................. ................. ................. ................. ........ ES-7
 


ES.4 National Benefits of the Final Rule ................. ................. ................. ............ ES-8
 


ES.4.1 Reduced Human Health Risk ................. ................. ................. .......... ES-10
 


ES.4.2 Ecological, Recreational, and Nonuser Benefits ................. ................. ............. ES-14
 


ES.4.3 POTW Impacts ................. ................. ................. ................. .... ES-15
 


ES.4.4 Total Estimated Benefits of the Final MP&M Rule ................. ................. .......... ES-16
 


ES.5 National Benefits-Costs Comparison ................. ................. ................. .......... ES-16
 


ES.6 Ohio Case Study ................. ................. ................. ................. ........ ES-18
 


ES.6.1 Benefits ................. ................. ................. ................. .......... ES-18
 


ES.6.2 Social Costs ................. ................. ................. ................. ....... ES-20
 


ES.6.3 Comparing Monetized Benefits and Costs ................. ................. ................. ES-20
 


PART I: INTRODUCTION AND BACKGROUND INFORMATION 

Chapter 1: Introduction 

1.1 Purpose ................. ................. ................. ................. ................. . 1-1
 


1.2 Introduction ................. ................. ................. ................. ............... 1-1
 


1.3 Readers’ Aids ................. ................. ................. ................. .............. 1-3
 


Chapter 2: The MP&M Industry and the Need for Regulation 

2.1 Overview of Facilities Evaluated for Regulation under the MP&M Point Source Category .............. . . . ..... 2-1
 


2.2 MP&M Discharges and the Need for Regulation ................. ................. ................. .... 2-3
 


2.2.1 Baseline MP&M Discharges for Regulated Facilities ................. ................. ............ 2-4
 


2.2.2 Discharges under the MP&M Regulation ................. ................. ................. .... 2-4
 


2.3 Addressing Market Imperfections ................. ................. ................. ............... 2-5
 


2.4 Overlap with Other Effluent Guidelines ................. ................. ................. ........... 2-6
 


2.5 Meeting Legislative and Litigation-Based Requirements ................. ................. .............. 2-9
 


Glossary ................. ................. ................. ................. ................. ... 2-11
 


Acronyms ................. ................. ................. ................. ................. .. 2-13
 


Chapter 3: Profile of the MP&M Industries 

3.1 Data Sources ................. ................. ................. ................. .............. 3-2
 


3.2 	Overview of the MP&M Industry and Industry Trends ................. ................. ............... 3-3
 


3.2.1 Aerospace ................. ................. ................. ................. ........... 3-7
 


3.2.2 Aircraft ................. ................. ................. ................. ............. 3-7
 


3.2.3 Electronic Equipment ................. ................. ................. ................. .. 3-7
 


3.2.4 Hardware ................. ................. ................. ................. ............ 3-8
 


3.2.5 Household Equipment ................. ................. ................. ................. .. 3-8
 


3.2.6 Instruments ................. ................. ................. ................. .......... 3-9
 


3.2.7 Iron and Steel ................. ................. ................. ................. ........ 3-9
 


3.2.8 Job Shops ................. ................. ................. ................. ........... 3-9
 


3.2.9 Mobile Industrial Equipment ................. ................. ................. ............. 3-9
 


3.2.10 Motor Vehicle and Bus & Truck ................. ................. ................. ........ 3-10
 


3.2.11 Office Machine ................. ................. ................. ................. ..... 3-10
 


3.2.12 Ordnance ................. ................. ................. ................. .......... 3-10
 


3.2.13 Precious Metals and Jewelry ................. ................. ................. ............ 3-11
 


Table of Contents-1 
MP&M EEBA Table of Contents 

3.2.14 Printed Wiring Boards ................. ................. ................. ................ 3-11
 


3.2.15 Railroad ................. ................. ................. ................. ........... 3-11
 


3.2.16 Ships and Boats ................. ................. ................. ................. ..... 3-11
 


3.2.17 Stationary Industrial Equipment ................. ................. ................. ......... 3-12
 


3.3 	Characteristics of MP&M Manufacturing Sectors ................. ................. ................. . 3-12
 


3.3.1 Domestic Production ................. ................. ................. ................. .. 3-13
 


3.3.2 Industry/Market Structure ................. ................. ................. ............... 3-18
 


3.3.3 Financial Condition and Performance ................. ................. ................. ...... 3-24
 


3.4 	Characteristics of MP&M Non-Manufacturing Sectors ................. ................. .............. 3-25
 


3.4.1 Domestic Production ................. ................. ................. ................. .. 3-25
 


3.4.2 Industry Structure and Competitiveness ................. ................. ................. .... 3-28
 


3.5 	Characteristics of All MP&M Sectors ................. ................. ................. ........... 3-30
 


3.5.1. Eight-firm Concentration Ratio ................. ................. ................. .......... 3-30
 


3.5.2 Risk Normalized Return on Assets ................. ................. ................. ........ 3-31
 


3.6 Characteristics of MP&M Facilities ................. ................. ................. ............ 3-32
 


Glossary ................. ................. ................. ................. ................. ... 3-38
 


Acronyms ................. ................. ................. ................. ................. .. 3-40
 


References ................. ................. ................. ................. ................. . 3-41
 


Chapter 4: Regulatory Options 

4.1 Subcategorization ................. ................. ................. ................. .......... 4-1
 


4.2 Technology Options ................. ................. ................. ................. ........ 4-3
 


4.3 BPT/BAT Options for Direct Dischargers ................. ................. ................. ........ 4-3
 


4.4 PSES Options for Indirect Dischargers ................. ................. ................. ........... 4-3
 


4.5 NSPS and PSNS Options for New Sources ................. ................. ................. ........ 4-4
 


4.6 Summary of the Final Rule and Regulatory Alternatives ................. ................. .............. 4-4
 


Glossary ................. ................. ................. ................. ................. .... 4-5
 


Acronyms ................. ................. ................. ................. ................. ... 4-6
 


PART II: COSTS AND ECONOMIC IMPACTS 

Chapter 5: Facility Impact Analysis 

5.1 Data Sources ................. ................. ................. ................. .............. 5-2
 


5.2 	Methodology ................. ................. ................. ................. .............. 5-2
 


5.2.1 Converting Engineering Compliance Costs and Survey Financial Data to Current Year Dollar Values ........ 5-3
 


5.2.2 Market-level Impacts and Cost Pass-through Analysis ................. ................. ........... 5-4
 


5.2.3 Impact Measures for Private Facilities ................. ................. ................. ...... 5-5
 


5.2.4 Impact Measures for Railroad Line Maintenance Facilities ................. ................. ...... 5-12
 


5.2.5 Impact Measures for Government-owned Facilities ................. ................. ............ 5-12
 


5.3 	Results ................. ................. ................. ................. ................. . 5-14
 


5.3.1 Baseline Closures ................. ................. ................. ................. ... 5-14
 


5.3.2 Price Increases ................. ................. ................. ................. ...... 5-15
 


5.3.3 Overview of Impacts ................. ................. ................. ................. .. 5-16
 


5.3.4 Results for Indirect Dischargers ................. ................. ................. .......... 5-18
 


5.3.5 Results for Direct Dischargers ................. ................. ................. ........... 5-19
 


5.3.6 Results for Private Facilities ................. ................. ................. ............ 5-20
 


5.3.7 Results for Government-Owned Facilities ................. ................. ................. .. 5-21
 


Glossary ................. ................. ................. ................. ................. ... 5-25
 

Acronyms ................. ................. ................. ................. ................. .. 5-26
 

References ................. ................. ................. ................. ................. . 5-27
 

Chapter 6: Employment Effects 

6.1 Job Losses Due to Closures ................. ................. ................. ................. ... 6-2
 


6.2 Job Gains Due to Compliance Requirements ................. ................. ................. ...... 6-3
 


6.3 Net Effects on Employment ................. ................. ................. ................. .. 6-5
 


Glossary ................. ................. ................. ................. ................. .... 6-7
 


Table of Contents-2 
MP&M EEBA Table of Contents 

Acronym ................. ................. ................. ................. ................. ... 6-8
 

References ................. ................. ................. ................. ................. .. 6-9
 

Chapter 7: Government and Community Impact Analysis
 


7.1 Impacts on Governments ................. ................. ................. ................. ..... 7-1
 


7.1.1 Impacts on Governments that Operate MP&M Facilities ................. ................. ......... 7-1
 


7.1.2 POTW Administrative Costs ................. ................. ................. .............. 7-2
 


7.2 Community Impacts of Facility Closures ................. ................. ................. ......... 7-6
 


Glossary ................. ................. ................. ................. ................. .... 7-7
 


Acronyms ................. ................. ................. ................. ................. ... 7-8
 


Chapter 8: Foreign Trade Impacts 

8.1 Data sources ................. ................. ................. ................. .............. 8-1
 


8.2 Methodology ................. ................. ................. ................. .............. 8-2
 


8.3 Results ................. ................. ................. ................. ................. .. 8-3
 


References ................. ................. ................. ................. ................. .. 8-5
 


Chapter 9: Firm Level, New Source and Industry Impacts
 


9.1 Firm Level Impacts ................. ................. ................. ................. ......... 9-1
 


9.1.1 Sources ................. ................. ................. ................. ............. 9-1
 


9.1.2 Methodology ................. ................. ................. ................. ......... 9-2
 


9.1.3 Results ................. ................. ................. ................. .............. 9-2
 


9.2 New Source Impacts ................. ................. ................. ................. ........ 9-3
 


9.2.1 Methodology ................. ................. ................. ................. ......... 9-4
 


9.2.2 Results ................. ................. ................. ................. .............. 9-5
 


9.3 Industry Level Impacts ................. ................. ................. ................. ...... 9-7
 


Glossary ................. ................. ................. ................. ................. .... 9-9
 


Acronyms ................. ................. ................. ................. ................. .. 9-10
 


References ................. ................. ................. ................. ................. . 9-11
 


Chapter 10: Small Entity Impact Analysis 

10.1 Defining Small Entities ................. ................. ................. ................. .... 10-2
 


10.2 Methodology ................. ................. ................. ................. ............ 10-4
 


10.3 Results ................. ................. ................. ................. ................. 10-4
 


10.3.1 Number of Affected Small Entities ................. ................. ................. ....... 10-4
 


10.3.2 Impacts on Facilities Owned by Small Entities ................. ................. ............... 10-5
 


10.3.3 Impacts on Small Firms ................. ................. ................. ............... 10-6
 


10.4 Consideration of Small Entity Impacts in Developing the Final Rule ................. ................. ... 10-7
 


Glossary ................. ................. ................. ................. ................. ... 10-8
 


Acronyms ................. ................. ................. ................. ................. .. 10-9
 


References ................. ................. ................. ................. ................. 10-10
 


Chapter 11: Social Costs 

11.1 Components of Social Costs ................. ................. ................. ................. 11-1
 


11.2 Resource Costs of Compliance ................. ................. ................. ............... 11-2
 


11.3 POTW Administration Costs ................. ................. ................. ................ 11-4
 


11.4 Social Costs of Unemployment ................. ................. ................. ............... 11-5
 


11.4.1 Social Cost of Worker Dislocation ................. ................. ................. ....... 11-5
 


11.4.2 Cost of Administering Unemployment Benefits Programs ................. ................. ...... 11-6
 


11.4.3 Total Cost of Unemployment ................. ................. ................. ........... 11-6
 


11.5 Total Social Costs ................. ................. ................. ................. ........ 11-7
 


Glossary ................. ................. ................. ................. ................. ... 11-8
 


References ................. ................. ................. ................. ................. . 11-9
 


Table of Contents-3 
MP&M EEBA Table of Contents 

PART III: BENEFITS 

Chapter 12: Benefit Overview 

12.1 MP&M Pollutants ................. ................. ................. ................. ........ 12-2
 


12.1.1 Characteristics of MP&M Pollutants ................. ................. ................. ..... 12-2
 


12.1.2 Effects of MP&M Pollutants on Human Health ................. ................. .............. 12-3
 


12.1.3 Environmental Effects of MP&M Pollutants ................. ................. ................ 12-7
 


12.1.4 Effects of MP&M Pollutants on Economic Productivity ................. ................. ....... 12-8
 


12.2 Linking the Regulation to Beneficial Outcomes ................. ................. ................. .. 12-9
 


12.3 Qualitative and Quantitative Benefits Assessment ................. ................. ................ 12-11
 


12.3.1 Overview of Benefit Categories ................. ................. ................. ........ 12-11
 


12.3.2 Human Health Benefits ................. ................. ................. ............... 12-13
 


12.3.3 Ecological Benefits ................. ................. ................. ................. 12-13
 


12.3.4 Economic Productivity Benefits ................. ................. ................. ........ 12-14
 


12.3.5 Methods for Valuing Benefit Events ................. ................. ................. ..... 12-14
 


Glossary ................. ................. ................. ................. ................. .. 12-16
 

Acronyms ................. ................. ................. ................. ................. . 12-19
 

References ................. ................. ................. ................. ................. 12-20
 

Chapter 13: Human Health Benefits 

13.1 Methodology & Data Sources ................. ................. ................. ................ 13-2
 


13.1.1 Cancer from Fish Consumption ................. ................. ................. .......... 13-3
 


13.1.2 Cancer from Drinking Water Consumption ................. ................. ................. 13-8
 


13.1.3 Exposures above Non-cancer Health Thresholds ................. ................. ............ 13-10
 


13.1.4 Human Health AWQC ................. ................. ................. ............... 13-14
 


13.2 Results ................. ................. ................. ................. ................ 13-17
 


13.2.1 Fish Consumption Cancer Results ................. ................. ................. ....... 13-17
 


13.2.2 Drinking Water Consumption Cancer Results ................. ................. ............... 13-19
 


13.2.3 Non-cancer Health Threshold Results ................. ................. ................. .... 13-19
 


13.2.4 Human Health AW QC Results ................. ................. ................. ......... 13-21
 


13.3 Limitations and Uncertainties ................. ................. ................. ............... 13-22
 


13.3.1 Sample Design & Analysis of Benefits by Location of Occurrence ................. ............... 13-22
 


13.3.2 In-Waterway Concentrations of MP&M Pollutants ................. ................. .......... 13-23
 


13.3.3 Joint Effects of Pollutants ................. ................. ................. ............. 13-23
 


13.3.4 Background Concentrations of MP&M Pollutants ................. ................. ........... 13-23
 


13.3.5 Downstream Effects ................. ................. ................. ................. 13-24
 


13.3.6 Exposed Fishing Population ................. ................. ................. ........... 13-24
 


13.3.7 Treatment of Cancer Latency ................. ................. ................. .......... 13-25
 


13.3.8 Treatment of Cessation Lag ................. ................. ................. ........... 13-25
 


13.3.9 Use of Mean Individual Exposure Parameters ................. ................. .............. 13-26
 


13.3.10 Cancer Potency Factors ................. ................. ................. .............. 13-26
 


Glossary ................. ................. ................. ................. ................. .. 13-27
 

Acronyms ................. ................. ................. ................. ................. . 13-28
 

References ................. ................. ................. ................. ................. 13-29
 

Chapter 14: Lead-Related Benefits 

14.1 Overview of Lead-Related Health Effects ................. ................. ................. ....... 14-2
 


14.1.1 Children Under Age One ................. ................. ................. ............... 14-3
 


14.1.2 Children Between the Ages of One and Seven ................. ................. ............... 14-3
 


14.1.3 Adults ................. ................. ................. ................. ............ 14-4
 


14.2 Health Benefits to Children ................. ................. ................. ................. . 14-4
 


14.2.1 PbB Distribution of Exposed Children ................. ................. ................. .... 14-5
 


14.2.2 Relationship Between PbB Levels and IQ ................. ................. ................. 14-12
 


14.2.3 Value of Children's Intelligence ................. ................. ................. ........ 14-12
 


14.2.4 Value of Additional Educational Resources ................. ................. ................ 14-14
 


14.2.5 Changes in Neonatal Mortality ................. ................. ................. ......... 14-17
 


Table of Contents-4 
MP&M EEBA Table of Contents 

14.3 Adult Health Benefits ................. ................. ................. ................. .... 14-17
 


14.3.1 Estimating Changes in Adult PbB Distribution Levels ................. ................. ........ 14-20
 


14.3.2 Male Health Benefits ................. ................. ................. ................ 14-22
 


14.3.3 Female Health Benefits ................. ................. ................. ............... 14-26
 


14.4 Lead-Related Benefit Results ................. ................. ................. ............... 14-28
 


14.4.1 Preschool Age Children Lead-Related Benefit Results ................. ................. ........ 14-28
 


14.4.2 Adult Lead-Related Benefit Results ................. ................. ................. ..... 14-29
 


14.5 Limitations and Uncertainties ................. ................. ................. ............... 14-31
 


14.5.1 Excluding Older Children ................. ................. ................. ............. 14-31
 


14.5.2 Compensatory Education Costs ................. ................. ................. ........ 14-32
 


14.5.3 Dose-Response Relationships ................. ................. ................. .......... 14-32
 


14.5.4 Absorption Function for Ingested Lead in Fish Tissue ................. ................. ........ 14-32
 


14.5.5 Economic Valuation ................. ................. ................. ................. 14-33
 


Glossary ................. ................. ................. ................. ................. .. 14-35
 

Acronyms ................. ................. ................. ................. ................. . 14-38
 

References ................. ................. ................. ................. ................. 14-39
 

Chapter 15: Recreational Benefits 

15.1 Ecological Improvements from the MP&M Regulation ................. ................. ............. 15-3
 


15.1.1 Overview of Ecological Improvements ................. ................. ................. .... 15-3
 


15.1.2 Quantification of Ecological Improvements ................. ................. ................. 15-3
 


15.1.3 Benefiting Reaches ................. ................. ................. ................. .. 15-4
 


15.1.4 Geographic Characteristics of MP&M Reaches ................. ................. .............. 15-6
 


15.2 Valuing Economic Recreational Benefits ................. ................. ................. ....... 15-6
 


15.2.1 Transferring Values from Surface Water Valuation Studies ................. ................. ..... 15-6
 


15.2.2 Recreational Fishing ................. ................. ................. ................. . 15-9
 


15.2.3 Wildlife Viewing ................. ................. ................. ................. .. 15-13
 


15.2.4 Recreational Boating ................. ................. ................. ................. 15-17
 


15.2.5 Nonuse Benefits ................. ................. ................. ................. ... 15-20
 


15.3 Summary of Recreational Benefits ................. ................. ................. ........... 15-20
 


15.4 Limitations and Uncertainties Associated with Estimating Recreational Benefits .............. . . . ......... 15-22
 


Glossary ................. ................. ................. ................. ................. .. 15-26
 


Acronyms ................. ................. ................. ................. ................. . 15-28
 


References ................. ................. ................. ................. ................. 15-29
 


Chapter 16: POTW Benefits 

16.1 Reduced Interference with POTW Operations ................. ................. ................. ... 16-2
 


16.2 Assessing Benefits from Reduced Sludge Contamination ................. ................. ............ 16-2
 


16.2.1 Data Sources ................. ................. ................. ................. ....... 16-2
 


16.2.2 Sludge Generation, Treatment, and Disposal Practices ................. ................. ........ 16-4
 


16.2.3 Overview of Improved Sludge Quality Benefits ................. ................. .............. 16-7
 


16.2.4 Sludge Use/Disposal Costs and Practices ................. ................. ................. .. 16-8
 


16.2.5 Quantifying Sludge Benefits ................. ................. ................. ........... 16-10
 


16.3 Estimated Savings in Sludge Use/Disposal Costs ................. ................. ................. 16-15
 


16.4 Methodology Limitations ................. ................. ................. ................. . 16-16
 


Glossary ................. ................. ................. ................. ................. .. 16-18
 


Acronyms ................. ................. ................. ................. ................. . 16-19
 


References ................. ................. ................. ................. ................. 16-20
 


Chapter 17: Environmental Justice & Protection of Children 

17.1 Demographic Characteristics of Populations Living in the Counties Near MP&M Facilities .............. . . . . 17-1
 


17.2 Protection of Children from Environmental Health and Safety Risks ................. ................. ... 17-3
 


Glossary ................. ................. ................. ................. ................. ... 17-4
 


Reference ................. ................. ................. ................. ................. .. 17-5
 


Table of Contents-5 
MP&M EEBA Table of Contents 

PART IV: COMPARISON OF COSTS AND BENEFITS 

Chapter 18: MP&M Benefit/Cost Comparison 

18.1 Estimating National Level Benefits and Costs ................. ................. ................. ... 18-1
 


18.2 Social Costs ................. ................. ................. ................. ............. 18-2
 


18.3 Benefits ................. ................. ................. ................. ................ 18-2
 


18.4 Comparing Monetized Benefits and Costs ................. ................. ................. ...... 18-2
 


Chapter 19: Social Costs and Benefits of Regulatory Alternatives 

19.1 Estimated Social Costs ................. ................. ................. ................. ..... 19-1
 


19.1.1 Compliance Costs for MP&M Facilities ................. ................. ................. ... 19-1
 


19.1.2 Government Administrative Costs ................. ................. ................. ........ 19-2
 


19.1.3 Cost of Unemployment ................. ................. ................. ................ 19-2
 


19.1.4 Total Social Costs ................. ................. ................. ................. ... 19-3
 


19.2 Estimated Benefits ................. ................. ................. ................. ........ 19-4
 


19.2.1 Human Health Benefits ................. ................. ................. ................ 19-4
 


19.2.2 Recreational Benefits ................. ................. ................. ................. . 19-5
 


19.2.3 Avoided Sewage Sludge Disposal or Use Costs ................. ................. ............... 19-6
 


19.2.4 Total Monetized Benefits ................. ................. ................. ............... 19-7
 


19.3 Comparison of Estimated Benefits and Costs ................. ................. ................. ..... 19-7
 


Glossary ................. ................. ................. ................. ................. .. 19-10
 


Acronym ................. ................. ................. ................. ................. .. 19-11
 


PART V: OHIO CASE STUDY 

Chapter 20: Baseline Conditions in Ohio 

20.1 Overview of Ohio’s Geography, Population, and Economy ................. ................. .......... 20-2
 


20.2 Profile of MP&M Facilities in Ohio ................. ................. ................. ........... 20-3
 


20.3 Ohio’s Water Resources ................. ................. ................. ................. ... 20-6
 


20.3.1 Aquatic Life Use ................. ................. ................. ................. .... 20-8
 


20.3.2 Water Recreation in Ohio ................. ................. ................. ............. 20-11
 


20.3.3 Commercial Fishing in Ohio ................. ................. ................. ........... 20-12
 


20.3.4 Surface Water Withdrawals ................. ................. ................. ........... 20-12
 


20.4 Surface Water Quality in Ohio ................. ................. ................. .............. 20-12
 


20.4.1 Use Attainment in Streams and Rivers in Ohio ................. ................. .............. 20-13
 


20.4.2 Lake Erie and Other Lakes Use Attainment ................. ................. ................ 20-13
 


20.4.3 Causes and Sources of Use Non-Attainment in Ohio ................. ................. ......... 20-14
 


20.5 Effects of Water Quality Impairments on Water Resource Services ................. ................. ... 20-15
 


20.5.1 Effect of Water Quality Impairment on Life Support for Animals and Plants .............. . . . ....... 20-15
 


20.5.2 Effect of Water Quality Impairment on Recreational Services ................. ................. .. 20-17
 


20.6 Presence and Distribution of Endangered and Threatened Species in Ohio ................. .............. 20-18
 


20.6.1 E&T Fish ................. ................. ................. ................. ......... 20-19
 


20.6.2 E&T Mollusks ................. ................. ................. ................. ..... 20-19
 


20.6.3 Other Aquatic E&T Species ................. ................. ................. ........... 20-20
 


Glossary ................. ................. ................. ................. ................. .. 20-24
 

Acronyms ................. ................. ................. ................. ................. . 20-27
 

References ................. ................. ................. ................. ................. 20-28
 

Chapter 21: Modeling Recreational Benefits in Ohio with a RUM Model RUM Analysis 

21.1 Methodology ................. ................. ................. ................. ........... 21-2
 


21.1.1 Overview ................. ................. ................. ................. .......... 21-2
 


21.1.2 Modeling the Site Choice Decision ................. ................. ................. ....... 21-3
 


21.1.3 Modeling Trip Participation ................. ................. ................. ............ 21-6
 


21.1.4 Calculating W elfare Changes from Water Quality Improvements ................. ................. 21-9
 


21.1.5 Extrapolating Results to the State Level ................. ................. ................. .. 21-10
 


Table of Contents-6 
MP&M EEBA Table of Contents 

21.2 Data ................. ................. ................. ................. ................. . 21-10
 


21.2.1 The Ohio Data ................. ................. ................. ................. .... 21-11
 


21.2.2 Estimating the Price of Visits to Sites ................. ................. ................. .... 21-14
 


21.2.3 Site Characteristics ................. ................. ................. ................. 21-14
 


21.3 Site Choice Model Estimates ................. ................. ................. ............... 21-17
 


21.3.1 Fishing Model ................. ................. ................. ................. .... 21-18
 


21.3.2 Boating Model ................. ................. ................. ................. .... 21-19
 


21.3.3 Swimming Model ................. ................. ................. ................. .. 21-20
 


21.3.4 Viewing (Near-water Activity) Model ................. ................. ................. ... 21-20
 


21.4 Trip Participation Model ................. ................. ................. ................. .. 21-20
 


21.5 Estimating Benefits from Reduced MP&M Discharges in Ohio ................. ................. ..... 21-23
 


21.5.1 Benefiting Reaches in Ohio ................. ................. ................. ........... 21-23
 


21.5.2 Estimating Recreational Benefits in Ohio ................. ................. ................. 21-24
 


21.6 Limitations and Uncertainty ................. ................. ................. ................ 21-25
 


21.6.1 One-State Approach ................. ................. ................. ................. 21-25
 


21.6.2 Including One-Day Trips Only ................. ................. ................. ......... 21-26
 


21.6.3 Nonuse Benefits ................. ................. ................. ................. ... 21-26
 


21.6.4 Potential Sources of Survey Bias ................. ................. ................. ....... 21-26
 


Glossary ................. ................. ................. ................. ................. .. 21-28
 

Acronyms ................. ................. ................. ................. ................. . 21-30
 

References ................. ................. ................. ................. ................. 21-31
 

Chapter 22: MP&M Benefit-Cost Analysis in Ohio 

22.1 Benefits of the Final Regulation ................. ................. ................. ............... 22-1
 


22.1.1 Human Health Benefits (Other than Lead) ................. ................. ................. .. 22-2
 


22.1.2 Lead-Related Benefits ................. ................. ................. ................. 22-3
 


22.1.3 Economic Productivity Benefits ................. ................. ................. ......... 22-4
 


22.1.4 Total Monetized Benefits ................. ................. ................. ............... 22-4
 


22.2 Social Costs of the Final Regulation ................. ................. ................. ........... 22-5
 


22.2.1 Baseline and Post-Compliance Closures ................. ................. ................. ... 22-5
 


22.2.2 Compliance Costs for MP&M Facilities ................. ................. ................. ... 22-6
 


22.2.3 Total Social Costs ................. ................. ................. ................. ... 22-7
 


22.3 Comparison of Monetized Benefits and Costs in Ohio ................. ................. .............. 22-7
 


Glossary ................. ................. ................. ................. ................. ... 22-8
 


Acronyms ................. ................. ................. ................. ................. .. 22-9
 


APPENDICES 

Appendix A: Detailed Economic Impact Analysis Information 

A.1 MP&M SIC and NAICS Codes ................. ................. ................. ................A-1
 


A.1.1 SIC Codes by Sector ................. ................. ................. ................. ... A-1
 


A.1.2 Bridge Between NAICS and SIC codes ................. ................. ................. ..... A-7
 


A.2 Annual Establishment “Births” and “Deaths” in MP&M Industries ................. ................. .... A-26
 


A.3 Description of MP&M Surveys ................. ................. ................. ............... A-28
 


A.3.1 Screener Surveys ................. ................. ................. ................. .... A-28
 


A.3.2 Ohio Screener Surveys ................. ................. ................. ................. A-28
 


A.3.3 Detailed MP&M Industry Surveys ................. ................. ................. ........ A-28
 


A.3.4 Iron and Steel Survey ................. ................. ................. ................. . A-29
 


A.3.5 Municipality Survey ................. ................. ................. ................. . . A-29
 


A.3.6 Federal Facility Survey ................. ................. ................. ................ A-29
 


A.3.7 POTW Survey ................. ................. ................. ................. ...... A-29
 


References ................. ................. ................. ................. ................. . A-31
 

Appendix B: Cost Pass-Through Analysis 

B.1 The Choice of Sector-Specific CPT Coefficients ................. ................. ................. ... B-1
 


B.2 Econometric Analysis ................. ................. ................. ................. ....... B-2
 


Table of Contents-7 
MP&M EEBA Table of Contents 

B.2.1 Framework ................. ................. ................. ................. .......... B-3
 


B.2.2 Data Used to Estimate the Regression Equation ................. ................. ................ B-4
 


B.2.3 Regression Results ................. ................. ................. ................. ....B-6
 


B.3 Market Structure Analysis ................. ................. ................. ................. ...B-9
 


B.3.1 Measures Descriptions ................. ................. ................. ................. . B-9
 


B.3.2 Results ................. ................. ................. ................. ............ B-13
 


B.4 Validation of Econometrically-Estimated CPT Coefficients ................. ................. .......... B-16
 


B.4.1 Other Metal Products ................. ................. ................. ................. . B-17
 


B.4.2 Job Shops ................. ................. ................. ................. .......... B-17
 


B..3 Motor Vehicle ................. ................. ................. ................. ....... B-18
 


B.4.4 Aircraft ................. ................. ................. ................. ........... B-18
 


B.4.5 Mobile Industrial Equipment ................. ................. ................. ........... B-18
 


B.4.6 Aerospace ................. ................. ................. ................. .......... B-18
 


B.5 Adjusting Estimates of Compliance CPT Potential ................. ................. ................. B-18
 


Attachment B.A: Selected Review of CPT Literature ................. ................. ................. . . B-20
 

B.A.1 Ashenfelter et al. (1998), “Identifying the Firm-Specific Cost Pass-Through Rate.” ................ . ... B-20
 

B.A.2 Exchange Rate Pass-Through ................. ................. ................. ........... B-20
 

B.A.3 Tax Pass-Through ................. ................. ................. ................. ... B-20
 

B.A.4 Studies Cited ................. ................. ................. ................. ....... B-20
 

Acronyms ................. ................. ................. ................. ................. . . B-22
 

Appendix C: Summary of Moderate Impact Thresholds by Sector 

C.1 Developing Threshold Values for Pre-Tax Return on Assets (PTRA) ................. ................. .... C-1
 


C.2 Developing Threshold Values for Interest Coverage Ratio (ICR) ................. ................. ........C-2
 


C.3 Summary of Results ................. ................. ................. ................. .........C-4
 


References ................. ................. ................. ................. ................. . . C-5
 


Appendix D: Estimating Capital Outlays for MP&M Discounted Cash Flow Analyses 

D.1 Analytic Concepts Underlying Analysis of Capital Outlays ................. ................. ........... D-2
 


D.2 Specifying Variables for the Analysis ................. ................. ................. .......... D-4
 


D.3 Selecting the Regression Analysis Dataset ................. ................. ................. ....... D-7
 


D.4 Specification of Models to be Tested ................. ................. ................. ........... D-8
 


D.4.1 Linear Model Specification ................. ................. ................. ............. D-9
 


D.4.2 Log-Linear Model Specification ................. ................. ................. ........ D-10
 


D.4.3 Sensitivity Analysis ................. ................. ................. ................. . D-12
 


D.5 Model Validation ................. ................. ................. ................. ........ D-12
 


Attachment D.A: Bibliography of Literature Reviewed for this Analysis ................. ................. ... D-17
 


Attachment D.B: Historical Variables Contained in the Value Line Investment Survey Dataset .............. . . . .. D-18
 


Appendix E: Calculation of Capital Cost Components 

E.1 Calculation of One-Time Capital Cost Components ................. ................. ................. . E-1
 


Appendix F: Administrative Costs 

F.1 	Effluent Guidelines Permitting Requirements ................. ................. ................. ...... F-1
 


F.1.1 NPDES Basic Industrial Permit Program ................. ................. ................. .... F-1
 


F.1.2 Pretreatment Program ................. ................. ................. ................. .. F-2
 


F.2 	POTW Administrative Cost Methodology ................. ................. ................. ........ F-2
 


F.2.1 Data Sources ................. ................. ................. ................. ......... F-2
 


F.2.2 Overview of Methodology ................. ................. ................. ............... F-3
 


F.3 	Unit Costs of Permitting Activities ................. ................. ................. .............. F-4
 


F.3.1 Permit Application and Issuance ................. ................. ................. ........... F-4
 


F.3.2 Inspection ................. ................. ................. ................. ........... F-7
 


F.3.3 Monitoring ................. ................. ................. ................. .......... F-7
 


F.3.4 Enforcement ................. ................. ................. ................. ......... F-9
 


F.3.5 Repermitting ................. ................. ................. ................. ........ F-10
 


F.4 POTW Administrative Costs by Option ................. ................. ................. ......... F-10
 


Appendix F Exhibits ................. ................. ................. ................. ........... F-12
 


Table of Contents-8 
MP&M EEBA Table of Contents 

References ................. ................. ................. ................. ................. . F-25
 

Appendix G: Extrapolation Methods 

G.1 Using Raking to Adjust MP&M Facility Sample Weights ................. ................. .............G-2
 


G.1.1 Data Sources ................. ................. ................. ................. ........ G-2
 


G.1.2 Raking Adjustment ................. ................. ................. ................. .... G-3
 


G.2 Methodology for Developing Sample-Weighted Estimates for Sites with More Than One MP&M Facility ........ G-7
 


G.3 Methodology for Extrapolation of Ohio Case Study Results to the National Level ............... . . .......... G-13
 


G.3.1 Change in Pollutant Loads ................. ................. ................. .............. G-14
 


G.3.2 Level of Recreational Activities on Reaches Affected by MP&M Discharges .............. . . . ........ G-14
 


G.3.3 Differences in Household Income ................. ................. ................. ........ G-14
 


G.4 Results ................. ................. ................. ................. ................. G-15
 


Glossary ................. ................. ................. ................. ................. ... G-17
 


Appendix H: Fate and Transport Model for DW and Ohio Analyses 

H.1 Model Equations ................. ................. ................. ................. .......... H-1
 


H.2 Model Assumptions ................. ................. ................. ................. ........ H-3
 


H.2.1 Steady Flow Conditions Exist Within the Stream or River Reach ................. ................. . H-3
 


H.2.2 Longitudinal Dispersion of the Pollutant Is Negligible ................. ................. .......... H-3
 


H.2.3 Flow Geometry, Suspension of Solids, and Reaction Rates Are Constant Within a River Reach ............H-4
 


H.3 Hydrologic Linkages ................. ................. ................. ................. ....... H-4
 


H.4 Associating Risk with Exposed Populations ................. ................. ................. ...... H-4
 


H.5 Data Sources ................. ................. ................. ................. .............H-4
 


H.5.1 Pollutant Loading Data Used in the Drinking Water Risk Analysis ................. ................. . H-4
 


H.5.2 Pollutant Loading Data Used in the Ohio Case Study Analysis ................. ................. .... H-4
 


Glossary ................. ................. ................. ................. ................. .... H-8
 


Acronyms ................. ................. ................. ................. ................. ... H-9
 


References ................. ................. ................. ................. ................. . H-10
 


Appendix I: Environmental Assessment 

I.1 MP&M Pollutant Characterization ................. ................. ................. .............. I-4
 


I.1.1 Identifying MP&M Pollutants ................. ................. ................. ............. I-4
 


I.1.2 Physical-Chemical Characteristics and Toxicity Data of MP&M Pollutants .............. . . . ............ I-9
 


I.1.3 Grouping MP&M Pollutants Based on Risk to Aquatic Receptors ................. ................. . I-21
 


I.1.4 Assumptions and Limitations ................. ................. ................. ............ I-23
 


I.2. 	Methodology ................. ................. ................. ................. ............. I-23
 


I.2.1 Sample Set Data Analysis and National Extrapolation ................. ................. .......... I-23
 


I.2.2 Water Quality Modeling ................. ................. ................. ................ I-23
 


I.2.3 Impact of Indirect Discharging Facilities on POTW Operations ................. ................. ... I-25
 


I.2.4 Assumptions and Limitations ................. ................. ................. ............ I-27
 


I.3 Data Sources ................. ................. ................. ................. ............. I-28
 


I.3.1 Facility-Specific Data ................. ................. ................. ................. . I-28
 


I.3.2 Water Body-Specific Data ................. ................. ................. ............... I-28
 


I.3.3 Information Used to Evaluate POTW Operations ................. ................. .............. I-29
 


I.4 Results ................. ................. ................. ................. ................. . I-33
 


I.4.1 Human Health Impacts ................. ................. ................. ................. I-34
 


I.4.2 Aquatic Life Effects ................. ................. ................. ................. ... I-37
 


I.4.3 POTW Effects ................. ................. ................. ................. ....... I-41
 


Glossary ................. ................. ................. ................. ................. ... I-44
 

Acronyms ................. ................. ................. ................. ................. .. I-48
 

References ................. ................. ................. ................. ................. . I-49
 

Appendix J: Spacial Distribution of MP&M Facilities and Recreational User 

Populations 

Table J.1 Distribution of MP&M Facilities and Participants of Water Based Recreation by State ................ . .. J-2
 

Figure J.1 Cumulative Distribution of Facilities and Participants ................. ................. ................. J-4
 

Table of Contents-9 
MP&M EEBA Table of Contents 

Appendix K: Selecting WPT Values for Benefits Transfer 

K.1 Desvousges et al., 1987. Option Price Estimates for Water Quality Improvements: A Contingent Valuation Study 

for the Monongahela River ................. ................. ................. ................. K-2
 

K.2 Farber and Griner, 2000. Valuing Watershed Quality Improvements Using Conjoint Analysis ................. K-3
 

K.3 Jakus et al., 1997. Do Sportfish Consumption Advisories Affect Reservoir Anglers’ Site Choice? .............. K-5
 

K.4 Lant and Roberts, 1990. Greenbelts in the Cornbelt: Riparian Wetlands, Intrinsic Values, and Market Failure .... K-6
 

K.5 Audrey Lyke, 1993. Discrete Choice Models to Value Changes in Environmental Quality: A Great Lakes Case 
 

Study ................. ................. ................. ................. ................. . K-7
 

K.6 Montgomery and Needelman, 1997. The Welfare Effects of Toxic Contamination in Freshwater Fish ........... K-8
 

K.7 Phaneuf et al., 1998. Valuing Water Quality Improvements Using Revealed Preference Methods When Corner 
 

Solutions are Present ................. ................. ................. ................. ...... K-8
 

Glossary ................. ................. ................. ................. ................. .. K-10
 

Acronyms ................. ................. ................. ................. ................. . K-11
 

References ................. ................. ................. ................. ................. K-12
 

Appendix L: Parameters Used in the IEUBK Model 

Table B-1: Description of Parameters Used in the IEUBK Lead Model ................. ................. ..... L-1
 

Appendix M: Sensitivity Analysis of Lead-Related Benefits 

M.1 Values for Quantified Lead-Related Health Effects ................. ................. ................. M-1 

M.2 Lead-Related Benefit Results ................. ................. ................. ................. M-2 

M.2.1 Preschool Age Children Lead-Related Benefits ................. ................. .............. M-2 

M.2.2 Adult Lead-Related Benefits ................. ................. ................. ............ M-3 

Appendix N: Analysis of the National Demand for Water-Based Recreation Survey 

N.1 Background Information ................. ................. ................. ................. .... N-1
 

N.2 Data Analysis ................. ................. ................. ................. ............ N-2
 

N.3 Participation in Water-Based Recreation by Activity Type ................. ................. ........... N-2
 

N.4 Allocation of Trips by Water Body Type ................. ................. ................. ....... N-11
 

N.5 One-Way Travel Distance ................. ................. ................. ................. . N-16
 

N.6 Individual Expenditures per Trip ................. ................. ................. ............. N-19
 

N.7 Distribution of Direct Costs for Single-day Trips ................. ................. ................. . N-22
 

N.8 Profile of Boating Trips ................. ................. ................. ................. ... N-27
 

N.9 Profile of Fishing Trips ................. ................. ................. ................. ... N-30
 

Table of Contents-10 
MP&M EEBA Executive Summary 

Executive Summary 

INTRODUCTION 

EPA is promulgating effluent limitations guidelines and
 


standards for the Metal Products and Machinery (MP&M)
 


industry. This document presents EPA’s economic and
 


environmental analyses supporting the final rule. The
 


Executive Summary provides an overview of the costs and
 


benefits of the regulation.
 


Overall, EPA finds that the final rule has modest economic
 


impacts and benefits. The estimated social cost of the final
 


rule is $13.8 million annually (2001$). The total benefits that
 


can be valued in dollar terms in the categories traditionally
 


analyzed for effluent guidelines range from around $1.0 to
 


$1.5 million annually (2001$), based on alternative
 


extrapolation methods.
 


EPA recognizes that estimates of both costs and benefits are
 


uncertain. To supplement the national level analysis
 


performed for the final MP&M regulation, EPA conducted a
 


more detailed case study of the expected State-level costs
 


and benefits of the MP &M rule in Ohio. In contrast to the
 


national-level analysis, the more detailed case study analysis
 


finds that the final regulation would achieve benefits
 


substantially exceeding estimated social costs. Comparing the midpoint estimate of social costs ($62,232) with the midpoint
 


EXECUTIVE SUMMARY CONTENTS 

ES.1 Overview of Facilities Evaluated for 

Regulation under the MP&M Point Source 

Category and Its Effluent Discharges ...... ES-1 

ES.2 Description of the Final Rule ............... ES-3 

ES.3 Economic Impacts and Social Costs of the 

Final Rule ................. .......... ES-3 

ES.3.1 Economic Impacts ................. ES-4 

ES.3.2 Social Costs ................. ..... ES-7 

ES.4 National Benefits of the Final Rule .......... ES-8 

ES.4.1 Reduced Human Health Risk ........ ES-10 

ES.4.2 Ecological, Recreational, and 

Nonuser Benefits ................. ... ES-14 

ES.4.3 Reduced POTW Impacts ........... ES-15 

ES.4.4 Total Estimated Benefits of the 

Final MP&M Rule ................. .. ES-16 

ES.5 National Benefit-Costs Comparison ......... ES-16 

ES.6 Ohio Case Study ................. ....... ES-18 

ES.6.1 Benefits ................. ........ ES-18 

ES.6.2 Social Costs ................. .... ES-20 

ES.6.3 Comparing Monetized Benefits 

and Costs ................. ......... ES-20 

estimate of monetizable benefits ($930,408) for Ohio, EPA estimates a net benefit of the final MP&M rule for Ohio is 

$868,178 (2001$). 

EPA notes that effluent limitations guidelines for the MP&M industry are technology-based. EPA is neither required to 

demonstrate environmental benefits of its technology-based rules, nor is it required to consider receiving water quality in 

setting technology-based effluent limitations guidelines and standards. EPA considers benefits as one of the factors that the 

Agency evaluates. 

Detailed descriptions of the analytic methodologies and results are presented in the Economic, Environmental, and Benefits 

Assessment for the Final Metal Products and Machinery Rule (EEBA). In addition, the EEBA presents costs, benefits, and 

economic impacts for alternatives to the final rule that were considered by EPA. 

ES.1 OVERVIEW OF FACILITIES EVALUATED FOR REGULATION UNDER THE MP&M 

POINT SOURCE CATEGORY AND ITS EFFLUENT DISCHARGES 

The MP&M Point Source Category regulates oily operations process wastewater discharges to surface waters from existing or 

new industrial facilities (including facilities owned and operated by federal, state, or local governments) engaged in 

manufacturing, rebuilding, or maintenance of metal parts, products, or machines for use in the sixteen Metal Product & 

Machinery (MP&M) industrial sectors. Please note the underlined language in the previous sentence as a facility may be 

subject to the MP&M effluent guidelines even if it is not in one of the MP&M industrial sectors. For example, EPA considers 

a facility performing machining part of the “Bus & Truck” MP&M industrial sector if it manufactures metal parts for truck 

trailers. Process wastewater means wastewater as defined at 40 CFR parts 122 and 401, and includes wastewater from air 

pollution control devices (see 40 CFR 438.2(g)). Oily operations are listed at 40 CFR 438.2(g) and defined in Appendix B to 

Part 438 (see also Section 4 of the TDD ). 

ES-1 
MP&M EEBA Executive Summary 

According to Statistics of U.S. Business, 1996, approximately 638,696 establishments operate in the MP&M industry sectors. 

Based on information in the MP&M survey database, approximately 44,000 facilities meet the definition of an MP&M 

facility. These 44,000 facilities include approximately 41,000 indirect dischargers (i.e., facilities discharging effluent to a 

publicly-owned sewage treatment works or POTWs) and 3,000 direct dischargers (i.e., facilities discharging effluent directly 

to a waterway under a NPDES permit). 

Table ES.1 reports the estimated number of MP&M facilities and total discharge flow (before final rule implementation) by 

type of facility. The largest number of sites, approximately 22,000, perform “rebuilding/maintenance only” and account for 

approximately 6 percent of the total estimated discharge flow for the industry. “Manufacturing only” contains the next largest 

number of facilities (15,400) and accounts, by far, for the largest percentage of the total estimated discharge flow for the 

industry (82 percent). 

Table ES.1: Number of MP&M Facilities and 

Total Discharge Flow by Type of Facility 

Type of Facility Number of 

Facilities 

Total Estimated 

Discharge Flow 

(million gal/yr) 

Percent of 

Facilities 

Percent of Total 

Discharge Flow 

Manufacturing & 

Rebuilding/Maintenance 

6,600 9,400 15.0% 12.0% 

Manufacturing only 15,400 64,100 35.0% 82.0% 

Rebuilding/Maintenance 

only 

22,000 4,700 50.0% 6.0% 

Total 44,000 78,200 100.0% 100.0% 

Source: U.S. EPA analysis. See Section 4 of the Technical Development Document for the final rule. 

Of the 43,858 water discharging facilities, 3,593 are predicted to close in the baseline, leaving 40,265 existing MP&M 

facilities that EPA estimates could be regulated.1 After accounting for subcategory and discharger class exclusions, EPA 

estimates that the final rule will regulate 2,382 of these facilities, all of which are direct dischargers. These regulated 

facilities represent 5.9 percent of the 40,265 facilities that could be potentially regulated. 

Table ES.2 summarizes information on the total number of MP&M facilities that were evaluated for the final rule, the number 

operating in the baseline, and the number and percent of facilities that will be regulated under the final rule. As reported in 

Table ES.2, no indirect dischargers are subject to the final regulation. The rule will regulate 2,382 direct dischargers in the 

Oily Wastes subcategory. 

Table ES.2: Number of MP&M Facilities Evaluated for the Final Rule 

and Regulated under the Final Rule 

Discharge Status MP&M 

Facilities 

Operating in 

the Baseline 

Regulated 

under the Final 

Rule 

Percent of Facilities 

Operating in the Baseline 

that are Regulated 

Direct dischargers 2,739 2,641 2,382 90% 

Indirect dischargers 41,162 37,652 0 0% 

All dischargers 43,858 40,265 2,382 6% 

Source: U.S. EPA analysis. 

1 These are facilities that are predicted to close due to weak financial performance under baseline conditions, i.e., in the absence of 

the final rule. EPA does not attribute the costs or the reduced discharges resulting from these baseline closures to the final rule, and 

therefore excludes these facilities from its analyses of the rule’s impacts. Baseline closures account for differences between the universe of 

facilities discussed in this report and the universe discussed in the Technical Development Document. 

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MP&M EEBA Executive Summary 

Several aspects of the MP&M industries as a whole and part of those industries evaluated for regulation under the final rule 

are important in understanding the need for the regulation, the likely distribution and occurrence of benefits, and the 

framework of the economic analysis for the regulation. 

Facilities in the relevant MP&M industries are located in every state, with a particular concentration in the heavy industrial 

regions along the Gulf Coast, both East and West Coasts and the Great Lakes Region. Moreover, MP&M facilities are 

frequently located in highly populated regions. Based on an analysis of in-scope sample facilities, around 35% of these 

facilities discharge to reaches located adjacent to counties with populations of at least 500 thousand people.2 

Discharges of these pollutants to surface waters and POTW s have a number of adverse effects, including degradation of 

aquatic habitats, reduced survivability and diversity of native aquatic life, and increased human health risk through the 

consumption of contaminated fish and water. 

Many MP&M facilities evaluated for the final regulation produce goods and services that serve multiple market sectors. It is 

not possible to associate regulatory costs and benefits to particular sectors, because EPA is not able to link regulated 

processes to specific sectors for facilities operating in multiple sectors. As a result, EPA’s cost and economic impact analyses 

are disaggregated by type of facility but not by sector. 

ES.2 DESCRIPTION OF THE FINAL RULE 

In order to address variations between products, raw materials processed, and other factors that result in distinctly different 

effluent characteristics, EPA proposed eight groupings called “subcategories” for the January 2001 proposal and June 2002 

Notice of Data Availability (NODA). EPA retained this subcategory structure for evaluating options for the final rule. 

Regulation of a category using subcategories allows each subcategory to have a uniform set of effluent limitations that take 

into account technological achievability and economic impacts unique to that subcategory (see Section 6 of the TDD). For 

the final rule, EPA is establishing limitations and standards only for direct dischargers in the Oily Wastes subcategory. The 

other seven subcategories (General Metals, Metal Finishing Job Shops, Non Chromium Anodizing, Printed Wiring Board, 

Railroad Line Maintenance, Shipbuilding Dry Docks, and Steel Forming & Finishing) were considered for regulation at 

proposal and for some of the alternative regulatory options, but are not further regulated under the final rule. 

EPA is establishing BPT pH limitations and daily maximum limitations for two pollutants, oil and grease as hexane 

extractable material (O&G (as HEM)) and total suspended solids (TSS), for direct dischargers in the Oily Wastes subcategory 

based on the proposed technology option (Option 6). The technology requirements include the following treatment measures: 

(1) in-process flow control and pollution prevention; and (2) oil-water separation by chemical emulsion breaking and 

skimming (see Section 9 of the TDD). This technology is available technology readily applicable to all facilities in the Oily 

Wastes subcategory. Approximately 42% of the direct discharging facilities in the Oily Wastes subcategory currently employ 

this technology already. 

EPA is promulgating BCT equivalent to BPT for facilities in the Oily Wastes subcategory and has decided not to establish 

BAT limitations. EPA is promulgating NSPS for new direct dischargers in the Oily Wastes subcategory at the BPT and BCT 

levels. 

ES.3 ECONOMIC IMPACTS AND SOCIAL COSTS OF THE FINAL RULE 

EPA assessed the economic impacts and social costs of the final rule using detailed financial and technical data from the 

MP &M surveys (see Section 3 of the TDD ). Engineering analyses of these facilities identified the pollution prevention and 

treatment systems needed to comply with the final rule and other regulatory alternatives. The estimated capital and annual 

operating and maintenance costs of these systems, incremental to the costs of systems already in place, represent the 

2 EPA is not able to characterize the location characteristics of all potentially-regulated MP&M facilities at the national level 

precisely, because the MP&M survey design was not intended to provide national results by location characteristics. 

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MP&M EEBA Executive Summary 

compliance costs of the rule.3 EPA analyzed the financial performance of the facilities evaluated for regulation under preregulation conditions (the baseline) and as subject to regulatory requirements. The Agency used a variety of measures to 

assess the economic impacts resulting from the final rule, both for the regulated MP&M facilities and for the firms and 

governments that own the facilities. The economic impact analysis also considered impacts for small entities in particular, 

and impacts on employment, foreign trade and communities. The results of the analyses for sample facilities were 

extrapolated using survey sample weights for each facility, to provide national-level results. 

ES.3.1 Economic Impacts 

Overall, EPA found the econom ic impact of the final rule to be modest. The following are EPA’s findings for different
 


categories of impacts.
 


a. Facility impacts
 


The facility impact analysis assesses how facilities will be affected financially by the final rule. Key outputs of the facility
 


impact analysis include expected facility closures in the MP&M industries, associated losses in employment, and the number
 


of facilities experiencing financial stress short of closure (“moderate impacts”). EPA performed economic impact analyses 

for three categories of facilities, using different methodologies to evaluate each of the groups. The three groups are: 

�	 	 Private MP&M Facilities. This group includes privately-owned facilities that do not perform railroad line 

maintenance and are not owned by governments. This major category includes private businesses in a wide range of 

sectors or industries, including facilities that manufacture and rebuild railroad equipment. Only facilities that repair 

railroad track and equipment along the railroad line are not included. 

� Railroad line maintenance facilities maintain and repair railroad track, equipment and vehicles. 

�	 	 Government-owned facilities include MP&M facilities operated by municipalities, State agencies and other public 

sector entities such as State universities. Many of these facilities repair, rebuild, and maintain buses, trucks, cars, 

utility vehicles (e.g., snow plows and street cleaners), and light machinery. 

The specific methodology used to assess impacts differed for each of the three types of MP&M facilities. For private MP&M 

facilities, EPA established thresholds for measures of financial performance and compared the facilities’ performance before 

and after compliance with each regulatory option with these thresholds. Impacts were measured at the operating company 

level for railroad line maintenance facilities, since firms are unlikely to keep track of financial performance at the facility level 

for these sites. For governments, EPA compared compliance costs with facilities’ baseline costs of service, and assessed the 

impact of the compliance costs on the government’s taxpayers and on its ability to finance compliance costs by issuing debt. 

EPA identified facilities that are financially weak and might be expected to close under baseline conditions. Of the estimated 

43,858 discharging facilities, 8.2 percent or 3,593 facilities were assessed as baseline closures. The 3,593 baseline closures 

include 3,511 indirect dischargers, or 8.5 percent of indirect dischargers, and 98 direct dischargers, or 3.6 percent of direct 

dischargers. These facilities were excluded from the post-compliance analysis of regulatory impacts. 

Table ES.3 summarizes the facility-level economic impact of the final rule. EPA estimates that the final rule will cause no 

facilities to close or to incur moderate financial stress short of closure. The final rule excludes all indirect discharging 

facilities and two percent of the direct discharging facilities from requirements. 

3 The annual equivalent of capital and other one-time costs is calculated by annualizing costs at a seven percent discount rate over an 

estimated 15 year equipment life. Annual compliance costs are annualized capital costs plus annual operating and maintenance (O&M) 

costs. 

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MP&M EEBA Executive Summary 

Table ES.3: Regulatory Impacts for All Facilities, Final Rule, National Estimates 

Totala Direct Indirect 

Number of facilities operating in the baseline: total 40,265 2,641 37,652 

private MP&M and railroad line maintenance 36,480 2,183 34,325 

government-owned 3,785 458 3,327 

Number of facilities with subcategory exclusions 37,883 259 37,652 

Percent of facilities operating in the baseline excluded or below 

cutoffs 94.1% 9.8% 100.0% 

Number of facilities operating subject to regulatory requirements 2,382 2,382 0 

Number of regulatory closures 0 0 0 

Percent of facilities operating in the baseline that are regulatory 

closures 0.0% 0.0% 0.0% 

Number of facilities experiencing moderate impacts 0 0 0 

Percent of facilities operating in the baseline that experience 

moderate impacts 0.0% 0.0% 0.0% 

a The total number of facilities does not sum to the number of facilities by subcategory because some facilities 

have an indirect and direct discharging operation within the same facility. 

Source: U.S. EPA analysis. 

Table ES.4 summarizes impacts for government-owned facilities in particular. Under the final rule, 88 percent of the 

government-owned facilities are excluded from requirements by subcategory exclusions. The compliance costs of the final 

rule do not result in significant budgetary impacts for any of the governments that operate MP&M facilities. 

Table ES.4: Regulatory Impacts for Government-Owned Facilities, 

Final Rule, National Estimates 

Number of government-owned facilities operating in the baseline 3,785 

Number of facilities with subcategory exclusions 3,327 

Percent of facilities operating in the baseline excluded 88% 

Number of facilities operating subject to regulatory requirements 458 

Number of facilities experiencing significant budgetary impactsa 0 

Percent of facilities operating in the baseline that experience 

significant budgetary impacts 0% 

a

 A government is judged to experience major budgetary impacts if (1) any of its 

MP&M facilities incur compliance costs exceeding 1% of baseline cost of service 

and (2) the government fails both the taxpayer impact and debt impact tests. 

Source: U.S. EPA analysis. 

b. Firm-level impacts
 


EPA examined the impacts of the final rule on firms that own MP&M facilities, as well as on the financial condition of the
 


facilities themselves. A firm that owns multiple MP&M facilities could experience adverse financial impacts at the firm level
 


if its facilities are among those that incur significant impacts at the facility level. The firm-level analysis is also used to 

assess impacts on small firms, as required by the Regulatory Flexibility Act. 

EPA compared compliance costs with revenue at the firm level as a measure of the relative burden of compliance costs. EPA 

applied this analysis only to MP&M facilities owned by private entities. EPA estimated firm-level compliance costs by 

summing costs for all facilities owned by the same firm that responded to the survey plus estimated compliance costs for 

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MP&M EEBA Executive Summary 

additional facilities for which respondents submitted voluntary information. The Agency was not able to estimate the national 

numbers of firms that own MP &M facilities precisely, because the sample weights based on the survey design represent 

numbers of facilities rather than firms. Most MP&M facilities (26,472 of 36,480, or 73 percent) are single-facility firms, 

however. These firms can be analyzed using the survey weights. In addition, from survey responses, EPA identified 389 

sample facilities that are owned by 276 multi-facility firms. It is not known how many multi-facility firms exist at the national 

level, so EPA included these 276 firms in the firm-level analysis without extrapolation to the national level. 

Table ES.5 shows the results of the firm-level analysis. The results represent a total of 26,748 MP&M firms (26,472 + 276), 

owning 26,861 facilities (26,472 owned by single-facility firms + 389 owned by multi-facility firms). 

Table ES.5: Firm Level Before-Tax Annual Compliance Costs 

as a Percent of Annual Revenues 

Number of 

Firms in the 

Analysis a 

Number and Percent with Before-Tax Annual Compliance Costs/Annual 

Revenues Equal to: 

0% >0% and <1% Over 1% 

Number % Number % Number % 

26,748 25,722 96.2% 1,027 3.8% 0 0% 

a Firms whose only MP&M facilities close in the baseline are excluded. 

Source: U.S. EPA analysis. 

None of the firms in the analysis incur after-tax costs of greater than 1 percent of their annual revenues. Of the 1,027 firms
 


that incur any costs at all, none own facilities that close or experience moderate impacts as a results of the final rule.
 


This analysis is likely to overstate costs at the firm level because it does not consider the actions a multi-facility firm might
 


take to reduce its compliance costs under the final rule, such as transferring functions among facilities to consolidate wet
 


processes and to take advantage of scale economies in wastewater treatment.
 


c. Employment effects
 


Potential changes in employment from the rule include: (1) job losses that occur when facilities close and (2) job gains
 


resulting from facilities’ compliance activities. EPA estimates that the final rule will cause no facilities to close and therefore
 


the final rule will cause no job losses. EPA estimates that the regulation will increase employment, with the manufacture and
 


installation of compliance equipment causing a short-term gain in direct employment of 20 FTEs. In addition, EPA estimates
 


that operation and maintenance of compliance equipment will cause a continuing direct requirement for 2 FTEs per year. The
 


net effect on direct employment of the regulation is an estimated increase in 47 FTE-years, a measure that reflects both the 

number and duration of jobs gained. Over the 15 year analysis period, the employment gain averages 3 FTEs per year. 

d. Community impacts
 


EPA also considered the potential impacts of changes in employment due to the regulation on the communities where MP&M
 


facilities are located. Given that no closures are predicted due to the final rule, EPA does not expect the rule to have 

significant impacts at the community level. 

e. Foreign trade impacts
 


The foreign trade impacts analysis allocates the value of changes in output for each facility that is projected to close to
 


exports, imports, or domestic sales, based on the dominant source of competition in each market as reported in the surveys. 

EPA does not expect any foreign trade impacts as a result of the final rule because no facility closures are expected. 

f. Impacts on new facilities 

The new facility analysis assessed whether revised or new discharge limits for newly constructed sources would create a 

barrier to entry by new businesses and new facilities. To assess the potential for barrier to entry, EPA compared, by 

subcategory and discharger status, the estimated annual incremental costs of meeting revised new source limits with the 

estimated annual revenue of new facilities. EPA based the estimates of annual revenue and incremental costs of meeting 

revised new source limits on information from the existing facility database. EPA used the findings from this analysis, in 

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MP&M EEBA Executive Summary 

terms of the estimated percentages of new facilities that would incur costs exceeding specified revenue thresholds, to decide 

whether to issue revised new source limits for the various industry subcategories and discharger classes. From this analysis, 

EPA concluded that the promulgation of revised new source limits for the Oily Wastes direct discharger subcategory would 

not create a barrier to entry and this information, in part, underlies EPA’s decision to promulgate new source limits for this 

subcategory as part of the final regulation. 

g. Impacts on small entities
 


Table ES.6 shows the total number of facilities operating in the baseline and the number owned by small entities. Overall,
 


approximately 73 percent of all MP&M facilities are owned by small entities. However, subcategory exclusions in the final
 


rule will exclude approximately 95 percent of the facilities owned by small entities. 

Table ES.6: Number and Percent of MP&M Facilities Owned by Small Entities 

Type of Facility 

Number of Facilities of 

all Sizes Operating in 

the Baseline 

Number of Facilities 

Owned by Small 

Entities 

Percent of Facilities 

Owned by Small 

Entities 

Private MP&Ma 36,480 27,418 75% 

Government-owned 3,785 1,962 52% 

Totala 40,265 29,380 73% 

a Excludes baseline closures 

Source: U.S. EPA analysis. 

EPA assessed impacts on small entities by comparing compliance costs to revenues for the small entities at the firm level and 
 

by analyzing the facility impact analysis results for facilities owned by small firms. These analyses indicate that no facilities 
 

will incur costs exceeding 1% of revenues, and only 1,019 facilities owned by small firms will incur any costs at all. None of 
 

these facilities incur moderate impacts or close as a result of the final rule. 
 

EPA estimates that 1,962 facilities are owned by small governments (those with populations less than 50,000). The 
 

subcategory exclusions in the final rule exclude 1,682 of these small government-owned MP&M facilities. Thus, the final 
 

rule covers 280 small government-owned facilities. Of these facilities, only 140 incur costs, and the average annual cost per 
 

facility is less than $30,000. All of the 140 facilities have costs less than 3 percent of baseline cost of service. EPA estimated 
 

no significant impacts for any of these facilities or the governments that own them, based on the analysis of change in site cost 
 

of service, impact on taxpayers, and impact on government debt levels. The total compliance cost for all the small 
 

government-owned facilities incurring costs under the final rule is $3.5 million. 
 

ES.3.2 Social Costs 

The social costs of the final rule represent the value of society’s resources used to comply with and administer the rule. EPA 

estimated three categories of social cost for the final regulation: 

� the cost of society’s economic resources used to comply with the final regulation, 

� the cost to governments of administering the final regulation, and 

� the social costs of unemployment resulting from the regulation. 

Resource costs of compliance are the value of society’s productive resources including labor, equipment, and materials 

expended to achieve the reductions in effluent discharges required by the final rule. The social costs of these resources are 

generally higher than the cost burden to facilities because facilities are able to deduct the costs from their taxable income and 

may offset some of the costs through increased prices to customers. The costs to society, however, are the full value of the 

resources used, whether they are paid for by the regulated facilities, by all taxpayers in the form of lost tax revenues, or passed 

on to customers through increased prices. 

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MP&M EEBA Executive Summary 

The main cost to government from administering the regulation is the cost to POTWs for writing permits, and for compliance 

monitoring and enforcement activities. POTWs could incur costs in writing new permits for previously unpermitted facilities, 

and writing revised permits for some facilities earlier than would otherwise be required. Because the final regulation excludes 

all indirect dischargers from coverage, EPA expects that the final rule will not increase POTW administrative costs. 

The loss of jobs from facility closures would represent a social cost of the regulation. From its facility impact analysis, EPA 

estimates that no facilities will close as a result of the regulation. Accordingly, EPA estimates a zero cost of unemployment 

for the final rule. EPA did not recognize possible savings in unemployment-related costs from jobs created by the rule as a 

negative cost (benefit) of the regulation. 

From this analysis EPA estimated a total annual social cost of $13.8 million annually (2001$) for the final rule (see Table 

ES.7). All of this cost results from the estimated resource cost of compliance. 

Table ES.7: Total Social Cost: Final Rule 

(millions, 2001$) 

Social Cost Categories Final Rule 

Resource cost of compliance expenditures $13.8 

Costs to POTWs of administering the rule $0.0 

Social costs of unemployment $0.0 

Total Social Cost $13.8 

Source: U.S. EPA analysis. 

ES.4 NATIONAL BENEFITS OF THE FINAL RULE 

The final regulation will reduce MP&M industry pollutant discharges to the nation’s surface waters with a number of 

consequent benefits to society, including: 

� improved quality of freshwater, estuarine, and marine ecosystems; 

� increased survivability and diversity of aquatic and terrestrial wildlife; and 

� reduced risks to human health through consumption of fish or water taken from affected waterways. 

Table ES.8 shows EPA estimates for reduction in pollutant discharges to U.S. waters under the final rule. Loadings are shown 

both in pounds of pollutant and in toxic-weighted pound equivalents. The latter measure reflects the relative toxicity of the 

various toxic pollutants. The regulation would result in a 80 percent reduction in total toxic-weighted pollutant lbs. 

equivalent per year. The estimated toxic weighted pollutant reductions range from 87 percent for priority metal pollutants to 1 

percent for arsenic. Reductions in pounds of pollutants (not toxic-weighted) range from 93 percent for oil and grease (O&G) 

to 5 percent for arsenic. As shown in Table ES.8, the final rule achieves modest reductions for arsenic, organics, biological 

oxygen demand (BOD), and chemical oxygen demand (COD), and significant reductions for toxic metals, other inorganics, 

bulk pollutants, and oil and grease. 

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MP&M EEBA Executive Summary 

Table ES.8: Summary of Discharges by Pollutant Type for Regulated MP&M Facilitiesa 

Pollutant Category 

Current Releases Releases under the Final Rule Percent Reduction Due to the 

Final Rule 

Pounds Pounds Eq. Pounds Pounds Eq. Pounds Pounds Eq. 

Priority Pollutants 

Metals 794 2,756 153 351 80.7% 87.3% 

Organics 336 58 268 45 20.2% 22.4% 

Arse nic 22 75 21 74 4.5% 1.3% 

Cyanide (CN) 0 0 - -

Nonconventional Pollutants 

Metals 25,863 417 16,428 158 36.5% 62.1% 

Organics 2,159 45 1,038 39 51.9% 13.3% 

Other inorganics 2,334 0.2 1,301 0.1 44.3% 50.0% 

Bulk pollutants 335,679 167,295 50.2% 

Conventional Pollutants 

BOD 263,419 165,567 37.1% 

COD 523,440 488,697 6.6% 

O&G 428,137 28,955 93.2% 

TSS 160,695 73,769 54.1% 

Total 3,351 667 80.1% 

0 0 

a Includes only direct discharging facilities in the Oily Wastes subcategory that continue to operate in the baseline and that are subject 

to the final rule. 

Source: U.S. EPA analysis. 

EPA assessed the benefits from the expected pollutant reductions in three broad classes: human health, ecological, and 

productivity benefits.4 EPA was able to assess benefits within these three classes with varying degrees of completeness and 

rigor. Where possible, EPA quantified the expected effects and estimated monetary values. Some benefit categories could 

not be monetized because of data limitations and a limited understanding of how society values certain water quality changes. 

EPA used sample facility data to estimate national benefits from the regulation. The Agency extrapolated findings from the 

sample facility analyses to the national level using two extrapolation methods: (1) traditional extrapolation and (2) 

post-stratification extrapolation. EPA traditionally uses a standard linear weighting technique (i.e., traditional extrapolation) 

to estimate national compliance costs, changes in pollutant removals, and national-level benefits of environmental regulations. 

However, using sample weights that are based only on facility-specific (e.g., engineering) characteristics without including 

non-facility factors can lead to a conditional bias in the estimation of national-level benefits. In particular, this approach 

omits consideration of important non-facility factors that influence the occurrence and size of benefits. Non-facility factors 

that are likely to affect the occurrence and size of benefits from reduced sample facility discharges and that are not reflected 

in the standard stratification and sample-weighting approach include the receiving water body type and size and the size of 

population residing in the vicinity of a sample facility. To address omission of these important non-facility factors (i.e., water 

body type and size, affected population, and co-occurrence MP&M discharges) in designing the MP&M facilities sample, 

EPA adjusted sampling weights through post-stratification using two variables: (1) receiving water body type and size and 

(2) the size of the population residing in the vicinity of the sample facility. The Agency used a commonly used post4

 EPA evaluated two productivity measures: (1) the reduction in pollutant interference at POTWs, and (2) pass-through of pollutants 

into the sludge, which limits options for POTW disposal of sewage sludge. Because the final rule only regulates direct discharges and thus 

does not affect POTW operations, productivity benefits were evaluated for alternative options only. 

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MP&M EEBA Executive Summary 

stratification method called “raking” to adjust original sample weights to reflect these benefits characteristics. Appendix G of 

this report provides detail on extrapolation methods used in this analysis. 

To supplement the national-level analysis performed for the final MP&M regulation, EPA also conducted a detailed case 

study of the expected state-level costs and benefits of the MP&M rule in Ohio. For several reasons, EPA judges that the Ohio 

case study is more robust than the national benefit analyses that EPA undertakes in support of effluent guideline development. 

These reasons include: (1) use of more detailed data on MP& M facilities than is possible at the national level; (2) use of more 

detailed and accurate water quality data than are usually available; (3) more accurate accounting for the presence and effect of 

multiple discharges to the same reach; (4) inclusion of data on non-MP&M discharges in the baseline and post compliance; 

(5) use of a first-order decay model to estimate in-stream concentrations in downstream water bodies; and (6) inclusion of an 

additional recreational benefit category (swimming) in the analysis. The Ohio case study analysis is presented in Chapters 20, 

21, and 22 of this report. 

ES.4.1 Reduced Human Health Risk 

EPA estimates that the final rule will prevent discharge of 18 pounds per year of carcinogens and 119 pounds per year of lead.
 


Also, the final rule will prevent discharge of an additional 6,900 pounds of 76 pollutants of concern that are known to cause
 


adverse human health effects. These reduced pollutant discharges from MP&M facilities are expected to result in reduced risk
 


of illness from consumption of contaminated fish, shellfish, and water.
 


EPA analyzed the following measures of health-related benefits: reduced cancer risk from fish and water consumption;
 


reduced risk of non-cancer toxic effects from fish and water consumption; lead-related health effects to children and adults;
 


and reduced occurrence of in-waterway pollutant concentrations in excess of levels of concern. The levels of concern include
 


human health-based ambient water quality criteria (AWQC) or documented toxic effect levels for those chemicals not covered
 


by water quality criteria. Although some health effects are relatively well understood and can be quantified and monetized in
 


a benefits analysis (e.g., cancer), others are less well understood, and may not be assessed with the same rigor or at all (e.g.,
 


systemic health effects). The Agency therefore monetized only two of these health benefits: (1) changes in the incidence of
 


cancer from fish and water consumption, and (2) changes in adverse health effects in children and adults from reduced lead
 


exposure.
 


The national-level analysis of human health benefits finds negligible monetized benefits from the final rule. However, because
 


of significant simplifications in the national level analysis, this finding should be recognized as potentially having substantial
 


error and should therefore be interpreted with caution. In particular, the national-level analysis: (1) is based only on limited
 


information on MP&M facilities at the national level; (2) accounts in only a very limited way for the presence and effect of
 


joint discharges on the same reach; (3) omits data on non-MP&M discharges in the baseline and post compliance; and (4)
 


omits consideration of the downstream effects of pollutant discharges.
 


In contrast to the national-level analysis, the methods and data used for the Ohio case study address a number of these analytic
 


weaknesses. This more rigorous analysis finds that the final regulation would achieve $0.5 million (2001$) in health-related
 


benefits in the state of Ohio alone. EPA estimates that this analysis provides a more accurate, albeit lower-bound, estimate of
 


health-related benefits than indicated by the simpler national-level analysis. Moreover, given (1) that Ohio represents only
 


about 6 percent of the total MP&M facility population and (2) that a substantial share of the total MP&M facility population
 


is located in other states with similar water body and population characteristics (e.g., the states of Illinois, Indiana, Michigan,
 


Pennsylvania), it is reasonable to expect that additional human health benefits would be estimated for the remainder of the
 


country if EPA were able to apply this more rigorous approach at the national level. Accordingly, EPA judges that the final
 


rule's human health benefits are higher than its social costs.
 


a. Benefits from reduced incidence of cancer cases
 


EPA assessed changes in the incidence of cancer cases from consumption of M P&M pollutants in fish tissue and drinking
 


water. The methodology for assessing human health benefits from reduced cancer incidence is presented in Chapter 13 of this
 


report. The Agency valued changes in incidence of cancer cases using a willingness-to-pay (WTP) of $6.5 million (2001$)
 


for avoiding premature mortality. This estimate of the value of a statistical life saved is recommended in EPA's Guidelines for 

Preparing Economic Analysis. This estimate does not include estimates of WTP to avoid morbidity prior to death. 

EPA estimated aggregate cancer risk from contaminated drinking water for populations served by drinking water intakes on 

water bodies to which MP& M facilities discharge. EPA based this analysis on six carcinogenic pollutants for which drinking 

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MP&M EEBA Executive Summary 

water criteria have not been published.5

 This analysis excludes seven carcinogens for which drinking water criteria have been 

published. EPA assumed that public drinking water treatment systems will remove these pollutants from the public water 

supply. To the extent that treatment for these seven pollutants may cause incidental removals of the chemicals without criteria, 

the analysis may overstate cancer-related benefits. 

Calculated in-stream concentrations provide the basis for estimating changes in cancer risk for populations served by affected 

drinking water intakes. EPA estimates that baseline MP&M discharges from in-scope facilities are associated with virtually 

zero annual cancer cases. The national-level analysis finds that the final regulation would lead to a marginal reduction in these 

cancer cases resulting from consumption of contaminated drinking water; correspondingly, monetary benefits estimated from 

reduced consumption of contaminated drinking water are essentially zero. 

EPA also estimated cancer risk from the consumption of contaminated fish for recreational and subsistence anglers and their 

families. EPA based this analysis on thirteen carcinogenic pollutants found in MP&M effluent discharges. Estimated 

contaminant concentrations in fish tissue are a function of predicted in-stream pollutant concentrations and pollutant 

bioconcentration factors. EPA used data on numbers of licensed fishermen by state and county, presence of fish consumption 

advisories, number of fishing trips per person per year, and average household size to estimate the affected population of 

recreational and subsistence anglers and their families. The analysis uses different fish consumption rates for recreational and 

subsistence anglers to estimate the change in cancer risk among these populations. 

EPA estimated that baseline MP&M discharges from in-scope facilities are associated with 0.03 annual cancer cases. The 

national-level analysis shows that the final option would lead to a marginal reduction in cancer cases among recreational and 

subsistence angler populations. The monetary benefits estimated from consumption of less contaminated fish by these 

populations are essentially negligible. 

The findings from the national analysis of changes in cancer risk for the final rule differ from the Ohio case study results. 

Based on the Ohio case study, the final option is expected to eliminate 0.01 cancer cases annually in the State of Ohio alone. 

This reduction translates into $14,500 (2001$) in annual benefits due to reduced cancer risk from consumption of 

contaminated fish tissue and drinking water (see Chapter 22 of this report for detail). 

The difference in the findings of the national and Ohio analyses results primarily from more comprehensive information on 

MP&M and non-MP&M facility discharges used in the Ohio case study analysis. The national-level analysis accounts only 

for the pollutant exposures from MP&M sample facilities. In contrast, the Ohio case study approach accounts for a broader 

baseline of pollutant exposure, including more thorough and detailed coverage of discharges from MP&M facilities and also 

estimated exposures from non-MP&M sources. As a result, the Ohio case study analysis more accurately reflects baseline 

health risk conditions. 

b. Reductions in systemic health effects 

The final rule can potentially achieve a wide range of non-cancer human health benefits (e.g., systemic effects, reproductive 

toxicity, and developmental toxicity) from reduced contamination of fish tissue and drinking water sources. The common 

approach for assessing the risk of non-cancer health effects from the ingestion of a pollutant is to calculate a hazard quotient 

by dividing an individual's oral exposure to the pollutant, expressed as a pollutant dose in milligrams per kilogram body 

weight per day (mg/kg-day), by the pollutant's oral reference dose (RfD). An RfD is defined as an estimate (with uncertainty 

spanning perhaps an order of magnitude) of a daily oral exposure that likely would not result in the occurrence of adverse 

health effects in humans, including sensitive individuals, during a lifetime. A hazard quotient less than one means that the 

pollutant dose to which an individual is exposed is less than the RfD, and, therefore, presumed to be without appreciable risk 

of adverse human health effects. EPA guidance for assessing exposures to mixtures of pollutants recommends calculating a 

hazard index (HI) by summing the individual hazard quotients for those pollutants in the mixture that affect the same target 

organ or system (e.g., the kidneys, the respiratory system). HI values are interpreted similarly to hazard quotients; values 

below one are generally considered to suggest that exposures are not likely to result in appreciable risk of adverse health 

effects during a lifetime, and values above one are generally cause for concern, although an HI greater than one does not 

necessarily suggest a likelihood of adverse effects. Chapter 13 of this report provides a detailed discussion of the 

methodology for assessing changes in systemic health effects associated with this rule. 

5 EPA included n-nitrosodimethylamine (NDMA) in its assessment of the baseline incidence of cancer cases. However, the Agency 

did not consider NDMA pollutant reductions in its benefits analysis due to limited wastewater sampling for that pollutant. 

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MP&M EEBA Executive Summary 

To evaluate the potential benefits of reducing the in-stream concentrations of 76 pollutants that cause non-cancer health
 


effects, EPA estimated target organ-specific HIs for drinking water and fish ingestion exposures in both the baseline and
 


post-compliance scenarios. Specifically, EPA calculated target-organ specific HIs for pollutants predicted in each MP&M
 


discharge reach; as a result, a separate HI was calculated for each target organ/exposure pathway (fish consumption and
 


drinking water)/reach combination. EPA then combined estimates of the numbers of individuals in the exposed populations
 


with the HIs for the populations to determine how many individuals might be expected to realize reduced risk of non-cancer
 


health effects in the post-compliance scenario.
 


The results of EPA's analysis suggest that hazard indices for individuals in the exposed populations may decrease after
 


facilities comply with today's rule. Increases in the percentage of exposed populations that would be exposed to no risk of
 


non-cancer adverse human health effects due to the MP&M discharges occur in both the fish and drinking water analyses. The
 


shift to lower hazard indices should be considered in conjunction with the finding that the hazard indices for incremental
 


exposures to pollutants discharged by MP&M facilities (for which reference doses are available) are less than one in the
 


baseline analysis for the entire population associated with sample facilities. Whether the incremental shifts in hazard indices
 


are significant in reducing absolute risks of non-cancer adverse human health effects is uncertain and will depend on the
 


magnitude of contaminant exposures for a given population from risk sources not accounted for in this analysis.
 


c. Benefits from reduced exposure to lead
 


EPA performed a separate analysis of benefits from reduced exposure to lead. This analysis differs from the analysis of
 


non-cancer adverse human health effects from exposure to other MP&M pollutants because it is based on dose-response
 


functions tied to specific health endpoints to which monetary values can be applied. Chapter 14 of this report presents the 

methodology for assessing benefits from reduced exposure to lead. 

Many lead-related adverse health effects are relatively common and are chronic in nature. These effects include, but are not 

limited to, hypertension, coronary heart disease, and impaired cognitive function. Lead is harmful to individuals of all ages, 

but the effects of lead on children are of particular concern. Children's rapid rate of development makes them more 

susceptible to neurobehavioral effects from lead exposure. The neurobehavioral effects on children from lead exposure 

include hyperactivity, behavioral and attention difficulties, delayed mental development, and motor and perceptual skill 

deficits. 

This analysis assessed benefits of reduced lead exposure from consumption of contaminated fish tissue to three sensitive 

populations: (1) preschool age children; (2) pregnant women; and (3) adult men and women. This analysis uses blood-lead 

levels as a biomarker of lead exposure. EPA estimated baseline and post-compliance blood lead levels in the exposed 

populations and then used changes in these levels to estimate benefits in the form of avoided health damages. 

EPA assessed neurobehavioral effects on children based on a dose response relationship for IQ decrements. Avoided 

neurological and cognitive damages are expressed as changes in overall IQ levels, including reduced incidence of extremely 

low IQ scores (<70, or two standard deviations below the mean) and reduced incidence of blood-lead levels above 20 mg/dL. 

The analysis uses the value of compensatory education that an individual would otherwise need and the impact of an 

additional IQ point on individuals' future earnings to value the avoided neurological and cognitive damages. The 

national-level analyses shows that implementation of the final option would not result in any changes in IQ loss across all 

exposed children. The final option does not reduce occurrences of extremely low IQ scores (<70) or incidences of blood-lead 

levels above 20 mg/dL. 

Prenatal exposure to lead is an important route of exposure. Fetal exposure to lead in utero due to maternal blood-lead levels 

may result in several adverse health effects, including decreased gestational age, reduced birth weight, late fetal death, 

neurobehavioral deficits in infants, and increased infant mortality. To assess benefits to pregnant women, EPA estimated 

changes in the risk of infant mortality due to changes in maternal blood-lead levels during pregnancy. The national-level 

analysis shows that the final option does not result in changes in maternal blood lead levels during pregnancy and as a result 

does not reduce neonatal mortality. 

The national-level analysis finds no benefits to children from reduced exposure to lead. However, as for the cancer risk 

analysis previously discussed, these findings differ from the more comprehensive analysis used in the Ohio case study. Using 

the more rigorous case study approach, EPA estimates that the final regulation will yield annual lead-related benefits for 

children in Ohio of $422,113 (2001$). This benefit value includes three components. First, reduced lead exposure is estimated 

to reduce neonatal mortality by 0.024 cases annually with an annual value of $162,094 (2001$). Second, reduced lead 

exposure will avoid the loss of an estimated 26.96 IQ points among preschool children in Ohio, which translates into 

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MP&M EEBA Executive Summary 

$253,934 (2001$) per year in benefits. Third, the annually avoided costs of compensatory education from incidence of IQ
 


below 70 and blood-lead levels above 20 g/dL among children amounts to approximately $5,345 (2001$).
 


Lead exposure has been shown to have adverse effects on the health of adults as well as children. The health effects in adults
 


that EPA quantified all derive from lead's effects on blood pressure. Quantified health effects include increased incidence of
 


hypertension (estimated for males only), initial coronary heart disease (CHD), strokes (initial cerebrovascular accidents and
 


atherothrombotic brain infarctions), and premature mortality. This analysis does not include other health effects associated
 


with elevated blood pressure and other adult health effects of lead, including nervous system disorders, anemia, and possible
 


cancer effects. EPA used cost of illness estimates (i.e., medical costs and lost work time) to estimate monetary value of
 


reduced incidence of hypertension, initial CHD , and strokes. EPA then used the value of a statistical life saved to value
 


changes in risk of premature mortality. The national-level analysis finds that the final rule will achieve no lead-related health
 


benefits among adults.
 


Again, the national analysis results differ from the Ohio case study results. Using the case study approach, EPA estimates that
 


the final regulation will achieve total lead-related benefits among Ohio adults of $117,393 (2001$). This value includes
 


benefits from reduced hypertension among adult males: a reduction of an estimated 9.4 cases annually, with benefits of
 


approximately $10,670 (2001$). In addition, reducing the incidence of initial CHD, strokes, and premature mortality among
 


adult males and females in Ohio would result in estimated benefits of $963, $2,115, and $103,645, respectively (see Chapter
 


22 of this report for detail).
 


Based on the national-level benefits analysis, EPA found that total benefits from reduced exposure to lead, for both children
 


and adults, are negligible under the final rule. However, based on the Ohio case study findings, benefits for children and
 


adults from reduced lead-related health effects of the final rule are estimated to total approximately $0.5 million (2001$)
 


annually in the state of Ohio alone (see Section H of today's final rule for detail). As in the cancer risk analysis, the difference
 


in the national and Ohio-based findings stems primarily from more comprehensive information on MP&M and non-MP&M
 


facility discharges used in Ohio.
 


d. Exceedances of human health-based AWQC
 


EPA also estimated the effect of MP&M facility discharges on the occurrence of pollutant concentrations in affected
 


waterways that exceed human health-based AW QCs. In a conceptual sense, this analysis and its findings are not additive to
 


the preceding analyses of change in cancer or lead-related health risks but are another way of quantitatively characterizing the
 


same possible benefit categories. This analysis compares the estimated baseline and post-compliance in-stream pollutant
 


concentrations in affected waterways to ambient water criteria for protection of human health. The comparison included
 


AW QC for protection of human health through consumption of organisms and consumption of water and organisms. Pollutant 

concentrations in excess of these values indicate potential risks to human health. 

EPA estimates that in-stream concentrations of 4 pollutants (i.e., arsenic, iron, manganese, and n-nitrosodimethylamine) will 

exceed human health criteria for consumption of water and organisms in 78 receiving reaches nationwide as the result of 

baseline MP&M pollutant discharges. EPA estimates that 23% of human health AWQC exceedances are caused by 

n-nitrosodimethylamine (NDMA). EPA did not consider NDMA pollutant reductions in its benefits analyses due to limited 

wastewater sampling data for that pollutant. EPA estimates that the final rule will not eliminate the occurrence of 

concentrations in excess of human health criteria for consumption of water and organisms and for consumption of organisms 

on any of the reaches on which baseline discharges are estimated to cause concentrations in excess of AWQC values. 

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MP&M EEBA Executive Summary 

ES.4.2 Ecological, Recreational, and Nonuser Benefits 

EPA expects the MP&M rule to improve aquatic species habitats by reducing concentrations of toxic contaminants such as
 


aluminum, cadmium, copper, lead, mercury, silver, and zinc in water. These improvements should enhance the quality and
 


value of water-based recreation, such as fishing, swimming, wildlife viewing, camping, waterfowl hunting, and boating. The
 


benefits from improved water-based recreation would be seen as increases in the increased value participants derive from a
 


day of recreation and the increased number of days that consumers of water-based recreation choose to visit the cleaner
 


waterways. This analysis measures the economic benefit to society from water quality improvements based on the increased
 


monetary value of recreational opportunities resulting from those improvements
 


a. Reduced aquatic life impacts
 


EPA quantified the ecological improvements of the final regulation by comparing estimates of in-waterway concentrations of
 


pollutants discharged by MP&M facilites with AWQC values for protection of aquatic species. Pollutant concentrations in
 


excess of acute and/or chronic AWQC limits for protection of aquatic life indicate potential adverse impacts to aquatic
 


species. EPA estimates that baseline in-stream concentrations of 9 pollutants (i.e., aluminum, cadmium, copper, lead,
 


manganese, mercury, nickel, silver, and zinc) will exceed the acute and chronic criterion for aquatic life in 353 reaches
 


nationwide. The final rule eliminates concentrations in excess of aquatic life AWQCs on nine of these reaches. EPA’s
 


analysis shows that none of the receiving reaches exceeding chronic or acute aquatic life AW QC at the baseline discharge
 


level will experience partial water quality improvements from reduced occurrence of AWQC exceedances for some
 


pollutants.
 


b. Recreational benefits
 


EPA assessed the recreational benefits from reduced occurrence of pollutant concentrations exceeding aquatic life and/or
 


human health AWQC values. Combining its findings from both the aquatic life and human health AWQC exceedance
 


analyses, EPA found that 394 stream reaches exceed chronic or acute aquatic life AWQC and/or human health AWQC values 

at baseline discharge levels. The Agency estimates that the final rule will eliminate exceedances on nine of these discharge 

reaches, leaving 384 reaches with concentrations of one or more pollutants exceeding AWQ C limits. None of these 384 

reaches will experience partial water quality improvements from reduced occurrence of some pollutant concentrations in 

excess of AW QC limits. 

EPA attached a monetary value to reduced exceedances based on increased values for three water-based recreation activities 

(fishing, wildlife viewing, and boating) and on nonuser values. EPA applied a benefits transfer approach to estimate the total 

WTP, including both use and nonuse values, for improvements in surface water quality. This approach builds upon a review 

and analysis of the surface water valuation literature. 

EPA first estimated the baseline value of water-based recreation for benefiting reaches, based on per-reach estimates of: 

� annual person-days of water-based recreation, and 

� per-day values of water-based recreation. 

The baseline per-day values of water-based recreation are based on studies by Walsh et. al (1992) and Bergstrom and Cordell 

(1991). The studies provide values per recreation day for a wide range of water-based activities, including fishing, boating, 

wildlife viewing, waterfowl hunting, camping, and picnicking. The mean values per recreational fishing, boating, and wildlife 

viewing day used in this analysis are $42.12, $48.30 and $26.28 (2001$), respectively. Applying facility weights and 

summing over all benefiting reaches provides a total baseline value for a given recreational activity for MP&M reaches 

expected to benefit from the elimination of pollutant concentrations in excess of AWQC limits. 

EPA then applied the percentage change in the recreational value of water resources implied by surface water valuation 

studies to estimate changes in values for all MP&M reaches in which the regulation eliminates AWQC exceedances by one or 

more MP&M pollutants. The Agency selected eight of the most comparable studies and calculated the changes in recreation 

values from water quality improvements (as percentage of the baseline) implied by those studies. Sources of estimates 

included Lyke (1993), Jakus et al. (1997), Montgomery and Needleman (1997), Paneuf et al. (1998), Desvousges et al. 

(1987), Lant and Roberts (1990), Farber and Griner (2000), and Tudor et al. (2002). EPA's reasoning for selecting each study 

is discussed in detail in Chapter 15 of this report. EPA took a simple mean of point estimates from all applicable studies to 

derive a central tendency value for percentage change in the water resource values due to water quality improvements. These 

studies yielded estimates of increased recreational value from water quality improvements expected from reduced MP&M 

ES-14 
MP&M EEBA Executive Summary 

discharges of 12, 9, and 18 percent for fishing, boating, and wildlife viewing respectively. Using all possible applicable 

valuation studies in developing a benefits transfer approach to valuing changes in the recreational value of water resources 

from reduced MP&M discharges, makes unit values more likely to be nationally representative, and avoids the potential bias 

inherent in using a single study to make estimates at the national level. 

Table ES.9 presents the estimated national recreational benefits of the final rule (2001$). The estimated increased value of 

recreational activities to users of water-based recreation is $537,197, $202,691, and $259,949 annually for fishing, boating, 

and wildlife viewing, respectively. The recreational activities considered in this analysis are stochastically independent; EPA 

calculated the total user value of enhanced water-based recreation opportunities by summing over the three recreation 

categories. The estimated increase in the total user value is $999,838 annually. 

EPA also estimated non-market nonuser benefits. These non-market nonuser benefits are not associated with current use of 

the affected ecosystem or habitat; instead, they arise from the value society places on improved water quality independent of 

planned uses or based on expected future use. Past studies have shown that nonuser values are a sizable component of the 

total economic value of water resources. EPA estimated average changes in nonuser value to equal one-half of the recreational 

use benefits based on study by A. Fisher and R. Raucher (1984). The estimated increase in nonuse value is $499,919 (2001$). 

A recent literature review finds that nonuse benefits are, on average, 1.9 to 2.5 times all use values, rather than 0.5 times 

recreational benefits alone as EPA has traditionally assumed for its nonuse benefit estimates (T. Brown, 1993). EPA's method 

for estimating nonuse benefits from water quality improvements resulting from reduced MP&M discharges is therefore likely 

to understate the true value of nonuse benefits. 

Table ES.9: Estimated Recreational Benefits from Reduced MP&M Discharges (thousands, 2001$) 

Recreational Activity 

Traditional 

Extrapolation 

Post-Stratification 

Extrapolation 

Recreational fishing $537 $350 

Recreational boating $203 $132 

Wildlife viewing and near-water recreation $260 $169 

Total recreational use benefits (fishing + boating + wildlife viewing) $1,000 $651 

Nonuser benefits (1⁄2 of total recreational use) $500 $326 

Total Recreational Benefits (2001$) $1,500 $977 

Source: U.S. EPA analysis. 

The recreational trips corresponding to the three activities considered in this analysis are stochastically independent; EPA 

calculated the total value of enhanced water-based recreation opportunities by summing the three recreation categories and 

nonuser value. The resulting increase in the value of water resources to consumers of water-based recreation and nonusers is 

$1,500 thousand (2001$) annually under the traditional extrapolation method and $977 thousand (2001$) annually under the 

post-stratification extrapolation method. 

ES.4.3 POTW Impacts 

The final rule only regulates direct dischargers. Therefore, the selected option does not affect POTW operation. For the 

alternative policy options that consider both direct and indirect dischargers, EPA evaluated two productivity measures 

associated with MP&M pollutants. The first measure is the reduction in pollutant interference at publicly-owned treatment 

works (POTW s). The second measure is pass-through of pollutants into the sludge, which limits options for POTW disposal 

of sewage sludge. These analyses are presented in Chapter 16 of this report. 

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MP&M EEBA Executive Summary 

ES.4.4 Total Estimated Benefits of the Final MP&M Rule 

Using the traditional extrapolation method, EPA estimates total benefits for the five monetized categories of approximately 

$1,500,000 (2001$) annually. This value understates the total benefits of the rule because the benefits analysis omits 

significant sources of benefits to society. Examples of benefit categories not reflected in this estimate include non-cancer 

health benefits other than benefits from reduced exposure to lead; other water-dependent recreational benefits, such as 

swimming and waterskiing benefits to recreational users from reduced concentration of conventional pollutants and 

nonconventional pollutants such as TKN; and reduced cost of drinking water treatment for the pollutants with drinking water 

criteria. In addition, as noted in the prior discussion, although the national-level benefits analysis finds negligible benefits 

from reduced health risk, the more rigorous analytic approach used for the Ohio case study found material health-related 

benefits approximately $0.5 million in the state of Ohio alone. 

ES.5 NATIONAL BENEFITS-COSTS COMPARISON 

The comparison of benefits and for the final rule is inevitably incomplete because EPA cannot value all of the benefits 

resulting from the final rule in dollar terms. A comparison of benefits and costs is thus limited by the lack of a comprehensive 

benefits valuation and also by uncertainties in the estimates. Bearing these limitations in mind, EPA presents a summary 

comparison of benefits and costs for the final rule in Table ES.10. The estimated social cost of the final rule is $13.8 million 

annually (2001$). The total benefits that can be valued in dollar terms in the categories traditionally analyzed for effluent 

guidelines range from $977,000 to $1,500,000 annually (2001$), based on the alternative extrapolation methods. 

As previously noted, EPA used more detailed information and a more comprehensive analytic method to estimate expected 

benefits of the final rule for the state of Ohio. This more rigorous analysis was undertaken to address certain issues in the 

national-level analysis and to supplement the national-level analysis performed for the final rule. The following section 

presents this analysis. The Ohio case study showed that the more rigorous analytic approach leads to a different conclusion 

from that found in the simpler, national-level analysis approach in particular, that the estimated state-level benefits exceed 

the estimated state-level cost. As previously discussed, given (1) that Ohio accounts for only about 6 percent of total MP&M 

facilities, and (2) that other states with substantial numbers of MP&M facilities have similar population and water body 

characteristics to Ohio, EPA estimates that use of the more rigorous approach nationally would yield a higher estimate of 

national benefits. On this basis, the Agency estimates that national benefits from the final rule may be comparable to its social 

costs. 

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MP&M EEBA Executive Summary 

Table ES.10: Comparison of National Annual Monetizable Benefits to Social Costs 

(thousands, 2001$) 

Benefit and Cost Categories Traditional Extrapolation Post-Stratification 

Extrapolation 

Benefit Categories 

Reduced Cancer Risk from Fish Consumption $0 $0 

Reduced Cancer Risk from Water Consumption $0 $0 

Reduced Risk from Exposure to Lead $0 $0 

Enhanced Water-Based Recreation $1,000 $651 

Nonuse Benefits $500 $326 

Total Monetized Benefits $1,500 $977 

Cost Categories 

Resource Costs of Compliance $13,825 $13,825 

Costs of Administering the Final Regulation $0 $0 

Social Costs of Unemployment $0 $0 

Total Monetized Costs $13,825 $13,825 

Net Monetized Benefits (Benefits Minus Costs) ($12,325) ($12,847) 

Source: U.S. EPA analysis. 

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MP&M EEBA Executive Summary 

ES.6 OHIO CASE STUDY 

Part V of this report presents a detailed case study of the expected state-level costs and benefits of the MP&M rule in Ohio. 

The case study assesses the costs and benefits of the final rule for facilities and water bodies located in Ohio. Ohio is among 

the ten states with the largest numbers of MP &M facilities. The state has a diverse water resource base and a more extensive 

water quality ecological database than many other states. EPA gathered data on MP&M facilities and on Ohio's baseline water 

quality conditions and water-based recreation activities to support the case study analysis. These data characterize current 

water quality conditions, water quality changes expected from the regulation, and the expected welfare changes from water 

quality improvements at water bodies affected by MP&M discharges. The case study also estimates the social costs of the 

final rule for facilities in Ohio and compares estimated social costs and benefits for the state. 

The case study analysis supplements the national-level analysis performed for the final MP&M regulation in two important 

ways. First, the analysis used improved data and methods to determine MP&M pollutant discharges from both MP&M 

facilities and other sources. In particular, EPA administered 1,600 screener questionnaires to augment information on the 

Ohio's MP& M facilities. The Agency also used information from the sampled M P&M facilities to estimate discharge 

characteristics of non-sampled MP&M facilities, as described in Appendix H of the EEBA report. The Agency assigned 

discharge characteristics to all non-MP&M industrial direct discharges based on the information provided in the EPA’s 

Permit Compliance System (PCS) database. Second, the analysis used an original travel cost study to value four recreational 

uses of water resources affected by the regulation: swimming, fishing, boating, and near-water activities. The added detail 

provides a more complete and reliable analysis of water quality changes from reduced MP&M discharges. The study provides 

more complete estimates of changes in human welfare resulting from reduced health risk, enhanced recreational opportunities, 

and improved economic productivity. 

EPA estimated human health benefits from reduced MP&M dischargers in Ohio using similar methodologies to those used for 

the national-level analysis. These methodologies are presented in Chapter 13 and 14 of the EEBA report. 

The case study analysis of recreational benefits combines water quality modeling with a random utility model (RUM) to 

assess how changes in water quality from the regulation will affect consumers' valuation of water resources. The RUM 

analysis addresses a wide range of pollutant types and effects, including water quality measures not often addressed in past 

recreational benefits studies. In particular, the model supports a more complete analysis of recreational benefits from 

reductions in nutrients and toxic pollutants (i.e., priority pollutants and nonconventional pollutants with toxic effects). 

EPA subjected this study to a formal peer review by experts in the natural resource valuation field. The peer review concluded 

that EPA had done a competent job, especially given the available data. As requested by the Agency, peer reviewers provided 

suggestions for further improvements in the analysis. Since the proposed rule analysis, the Agency made changes to the Ohio 

model and conducted additional sensitivity analyses suggested by the reviewers. The peer review report and EPA's response 

to peer reviewers' comments, along with the revised model, are in the docket for the rule. 

ES.6.1 Benefits 

The use of an original RUM in this case study allows the Agency to address limitations inherent in benefits transfer used in 

the analysis of recreational benefits at the national level. The use of benefits transfer often requires additional assumptions 

because water quality changes evaluated in the available recreation demand studies are only roughly comparable with the 

water quality measures evaluated for a particular rule. The RUM model estimates the effects of the specific water quality 

characteristics analyzed for the final MP&M regulation, such as presence of AWQC exceedances and concentrations of the 

nonconventional pollutant Total Kjeldahl Nitrogen (TKN). EPA estimates that this direct link between the water quality 

characteristics analyzed for the rule and the characteristics valued in the RUM analysis reduces uncertainty in benefit 

estimates and makes the analysis of recreational benefits more robust. 

The final MP&M regulation affects a broad range of pollutants, some of which are toxic to human and aquatic life but are not 

directly observable (i.e., priority and nonconventional pollutants). These unobservable toxic pollutants degrade aquatic 

habitats, decrease the size and abundance of fish and other aquatic species, increase fish deformities, and change watershed 

species composition. Changes in toxic pollutant concentrations may therefore affect recreationists' valuation of water 

resources, even if consumers are unaware of changes in ambient pollutant concentrations. 

The study used data from the National Demand Survey for Water-Based Recreation (NDS), conducted by U.S. EPA and the 

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MP&M EEBA Executive Summary 

National Forest Service, to examine the effects of in-stream pollutant concentrations on consumers' decisions to visit a 

particular water body. The analysis estimated baseline and post-compliance water quality at recreation sites actually visited by 

the surveyed consumers and at all other sites within the consumers' choice set, visited or not. The RUM analysis of consumer 

behavior then estimated the effect of ambient water quality and other site characteristics on the total number of trips taken for 

different water-based recreation activities and the allocation of these trips among particular recreational sites. The RUM 

analysis is a travel cost model, in which the cost to travel to a particular recreational site represents the "price" of a visit. 

EPA modeled two consumer decisions: (1) how many water-based recreational trips to take during the recreational season (the 

trip participation model); and (2) which recreation site to choose (the site choice model). Combining the trip participation 

model's prediction of trips under the baseline and post-compliance scenarios and the site choice model's per-trip welfare 

measure provides a measure of total welfare. EPA calculated each individual's seasonal welfare gain for each recreation 

activity from post-compliance water quality changes, and then used Census data to aggregate the estimated welfare change to 

the State level. The sum of estimated welfare changes over the four recreation activities yielded estimates of total welfare 

gain. 

EPA estimated other components of benefits in Ohio using similar methodologies to those used for the national-level analysis. 

In addition to the RUM study of recreational benefits, other analytical improvements included the following: (1) use of more 

detailed data on MP&M facilities, obtained from the 1,600 additional surveys; (2) use of data on non-MP&M discharges to 

estimate current baseline conditions in the state, and (3) use of a first-order decay model to estimate in-stream concentrations 

in the Ohio water bodies in the baseline and post-compliance. 

Appendix H of this report describes the water quality model used in this analysis and the approach and data sources used to 

estimate total pollutant loadings from all industrial and municipal sources to Ohio's water bodies. The Agency has concluded 

that the added level of detail results in more robust benefit estimates. 

Summing the monetary values over all benefit categories yields total monetized benefits of $930,408 (2001$) annually for the 

final rule, as shown in Table ES.11. Although more comprehensive than the national benefits analysis, the case study benefit 

estimates still omit important mechanisms by which society is likely to benefit from the final rule. Examples of benefit 

categories not reflected in the monetized benefits include non-cancer health benefits (other than lead-related benefits) and 

reduced costs of drinking water treatment. 

Table ES.11: Annual Benefits from Reduced MP&M Discharges in Ohio 

(thousands, 2001$) 

Benefit Category Mean Annual Benefits 

1. d cancer risk: 

Fish consumption 

Water consumption 

$15 

$0 

2. isk from exposure to lead: 

Children 

Adults 

$422 

$117 

3. ishing $153 

4. wimming $10 

5. Enhanced boating $0 

4. ildlife viewing $88 

5. Nonuse benefits (1⁄2 recreational use benefits) $125 

Total Monetized Benefits $930 

Reduce 

Reduced r 

Enhanced f 

Enhanced s 

Enhanced w 

Source: U.S. EPA analysis. 

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MP&M EEBA Executive Summary 

ES.6.2 Social Costs 

EPA also estimated the social costs of the final rule for MP&M facilities in Ohio. EPA developed engineering estimates of 

compliance costs for each Ohio facility, and annualized costs using a seven percent discount rate over a 15-year period. 

Estimating the frequency of baseline closures is necessary to assess the costs of regulation. Facilities assessed as baseline 

closures are not expected to incur compliance costs under the final MP&M regulation. The screener data collected for Ohio 

facilities did not provide financial data to perform an after-tax cash flow or net present value test, as done in the national 

analysis. EPA therefore used data from the national analysis to estimate the percentage of facilities assessed as baseline 

closures. EPA assumed that the frequency of baseline closures among Ohio facilities would be the same as that estimated in 

the national analysis for facilities with the same discharge status, subcategory, and flow category. For example, two percent 

of direct Oily Wastes facilities discharging less than one million gallons per year close in the baseline in the national data set; 

this same percentage is assumed for Ohio screener indirect dischargers in that flow and size category. EPA reduced the total 

estimated costs for screener facilities, by analysis category, based on the fraction of facilities assessed as baseline closures. 

EPA used the same methods as used in the national social cost analysis to estimate other components of social costs for the 

Ohio case study. Table ES.12 shows the total estimated social costs of the final rule for Ohio facilities. 

Table ES.12: Annual Social Costs for Ohio Facilities: 

Final Option 

(thousands, 2001$, costs annualized at 7%) 

Component of Social Costs Final Rule 

Resource value of compliance costs $62 

Government administrative costs $0 

Social cost of unemployment $0 

Total Social Cost $62 

Source: U.S. EPA analysis. 

ES.6.3 Comparing Monetized Benefits and Costs 

The Ohio case study shows substantial net positive benefits associated with the MP&M regulation. EPA estimates the social 

cost in Ohio of the final regulation to be $62 thousand annually ($2001). The sum total of benefits that can be valued in dollar 

terms is $930 thousand annually ($2001). Comparing the midpoint estimate of social costs ($62 thousand) with the midpoint 

estimate of monetizable benefits ($930 thousand) results in a net social benefit of $868 thousand. This represents a partial 

cost-benefit comparison because not all of the benefits resulting from the regulation can be valued in dollar terms (e.g., 

changes in systemic health risk). 

For the reasons previously discussed, EPA judges that the analytic approach and detailed data used for the Ohio case study 

provide a more robust and accurate benefits estimate than the data and approach used for the national-level analysis. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 1: Introduction 

Chapter 1: Introduction

INTRODUCTION

The U.S. Environmental Protection Agency (EPA) is 

promulgating effluent limitations guidelines and standards for 

the Metal Products and Machinery (MP&M) Point Source 

Category, under Sections 301, 304, 306, 307 and 501 of the 

Clean Water Act. EPA has determined that the final rule is 

CHAPTER CONTENTS

1.1 Purpose ................. ................. . 1-1 

1.2 Organization ................. .............. 1-1 

1.3 Readers’ Aids ................. ............. 1-3 

not likely to result in aggregate costs to the economy that exceed $100 million annually. The Agency therefore found that the 

final regulation is not a “significant regulatory action” as defined by Executive Order 12866 (58 FR 51735, October 4, 1993). 

1.1 PURPOSE

This Economic, Environmental, and Benefits Analysis report (EEBA) presents EPA’s economic and benefits analyses for the 

final MP&M regulation. These analyses supported EPA in developing the final regulation and in meeting the requirements of 

the following statutes and executive orders: 

�	 	 Executive Order 12866 “Regulatory Planning and Review”, which requires analysis of costs, benefits, and economic 

impacts of the final rule and regulatory alternatives; 

�	 	 Unfunded Mandates Reform Act (UMRA), which requires evaluation of impacts on governments, among other 

requirements; 

�	 	 Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 

(RFA/SBREFA), which requires consideration of the rule’s impact on small firms and governments; 

�	 	 Executive Order 12898 “Federal Actions to Address Environmental Justice in Minority Populations and LowIncome Populations”; and 

� Executive Order 13084 “ Protection of Children from Environmental Health Risks and Safety Risks”. 

1.2 ORGANIZATION

This report is organized in five major parts, 22 chapters, and 14 appendices, as follows: 

Part I “Introduction and Background Information” (Chapters 1 though 4) describes the need for the regulation, provides a 

profile of the MP&M industry, and describes regulatory options evaluated and selected by the Agency for the final rule. 

Part II “Costs and Economic Impacts” (Chapters 5 through 11) presents EPA’s analysis of the economic impacts and social 

costs of the final rule. Chapter 5 presents the analysis of costs and impacts at the facility level. Chapters 6 through 9 present 

analyses of other types of economic impacts that derive from the facility-level analysis, including impacts on employment, 

governments (for EPA’s analyses under UMRA), communities, foreign trade, firms, and new facilities. Chapter 10 provides 

an analysis of impacts on small firms and governments, as required by RFA/SBREFA. Finally, Chapter 11 presents the social 

costs of the final rule. 

Part III “Benefits” (Chapters 12 through 17) provides EPA’s analysis of the environmental impacts and benefits of the final 

rule. Chapter 12 provides an overview of the benefits expected from the rule. Chapters 13 through 16 present EPA’s 

analyses of different components of the benefits analysis. These include human health benefits (except for lead-related) 

(Chapter 13), lead-related benefits (Chapter 14), recreational benefits (Chapter 15), and benefits to POTW s (Chapter 16). 

Chapter 17 presents an analysis of the environmental justice effects of the final rule, as required by Executive Order 12898. 

1-1
MP&M EEBA Part I: Introduction and Background Information Chapter 1: Introduction 

Part IV “Comparison of Costs and Benefits” (Chapters 18 and 19) compares the social costs and benefits for the final rule 

(Chapter 18) and for other regulatory alternatives evaluated by the Agency for the final rule (Chapter 19). 

Part V “ Ohio Case Study” (Chapters 20 through 22) provides a detailed case study of the final rule’s costs and benefits for 

the State of Ohio. This case study includes a more detailed and complete analysis of benefits, based on more complete 

information on the number and location of MP&M facilities and the characteristics of affected waters than was available for 

the national analyses. The case study also includes an original travel cost study to value recreational uses affected by the final 

rule. EPA believes that the case study provides more robust results because it avoids the uncertainties that result from the 

need to extrapolate sample facility results to the national level. The results of the case study generally confirm the overall 

results of the national analysis. 

Appendices to this report provide additional material in support of the analyses described in the chapters, including the 

following: 

� Appendix A: supporting material for the profile of the MP&M industries in Chapter 3; 

� Appendix B: description of the cost pass-through analysis; 

� Appendix C: description of the moderate impact analysis; 

� Appendix D: description of the methodology used to estimate capital outlays as part of the facility impact analysis; 

� Appendix E: description of the calculation of capital cost components; 

� Appendix F: description of the methodology used to estimate POTW administrative costs; 

� Appendix G: summary of the method used to extrapolate sample facility results to the national level; 

� Appendix H: description of fate and transport model for drinking water and Ohio analyses; 

� Appendix I: discussion of methodologies and results of the environmental assessment analysis; 

� Appendix J: analyses of spatial distribution of MP&M facility location and benefiting population; 

�	 	 Appendix K: description of the surface water valuation studies and specific values selected for assessing recreational 

benefits from the final regulation; 

� Appendix L: description of parameters in the IEUBK lead model; 

� Appendix M: sensitivity analysis of lead related benefits; and 

� Appendix N: analysis of the national demand for water-based recreation survey (NDS). 

The docket for the final rule, located at U.S. EPA Headquarters, provides additional supporting documentation, including: 

� copies of the literature cited in the report;
 


� documentation of the financial and economic portions of the MP&M Section 308 surveys;
 


� memorandums documenting supplementary analyses undertaken in support of regulation development, but that are
 


not included in the EEBA; and 

� datasets, spreadsheets, and programs used to perform the analyses. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 1: Introduction 

1.3 READERS’ AIDS

Each chapter includes a chapter-specific table of contents. A list of references is provided at the end of each chapter. 

Glossaries and lists of acronyms are also provided at the end of the chapters, and the first usage of items listed in them are 

denoted in the text with the following formats: 

� Glossary indicates that a term is defined in the chapter glossary, and 

� Acronym indicates that the acronym is included in the chapter list of acronyms. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 1: Introduction 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

Chapter 2: The MP&M Industry and
 

the Need for Regulation
 

INTRODUCTION 

The Metal Products and Machinery (MP&M) effluent 

guidelines establish limitations and standards only for direct 

dischargers in the Oily Wastes subcategory (40 CFR 438, 

Subpart A). EPA establishes industrial subcategories based 

on a number of considerations (see Chapter 4 and Section 6 

of the TDD). EPA evaluated seven other subcategories for 

the final rule: general metals, metal finishing job shops, non 

chromium anodizing, printed wiring board, railroad line 

maintenance, shipbuilding dry docks, and steel forming and 

finishing. EPA evaluated a number of options for these seven 

subcategories. Based on these analyses, EPA did not 

establish or revise limitations or standards for facilities in 

these seven subcategories. 

CHAPTER CONTENTS 

2.1 Overview of Facilities Evaluated for Regulation under 

the MP&M Point Source Category .............. 2-1 

2.2 MP&M Discharges and the Need For Regulation . . 2-3 

2.2.1 Baseline MP&M Discharges for Regulated 

Facilities ................. ......... 2-4 

2.2.2 Discharges under the MP&M Regulation . 2-4 

2.3 Addressing Market Imperfections .............. 2-5 

2.4 Overlap with Other Effluent Guidelines .......... 2-6 

2.5 Meeting Legislative and Litigation-Based 

Requirements ................. ............. 2-9 

Glossary ................. ................. ... 2-11 

Acronyms ................. ................. .. 2-13 

The facilities regulated under this rule produce, manufacture, rebuild, or maintain metal parts, products, or machines for use 

in sixteen different industrial sectors. These industrial sectors include: hardware, aircraft, aerospace, ordnance, electronic 

equipment, stationary industrial equipment, mobile industrial equipment, buses and trucks, motor vehicles, household 

equipment, instruments, office machines, railroads, ships and boats, precious metals and jewelry, and miscellaneous metal 

products. Most of the subcategories above serve multiple markets. EPA evaluated options that would have covered facilities 

in three additional industrial sectors: printed wiring boards, metal finishing job shops, and iron and steel. The final regulation 

does not cover facilities in these sectors. 

This chapter provides an overview of the MP&M industry evaluated for the final rule and presents the pollutant discharges 

from MP&M facilities subject to the final regulation. The chapter also reviews the reasons why EPA is regulating the 

industry’s effluent discharges including the need to reduce pollutant discharges from the MP&M industry, the issue of 

addressing market imperfections, other effluent guidelines that may overlap in coverage of the MP&M industry sectors 

evaluated for the final rule, and requirements that stem from the Clean Water Act (CWA) and litigation. 

2.1 OVERVIEW OF FACILITIES EVALUATED FOR REGULATION UNDER THE MP&M POINT 

SOURCE CATEGORY 

The MP&M Point Source Category regulates oily operations process wastewater discharges to surface waters from existing or 

new industrial facilities (including facilities owned and operated by Federal, State, or local governments) engaged in 

manufacturing, rebuilding, or maintenance of metal parts, products, or machines for use in the sixteen Metal Product & 

Machinery (MP&M) industrial sectors listed above. Please note the underlined language in the previous sentence as a facility 

may be subject to the MP&M effluent guidelines even if it is not in one of the MP&M industry sectors. For example, EPA 

considers a facility performing machining part of the “Bus & Truck” MP&M industry sector if it manufactures metal parts for 

truck trailers. Process wastewater means wastewater as defined at 40 CFR parts 122 and 401, and includes wastewater from 

air pollution control devices (see 40 CFR 438.2(g)). Oily operations are listed at 40 CFR 438.2(g) and defined in Appendix B 

to Part 438 (see also Section 4 of the TDD). 

As defined for this document, MP&M facilities: (1) produce metal parts, products, or machines for use in one of the 19 

industry sectors evaluated for coverage in the MP&M point source category; (2) use operations in one of the eight regulatory 

subcategories evaluated for coverage in the MP&M point source category; and (3) discharge process wastewater, either 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

directly or indirectly, to surface waters. MP&M facilities frequently produce products for multiple sectors and subcategories. 

As referred to in this document, MP&M facilities represent only a portion of all facilities in the industry sectors, since some 

facilities may perform operations that are not covered by one of the subcategories (i.e., part assembly or plastic molding), and 

some may not generate or discharge process wastewater. 

According to Statistics of U.S. Business, 1996, approximately 638,696 establishments operate in the MP&M industry sectors. 

Based on information in the MP&M survey database, approximately 44,000 facilities meet the definition of an MP&M 

facility. These 44,000 facilities include approximately 41,000 indirect dischargers (i.e., facilities discharging effluent to a 

publicly-owned sewage treatment works or POTWs) that would be subject to Pretreatment Standards for 

Existing Sources (PSES). The remaining 3,000 direct dischargers (i.e., they discharge effluent directly to a waterway 

under a National Pollutant Discharge Elimination System (NPDES) permit) and would thus be subject to Best Available 

Technology Economically Achievable (BAT ) and Best Practicable Control Technology Currently Available 

(BPT ) requirements. 

Table 2.1 reports the estimated number of MP&M facilities and total discharge flow (before final rule implementation) by 

type of facility. The largest number of sites, approximately 22,000, perform “rebuilding/maintenance only” and account for 

approximately 6 percent of the total estimated discharge flow for the industry. “Manufacturing only” contains the next largest 

number of facilities (15,400) and accounts, by far, for the largest percentage of the total estimated discharge flow for the 

industry (82 percent). 

Table 2.1: Number of MP&M Facilities and 

Total Discharge Flow by Type of Facility 

Type of Facility Number of 

Facilities 

Total Estimated 

Discharge Flow 

(million gal/yr) 

Percent of 

Facilities 

Percent of Total 

Discharge Flow 

Manufacturing & 

Rebuilding/Maintenance 6,600 9,400 15.0% 12.0% 

Manufacturing Only 15,400 64,100 35.0% 82.0% 

Rebuilding/Maintenance 

Only 22,000 4,700 50.0% 6.0% 

Total 44,000 78,200 100.0% 100.0% 

Source: U.S. EPA analysis. See Section 4 of the Technical Development Document for the final 

rule. 

Of the 43,858 water discharging facilities, 3,593 are predicted to close in the baseline, leaving 40,265 existing MP&M 

facilities that EPA estimates could be regulated.1 After accounting for subcategory and discharger class exclusions, EPA 

estimates that the final rule will regulate 2,382 of these facilities, all of which are direct dischargers. These regulated 

facilities represent 5.9 percent of the 40,265 facilities that could be potentially regulated. 

Table 2.2 summarizes information on the total number of MP&M facilities that were evaluated for the final rule, and the 

number that will be regulated under the final rule. As reported in Table 2.2, no indirect dischargers are subject to the final 

regulation. The rule will regulate 2,382 direct dischargers in the Oily Wastes subcategory. The rule excludes direct 

dischargers in the General Metals, Metal Finishing Job Shops, Non -Chromium Anodizing, Printed Wiring Board, Railroad 

Line Maintenance, Shipbuilding Dry Docks, and Steel Forming and Finishing subcategories (214 facilities, 12 facilities, 0 

facilities, 8 facilities, 6 facilities, 6 facilities, and 13 facilities, respectively) 2

. 

1 These are facilities that are predicted to close due to weak financial performance under baseline conditions, i.e., in the absence of 

the final rule. EPA does not attribute the costs or the reduced discharges resulting from these baseline closures to the final rule, and 

therefore excludes these facilities from its analyses of the rule’s impacts. Baseline closures account for differences between the universe of 

facilities discussed in this report and the universe discussed in the Technical Development Document. 

2 EPA excluded 3,511 indirect and 98 direct dischargers predicted to close in the baseline. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

Table 2.2: MP&M Facilities by Subcategory and Discharger Class, and 

Facilities Regulated Under the Final Rulea 

Subcategory 

Indirect Dischargers Direct Dischargers 

Evaluated for 

Regulation 

(# of facilities) 

Regulated under 

Final Rule 

(# of facilities) 

Evaluated for 

Regulation 

(# of facilities) 

Regulated under 

Final Rule 

(# of facilities) 

General Metals 10,244 0 214 0 

Metal Finishing Job Shop 1,479 0 12 0 

Non-Chromium Anodizing 93 0 0 0 

Printed Wiring Board 600 0 8 0 

Steel Forming & Finishing 12 0 13 0 

Oily Waste 24,394 0 2,382 2,382 

Railroad Line Maintenance 820 0 6 0 

Shipbuilding Dry Dock 9 0 6 0 

All Categories 37,652 0 2,641 2,382 

a Excludes facilities that close in the baseline. 

Source: U.S. EPA analysis. 

2.2 MP&M DISCHARGES AND THE NEED FOR REGULATION 

EPA is regulating the MP&M industry because the industry releases substantial quantities of pollutants, including toxic 

pollutant compounds (priority and nonconventional metals and organics) and conventional pollutants such as total 

suspended solids (TSS) and oil and grease (O&G). These MP&M industry pollutants are generally controlled by 

straightforward and widely-used treatment system technologies such as chemical precipitation and clarification (frequently 

referred to as the “lime and settle” process).3 

Discharges of these pollutants to surface waters and POTWs have a number of adverse effects, including degradation of 

aquatic habitats, reduced survivability and diversity of native aquatic life, and increased human health risk through the 

consumption of contaminated fish and water. In addition, many of these pollutants volatilize into the air, disrupt biological 

wastewater treatment systems, and contaminate sewage sludge. 

Metal constituents are of particular concern because of the large amounts present in MP&M effluents. Unlike some organic 

compounds and other wastes that are metabolized in activated sludge systems to relatively innocuous constituents, metals are 

chemical elements and cannot be eliminated. Moreover, in solution, some metals have a high affinity for biological uptake. 

Depending on site-specific conditions, metals form insoluble inorganic and organic complexes that partition to sewage sludge 

at POTW s or underlying sediment in aquatic ecosystems. The accumulated metal constituents can return to a bioavailable 

form upon land application of sewage sludge; dredging and resuspension of sediment; or as a result of seasonal, natural, or 

induced alteration of sediment chemistry. 

Benefits of reducing metal and other pollutant loads to the environment from MP&M facilities include reduced risk of cancer 

and systemic human health risks, improved recreation opportunities (e.g., fishing , swimming, boating, and other near-water 

recreational activities), improved aquatic and benthic habitats, and less costly sewage sludge disposal and increased beneficial 

use of the sludge.4 

3 See Chapter 12 and Appendix I for more detailed information on the pollutants of concern in the MP&M industry. 

4 Sewage sludge is also called biosolids. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

The goal of the MP &M regulation is to reduce pollutant discharges and to eliminate or reduce the level of risk and harm 

caused by them. These pollutant discharges and their harmful consequences are the externalities that the MP&M regulation 

addresses, as discussed in Section 2.3. 

2.2.1 Baseline MP&M Discharges for Regulated Facilities 

Table 2.3 provides an overview of the discharges from MP&M facilities that are regulated under the final rule. Loadings are 

defined as toxic-weighted loadings. This measure weights quantities of different pollutants by a measure of their relative 

toxicity. Toxic-weighted loadings measures the relative toxic effects of discharges containing different mixtures of pollutants. 

MP&M discharges also contain conventional pollutants with little or no toxic effects but that can have substantial adverse 

environmental impacts, such as O&G and some components of TSS. 

Table 2.3: Toxic-Weighted Discharges for Direct Discharging Facilities in the Oily 

Wastes Subcategory a 

# of Regulated Facilities 2,382 

Baseline Discharges 3,351 

Average Baseline Loadings per Facility 1.41 

Remaining Discharges Under Final Rule 668 

Average Discharges Under Final Rule per Facility 0.28 

Discharge Reductions Achieved by Final Rule 2,683 

(Pounds Equivalent) 

a Discharges discussed in this table are total discharges from the facility, and do not reflect POTW pollutant 

removals. EPA believes it is appropriate to analyze wastewater discharges disregarding POTW removals because 

indirect discharges present environmental risks that are not fully addressed by POTW treatment. The MP&M 

industry releases 89 pollutants that cause inhibition problems at POTWs and an additional 35 pollutants that 

volatilize to form hazardous air pollutants (HAPs) that may present a threat to human health or the environment. 

Other MP&M pollutants are found in POTW sludge. Only eight of these pollutants have land application 

pollutant criteria that limit the uses of sludge. 

b Excludes discharges from facilities that are projected to close in the baseline (327 lbs-equiv., or an average of 

4.4 lbs-equiv. per closing facility). 

Source: U.S. EPA analysis. 

As reported in Table 2.3, direct dischargers in the Oily Wastes subcategory currently release a total of 3,351 toxic weighted 

pounds per year, an average of 1.41 toxic weighted pounds per facility. After implementation of the final rule, EPA estimates 

that Oily Wastes direct dischargers will release only 668 toxic weighted pounds per year, an average of 0.28 toxic pounds per 

facility. EPA estimates that the final rule will reduce pollutant discharges by approximately 2,683 toxic weighted pounds per 

year. 

2.2.2 Discharges under the MP&M Regulation 

Reductions in toxic loadings result from treatment of effluents and pollution prevention at facilities that are subject to the 

regulation. Table 2.4 shows baseline and post-regulation loadings by type of pollutant, both as unweighted pounds and on a 

toxic-weighted basis, for facilities that are regulated under the final rule. The final rule eliminates 80.1 percent of the baseline 

toxic-weighted loadings from the facilities that are regulated, including 83.7 percent of the priority pollutants (87.3 percent 

of metals, 22.4 percent of organics, and 1.3 percent of arsenic) and 57.4 percent of the nonconventional pollutants (62.1 

percent of metals, 13.3 percent of organics, and 50.0 percent of “other inorganics”). The final rule also eliminates substantial 

fractions of the baseline discharges of conventional pollutants from the regulated facilities, including 6.6 percent of 

2-4 
MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

chemical oxygen demand (COD), 37.1 percent of biological oxygen demand (BOD), 93.2 percent of oil and grease 

(O&G ), and 54.1 percent of total suspended solids (TSS).5 

Table 2.4: Summary of Discharges by Pollutant Type for Facilities Regulated under the Final Rulea 

Pollutant Category 

Current Releases Releases under the Final Rule Final Rule Reductions 

Pounds Pounds Eq. Pounds Pounds Eq. Pounds Pounds Eq. 

Priority Pollutants 

Metals 794 2,756 153 351 641 2,405 

Organics 336 58 268 45 68 13 

Arsenic 22 75 21 74 1 1 

Cyanide (CN) 0 0 0 0 0 0 

Nonconventional Pollutants 

Metals 25,863 417 16,428 158 9,435 259 

Organics 2,159 45 1,038 39 1,121 6 

Other Inorganics 2,334 0.2 1,301 0.1 1,033 0.1 

Bulk Pollutants 335,679 167,295 168,384 

Conventional Pollutants 

BOD 263,419 165,567 97,852 

COD 523,440 488,697 34,743 

O&G 428,137 28,955 399,182 

TSS 160,695 73,769 86,926 

a Discharges discussed in this table are facility discharges and do not account for POTW removals. EPA believes it is appropriate to 

analyze wastewater discharges disregarding POTW removals because indirect discharges present environmental risks that are not fully 

addressed by POTW treatment. The MP&M industry releases 89 pollutants that cause inhibition problems at POTWs and an additional 

35 pollutants that volatilize to form hazardous air pollutants (HAPs) that may present a threat to human health or the environment. 

Other MP&M pollutants released by the industry are found in POTW sludge. Only eight of these pollutants have land application 

pollutant criteria that limit the uses of sludge. 

Source: U.S. EPA analysis. 

2.3 ADDRESSING MARKET IMPERFECTIONS 

Environmental legislation in general, and the CWA and the MP&M regulation in particular, seek to correct imperfections – 

uncompensated environmental externalities – in the functioning of the market economy. In manufacturing, rebuilding, and 

repairing metal products and machinery, MP&M facilities release pollutants that increase risks to human health and aquatic 

life and cause other environmental harm without accounting for the consequences of these actions on other parties (sometimes 

referred to as third parties) who do not directly participate in the business transactions of the business entities. 

5 It is not possible to provide an overall estimate of total pollutant pounds removed, because overlap among some of the pollutant 

categories would result in double-counting if the categories were summed. For example, TSS may include some of the priority pollutant 

and nonconventional metals discharges. Use of the toxic-weighted loadings avoids this double-counting, but does not include conventional 

pollutants. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

These costs are not borne by the responsible entities and are therefore external to the production and pricing decisions of the 

responsible entity. 

A profit-maximizing firm or a cost-minimizing government-owned facility will ignore these costs when deciding how much to 

produce and how to produce it. In addition, the externality is uncompensated because no party is compensated for the adverse 

consequences of the pollution releases. 

When these external costs are not accounted for in the production and pricing decisions of the responsible entities, their 

decisions will yield a mix and quantity of goods and services in the economy, and an allocation of economic resources to 

production activities, that are less than optimal. In particular, the quantity of pollution and related environmental harm caused 

by the activities of the responsible entities will, in general, exceed socially optimal levels. As a result, society will not 

maximize total social welfare. 

In addition, adverse distributional effects may accompany the uncompensated environmental externalities. If the 

distribution of pollution and environmental harm is not random among the U.S. population, but instead is concentrated among 

certain population subgroups based on socio-economic or other demographic characteristics, then the uncompensated 

environmental externalities may produce undesirable transfers of economic welfare among subgroups of the population. See 

Chapter 17: Environmental Justice and Protection of Children for more information. 

The goal of environmental legislation and implementing regulations, including the final MP&M rule that is the subject of this 

EEBA, is to correct these environmental externalities by requiring businesses and other polluting entities to reduce their 

pollution and environmental harm. Congress, in enacting the authorizing legislation, and EPA, in promulgating the 

implementing regulations, act on behalf of society to achieve a mix of goods and services and a level of pollution that more 

nearly approximates socially optimal levels. As a result, the mix and quantity of goods and services provided by the 

economy, the allocation of economic resources to those activities, and the quantity of pollution and environmental harm 

accompanying those activities will yield higher economic welfare to society. 

Requiring polluting entities to reduce levels of pollution and environmental harm is one approach to addressing the problem 

of environmental externalities. This approach imposes costs on the polluting entities in the form of compliance costs incurred 

to reduce pollution to allowed levels. A polluting entity will either incur the costs of meeting the regulatory limits or will 

determine that compliance is not in its best financial interest and will cease the pollution-generating activities. This approach 

to addressing the problem of environmental externalities will generally result in improved economic efficiency and net 

welfare gains for society if the cost of reducing the pollution and environmental harm activities is less than the value of 

benefits to society from the reduced pollution and environmental harm. 

It is theoretically possible to correct the market imperfection by means other than direct regulation. For example, negotiation 

and/or litigation could achieve an optimal allocation of economic resources and mix of production activities within the 

economy. However, the transaction costs of assembling the affected parties and involving them in the negotiation/litigation 

process, as well as the public goods character of the improvement sought by negotiation or litigation, make this approach 

impractical. 

2.4 OVERLAP WITH OTHER EFFLUENT GUIDELINES 

EPA has previously promulgated effluent guidelines regulations for 13 metals-related industries. In some instances, these 

industries may perform operations that are found in MP&M facilities. These effluent guidelines are: 

� Electroplating (40 CFR Part 413), 

� Iron & Steel Manufacturing (40 CFR Part 420), 

� Nonferrous Metals Manufacturing (40 CFR Part 421), 

� Ferroalloy Manufacturing (40 CFR Part 424), 

� Metal Finishing (40 CFR Part 433), 

� Battery Manufacturing (40 CFR Part 461), 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

� Metal Molding & Casting (40 CFR Part 464), 

� Coil Coating (40 CFR Part 465), 

� Porcelain Enameling (40 CFR Part 466), 

� Aluminum Forming (40 CFR Part 467), 

� Copper Forming (40 CFR Part 468), 

� Electrical & Electronic Components (40 CFR Part 469), and 

� Nonferrous Metals Forming & Metal Powders (40 CFR Part 471). 

In 1986, the Agency reviewed coverage of these regulations and identified a significant number of metals processing facilities 

discharging wastewater that these 13 regulations did not cover. From this review, EPA performed a more detailed analysis of 

these unregulated sites and identified the discharge of significant amounts of pollutants. This analysis resulted in the 

formation of the “Machinery Manufacturing and Rebuilding” (MM&R) point source category. In 1992, EPA changed the 

name of the category to “Metal Products and Machinery” (MP&M) to clarify coverage of the category (57 FR 19748). 

Only direct dischargers in the Oily Wastes subcategory will be regulated under the final regulations for 40 CFR Part 38. 

Table 2.5 shows the MP&M subcategories and the coverages that apply to each. EPA does not intend this table to be 

exhaustive, but rather to provide a general overview of the applicability of the Electroplating, Metal Finishing, and Metal 

Products & Machinery effluent guidelines. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry 

Table 2.5: Coverage by MP&M Subcategory 

Subcategory 

Continue Coverage under 40 CFR Part 413 

(Electroplating) 

Continue Coverage under 40 CFR Part 433 

(Metal Finishing) 

Coverage under 40 C

(Metal Products & M

General Metals (including 

Continuous Electroplaters) 

Existing indirect dischargers currently covered by Part 413. 

New and existing direct and indirect dischargers 

currently covered by Part 433. 

None 

Metal Finishing Job Shops Existing indirect dischargers currently covered 

by Part 413. 

New and existing direct and indirect dischargers 

currently covered by Part 433. 

None 

Non-Chromium Anodizers a Existing indirect dischargers that are currently 

covered by 413. 

New and existing direct and indirect dischargers 

currently covered by Part 433. 

None 

Printed Wiring Board (Printed Circuit Board) 

Existing indirect dischargers that are currently 

covered by 413. 

New and existing direct and indirect dischargers 

currently covered by Part 433. 

None 

Steel Forming & Finishing 

Wire Drawinga 

N/A N/A None 

Oily Wasteb N/A N/A All new and existing 

subcategory. (See 43

Railroad Line Maintenanceb N/A N/A None 

Shipbuilding Dry Docksb N/A N/A None 

a These facilities will continue to be subject to Part 420. b There are no national categorical pretreatment standards for these facilities. 

Source: U.S. EPA analysis. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

Figure 2.1 illustrates the relationship among the various metals industries effluent guidelines. 

Figure 2.1: Metals Industries Effluent Guidelines Covered Under 40CFR 

Source: U.S. EPA analysis. 

2.5 MEETING LEGISLATIVE AND LITIGATION-BASED REQUIREMENTS 

EPA’s effluent limitations guidelines and standards for the MP&M industry are under authority of the CWA, Sections 301, 

304, 306, 307, and 501. These CWA sections require the EPA Administrator to publish limitations and guidelines for 

controlling industrial effluent discharges consistent with the overall CWA objective to “restore and maintain the chemical, 

physical, and biological integrity of the Nation’s waters.” EPA’s MP&M industry regulation responds to these requirements. 

In addition, the MP&M regulation responds to the requirements of a consent decree entered by the Agency as a result of 

litigation. Section 304(m) of the CWA (33 U.S.C. 1314(m)), added by the Water Quality Act of 1987, required EPA to 

establish schedules for (i) reviewing and revising existing effluent limitations guidelines and standards, and (ii) promulgating 

new effluent guidelines. On January 2, 1990, EPA published an Effluent Guidelines Plan (55 FR 80), in which schedules 

were established for developing new and revised effluent guidelines for several industry categories. One of the industries for 

which the Agency established a schedule was the Machinery Manufacturing and Rebuilding Category (MM&R).6 

6 The name was changed to Metal Products and Machinery (MP&M) in 1992 to avoid confusion over what was covered by the rule. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

The Natural Resources Defense Council, Inc. (NRDC) and Public Citizen, Inc. challenged the Effluent Guidelines Plan in a 

suit filed in U.S. District Court for the District of Columbia (NRDC et al v. Reilly, Civ. No. 89-2980). The plaintiffs charged 

that EPA’s plan did not meet the requirements of Section 304(m). A Consent Decree in this litigation was entered by the 

Court on January 31, 1992. This plan required, among other things, that EPA propose effluent guidelines for the MP&M 

category by November, 1994 and take final action on these effluent guidelines by May, 1996. EPA filed a motion with the 

Court on September 28, 1994, requesting an extension until March 31, 1995, for the EPA Administrator to sign the proposed 

regulation and a subsequent four month extension for signature of the final regulation in September 1996. EPA published a 

proposal entitled, “Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards: Metal 

Products and Machinery” (60 FR 28210) on May 30, 1995. 

EPA initially divided the industry into two phases based on industry sector, as the Agency believed that would make the 

regulation more manageable. The Phase I proposal included the following industry sectors: Aerospace; Aircraft; Electronic 

Equipment; Hardware; Mobile Industrial Equipment; Ordnance; and Stationary Industrial Equipment. At that time, EPA 

planned to propose a rule for the Phase II sectors approximately three years after the MP&M Phase I proposal. 

EPA received over 4,000 pages of public comment on the Phase I proposal. One area where commenters from all stakeholder 

groups (i.e., industry, environmental groups, and regulators) were in agreement was that EPA should not divide the MP&M 

industry into two separate regulations. Commenters raised concerns regarding the regulation of similar facilities with 

different compliance schedules and potentially different limitations for similar processes based solely on whether the facilities 

were in a Phase I or Phase II sector. Furthermore, a large number of facilities performed work in multiple sectors. In such 

cases, permit writers and control authorities (e.g., POTW s) would need to decide which MP&M rule (Phase I or 2) applied to 

a facility. 

Based on these comments, EPA decided to combine the two phases of the regulation into one proposal. EPA published a 

proposal entitled, “Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards for the 

Metal Products and Machinery Point Source Category” (66 FR 424) on January 3, 2001. The proposal published in January 

2001 completely replaced the 1995 proposal. 

On June 5, 2002, EPA published a Notice of Data Availability (NODA) (67 FR 38752). In the NODA, EPA discussed major 

issues raised in comments on the 2001 proposal; suggested revisions to the technical and economic methodologies used to 

estimate compliance costs, pollutant loadings, and economic and environmental impacts; presented the results of these 

suggested methodology changes and incorporation of new (or revised) data; and summarized the Agency’s thinking on how 

these results could affect the Agency’s final decisions. 

This report addresses the 304(m) decree as amended, requiring the MP&M rules to be promulgated by February 14, 2003. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

GLOSSARY 

Best Available Technology Economically Achievable: Effluent limitations for direct dischargers, addressing priority
 


and nonconventional pollutants. BAT is based on the best existing economically achievable performance of plants in the
 


industrial subcategory or category. Factors considered in assessing BAT include the cost of achieving BAT effluent
 


reductions, the age of equipment and facilities involved, the processes employed, engineering aspects of the control
 


technology, potential process changes, non-water quality environmental impacts (including energy requirements), economic
 


achievability, and such factors as the Administrator deems appropriate. The Agency may base BAT limitations upon effluent
 


reductions attainable through changes in a facility's processes and operations. Where existing performance is uniformly
 


inadequate, EPA may base BAT upon technology transferred from a different subcategory within an industry or from another
 


industrial category.
 


Best Practicable Control Technology Currently Available: Effluent limitations for direct discharging facilities,
 


addressing conventional, toxic, and nonconventional pollutants. In specifying BPT, EPA considers the cost of achieving
 


effluent reductions in relation to the effluent reduction benefits. The Agency also considers the age of the equipment and
 


facilities, the processes employed and any required process changes, engineering aspects of the control technologies, non-


water quality environmental impacts (including energy requirements), and such other factors as the Agency deems
 


appropriate. Limitations are traditionally based on the average of the best performances of facilities within the industry of
 


various ages, sizes, processes, or other common characteristics. Where existing performance is uniformly inadequate, EPA
 


may require higher levels of control than currently in place in an industrial category if the Agency determines that the
 


technology can be practically applied.
 


bioavailable: Degree of ability to be absorbed and ready to interact in organism metabolism.
 


(http://www.epa.gov/OCEPAterms)
 


biological oxygen demand: A measure of the amount of oxygen consumed in the biological processes that break down
 


organic matter in water. The greater the BOD, the greater the degree of pollution.
 


(http://www.epa.gov/OCEPAterms/bterms.html)
 


chemical oxygen demand: A measure of the oxygen required to oxidize all compounds, both organic and inorganic, in
 


water. (http://www.epa.gov/OCEPAterms/cterms.html)
 


Clean Water Act: Act passed by the U.S. Congress to control water pollution. Formerly referred to as the Federal Water
 


Pollution Control Act of 1972 or Federal Water Pollution Control Act Amendments of 1972 (Public Law 92-500), 33 U.S.C.
 


1251 et. seq., as amended by: Public Law 96-483; Public Law 97-117; Public Laws 95-217, 97-117, 97-440, and 100-04.
 


conventional pollutants: Statutorily listed pollutants understood well by scientists. These may be in the form of organic
 


waste, sediment, acid, bacteria, viruses, nutrients, oil and grease, or heat. (http://www.epa.gov/OCEPAterms)
 


distributional effects: Occurs when the distribution of pollution and environmental harm is not random among the U.S.
 


population, but instead is concentrated among certain population subgroups based on socio-economic or other demographic
 


characteristics, then the uncompensated environmental externalities may produce undesirable transfers of economic welfare
 


among subgroups of the population.
 


externalities: Costs or benefits of market transactions that are not reflected in the prices buyers and sellers use to make
 


their decisions. An externality is a by-product of the production or consumption of a good or service that affects someone not
 


immediately involved in the transaction.
 


(http://www.enmu.edu/users/biced/home/glossary.html)
 


A type of market failure that causes inefficiency.
 


(http://www.amosweb.com/cgi-bin/gls_dsp.pl?term=externalities)
 


MP&M facilities: MP&M facilities are defined on the basis of three considerations: (1) they produce metal parts, products,
 


or machines for use in one of the 19 industry sectors evaluated for coverage in the MP&M point source category; (2) they use
 


operations in one of the eight regulatory subcategories evaluated for coverage in the MP&M point source category; and (3)
 


they discharge process wastewater, either directly or indirectly, to surface waters. In this document, the term “MP&M
 


facilities” refers to all facilities meeting the above definition, regardless of whether a facility’s industrial sector, subcategory,
 


or discharger category is covered by the final regulation. If the MP&M facilities are referred to as “regulated” facilities or
 


facilities “subject to the final regulation”, the use of the qualifier “regulated” or “subject to the final regulation” restricts
 


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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

the definition to include only those facilities in the industry sectors, subcategory, and discharger category covered by the final
 


regulation.
 


MP&M industry: The facilities and markets comprising the 19 industry sectors evaluated for coverage in the MP&M point
 


source category. In this document, the term “MP&M industry” refers to the full 19 industry sectors, regardless of whether an
 


industry sector is covered by the final regulation. If the MP&M industry is referred to as the regulated MP &M industry, the
 


use of the qualifier “regulated” restricts the definition to only the industry sectors, subcategory, and discharger category
 


covered by the final regulation.
 


nonconventional pollutants: Any pollutant not statutorily listed or which is poorly understood by the scientific
 


community.
 


(http://www.epa.gov/OCEPAterms)
 


oil and grease (O&G): These organic substances may include hydrocarbons, fats, oils, waxes and high-molecular fatty
 


acids. Oil and grease may produce sludge solids that are difficult to process. (http://www.epa.gov/owmitnet/reg.htm)
 


Pretreatment Standards for Existing Sources (PSES): Categorical pretreatment standards for existing indirect
 


dischargers, designed to prevent the discharge of pollutants that pass through, interfere with, or are otherwise incompatible
 


with the operation of POTWs. Standards are technology-based and analogous to BAT effluent limitations guidelines.
 


priority pollutants: 126 individual chemicals that EPA routinely analyzes when assessing contaminated surface water,
 


sediment, groundwater or soil samples.
 


publicly-owned treatment works: A treatment works for municipal sewage or liquid industrial wastes that is owned by a
 


State or municipality.
 


socially optimal level: Situation in which it is impossible to make any individual better off without making someone else
 


worse off. Also referred to as Pareto optimal.
 


social welfare: The sum of the welfare of all participants in the society; measured by the sum of consumer surplus --the
 


value consumers derive from goods and services less the price they have to pay for the goods and services -- and producers'
 


surplus -- the revenue received by producers of goods and services less their costs of producing the goods and services.
 


third parties: Those affected by a by-product of the production or consumption of a good or service that are not
 


immediately involved in the transaction.
 


total suspended solids: A measure of the suspended solids in wastewater, effluent, or water bodies, determined by tests
 


for "total suspended non-filterable solids."
 


(http://www.epa.gov/OCEPAterms/tterms.html).
 


toxic-weighted pollutants: This measure weights quantities of different pollutants in effluents by a measure of their
 


relative toxicity. Toxic-weighted loadings measures the relative toxic effects of discharges containing different mixtures of
 


pollutants.
 


uncompensated: Where parties damaged by externalities receive no compensation for accepting the damage.
 


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MP&M EEBA Part I: Introduction and Background Information Chapter 2: The MP&M Industry and the Need for Regulation 

ACRONYMS 

BAT : Best Available Technology Economically Achievable
 


BPT: Best Practicable Control Technology Currently Available
 


BOD: biological oxygen demand
 


COD: chemical oxygen demand
 


CWA: Clean Water Act
 


MM &R: Machinery Manufacturing and Rebuilding
 


MP&M: Metal Products and Machinery
 


NPDES: National Pollutant Discharge Elimination System
 


NRDC: Natural Resources Defense Council
 


O&G: oil and grease
 


POTW: publicly-owned treatment works
 


PSES: Pretreatment Standards for Existing Sources
 


TSS: total suspended solids
 


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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Chapter 3: Profile of the MP&M
 


Industry Sectors
 


INTRODUCTION 

The final MP&M rule will apply to facilities that 

manufacture, rebuild, or maintain metal parts, products or 

machines to be used in a large number of industrial sectors. 

Manufacturing is the series of unit operations necessary to 

produce metal products, and is generally performed in a 

production environment. Rebuilding/maintenance is the 

series of unit operations necessary to disassemble used metal 

products into components, replace the components or 

subassemblies or restore them to original function, and 

reassemble the metal product. These operations are intended 

to keep metal products in operating condition and can be 

performed in either a production or a non-production 

environment. Manufacturing and rebuilding/maintenance 

activities often occur at the same facilities. 

The MP&M industry encompasses a large number of 

industries that manufacture intermediate and final goods, 

support transportation and other vehicle services, and repair 

and maintain products and equipment. The health of the 

MP&M industry is generally tied to the overall economic 

performance of the economy. The MP&M industry includes 

manufacturing and non-manufacturing industries defined by 

224 4-digit Standard Industrial Classification (SIC) 

codes, which are grouped into nineteen industry sectors.1 Of 

the 224 SIC codes, 174 are manufacturing (SICs 20 through 

39) and 50 are non-manufacturing. All nineteen sectors 

include manufacturing industries, and eleven include nonmanufacturing industries as well. 

Although EPA evaluated regulatory options that would have 

covered facilities operating in any of the nineteen sectors, the 

final regulation covers facilities operating only in sixteen of 

those sectors. 

CHAPTER CONTENTS 

3.1 Data Sources ................. ............. 3-2 

3.2 Overview of the MP&M Industry and Industry 

Trends ................. ............... 3-3 

3.2.1 Aerospace ................. ........ 3-7 

3.2.2 Aircraft ................. .......... 3-7 

3.2.3 Electronic Equipment ................ 3-7 

3.2.4 Hardware ................. ........ 3-8 

3.2.5 Household Equipment ............... 3-8 

3.2.6 Instruments ................. ....... 3-9 

3.2.7 Iron and Steel ................. ..... 3-9 

3.2.8 Job Shops ................. ........ 3-9 

3.2.9 Mobile Industrial Equipment .......... 3-9 

3.2.10 Motor Vehicle and Bus & Truck ...... 3-10 

3.2.11 Office Machine ................. ... 3-10 

3.2.12 Ordnance ................. ....... 3-10 

3.2.13 Precious Metals and Jewelry .......... 3-11 

3.2.14 Printed Wiring Boards .............. 3-11 

3.2.15 Railroad ................. ........ 3-11 

3.2.16 Ships and Boats ................. .. 3-11 

3.2.17 Stationary Industrial Equipment ....... 3-12 

3.3 Characteristics of MP&M Manufacturing Sectors 3-12 

3.3.1 Domestic Production ............... 3-13 

3.3.2 Industry/Market Structure ............ 3-18 

3.3.3 Financial Condition and Performance . . 3-24 

3.4 Characteristics of MP&M Non-Manufacturing 

Sectors ................. ............. 3-25 

3.4.1 Domestic Production ............... 3-25 

3.4.2 Industry Structure and Competitiveness . 3-28 

3.5 Characteristics of All MP&M Sectors ......... 3-30 

3.5.1 Eight-firm Concentration Ratio ....... 3-30 

3.5.2 Risk Normalized Return on Assets ..... 3-31 

3.6 Characteristics of MP&M Facilities ........... 3-32 

Glossary ................. ................. ... 3-38 

Acronyms ................. ................. .. 3-40 

References ................. ................. . 3-41 

This chapter provides a profile of the industry sectors that were evaluated for coverage by the MP&M rule. The profile 

focuses on the economic characteristics of the sectors and the facilities within the sectors, which may affect the rule’s 

financial and economic impacts. It presents and interprets a wide variety of data associated with production, market structure, 

and competitiveness, for each sector and for the MP&M industry as a whole. 

1 Appendix A lists the nineteen sectors and their associated 4-digit SIC codes. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

3.1 DATA SOURCES 

This profile presents data from the Economic Censuses, Statistics of U.S. Businesses (SUSB), Annual Survey of 

Manufacturers (ASM ), U.S. Industry and Trade Outlook, EPA’s Sector Notebooks, and other sources, to characterize the 

MP&M sectors, including both dischargers and non-dischargers. 

The years 1988 and 1996 were chosen as the years for which data are presented because these are the base analysis years, 

respectively, for the MP&M Phase 1 sectors survey and the Phase 2 survey. In the cases when data for those years were not 

available, data from other years were used. 

This profile relies on industries defined by SICs, both because data collection for the MP& M sectors was defined by SICs and 

to allow use of historical data. The Census Bureau switched to use of the new North American Industry Classification 

System (NAICS) codes starting with the 1997 Economic Censuses. Data classified by NAICS code were converted to SIC 

format before being included in the profile. The conversion used a bridge containing the percentage of each NAICS code that 

needed to be assigned to each SIC code. For a detailed discussion of the bridge, see Appendix A. 

The Agency used survey data to characterize the facilities within the MP&M sectors that are potentially subject to the rule 

because they discharge process wastewater from MP&M operations. The survey provides data such as discharge type, small 

business status, sources of revenues, and financial performance. 

The survey requested information on the sectors from which each facility derives its revenues. Many facilities derive 

revenues from more than one sector. It is therefore difficult to link facility characteristics to a specific sector. Data on the 

potentially-regulated facilities are therefore summarized by the regulatory subcategories rather than by sectors. 

All monetary values are shown in real 2001 dollars. EPA used the Producer Price Index (PPI) for industrial commodities 

as a conversion tool. A PPI is an index that measures price changes, from the perspective of the seller, of a collection of 

goods and services that are important inputs for a specific industry or for the economy as a whole. This chapter uses the PPI 

for industrial commodities to inflate nominal values to real values. Later chapters include PPI’s that are sector specific. 

These PPI’s are derived from the average of the PPI’s for each component industry SIC code, weighted by industry output. 

Table 3-1 shows the PPI values for the relevant years for which prices were deflated. The PPI for industrial commodities 

increased slightly every year between 1988 and 1996. Total inflation for industrial commodities from 1988 to 1996 was 

19.8%. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.1: Producer Price Index for Industrial Commodities 

Year Producer Price Index (PPI) Percent Change 

1988 100.0 n/a 

1989 105.0 5.0% 

1990 108.9 3.8% 

1991 109.6 0.6% 

1992 110.4 0.8% 

1993 111.9 1.4% 

1994 113.5 1.4% 

1995 118.1 4.0% 

1996 119.8 1.4% 

1997 120.1 0.3% 

1998 117.4 -2.3% 

1999 119.0 1.4% 

2000 126.8 6.6% 

2001 127.7 0.7% 

Source: Bureau of Labor Statistics, Producer Price Index. 

3.2 OVERVIEW OF THE MP&M INDUSTRY AND INDUSTRY TRENDS 

This section provides a general overview of the MP&M industry. It describes the individual MP&M industry sectors, 

provides basic economic information about MP&M manufacturers, and summarizes recent industry trends. 

Figure 3-1 shows that MP&M facilities are located in every state. A few MP& M sectors such as shipbuilding are 

concentrated geographically. Transportation-related MP&M facilities are found throughout the country. Overall, MP&M 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

facilities are most concentrated in the heavy industrial regions along the Gulf Coast, both the East and West Coasts, and the 

Great Lakes Region (New York, Pennsylvania, Ohio, Indiana, Illinois, and Michigan). 

Figure 3.1: Number of MP&M Facilities by State in 1992 

Source: Department of Commerce, Bureau of the Census, Census of Manufacturers, Census of Transportation, Census of Wholesale 

Trade, Census of Retail Trade, Census of Service Industries, 1992. 

Table 3.2 lists the MP&M sectors and provides a brief description of the products and services produced by each. Appendix 

A provides a more detailed list of the 4-digit SIC codes in each sector. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.2: MP&M Sector Definitions 

Sector Sector Description 

Aerospace Metal parts or products such as missiles, space vehicles, satellites and associated launching 

equipment. 

Aircraft Metal parts or products including all types of aircraft for public, private or commercial use. 

aircraft parts and equipment as well as aircraft maintenance activities. 

Bus and Truck Metal parts or products including freight trucks and trailers as well as public, private and commercial 

buses. ludes all associated equipment including equipment specific to truck and bus terminals. 

Includes bus and truck maintenance activities. 

Electronic Equipment Metal parts or products including general electronic components such as tubes, capacitors, and 

transformers, as well as finished electronic equipment such as televisions, radios, and telephones. 

Hardware Metal parts or products such as tools, cutlery, valves and tubing, dies, springs, sheet metal, drums, and 

heat treating equipment. 

Household Equipment Metal parts or products including appliances such as refrigerators, laundry equipment, lighting 

equipment, cooking equipment, and vacuum cleaners. munication type radios and 

televisions are included in this sector. 

Iron and Steel Sites engaged in iron or steel manufacturing, forming and finishing. 

Instruments Metal parts or products such as laboratory and medical equipment, measuring devices, environmental 

and process controls, optical equipment, surgical and dental equipment, and pens. 

Metal Finishing Job Shop Facilities with more than 50 percent of their revenues coming from work on products not owned by 

the site. While there are SIC codes associated with some Metal Finishing Job Shops, they sell to a 

variety of markets and are not a market in and of themselves. 

Mobile Industrial Equipment Metal parts or products including tractors and other farm equipment, construction machinery and 

equipment, mining machinery and equipment, industrial cranes and hoists, and tracked military 

vehicles. 

Motor Vehicle Metal parts or products including private passenger vehicles and associated parts and accessories such 

as automobiles, motorcycles, utility trailers and recreational vehicles, and mobile homes. 

Office Machines Metal parts or products including office computer equipment, storage devices, printers, photocopiers 

and associated parts and accessories. 

Ordnance Metal parts or products including all small arms, artillery, and ammunition with the exception of 

missiles (aerospace). anufacture of explosives. 

Other Metal Products Metal parts or products including products and machinery not categorized into the other sectors (e.g., 

sporting goods, musical instruments). 

Precious Metals and Jewelry Metal parts or products including jewelry, silverware, trophies, and clocks as well as all associated 

parts and accessories. 

Printed Wiring Boards Metal parts or products including printed wiring boards and printed circuit boards. 

Railroad Metal parts or products including railcars, locomotives and associated parts and accessories as well as 

track, switching and terminal stations. 

Ships and Boats Metal parts or products including ships and boats for military, freight, and private recreation. 

submarines, ferries, tug boats, barges, yachts, and other recreational boats as well as all parts and 

accessories. lso includes rebuilding and maintenance activities performed at marinas, dry docks, and 

other on shore activities specifically related to ships and boats. 

Stationary Industrial 

Equipment 

Metal parts or products including all industrial machinery, such as turbines, oil field machinery, 

elevators and moving stairways, conveying equipment, chemical process industry equipment, pumps, 

compressors, blowers, industrial ovens, vending machines, commercial laundry equipment, 

commercial refrigeration and heating equipment, welding apparatus, motors, and generators. 

Includes 

Inc 

Non-com 

Does not include the chemical processing or the m 

Includes 

A 

Source: U.S. EPA analysis. 

Table 3.3 shows output by sector for manufacturers, non-manufacturers, and all MP&M firms. Output is a good indicator of 

the overall size of a market. In 1997, MP&M firms accounted for more than $2.8 trillion in output. Motor vehicles were the 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

largest single MP&M sector, accounting for 43 percent of all MP&M output. Ordnance is the smallest sector, with 0.2 

percent of MP&M output. 

The MP&M manufacturing and non-manufacturing sectors differ in several important ways. The manufacturing sector 

accounted for $1.6 trillion in output, equal to 57 percent of the total MP&M output. The non-manufacturing sector accounted 

for $1.2 trillion, or 43 percent of MP&M output. Although MP&M non-manufacturers’ revenues were nearly $400 billion 

smaller than manufacturers’ revenues, the MP&M non-manufacturers had three times as many facilities as the MP&M 

manufacturers. Also, although manufacturing output was relatively evenly divided among the different sectors, more than 86 

percent of non-manufacturing output came from the motor vehicle and bus and truck sectors. 

Table 3.3: MP&M Output and Share in 1997a

 (millions, 2001$) 

Sector 

Manufacturers Non-Manufacturers Sector Total 

Output b Share Output b Share Output b Share 

Aerospace 20,115.1 1.2% 20,115.1 0.7% 

Aircraft 105,163.8 6.4% 9,935.9 0.8% 115,099.7 4.0% 

Bus & Truck 15,118.4 0.9% 209,316.1 16.7% 224,434.5 7.8% 

Electronic Equipment 145,886.9 8.9% 145,886.9 5.1% 

Hardware 189,145.5 11.6% 189,145.5 6.6% 

Household Equipment 102,242.3 6.3% 2,847.7 0.2% 105,090.0 3.6% 

Instruments 141,548.0 8.7% 7,401.9 0.6% 148,949.9 5.2% 

Iron and Steel 20,403.0 1.2% 20,403.0 0.7% 

Job Shop c 15,360.2 0.9% 15,360.2 0.5% 

Mobile Industrial Equipment 54,704.7 3.3% 54,704.7 1.9% 

Motor Vehicle 366,448.7 22.4% 870,450.5 69.6% 1,236,899.2 42.8% 

Office Machine 119,783.0 7.3% 30,929.9 2.5% 150,712.9 5.2% 

Ordnance 5,778.8 0.4% 5,778.8 0.2% 

Other Metal Products 60,249.6 3.7% 22,040.7 1.8% 82,290.3 2.9% 

Precious Metals and Jewelry 9,760.7 0.6% 367.4 0.0% 10,128.1 0.4% 

Printed Wiring Boards 10,400.7 0.6% 10,400.7 0.4% 

Railroad d 8,412.6 0.5% 30,727.9 2.5% 39,140.5 1.4% 

Ships and Boats 18,081.1 1.1% 37,383.0 3.0% 55,464.1 1.9% 

Stationary Industrial Equipment 227,053.7 13.9% 29,747.1 2.4% 256,800.8 8.9% 

Total MP&M 1,635,656.8 100.0% 1,251,148.1 100.0% 2,886,804.9 100.0% 

Percent of total 56.7% 43.3% 100.0% 

a Data for 1996 were not available, so economic census data from 1997 were used. b Value of shipments for manufacturing industries; total sales for retail and wholesale trade; total receipts for service industries; total 

revenue for transportation. c Includes facilities in two SICs that are defined specifically as job shops (SICs 3471 and 3479.) Facilities reporting in other sectors 

may also operate as job shops, so these data are likely to understate the true output of MP&M job shops. d Non-manufacturing railroad data are estimated based on 1992 data. 

Source: Department of Commerce, Bureau of the Census, Census of Manufacturers, Census of Transportation, Census of Wholesale 

Trade, Census of Retail Trade, Census of Service Industries, 1997. 

The following sections describe the MP&M sectors and briefly discuss recent industry trends in each sector. The discussion is 

based on 2001 Value Line Industry Reports, U.S. Industry and Trade Outlook 2000 (DRI-McGraw Hill), EPA’s Sector 

Notebooks, and other sources. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

3.2.1 Aerospace 

The aerospace industry includes original equipment manufacturers (OEM ) and facilities that rebuild and repair aerospace 

equipment. The industry serves both military and commercial end-uses such as space vehicles for commercial communication 

satellites, although military applications dominate. Its products include guided missiles, space vehicles, and associated 

propulsion units and parts. The assembly of aerospace products draws on numerous other industries, including plastics, 

rubber, fabricated metals, metal casing, glass, textile, and electronic components. Aerospace products are typically produced 

by a prime contractor and several tiers of subcontractors. Final assembly is performed by relatively few facilities, only a 

small number compared with the numerous subassembly and parts manufacturers. Aerospace manufacturing is extremely 

capital intensive. 

The U.S. aerospace industry has consolidated substantially in recent years, due to declines in defense spending. The number 

of facilities and firms as well as sector value of shipments and employment decreased from 1988 to 1996 in the US. 

Growth in the industry is expected to come from lower cost air-to-air missiles, with strong focus on increasing efficiency in 

production by reducing costs. Consumer demand has also grown for direct-to-home television, voice and data transmission, 

and other satellite services, which have increased the commercial demand for space vehicles needed to launch satellites. 

The aerospace industry exports a substantial share of its output. Many North American and European governments with large 

defense budgets have been seeking to reduce their military budgets, while governments in South America (with smaller 

budgets) have been maintaining or increasing their defense spending. Substantial consolidation has occurred in the European 

aerospace industry, which has become more competitive with U.S. companies (U.S. EPA 1997; DRI/McGraw Hill 2000). 

3.2.2 Aircraft 

Trends in the aircraft sector are heavily influenced by changes in industry structure and in the international political-economic 

arena. Although new aircraft production increased substantially in 1998 and 1999, production weakened in 2001 because of 

the economic slowdown and then plummeted following the September 11th terrorist attacks. Airlines have reacted to falling 

ticket sales by cutting scheduled flights, reducing personnel, and delaying or cancelling investment in new aircraft. 

During the 1990's, there was substantial restructuring through mergers and consolidation in the aircraft manufacturing 

industry, including producers of both aircraft and aircraft parts nationally and internationally. Firms focused on improving 

efficiency through cost cutting efforts such as reduced staffing. In addition, there is a growing trend for U.S. producers to 

outsource many aircraft parts to firms in other nations, in order to bring down costs and compete internationally. 

In addition to aircraft manufacturing, this sector includes rebuilding and repair of aircraft at manufacturers’ facilities or at 

airports.2 The aircraft maintenance and repair industry has slowed with the post 9/11 decline in passenger travel. 

3.2.3 Electronic Equipment 

The electronic equipment sector can be divided into two general groups of industries: microelectronics manufacturers and 

telecommunications equipment manufacturers. 

Microelectronics industries manufacture a wide range of products, from electronic connectors to integrated circuit panels. 

These products are used as material inputs in many industries such as automotive, telecommunications, aerospace, computer, 

and medical equipment. Although the microelectronics industry covers a diverse array of products, producers, and end-uses, 

some general trends have been evident in the industry. A strong increase in the use of microelectronic products in industries 

throughout the economy has led to rapid growth in microelectronics manufacturing over the past two decades. Although the 

US is a major producer of consumer electronics, Japan is the world’s leading producer of consumer electronics, and U.S. 

firms face strong international competition for cutting edge technological advances in their products. Due to the high skill 

level necessary in the development of products, there is considerable competition for skilled labor. The recent economic 

slowdown has led to lowered demand for end-products that incorporate microelectronics. In response, the microelectronics 

2 The rule regulates wastewater generated from washing vehicles only when it occurs as a preparatory step prior to performing an 

MP&M unit operation (e.g., prior to disassembly to perform engine maintenance or rebuilding). The rule does not cover the washing of 

cars, aircraft, or other vehicles when it is performed only for aesthetic/cosmetic purposes. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

industry has reduced capacity and laid off workers to reduce costs. Despite this decline, microelectronics continue to be an 

increasingly necessary component of the global economy. 

Telecommunication industries focus on the production of network equipment, fiber optics, and wireless communication 

equipment. Much of the growth in the industry has come from the increasing use of fiber optics and wireless end-user 

devices. The telecommunications industries experienced rapid growth in the nineties; however, industry activity slowed 

considerably with the collapse of the telecommunications bubble. Telecom firms have reacted by cutting employees, reducing 

costs, and selling off portions of their firms. Most have continued their R&D efforts. 

3.2.4 Hardware 

The hardware sector consists of many different industries, which can be generally classified into three groups: building 

hardware, conventional hardware, and tooling hardware. 

Building hardware consists of a group of industries that manufacture metal building products, including fabricated structural 

metal, sheet metalwork, and architectural metalwork. This group of industries grew rapidly throughout the 1990's. The 

building products industry as a whole saw record sales in 1998 and again in 1999. Much of this growth is attributed to large 

highway projects funded by the Transportation Efficiency Act for the 21st Century. 

Conventional hardware includes products such as screws, industrial fasteners, and valves and hose fittings. The products 

produced in this industry are used in the production of manufactured goods. Trends in this industry, therefore, generally 

reflect trends in other manufacturing industries. One of the most important industries influencing conventional hardware is 

the auto industry. Hardware producers have experienced pressures from end users such as auto makers to reduce costs. The 

industry faces a continued trend of consolidation of firms and increasing global pressure from countries with low labor costs. 

Domestic producers of screws and industrial fasteners saw growth in the real value of shipments due to the strong U.S. 

economy in the late nineties. 

The tooling hardware sector also contains a variety of different industries that produce various types of tools for different 

uses. Because these industries also face continued globalization, many of them are impacted by changes in the global 

economy. The decline in Asian markets in 1998 and 1999 resulted in a sharp decline in the value of shipments for the 

machine tooling industries. Prior to the 1998 financial crisis, value of shipments were increasing annually. The market for 

the power-driven segment of hand tools has increased, however, despite troubled overseas markets. 

3.2.5 Household Equipment 

There are three general groups of industries included in the household equipment sector: household furniture, household 

appliances, and plumbing equipment. Generally speaking, factors that affect this sector are consistent across these three 

groups. Low unemployment and increased disposable income stimulated growth in each of these industries in the nineties. 

However, because purchases of household equipment are relatively expensive and discretionary, consumers cut back spending 

in the recent recession. All three household equipment industries face international competition, as imports account for a 

substantial share of domestic consumption. 

Metal furniture accounts for 20 percent of the household furniture industry. Metal components are increasingly being added 

to non-metal furniture. For example, there is a trend to increase the functionality of non-metal furniture by equipping 

recliners with heat and massage. This could increase the industry’s reliance on metal parts. The industry has integrated 

vertically, as large manufacturers have begun to open their own retail stores in an effort to differentiate their products. 

There are two groups of household appliance manufacturers. Major appliances such as washing machines and refrigerators 

are produced by relatively few firms. Smaller appliances are characterized by little product differentiation but considerable 

price competition and are manufactured by a larger number of companies. 

Finally, a significant characteristic of the plumbing equipment market is the extent of U.S. dependence on foreign imports. 

While the U.S. construction market has grown at a record pace in the past few years, increasing demand for plumbing 

equipment, much of the demand has been served by imports and this industry has a trade deficit. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

3.2.6 Instruments 

The instruments sector is characterized by a diverse array of technologically advanced products and intense global 

competition among many firms of varying sizes. The sector can be generally divided into industrial measuring and testing 

instruments, and medical instruments. 

In the industrial measuring industry, producers of laboratory instruments are typically integrated firms who have consolidated 

and reduced costs in response to pressures from medical and pharmaceutical customers. Producers of measuring devices are 

also facing pressures to consolidate. These firms have been hurt by low commodity prices during the past few years, which 

have led to reduced investment in measuring equipment by fuel and grain producers. Sales should rebound, however, if Asian 

economies and fuel prices continue to grow. Small companies still dominate the electronic test equipment industry, which is 

characterized by a high degree of product differentiation. Most of these firms are not large enough to export products. 

Sales for medical devices increased steadily throughout the 1990's, while employment remained relatively constant. The 

industry has historically been characterized by many small to mid-size firms and intense competition for technological 

innovation. Efforts to bring down health care costs is one of the primary challenges facing this industry. Pressure to reduce 

costs has reduced insurance companies’ willingness-to-pay for new equipment. As the population ages, however, demand for 

medical services and devices is expected to grow. The industry will likely continue to grow in the next few years, but at a 

slower pace than it has grown historically.. 

3.2.7 Iron and Steel 

The basic iron and steel industry is regulated under 40 CFR 420, and primary iron and steel works, blast furnaces and rolling 

mills are not affected by the MP&M rule. The MP&M rule will regulate facilities that perform MP&M operations or cold 

forming operations on steel wire, rod, bar, pipe, or tube. This subcategory does not include facilities that perform those 

operations on base materials other than steel, nor does it include wastewater from cold forming, electroplating or continuous 

hot dip coating of steel sheet, strip, or plates or wastewater from performing any hot steel forming operations. 

Events in the global steel industry in the past few years have had significant and possibly far reaching impacts on domestic 

producers. In 1998, the industry experienced a global steel crisis. This crisis was caused in part by the Asian financial crisis, 

which triggered a sharp decline in imports of steel by major steel importing countries of Asia. This led to a flood of steel 

imports into U.S., and U.S. steel imports rose 33 percent in 1998. The situation was made worse by global overcapacity 

largely derived from producers in Russia and Latin America. 

This flood of steel into the U.S. and Europe led to rapidly declining steel prices in both regions. Excess inventories that 

accrued during the surge of imports hurt domestic producers. The “unfair” trading prices resulted in over 20 nations taking 

formal trade protection actions such as import duties and price floors. The US Congress determined that foreign steel was 

being sold in the US at unfair prices, and reacted by enacting anti-dumping tariffs. The slowdown in the US economy has 

also negatively affected the steel industry. Most steel firms are being forced to focus on rationalizing capacity and cutting 

costs. 

3.2.8 Job Shops 

MP&M metal finishing job shops are defined as those facilities with more than 50 percent of their revenues coming from 

products not owned by the site. While there are specific SIC codes associated with some Metal Finishing Job Shops, they sell 

to a variety of markets and are not a market in and of themselves. 

3.2.9 Mobile Industrial Equipment 

Mobile industrial equipment includes a number of different industries that produce machinery for different purposes, 

including construction, farming, and mining. Growth in the construction equipment industry is typically tied to economic 

factors such as housing starts, employment, and consumer confidence. Shipments of construction equipment rose steadily 

during much of the 1990's. The 1998 Transportation Equity Act for the 21st Century was expected to stimulate further 

spending by federal, state, and local governments. However, the current recession has forced many industry buyers to cut 

back or cancel orders. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

The farm and mining machinery industries both have been suffering from low commodity prices. Both industries experienced 

growth in shipments throughout much of the 1990's, but were hit in 1999 by low prices. Farm equipment was hit hardest as 

the real value of shipments fell by 38 percent in 1999. Output is expected to continue to decrease until grain surpluses decline 

and agricultural prices rise. However, the consolidation of farms has also had a significant in impact on this industry. With 

the increase in farm size, there is growing dependence upon mechanization to farm more acres per farm. 

3.2.10 Motor Vehicle and Bus & Truck 

The major trend in the motor vehicle and bus and truck industries is the continual consolidation of firms into highly capital 

intensive globalized manufacturers. Motor vehicle manufacturers are no longer constrained within national boundaries, as 

mergers and joint ventures include some of the largest firms from different countries. Many foreign owned manufacturers 

have facilities located in the U.S., and relative production costs and exchange rates play a greater role in determining the 

location of production facilities than the national identity of parent companies. 

Manufacturers have increasingly standardized the design of motor vehicles and their parts. These changes have resulted in 

much less product differentiation among manufacturers, but also in greater product quality. However, greater product quality 

has resulted in a consistently sharp increase in price over the past three decades. This price increase may have reached its 

pinnacle in the mid-nineties, since prices declined in 1998 and 1999. Industry output for automobiles increased 1.3 percent 

between 1996 and 2000. Although the current recession has hurt car prices, manufacturers have used incentives such as zero 

percent financing to maintain sales volume. 

3.2.11 Office Machine 

The office machine sector experienced rapid growth in the nineties that reversed itself with the downturn in the economy. 

The industry experienced 7.8 percent growth in the real value of shipments between 1996 and 2000. While this growth was 

accomplished with only a 1.3 percent increase in total employment, production employment increased by 5.4 percent. The 

relative difference between total and production employment can be attributed to increasing reliance on the Internet for sales, 

thereby reducing the need for non-production sales staff. Despite this increase in production employment, the industry 

remained extremely capital intensive. The recent weakness of the US economy hit the office machine sector hard with 

business purchases of computers and computer accessories falling significantly. 

Firms in the office machine sector have undergone mergers and acquisitions to bring down costs in order to compete. Firms 

often rely on joint venturing agreements, and sometimes form alliances with past competitors to produce complementary 

components of new technologies. Consolidation also allows firms to diversify, providing a range of products such as PCs, 

software, and information technology to protect against the strong competition in the market for any one product. Firms have 

also increasingly outsourced production to electronics manufacturers more equipped to increase production and take 

advantage of economies of size, while the original firms utilize their resources for research and development of new 

technologies to stay competitive. 

Globalization is an important trend in this industry as machine components are produced in different countries. Despite the 

trend toward a globalized market, the U.S. has held a negative trade balance for over a decade. 

3.2.12 Ordnance 

The ordnance sector includes firms that manufacture small arms, including grenade launchers and heavy field machine guns; 

artillery, including naval, aircraft, anti-aircraft, tank, coast, and field artillery; and ammunition, including bullets, bombs, 

mines, torpedoes, grenades, depth charges, and chemical warfare projectiles. It does not include the chemical processing or 

manufacture of explosives. Overall, the industry has a high ratio of value added to total sales. 

The ordnance sector has contracted significantly since the end of the Cold War. Decreases in US government military 

spending have caused significant declines in ordnance production, leading to lower industry shipments and cutbacks in 

employment. Foreign customers, including foreign governments, buy over 80 percent of the ordnance manufactured in the 

US. Although shipments of military weaponry have declined, sales of small arms have increased in the US over the past few 

years. Recent military actions by the US will likely result in government weapons purchases that will benefit the industry. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

3.2.13 Precious Metals and Jewelry 

Domestic production in the precious metals and jewelry industry is dominated by many small firms with low capital intensity, 

mostly concentrated in the northeast US. It is influenced by trends in consumer behavior, the retail market, and global 

competition. Devaluation in the price of gold due to declining world prices has benefitted the industry because it reduces the 

cost of making jewelry. Increased disposable income fueled strong consumer spending on precious metals and costume 

jewelry in the nineties, but this trend has weakened with the recent economic downturn. 

Increases in spending have not always translated into gains for domestic producers. The lowering of tariffs has resulted in a 

steady increase in imports of costume jewelry, as labor-intensive production is often less expensive in developing countries. 

Domestic producers have also been hurt by the strong U.S. dollar, which makes U.S. exports more expensive. Another 

challenge comes from the retail market, which has put strong pressure on producers to bring down prices in order to compete. 

These challenges include consolidation of retailers, giving them greater purchasing power, increased Internet and television 

home shopping, and a decrease in the number of wholesalers. 

3.2.14 Printed Wiring Boards 

Printed wiring boards (also referred to as printed circuit boards) are the physical structures on which electronic components 

such as semiconductor and capacitors are mounted. Computers and comm unications are the largest uses for printed wiring 

boards. In addition, printed wiring boards are used in a wide array of other products, including toys, radios, television sets, 

electronic wiring in cars, guided-missile and airborne electronic equipment, biotechnology, medical devices, digital imaging 

equipment, and industrial control equipment. While some producers of PWBs produce them for their own use, most 

manufacturers are independent firms that sell PWBs to the open market. The majority of PWB manufacturers are small firms. 

The domestic PWB industry experienced considerable growth throughout the 1990's. Real industry output grew nine percent 

from 1996 to 2000. Growth was spurred by continual growth in end-use markets. In addition to the increased in value of 

shipments, U.S. firms saw a 5.6 percent increase in average hourly earnings and a 16.3 percent increase in capital 

expenditures over the same period. However, demand in the PC, telecommunications, and electronics sectors has 

weakened recently. In parallel, there is growing international competitive pressure for PWB makers to reduce production 

costs. Consequently, many of the larger PWB firms are looking to relocate offshore. 

3.2.15 Railroad 

Railroad service consists of both freight and passenger service. In the past few years, railroad companies have been focusing 

on improving the efficiency of their lines and services. There has been a continued trend toward consolidation of major 

freight railroads. Consequently, companies have reduced the number of lines and focused attention on increasing the capacity 

of fewer lines. Railroads have also begun to focus on guaranteeing deliveries at specific times, which will allow them to 

compete with the trucking industry. 

Since the 1980's railroad traffic increased by 50 percent, while the line network decreased by 39 percent. This was 

accomplished by increasing capital expenditures for equipment such as new locomotives with greater horsepower, installation 

of double tracks, and increases in the capacity of non-railroad owned freight cars. Consequently, freight service in the 

nineties saw the first increase in operating revenue since 1984, although this was coupled with sharp decreases in 

employment. Passenger service has undergone similar changes to increase efficiency by adding new locomotives and 

beginning a transition to high speed train service. Total industry output increased 7.6 percent per year from 1988 to 1996. 

Although transportation volume is sensitive to the generally poor macroeconomic situation, railways have succeeded in 

cutting costs to maintain earnings. 

3.2.16 Ships and Boats 

Ship manufacturing experienced continual declines throughout the 1990's. Despite efforts by the Federal Government to 

stimulate investment in converting the industry from production of military ships to merchant ships, the U.S. Navy remains 

the primary customer of shipbuilders. The U.S. Navy dramatically reduced its orders for new vessels since the end of the 

Cold War, and has decommissioned many ships and submarines. The Navy decreased its fleet by 208 ships from 1985 to 

1998. Although the Navy plans to add 66 new ships through construction and conversion from 2000 through 2004, this 

represents a decline of over 60 percent in the procurement of new ships since the 1980's. The ship building industry was 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

helped by the Oil Pollution Act of 1990, which required all oil tankers entering U.S. ports to have double hulls. General 

economic woes and instability in the Middle East are expected to hurt the ships and boats industry. 

This sector also manufactures recreational boats, with sales that reflect overall trends in recreational expenditures. The U.S. 

boat building business is the world’s leading supplier of recreational craft. Despite this, rapid growth in the market for 

smaller personal water craft (e.g., jet skis) has led to an increase in imports of boats. 

3.2.17 Stationary Industrial Equipment 

The stationary industrial equipment sector includes firms that manufacture machinery and machinery parts used for oil, paper,
 


and food production, printing and packaging, as well as heaters and air conditioners, electric generating equipment, and motor
 


generators. These industries also produce large metal-working machines used in making parts for other industries.
 


The industries supplying oil and gas production, paper production, and printing machinery were affected by similar global
 


factors, and consequently followed similar trends. Low petroleum prices affected oil production in 1998. Natural gas
 


production was influenced by the low oil prices, which put pressure on the gas industry to reduce costs in order to compete.
 


These factors led to a decline of 38 percent in real value of shipments for oil production equipment manufacturers in 1998 and
 


1999. The price of petroleum increased in 1999 and 2000 and machinery shipments rebounded by 9.2 percent. However,
 


natural gas prices fell in 2001, hurting the industry.
 


Paper manufacturing equipment has suffered from events overseas. Although the U.S. has seen a decline in the production of
 


paper throughout the latter half of the 1990's, the U.S. remains the largest producer of paper manufacturing machinery. The
 


industry therefore relies heavily on exports to sustain growth. With struggling economies overseas, the industry saw a decline
 


in value of shipments from 1996 to 2000. Printing machinery manufacturers realized strong growth during the first half of the
 


1990's due to increased demand for new digital presses, but a decline in exports resulted in slower growth for the later half of
 


the decade. Global events did not have such an impact on manufacturers of packaging machinery, as the U.S. is not only the
 


leading producer of this equipment but also its leading end-user.
 


A variety of industries manufacture equipment used to produce energy or to power equipment. Refrigeration, air
 


conditioning, and heating equipment sales tend to follow growth in housing starts and construction of new office buildings. A
 


number of factors contributed to strong growth in this industry throughout the 1990's including record housing starts, record
 


heat in the summer of 1999, replacement of chlorofluorocarbon (CFC) air conditioning units, and a large percentage of new
 


homes being built with central air conditioning. With 66 percent of the existing air conditioners containing CFC technology
 


still in operation, replacement of these machines provides an opportunity for growth in this industry in the future.
 


Manufacturers of turbines, transformers, and switchboards, all of which are used for the production of electricity, saw
 


considerable growth in the late 1990s as the domestic economy grew. This strength has been limited by the recent recession.
 


A number of advanced technologies have been developed to meet the demands of a deregulated industry. These new
 


technologies are capable of producing electricity from smaller facilities at competitive costs. Implementation of these
 


technologies is not expected to take place for a few years, however, until the effects of deregulation become clearer.
 


3.3 CHARACTERISTICS OF MP&M MANUFACTURING SECTORS 

The data in these analyses come primarily from the Annual Survey of Manufacturers and the Small Business Administration, 

although some data from the 1997 Census were used for important economic indicators that were not available in 1996. The 

multi-year analyses presented in this section cover a nine year period from 1988 to 1996, the base years for the original Phase 

1 and Phase 2 survey data. Although ideally data would have been presented for the ten year period from 1987 to 1996, OMB 

reclassified a number of 4-digit SIC industries in 1987. This made it difficult to compare SIC codes before and after this 

reclassification and resulted in incomplete data in the Annual Survey of Manufacturers for many SIC codes in 1987. Because 

the data were incomplete in 1987, 1988 was chosen as the first year of the time series. With the exception of data for nonmanufacturing sectors, single-year data focus on the year 1996, the base analysis year for the overall MP& M regulatory 

analysis. Because the Annual Survey of Manufacturers does not include data for non-manufacturing sectors, single-year data 

for these sectors are for 1997, the most recent year of the Economic Census. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

3.3.1 Domestic Production 

a. Output
 


The two most common measures of manufacturing output are value of shipments (VOS) and value added (VA).
 


Historical trends in these measures provide insight into the overall economic health of an industry. Value of shipments is the
 


sum of the receipts a manufacturer earns from the sale of its outputs. It is an indicator of the overall size of a market or the
 


size of a firm in relation to its market or competitors. Value added is the difference between the value of shipments and the
 


value of purchased non-labor inputs used to make the products sold. It is used to measure the value of production activity in a
 


particular industry. The ratio of VA to VOS is an indicator of the importance of the industry’s contribution to the total value
 


of the product. A ratio close to zero indicates that the value of the input materials is much more important than the value of 

industry processing. A ratio close to one indicates that industry processing is the primary source of value in the product. 

Table 3.4 presents Department of Commerce data on VOS and VA for the MP&M manufacturing sectors during the period
 


from 1988 to 1996. VOS for the entire MP&M manufacturing sector grew from 1.27 trillion dollars in 1988 to 1.51 trillion
 


dollars in 1996, for an average annual growth rate of 2.1 percent. VA for the entire industry grew at a slower annual rate of
 


1.5 percent, from 638 billion dollars to 720 billion dollars. In comparison, US GDP grew at 2.6 percent per year over the
 


same period.
 


Value added as a percent of value of shipments for the MP&M manufacturing industries as a whole was 48 percent in 1996.
 


This indicates that 48 percent of the value of their output was the result of MP&M processing and 52 percent was the cost of
 


purchased inputs. In general, MP&M processing is important to the value of MP&M output products.
 


Growth in the individual sectors was generally consistent with the overall trend in MP&M manufacturing of slow positive
 


growth. Fourteen of the nineteen sectors had positive growth in VOS, and thirteen had positive growth in VA. Railroad
 


equipment manufacturers enjoyed the largest average annual growth of 7.6 percent in VOS. Electronic equipment
 


experienced the next largest average growth, with annual growth in VOS averaging 5.1 percent. Only the aerospace and
 


ordnance industries experienced a large decline in VOS and VA over this period. Aerospace VOS declined 7.6 percent per
 


year and ordnance VOS declined 7.3 percent per year. Both decreases were attributable to cutbacks in government defense
 


spending at the end of the Cold War.
 


VA as a percent of VO S for the individual sectors varied substantially from the manufacturing average of 48 percent. The
 


ordnance sector had the highest ratio of VA to VOS, at 67.6 percent, and the instrument and printed wiring board sectors also
 


had high ratios. In these sectors, industry processing is the most important part of the value of the finished product. Sectors
 


with low ratios of VA to VOS included the iron and steel sector, railroad sector, bus and truck sector and especially the motor
 


vehicle sector, for which VA as a percent of VOS was equal to only 33.7 percent. The value of input materials was the most
 


important contributor to the value of products in these sectors.
 


b. Number of facilities and firms
 


The number of facilities and firms in an industry is an indicator of industry size and structure. Changes in the number of firms
 


and facilities can indicate whether or not the industry is experiencing growth, and changes in the ratio of facilities to firms can 

indicate whether an industry is becoming more integrated. 

This profile uses SUSB data to assess the number of firms and facilities in the MP&M manufacturing sector. The SUSB did 

not begin its survey until 1989, and it did not include firms in its survey until a year later. Thus, facilities data are presented 

in 1989 and firm data are presented in 1990. 

Table 3.5 shows the number of MP&M manufacturing facilities in 1989 and 1996 and the number of firms in 1990 and 1996. 

Overall, the number of firms grew 2.1 percent annually and the number of facilities grew 1.4 percent annually over this 

period. By 1996, there were 144,603 manufacturing firms and 153,354 facilities. The average number of facilities per firm 

was relatively constant, with only a minor decrease from 1.07 in 1990 to 1.06 in 1996. Most MP&M manufacturers are 

single-facility firms. 

Trends in the individual manufacturing sectors were generally consistent with overall trends in manufacturing. The aerospace 

industry was the only MP&M manufacturing sector to experience significant downsizing during this period, with firms and 

facilities decreasing annually by 4.1 and 4.2 percent, respectively. The iron and steel industry experienced a more modest 

decrease in number of firms and facilities. The number of firms and facilities in the printed wiring board sector grew the 

fastest, by a little over five percent annually. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.4: Real Value of Shipments and Value Added: MP&M Manufacturing Sectors (millions, 2001$) 

Sector 

Value of Industry Shipments Value Added by Manufacture 

1988 1996 

Average 

Annual 

Growth 

Rate 

1988 1996 

Average 

Annual 

Growth 

Rate 

Value Added as 

a % of Value of 

Shipments in 

1996 

Aerospace 35,991 19,111 -7.6% 24,167 10,645 -9.7% 55.7% 

Aircraft 101,554 88,897 -1.7% 51,692 48,204 -0.9% 54.2% 

Bus & Truck 9,843 14,362 4.8% 3,622 5,513 5.4% 38.4% 

Electronic Equipment 85,498 127,347 5.1% 48,862 67,071 4.0% 52.7% 

Hardware 152,597 180,756 2.1% 82,644 98,674 2.2% 54.6% 

Household Equipment 87,764 98,763 1.5% 42,595 45,551 0.8% 46.1% 

Instruments 118,322 136,377 1.8% 78,160 89,052 1.6% 65.3% 

Iron and Steel 19,396 19,963 0.4% 7,228 7,103 -0.2% 35.6% 

Job Shops 11,733 14,927 3.1% 6,967 8,307 2.2% 55.7% 

Mobile Industrial Equipment 45,150 56,159 2.8% 21,356 24,302 1.6% 43.3% 

Motor Vehicle 315,641 387,547 2.6% 107,025 130,627 2.5% 33.7% 

Office Machine 86,352 110,084 3.1% 43,008 43,849 0.2% 39.8% 

Ordnance 10,241 5,567 -7.3% 6,631 3,761 -6.8% 67.6% 

Other Metal Products 58,809 63,995 1.1% 36,039 37,431 0.5% 58.5% 

Precious Metals and Jewelry 10,790 9,242 -1.9% 5,018 4,403 -1.6% 47.6% 

Printed Wiring Boards 10,162 11,408 1.5% 5,927 6,997 2.1% 61.3% 

Railroad 4,195 7,533 7.6% 1,893 2,761 4.8% 36.7% 

Ships and Boats 18,802 16,666 -1.5% 10,086 8,424 -2.2% 50.5% 

Stationary Industrial Equipment 176,961 236,213 3.7% 97,388 125,443 3.2% 53.1% 

Total 1,359,801 1,604,916 2.1% 680,309 768,118 1.5% 47.9% 

US GDP 7,189,924 8,821,069 2.6% n/a n/a n/a n/a 

Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufacturers; Economagic 

Horizontal integration varied substantially across sectors. The railroad sector, with 1.41 facilities per firm in 1996, was the 

most horizontally integrated, but the iron and steel and aerospace sectors also had high numbers of facilities per firm. The 

precious metals and jewelry sector had nearly a one to one ratio between facilities and firms, indicating a very low level of 

horizontal integration. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.5: Number of Firms and Facilities: MP&M Manufacturing Sectors 

Sector 

Number of Firms Number of Facilities Facilities per 

Firm 

1990 1996 

Average 

Annual 

Growth 

Rate 

1989 1996 

Average 

Annual 

Growth 

Rate 

1990a 1996 

Aerospace 109 85 -4.1% 143 106 -4.2% 1.33 1.25 

Aircraft 1,428 1,486 0.7% 1,633 1,691 0.5% 1.16 1.14 

Bus & Truck 889 953 1.2% 1,016 1,040 0.3% 1.11 1.09 

Electronic Equipment 5,649 6,180 1.5% 6,396 6,693 0.7% 1.08 1.08 

Hardware 34,984 37,832 1.3% 37,861 40,044 0.8% 1.06 1.06 

Household Equipment 6,787 7,563 1.8% 7,914 8,303 0.7% 1.11 1.10 

Instruments 7,963 9,730 3.4% 8,959 10,552 2.4% 1.10 1.08 

Iron and Steel 597 583 -0.4% 784 770 -0.3% 1.30 1.32 

Job Shop 4,798 5,280 1.6% 5,104 5,549 1.2% 1.04 1.05 

Mobile Industrial 

Equipment 3,318 3,341 0.1% 3,606 3,591 -0.1% 1.07 1.07 

Motor Vehicle 4,991 6,044 3.2% 5,977 7,024 2.3% 1.17 1.16 

Office Machine 1,828 2,002 1.5% 2,050 2,087 0.3% 1.07 1.04 

Ordnance 340 421 3.6% 385 442 2.0% 1.09 1.05 

Other Metal Products 11,517 13,819 3.1% 12,069 14,198 2.3% 1.03 1.03 

Precious Metals and 

Jewelry 3,719 3,867 0.7% 3,870 3,892 0.1% 1.01 1.01 

Printed Wiring Boards 1,034 1,452 5.8% 1,046 1,530 5.6% 1.06 1.05 

Railroad 147 152 0.6% 180 215 2.6% 1.27 1.41 

Ships and Boats 2,511 3,195 4.1% 2,708 3,310 2.9% 1.05 1.04 

Stationary Industrial 

Equipment 35,231 40,618 2.4% 37,261 42,317 1.8% 1.04 1.04 

Total 127,840 144,603 2.1% 138,962 153,354 1.4% 1.07 1.06 

a Calculated using data from 1990 for facilities and firms. 

Source: Small Business Administration, Statistics of U.S. Businesses. 

c. Employment 

Employment is a measure of the level and trend of activity in an industry. While employment growth generally signals 

economic strength in an industry, strong productivity growth and scale economies can yield growth in revenues that exceeds 

growth in employment. Changing patterns of labor utilization relative to output are particularly important in understanding 

how regulatory requirements may translate into job losses both in aggregate and at the community level. This profile presents 

DOC data on employment for 1988 and 1996. 

Table 3.6 shows that employment in the MP&M manufacturing sectors as a whole decreased modestly between 1988 and 

1997. Over those years, total employment dropped from 7.98 million to 7.55 million, an average decline of 0.7 percent 

annually. To put this in perspective, VOS for the entire MP&M manufacturing sector grew about 2.1% annually over the 

same period of time, signaling that growth in output has been driven by increases in capital expenditures and labor 

productivity, not by increases in employment. 

Although total MP&M industry employment declined over the analysis period, not all sectors experienced employment 

declines. Employment grew or stayed constant in ten of the nineteen sectors. However, while a number of sectors evidenced 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

large percentage and absolute losses in employment, no sectors showed large percentage gains and only two showed large 

absolute gains in employment . Employment shrank by 11.6 percent annually in the aerospace sector, 9.1 percent in the 

ordnance sector, and 5.6 percent in the aircraft sector, due to cutbacks in defense spending following the Cold W ar. The 

greatest absolute decline occurred in the aircraft sector, which lost almost 220,000 jobs. The largest percentage increase in 

employment was in the railroad sector, which gained just 2.1 percent annually. The largest absolute increase in employment 

over the nine years was in the stationary industrial equipment sector, which gained 127,100 jobs. 

Table 3.6: Employment: MP&M Manufacturing Sectors 

Sector 

Number of Employees 

1988 1996 Average Annual 

Growth Rate 

Aerospace 223,700 81,000 -11.9% 

Aircraft 596,600 376,800 -5.6% 

Bus & Truck 63,900 67,700 0.7% 

Electronic Equipment 602,500 604,800 0.0% 

Hardware 1,246,200 1,307,600 0.6% 

Household Equipment 584,900 570,600 -0.3% 

Instruments 886,500 753,800 -2.0% 

Iron and Steel 65,500 67,900 0.5% 

Job Shops 123,300 129,200 0.6% 

Mobile Industrial Equipment 232,400 232,600 0.0% 

Motor Vehicle 928,000 974,000 0.6% 

Office Machine 329,800 259,100 -3.0% 

Ordnance 86,500 40,200 -9.1% 

Other Metal Products 368,100 361,400 -0.2% 

Precious Metals and Jewelry 87,100 65,800 -3.4% 

Printed Wiring Boards 80,900 88,300 1.1% 

Railroad 25,900 30,600 2.1% 

Ships and Boats 182,900 141,300 -3.2% 

Stationary Industrial Equipment 1,269,800 1,396,900 1.2% 

Total 7,984,500 7,549,600 -0.7% 

Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufacturers. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

d. Capital expenditures
 


Capital expenditures are an indicator of production characteristics and market structure. Capital expenditures are the amount
 


of money spent annually on capital, which includes equipment, machinery, vehicles, software, buildings, intellectual rights, or
 


any other permanent addition to a firm. Capital does not refer to input materials that are consumed in the course of 

production. New capital expenditures are needed to modernize, expand, and replace a firm’s existing production capacity to 

meet growing demand or to stay current with new regulations or changing technology. 

An industry with high capital stock compared to its employee payroll is considered capital intensive: its production relies 

more heavily on machinery, software, and other forms of capital than on labor. An industry with high capital requirements 

can have significant barriers to entry for new firms, making the market less competitive. 

Table 3.7 presents DOC data on new capital expenditures by MP&M manufacturing sector. 

Table 3.7: New Capital Expenditures: MP&M Manufacturing Sectors 

Sector 

Capital Expenditures 

(millions, 2001$) 

Capital Expenditures per Facility 

(2001$) 

1988 1996 Average Annual 

Growth Rate 1988/89 1996 Change from 

1988/89 to 1996 

Aerospace 1,310 522 -10.9% 9,160,839 4,924,528 -4,236,311 

Aircraft 3,015 2,156 -4.1% 1,846,295 1,274,985 -571,310 

Bus & Truck 161 213 3.6% 158,465 204,808 46,343 

Electronic Equipment 3,118 4,482 4.6% 487,492 669,655 182,163 

Hardware 3,517 5,624 6.0% 92,892 140,446 47,553 

Household Equipment 2,150 2,616 2.5% 271,670 315,067 43,396 

Instruments 4,002 4,832 2.4% 446,702 457,923 11,221 

Iron and Steel 420 623 5.0% 535,714 809,091 273,377 

Job Shops 353 772 10.3% 69,161 139,124 69,963 

Mobile Industrial Equipment 1,121 1,121 0.0% 310,871 312,169 1,299 

Motor Vehicle 5,697 12,840 10.7% 953,154 1,828,018 874,864 

Office Machine 3,044 3,109 0.3% 1,484,878 1,489,698 4,820 

Ordnance 196 91 -9.2% 509,091 205,882 -303,209 

Other Metal Products 1,768 1,999 1.5% 146,491 140,794 -5,697 

Precious Metals and Jewelry 93 156 6.7% 24,031 40,082 16,051 

Printed Wiring Boards 430 624 4.8% 411,090 407,843 -3,247 

Railroad 78 103 3.6% 433,333 479,070 45,736 

Ships and Boats 483 374 -3.1% 178,360 112,991 -65,369 

Stationary Industrial Equipment 4,333 7,222 6.6% 116,288 170,664 54,376 

Total 35,288 49,480 4.3% 253,940 322,652 68,712 

Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufacturers. 

In general, the MP &M manufacturing sector is relatively capital intensive. In 1988, manufacturing capital expenditures were 

38.3 billion dollars. They increased by 4.3 percent annually to reach a total yearly investment in capital of 49.5 billion dollars 

in 1996. Average yearly capital expenditures per firm increased from $254,000 in 1988 to $353,000 in 1996. 

For the most part, changes in capital investment from 1988 to 1996 in the individual manufacturing sectors followed the trend 

for the MP&M manufacturing sectors as a whole. Capital expenditures in the job shop and motor vehicle sectors grew at over 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

10% annually. The only sectors for which spending on new capital declined were aerospace, aircraft, ordnance, and ships and 

boats. 

There was large variation in capital expenditures across the MP&M sectors. A few industries stood out as being extremely 

capital intensive. Aerospace firms spent an average of 4.8 million dollars on capital per firm in 1996, and the aircraft, motor 

vehicle, and office machine sectors each spent more than one million dollars per firm in 1996. The precious metal and 

jewelry sector had the lowest levels of capital investment, with only $40,000 spent per firm in 1996. 

3.3.2 Industry/Market Structure 

A number of factors play an important role in determining market structure for an industry, including the barriers that firms 

face in entering and exiting the market, the degree to which firms in the market are vertically and horizontally integrated, and 

the extent to which markets have been globalized. The following sections discuss these factors. 

a. Facility size
 


Facility size is an indicator of economies of scale. The presence of many large facilities can indicate that there are advantages
 


to building on a larger scale, such as dividing labor more efficiently, utilizing equipment more effectively, or getting bulk
 


discounts. 

Table 3.8 shows 1997 Census data on the distribution of manufacturing facilities and VOS by employment size category and 

MP&M sector. The MP&M industry is characterized by a large number of small facilities. The Census data indicate that, in 

1997, 98.6 percent of all facilities in the MP&M industry employed less than 500 employees. Those facilities, however, 

accounted for only 59 percent of the total value of shipments from the manufacturing industries. The 1.4 percent of facilities 

with 500 or more employees generated 41 percent of the total VOS from the manufacturing industries. These large facilities 

are likely to enjoy substantial economies of scale. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.8: Number of Facilities and Value of Shipments by Employment Size Category: 

MP&M Manufacturing Sectors in 1997 

Sector 

Number of Facilities Value of Shipments (millions, 2001$) 

1 to 19 20 to 

99 

100 to 

499 

500 to 

2,499 

2,500 

or 

more 

1 to 19 20 to 99 100 to 

499 

500 to 

2,499 

2,500 or 

more 

Aerospace 33 23 20 13 10 42 991 15,993 185 2,916 

Aircraft 898 441 270 72 32 716 10,087 74,417 2,744 17,913 

Bus & Truck 658 335 154 18 1 675 8,013 573 2,366 3,357 

Electronic 

Equipment 

3,450 2,086 1,019 205 21 2,945 37,794 37,178 14,258 54,660 

Hardware 26,065 11,854 2,686 189 0 20,669 79,456 3 69,005 25,619 

Household 

Equipment 

4,958 2,274 1,110 191 11 3,745 40,843 7,314 13,747 37,067 

Instruments 6,741 2,667 1,103 253 20 5,592 44,850 21,168 17,124 52,680 

Iron and Steel 278 292 205 13 0 528 11,072 0 4,530 4,254 

Job Shop 3,701 1,654 199 6 0 2,103 5,610 0 7,273 343 

Mobile Industrial 

Equipment 

2,116 990 383 90 9 1,937 17,351 8,913 7,219 26,684 

Motor Vehicle 4,004 1,874 1,206 324 79 3,495 54,221 231,896 13,404 119,088 

Office Machine 1,408 485 218 73 21 1,553 16,551 59,499 4,842 35,440 

Ordnance 298 77 40 17 2 168 1,472 935 522 2,686 

Other Metal 

Products 

11,265 2,375 611 68 3 5,382 21,579 7,473 12,511 16,812 

Precious Metals 

and Jewelry 

3,250 480 100 12 0 1,777 3,436 0 2,864 1,666 

Printed Wiring 

Boards 

801 412 156 20 0 526 4,322 0 2,022 3,334 

Railroad 81 71 54 13 1 99 2,659 1,222 678 3,714 

Ships and Boats 3,755 469 179 25 6 1,314 5,714 6,414 2,036 2,404 

Stationary 

Industrial 

Equipment 

30,513 8,555 2,344 343 12 18,793 86,348 10,837 50,039 69,921 

Total 104,274 37,413 12,056 1,947 227 72,061 452,366 483,834 227,368 480,558 

Source: Department of Commerce, Bureau of the Census, Census of Manufacturers, 1997. 

Although the majority of MP&M industry facilities are small, the distribution of facilities by employment size category varies
 


substantially among the 19 MP&M sectors. The aerospace, aircraft, motor vehicle, and railroad sectors all had proportionally
 


high numbers of large facilities. The aerospace sector, in particular, had large economies of scale, with 23 percent of its
 


facilities employing 500 or more employees. The hardware, job shop, other metal products, precious metal, and ships and
 


boats sectors had proportionally large numbers of small facilities. At least 93 percent of facilities in each of these sectors had
 


less than 100 employees.
 


b. Firm size
 


This profile uses firm employment size as an indicator of market power and barriers to entry. If the largest firms in an
 


industry own disproportionately many facilities or control a large portion of industry output, then they may have significant
 


market power. These firms can use their large production capacities to control and exploit markets. The presence of many 

large firms in an industry can also indicate that there are barriers to entry into that industry, such as capital requirements or 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

economies of scale, that give existing firms in the industry a competitive advantage. EPA used 1996 SUSB data to assess the 

competitiveness of the MP&M manufacturing industries. 

Table 3.9 presents the distribution of manufacturing firms, facilities, and VOS by firm employment size and MP&M sector. 

Overall, most MP&M manufacturing firms were small, but the firms that were big owned many facilities and had 

disproportionately high receipts. In 1996, 138,492 firms, equal to 96 percent of manufacturers, had fewer than 500 

employees. These small businesses owned 92 percent of all facilities but had total sales of only 418.3 billion dollars, equal to 

28 percent of total estimated receipts. In 1996, 6,111 firms had 500 or more employees. These firms owned eight percent of 

all facilities but had estimated receipts of 1.08 trillion dollars, equal to 72 percent of the total for manufacturers. It is likely 

that there are significant economies of scale in the MP&M manufacturing industries. 

Although MP&M manufacturing firms tend to be small, firm size varies significantly among individual sectors. The 

aerospace, iron and job shops, and railroad sectors had proportionally high numbers of large facilities. In the aerospace 

sector, 50 percent of facilities were owned by firms with 500 or more employees, and 38 percent of firms had 500 or more 

employees. In contrast, over 98 percent of firms in the job shop, other metal products, precious metals, and ships and boats 

sectors had less than 500 employees. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.9: Number of Firms, Facilities, and Estimated Receipts by Firm Employment Size Category, 1996: 

MP&M Manufacturing Sectors 

Sector 

Firms Facilities Estimated Receipts 

(millions, 2001$) 

1 to 99 100 to 

499 

500 or 

more 1 to 99 100 to 

499 

500 or 

more 1 to 99 100 to 

499 

500 or 

more 

Aerospace 51 2 32 51 2 53 n/a n/a 19,029 

Aircraft 1,209 135 142 1,212 158 321 2,453 2,840 93,860 

Bus & Truck 805 92 56 810 107 123 2,269 2,638 6,702 

Electronic 

Equipment 4,936 681 563 4,977 786 930 12,156 17,353 81,615 

Hardware 34,162 2,345 1,325 34,398 2,968 2,678 66,557 42,561 61,295 

Household 

Equipment 6,408 665 490 6,455 791 1,057 12,799 17,412 66,409 

Instruments 8,273 727 730 8,320 842 1,390 17,248 16,243 96,894 

Iron and Steel 362 108 113 368 153 249 2,015 4,426 12,737 

Job Shops 4,945 240 95 5,001 338 210 7,157 3,487 3,097 

Mobile Industrial 

Equipment 2,875 263 203 2,898 319 374 6,668 6,321 32,129 

Motor Vehicle 4,950 614 480 4,987 724 1,313 11,314 21,376 366,635 

Office Machine 1,662 167 173 1,668 180 239 5,373 7,535 64,424 

Ordnance 358 25 38 358 28 56 329 453 4,213 

Other Metal 

Products 13,097 492 230 13,152 602 444 13,568 10,738 30,677 

Precious Metals and 

Jewelry 3,747 86 34 3,753 89 50 3,559 2,019 2,148 

Printed Wiring 

Boards 1,250 137 65 1,258 150 122 2,231 2,402 5,769 

Railroad 99 24 29 101 30 84 326 496 6,271 

Ships and Boats 3,003 137 55 3,012 165 133 2,699 2,954 11,501 

Stationary 

Industrial 

Equipment 

37,669 1,691 1,258 37,835 2,002 2,480 52,700 35,623 119,210 

Total 129,861 8,631 6,111 130,614 10,434 12,306 221,420 196,877 1,084,612 

Source: Small Business Administration, Statistics of U.S. Businesses, 1996. 

c. Foreign trade

 

This profile uses two measures of foreign competitiveness: export dependence and import penetration. Export
 


dependence is the share of value of shipments that is exported. Import penetration is the share of domestic consumption met
 


by imports. For both measures, a high value indicates a relatively high openness to foreign markets and global competition.
 


This openness has benefits, including providing domestic consumers with a wider selection of products and services at lower
 


prices, and allowing domestic producers to make profits in foreign markets. It can have costs, too, if imports to domestic
 


consumers are unreliable or if foreign competition drives down prices for domestic producers. This profile uses 1996 data 

from the Department of Commerce to illustrate trends in foreign trade. 

Table 3.10 shows that overall, the U.S. is an importer of MP&M manufactured goods, with net imports of 75.7 billion dollars 

in 1996. In general, MP&M industry sectors face global competition, as illustrated by the number of sectors that had both a 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

high export dependence and import penetration. For example, in the precious metals sector, roughly 77 percent of U.S. 

consumption was met by imports, while almost 23 percent of U.S. production was sold as exports. 

Although overall the US has a large trade deficit in MP&M manufactured goods and services, the US was a net exporter in six 

of the eighteen sectors for which balance of trade data was available. Eighty one percent of production in the ordnance sector 

and 67 percent of production in the aircraft sector was consumed overseas. The aircraft sector had the highest absolute net 

exports, valued at 27.26 billion dollars. A few sectors, especially aerospace, ships and boats, iron and steel, and bus and truck, 

were relatively closed to global competition, with low levels of imports and exports. Foreign imports had the highest relative 

importance in the precious metals, office machine, and household equipment sectors. The motor vehicle sector had the 

highest absolute net imports, valued at 63.12 billion dollars. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.10: Trade Statistics, 1996: MP&M Manufacturing Sectors 

Sector 

Value of 

Imports 

(millions, 

2001$) 

Value of 

Exports 

(millions, 

2001$) 

Value of 

Shipments 

(millions, 2001$) 

Implied 

Domestic 

Consumptiona 

Import 

Penetrationb 

Export 

Dependencec 

(a) (b) (c) (d) (e) (f) (g) 

Aerospace 143 143 19,111 19,112 0.7% 0.7% 

Aircraft 14,015 41,278 88,896 61,633 22.7% 67.0% 

Bus & Truck 410 436 14,362 14,335 2.9% 3.0% 

Electronic 

Equipment 

31,478 30,615 127,347 128,211 24.6% 23.9% 

Hardware 26,753 20,560 180,756 186,949 14.3% 11.0% 

Household 

Equipment 

40,697 16,809 98,762 122,650 33.2% 13.7% 

Instruments 18,990 31,462 136,376 123,904 15.3% 25.4% 

Iron and Steel 937 263 19,963 20,637 4.5% 1.3% 

Job Shopd n/a n/a 14,927 n/a n/a n/a 

Mobile Industrial 

Equipment 

10,775 16,634 56,159 50,300 21.4% 33.1% 

Motor Vehicle 124,203 61,015 387,546 450,735 27.6% 13.5% 

Office Machine 67,082 47,783 110,084 129,384 51.8% 36.9% 

Ordnance 647 2,792 5,566 3,421 18.9% 81.6% 

Other Metal 

Products 

25,282 11,243 63,996 78,035 32.4% 14.4% 

Precious Metals and 

Jewelry 

15,839 4,607 9,243 20,474 77.4% 22.5% 

Printed Circuit 

Boards 

2,667 1,947 11,408 12,127 22.0% 16.1% 

Railroad 1,208 773 7,533 7,969 15.2% 9.7% 

Ships and Boats 1,081 1,080 16,666 16,666 6.5% 6.5% 

Stationary Industrial 

Equipment 

38,809 55,835 236,213 219,187 17.7% 25.5% 

Totale 421,015 345,274 1,604,915 1,680,656 25.1% 20.5% 

a Implied domestic consumption based on value of shipments, imports, and exports [column d + column b - column c]. b Import penetration based on implied domestic consumption and imports [column b / column e]. 

Export dependence based on value of shipments and exports [column c / column d]. d As explained in the text, job shops include only two SICs specific to job shops, and not facilities in other SICs that may be operating 

as job shops. 

e Components may not sum to totals due to rounding. 

Source: Department of Commerce, Bureau of the Census. 

d. Establishment births and deaths

 

The number of firms starting up and closing each year reflects the competitiveness of an industry. Industries with high
 


numbers of these “births” and “deaths” relative to the total number of firms in the industry are likely to have low barriers to
 


entry or exit. These industries are likely to be competitive. Industries with low number of births and deaths are more likely to
 


have significant barriers to entry and exit, such as capital requirements or economies of scale, that make the industries less
 


competitive. As discussed in previous sections, firms in less competitive industries can manipulate prices to generate profits, 

while firms in more competitive industries have little control over prices. This profile presents SUSB data from 1989 to 

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c 
MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

1997 on establishment births and deaths. These data are only available by three digit SIC code, making it impossible to 

calculate sector specific birth and deaths rates. However, data for the MP&M industry as a whole are presented. 

The M P&M manufacturing sector has an annual birth rate of 8.1 percent and an annual death rate of 7.8 percent, indicating 

that in general the MP&M manufacturing sector is relatively competitive. Three digit SIC industry birth and death rates are 

much more variable, ranging from 4 percent to up to 15 percent. For a more complete discussion, along with the three digit 

SIC birth and death rates, see Appendix A. 

3.3.3 Financial Condition and Performance 

Operating margin is a measure of industry financial performance. Operating margin is defined as VOS less annual payroll 

and cost of materials, as a percent of VOS, and thus measures pre-tax operating profitability before capital- and financingrelated charges. Firms with higher operating margins have more cushion against operating losses as a consequence of 

fluctuating input prices, and thus are likely to be more stable. 

Table 3.11 presents DOC data on operating margins for each MP&M manufacturing industry for the years 1988 and 1996, as 

well as the change in operating margin between the two years. In 1996, the average operating margin for the MP&M sectors 

was 29.6 percent. This was a slight increase from 1988, when the average operating margin for the MP&M manufacturers 

was 28.0 percent. Ten MP&M manufacturing sectors experienced increases in their operating margins during this time 

period, while nine industries experienced decreases. 

Instruments, other metal products, and ordnance were the most profitable sectors, according to this measure, with operating 

margins around 40 percent. The iron and steel, motor vehicle, railroad, and ships and boats sectors had the lowest operating 

margins, all near 22 percent. The greatest increases in operating margin occurred in the aircraft, ordnance, and bus & truck 

industries, which all gained between five and six percent. The greatest decrease occurred in the aerospace industry, which 

lost 3.5 percent. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.11: Operating Margina: MP&M Manufacturing Sectors in 1988 and 1996 

Sector 1988 1996 Change in Operating 

Margin 

Aerospace 32.4% 28.9% -3.5% 

Aircraft 20.6% 26.7% 6.1% 

Bus & Truck 18.5% 24.4% 5.9% 

Electronic Equipment 32.0% 33.8% 1.8% 

Hardware 27.5% 29.7% 2.2% 

Household Equipment 29.7% 29.5% -0.2% 

Instruments 37.1% 41.1% 4.0% 

Iron and Steel 23.2% 22.9% -0.3% 

Job Shops 31.8% 30.8% -1.0% 

Mobile Industrial Equipment 27.9% 28.2% 0.3% 

Motor Vehicle 20.9% 22.4% 1.5% 

Office Machine 31.7% 30.2% -1.5% 

Ordnance 34.3% 39.6% 5.3% 

Other Metal Products 41.9% 40.4% -1.5% 

Precious Metals and Jewelry 27.9% 28.2% 0.3% 

Printed Wiring Boards 37.2% 36.8% -0.4% 

Railroad 22.4% 22.1% -0.3% 

Ships and Boats 23.2% 22.5% -0.7% 

Stationary Industrial Equipment 29.4% 31.5% 2.1% 

All MP&M Manufacturersb 28.0% 29.6% 1.6% 

a Operating Margin is calculated as (value of shipments - cost of materials - payroll)/value of shipments. b Weighted average by VOS. 

Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufacturers. 

3.4 CHARACTERISTICS OF MP&M NON-MANUFACTURING SECTORS 

Eleven of the 18 MP&M sectors include non-manufacturing industries. The non-manufacturing activities are defined by 50 

four-digit SIC codes: 26 transportation SIC codes, 18 service SIC codes, five retail trade SIC codes, and one wholesale trade 

SIC code. MP&M facilities may perform both manufacturing and non-manufacturing activities. 

The analyses presented in this section cover 1997 only, because the Census does not collect data annually for nonmanufacturing SICs as it does for manufacturers in the Annual Survey of Manufacturers. The profile is based on data from 

the 1997 Censuses of Transportation, Communications, and Utilities; Service Industries; Retail Trade; and Wholesale Trade. 

3.4.1 Domestic Production 

a. Output

 

This profile uses sales and receipts as a measure of output. The sum of the receipts a manufacturer earns from the sale of its
 


outputs	 is an indicator of the overall size of a market or the size of a firm in relation to its market or competitors. EPA used 

Department of Commerce data to assess sales and receipts for the MP&M non-manufacturing sectors. 

Table 3.12 shows sales and receipts by sector for MP&M non-manufacturers. The MP&M nonmanufacturing sector 

generated 1.25 trillion dollars in sales and receipts in 1997. Motor vehicle repair and maintenance, with sales and receipts of 

870 billion dollars, accounted for almost 70 percent of total sales and receipts. Bus and truck, with sales and receipts of 209 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

billion dollars, accounted for another 17 percent. These two vehicle sectors made up 87% of total non-manufacturing output. 

The smallest sector was precious metals and jewelry, which accounted for only 367 million dollars in sales and receipts. 

Table 3.12: Sales/Receipts: MP&M Non-Manufacturing Sectors in 1997 

(millions, 2001$) 

Sector Output a Share 

Aircraft 9,935.9 0.8% 

Bus & Truck 209,316.1 16.7% 

Household Equipment 2,848 0.2% 

Instruments 7,402 0.6% 

Motor Vehicle 870,451 69.6% 

Office Machine 30,930 2.5% 

Other Metal Products 22,041 1.8% 

Precious Metals and Jewelry 367 0.029% 

Railroadb 30,728 2.5% 

Ships and Boats 37,383 3.0% 

Stationary Industrial Equipment 29,747 2.4% 

Total 1,251,148 100.0% 

a Total sales for retail and wholesale trade, total receipts for service industries, total revenue for 

transportation. b Railroad sales/receipts is estimated from 1992 data. 

Source: Department of Commerce, Bureau of the Census, Census of Transportation, Census of 

Wholesale Trade, Census of Retail Trade, Census of Service Industries, 1997. 

b. Number of facilities and firms

 

The number of facilities and firms in an industry is an indicator of the size and structure of an industry. Increases and
 


decreases in the number of firms and facilities can indicate whether an industry is growing or shrinking, and changes in the
 


ratio of facilities and firms can indicate whether an industry is becoming more integrated and concentrated. This profile uses
 


SBA data to assess the number of facilities and firms in the non-manufacturing sector from 1989 to 1996. The SBA changed 

its survey to include firms in 1990, but data on the number of firms are not available from this source in 1989. 

Table 3.13 shows the number of facilities and firms in the MP&M non-manufacturing sectors in 1989/1990 and 1996, with 

average annual growth rates. The number of firms and facilities grew from 1989 to 1996 in all of the sectors. The average 

number of facilities per firm shrank slightly over this time period, from 1.13 to 1.11, due to the fact that the number of firms 

in the non-manufacturing sector grew at 4.5 percent per year while the number of facilities grew at only 3.6 percent per year. 

In general, most MP&M non-manufacturers are single facility firms. 

Although the number of facilities and firms increased for all of the sectors over this time period, not all industries grew at the 

same rate. The number of facilities in the other metal products sector grew at only 0.6 percent annually, and the number of 

facilities in the stationary industrial equipment and instruments sectors grew at 1.3 percent annually. In contrast, the number 

of facilities in the office machine sector grew by 20.2 percent annually and the number of firms in the office machine sector 

grew by 23.7 percent annually. 

Concentration varied across the sectors. Stationary industrial equipment was the most concentrated sector, with an average of 

1.45 facilities per firm in 1996. The other metal products, household equipment, and office machine sectors were the least 

concentrated sectors, with only 1.04, 1.06, and 1.07 facilities per firm, respectively. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.13: Number of Firms and Facilities: MP&M Non-Manufacturing Sectors 

Sector 

Number of Firms Number of Facilities Facilities per Firm 

1990 1996 

Average 

Annual 

Growth Rate 

1989 1996 

Average 

Annual 

Growth 

Rate 

1989/90 1996 

Aircraft 2,024 3,281 8.4% 2,463 4,062 7.4% 1.22 1.24 

Bus & Truck 74,719 113,840 7.3% 88,128 127,675 5.4% 1.18 1.12 

Household Equipment 3,234 3,706 2.3% 3,367 3,935 2.3% 1.04 1.06 

Instruments 7,214 7,444 0.5% 8,365 9,185 1.3% 1.16 1.23 

Motor Vehicle 183,986 213,355 2.5% 203,592 234,542 2.0% 1.11 1.10 

Office Machine 9,206 32,916 23.7% 9,714 35,150 20.2% 1.06 1.07 

Other Metal Products 32,865 36,290 1.7% 34,683 37,902 1.3% 1.06 1.04 

Precious Metals and Jewelry 1,379 1,625 2.8% 1,535 1,838 2.6% 1.11 1.13 

Railroada n/a n/a n/a n/a n/a n/a n/a n/a 

Ships and Boats 5,739 8,290 6.3% 6,561 9,262 5.0% 1.14 1.12 

Stationary Industrial Equipment 14,672 15,075 0.5% 20,880 21,791 0.6% 1.42 1.45 

Total 335,038 435,822 4.5% 379,288 485,342 3.6% 1.13 1.11 

a The railroad sector has only two non-manufacturing SIC codes, both of which were excluded from the 1997 Census. Thus no data on 

railroads is available. 

Source: Small Business Administration, Statistics of U.S. Businesses. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

c. Employment

 

Employment is a measure of the level and trend of activity in an industry. Payroll is a measure of the skill level of employees
 


and of their value to the production process. While employment growth is often correlated with economic strength in an
 


industry, strong productivity growth and scale economies can result in growth in revenues that could not be predicted from 

employment trends alone. Trends in labor utilization relative to output are important in understanding how regulatory 

requirements may translate into job losses both in aggregate and at the community level. 

Table 3.14 shows DOC data on employment and payroll for the non-manufacturing MP&M sectors in 1997. Total 

employment for the non-manufacturing sector was 5.99 million, and total payroll was $201 billion. Average yearly 

pay/employee was $33,610. 

The majority of total employment came from the motor vehicle and bus and truck sectors. The motor vehicle sector had 2.6 

million employees, and the bus and truck sector had 2.1 million employees. Together these two sectors accounted for over 78 

percent of total employment in the non-manufacturing sector. The precious metals and jewelry sector had the lowest 

employment, with only 5,599 employees. 

Workers in a few industries were highly compensated. The railroad sector paid its workers $58,851 per year, and the office 

machine sector paid $56,092 per year. On the other extreme, workers in the precious metals and jewelry sector earned only 

$20,121 per year. 

Table 3.14: Employment and Payroll, 1997: MP&M Non-Manufacturing Sectors 

Sector Employment Share Payroll 

(thousands, 2001$) Share Pay/Employee 

Aircraft 121,210 2.0% 3,286,985 1.6% 27,118 

Bus & Truck 2,106,432 35.1% 65,643,990 32.6% 31,164 

Household Equipment 25,455 0.4% 935,661 0.5% 36,757 

Instruments 76,970 1.3% 2,530,404 1.3% 32,875 

Motor Vehicle 2,622,049 43.7% 83,223,310 41.3% 31,740 

Office Machine 235,332 3.9% 13,200,240 6.6% 56,092 

Other Metal Products 226,069 3.8% 6,981,264 3.5% 30,881 

Precious Metals and Jewelry 5,599 0.1% 112,659 0.1% 20,121 

Railroad 197,421 3.3% 11,618,460 5.8% 58,851 

Ships and Boats 178,560 3.0% 7,221,006 3.6% 40,440 

Stationary Industrial Equipment 198,735 3.3% 6,701,350 3.3% 33,720 

Total 5,993,832 100.0% 201,455,328.90 100.0% 33,610.44 

Source: Department of Commerce, Census of Transportation, Census of Wholesale Trade, Census of Retail Trade, Census 

of Service Industries, 1997. 

3.4.2 Industry Structure and Competitiveness 

A number of factors play an important role in determining market structure for an industry, including the barriers that firms
 


face in entering and exiting the market, the degree to which firms in the market are vertically and horizontally integrated, and
 


the extent to which markets have been globalized. This profile shows facility size and firm size as measures of industry
 


structure and competitiveness in the MP&M non-manufacturing sector.
 


a. Facility size

 

Facility size is an indicator of economies of scale. The presence of many large facilities in an industry can indicate that there
 


are advantages to building on a larger scale, such as dividing labor more efficiently, utilizing equipment more effectively, or 

getting bulk discounts. EPA used data from the 1997 Census to assess facility size for manufacturing facilities. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Non-manufacturing facilities tend to be small. There were 255,602 non-manufacturing facilities, or 52.9 percent, that 

employed 4 employees or less. These facilities accounted for 7 percent of sales and receipts in the non-manufacturing 

MP &M sectors. Facilities with less than 20 employees accounted for 88 percent of all non-manufacturing facilities but 

generated only 24 percent of non-manufacturing revenues. Facilities with more than 100 employees employed less than one 

percent of total employees, but generated 17 percent of total revenues. Non-manufacturing MP&M facilities appear to 

experience significant economies of scale. 

Although the individual non-manufacturing sectors tended to have small facilities, there was some variation between sectors 

in facility size. The aircraft sector and the ships and boats sector had relatively large facilities, probably because these sectors 

are involved with large-scale transportation. For both sectors, 6.3 percent of facilities had more than 100 employees. In 

contrast, the other metal products and precious metals and jewelry sectors had mostly small facilities. Ninety four percent of 

facilities in the other metal products sector and 96 percent of facilities in the precious metals and jewelry sector had less than 

20 employees. 

Table 3.15 presents the number of facilities and total sales by facility employment size category for each category. 

Table 3.15: Number of Facilities and Sales/Receipts by Facility Employment Size Category: 

MP&M Non-Manufacturing Sectors in 1997 

Sector 

Number of Facilities Sales/Receipts (millions, $2001) 

0 to 4 5 to 9 10 to 19 20 to 99 100 or 

more 0 to 4 5 to 9 10 to 19 20 to 99 100 or 

more 

Aircraft 1,936 936 720 870 299 381 482 879 2,767 5,433 

Bus & Truck 67,959 24,548 19,355 21,294 3,573 15,924 16,044 24,189 75,663 81,036 

Household Equipment 1,886 735 456 305 37 358 411 551 1,072 457 

Instruments 5,535 1,737 988 711 131 1,017 936 1,064 2,473 1,917 

Motor Vehicle 126,505 58,372 28,184 23,021 2,548 41,209 45,438 62,030 388,395 180,200 

Office Machine 16,849 3,619 2,186 1,935 408 3,598 2,592 3,327 9,285 12,146 

Other Metal Products 21,564 7,585 3,813 2,136 138 3,810 3,856 4,444 7,178 2,118 

Precious Metals and 

Jewelry 

790 215 88 41 2 109 81 70 88 19 

Railroada n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 

Ships and Boats 2,605 930 848 1,046 366 2,578 1,580 2,161 9,535 19,380 

Stationary Industrial 

Equipment 

9,974 7,601 3,601 2,084 134 3,183 5,487 6,000 9,321 3,189 

Total 255,602 106,277 60,238 53,443 7,635 72,168 76,907 104,714 505,778 305,894 

a The non-manufacturing railroad sector is comprised of two SIC codes, both of which were excluded from the 1997 Census. 

Source: Department of Commerce, Bureau of the Census, Census of Transportation, Census of Wholesale Trade, Census of Retail 

Trade, Census of Service Industries, 1997. 

b. Firm size

 

This profile uses firm employment size as an indicator of market power and barriers to entry. The distribution of facilities and
 


output by firm size can indicate that the firms in an industry have market power. If the largest firms own disproportionately
 


many facilities, in which case they are considered horizontally integrated, or if the largest firms control a large portion of
 


industry output, then they may have significant market power. These firms can use their large capacities to control and
 


exploit markets. The presence of many large firms in an industry can also indicate that there are barriers to entry into that 

industry, such as capital requirements or economies of scale, that give existing firms in the industry a competitive advantage. 

Table 3.16 presents SUSB data on numbers of firms and facilities with estimated receipts by firm employment size category 

in 1996 for MP&M non-manufacturers. In general, although the majority of MP&M non-manufacturing firms were small, the 

larger firms owned many facilities and had disproportionately large market shares. The vast majority of non-manufacturing 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

firms – 427,173 firms or about 98 percent of non-manufacturers – employed fewer than 100 employees. However, these firms 

owned only 90 percent of all facilities and earned 610 billion dollars, only 58 percent of all revenues. The 2,338 firms with 

500 or more employees, equal to 0.54 percent of all non-manufacturers, owned 6.5 percent of all facilities and generated 207 

billion dollars, equal to 19.8 percent of total revenue. 

Firm size in the individual MP&M non-manufacturing sectors is relatively similar to the trends in the non-manufacturing 

sector as a whole. At least 94 percent of the firms in every sector had less than 100 employees. Although firm size varies 

little by sector, there were larger variations in receipts by firm size. The aircraft, instruments, and ships and boats sectors 

each had a small percentage of firms that controlled a large share of the market. In the aircraft sector, the largest 2.35 percent 

of firms generated 60.4 percent of total revenues. In the instruments sector, the largest 1.2 percent of firms generated 50.2 

percent of total revenues. In the ships and boats sector, the largest 2.6 percent of firms generated 57.4 percent of total 

revenues. 

Table 3.16: Number of Firms, Facilities, and Estimated Receipts by Firm Employment Size Category, 1996: 

MP&M Non-Manufacturing Sectors 

Sector 

Firms Facilities Estimated Receipts (millions, 

2001$) 

1 to 99 100 to 

499 

500 or 

more 1 to 99 100 to 

499 

500 or 

more 1 to 99 100 to 

499 

500 or 

more 

Aircraft 3,124 80 77 3,189 139 734 2,717 1,264 6,071 

Bus & Truck 111,038 2,001 801 112,751 4,334 10,590 79,331 23,943 66,113 

Household Equipment 3,669 19 18 3,700 23 212 2,032 275 873 

Instruments 7,277 76 91 7,536 206 1,443 3,119 562 3,715 

Motor Vehicle 209,814 3,010 531 216,707 7,119 10,716 465,989 186,083 87,113 

Office Machine 32,428 290 198 32,745 759 1,646 14,787 4,800 10,565 

Other Metal Products 35,788 284 218 36,205 567 1,130 16,749 2,308 4,610 

Precious Metals and Jewelry 1,615 6 4 1,661 105 72 269 0 0 

Railroad n/a n/a n/a n/a n/a n/a n/a n/a n/a 

Ships and Boats 7,833 243 214 8,000 519 743 9,087 6,122 20,493 

Stationary Industrial Equipment 14,587 302 186 16,331 1,359 4,101 15,422 4,606 7,739 

Total 427,173 6,311 2,338 438,825 15,130 31,387 609,502 229,963 207,294 

a The non-manufacturing railroad sector is comprised of two SIC codes, both of which were excluded from the 1997 Census. 

Source: Small Business Administration, Statistics of U.S. Businesses. 

3.5 CHARACTERISTICS OF ALL MP&M SECTORS 

This section presents additional market structure data for the MP&M industry as a whole. It includes eight-firm concentration 

data and risk-normalized return on assets (ROA) data as measures of industry competitiveness. 

3.5.1 Eight-firm Concentration Ratio 

The eight-firm concentration ratio (8-firm CR) is a measure of the degree to which the largest firms in an industry have 

market power. It is defined as the percentage of the value of total industry shipments that is produced by the top eight firms 

of a given industry. In general, an industry with a high 8-firm CR are likely to have larger entry and exit barriers and to be 

less competitive. Firms in this kind of industry have less incentive to compete and more ability to manipulate prices to 

increase their profits. It is more difficult for firms in a competitive, less concentrated industry to manipulate prices. This 

profile presents 8-firm CR data from the 1992 Census. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.17 shows the 8-firm CR for each sector in 1992. The aerospace and aircraft sectors were particularly concentrated, 

with the largest eight firms in each sector producing 92 percent and 85 percent of industry shipments, respectively. The motor 

vehicle, ordnance, and railroad sectors were also relatively concentrated. The job shop and hardware industries were the least 

concentrated, with only 19 percent and 25 percent of output, respectively, being produced by the eight largest firms. 

Table 3.17: ght-firm Concentration Ratio, 1992 

Sector 

8-firm Concentration Ratio 

Value Ranka 

Aerospace 92.29 19 

Aircraft 85.3 18 

Bus & Truck 42.51 7 

Electronic Equipment 47.27 9 

Hardware 24.52 2 

Household Equipment 54.22 10 

Instruments 44.2 8 

Iron and Steel 41.87 6 

Job Shop 19.26 1 

Mobile Industrial Equipment 58.56 13 

Motor Vehicle 77.30 17 

Office Machine 61.38 14 

Ordnance 76.90 16 

Other Metal Products 54.27 11 

Precious Metals and Jewelry 35.0 4 

Printed Circuit Boards 35.0 3 

Railroad 71.00 15 

Ships and Boats 58.20 12 

Stationary Industrial Equipment 41.16 5 

Ei 

a Rank is a comparison within the MP&M manufacturing sectors only. A rank of 1 

indicates the lowest level of concentration. 

Source: Department of Commerce, Bureau of the Census. 

3.5.2 Risk Normalized Return on Assets 

Firms’ abilities to enter and exit markets determine, in part, the competitiveness of an industry. If significant barriers to entry 

exist, potential entrants may be dissuaded and existing firms may enjoy market power. If few barriers to entry exist, existing 

firms are more likely to face competition for market share via price and other competitive tactics. Some important entry 

barriers for the MP &M industry are large capital requirements, economies of scale, and brand name recognition. Although 

data on barriers to entry are limited, the available data show that market power exists in some sectors. 

EPA used the risk normalized return on assets as an indicator of the existence of entry or exit barriers for each industry 3

. A 

firm’s return on assets is the profit the firm earns from investing in assets. Normally, firms in riskier industries tend to have 

higher ROA’s. However, barriers to entry or exit can allow firms to achieve higher ROA’s than would be predicted from their 

3 The risk normalized ROA only assigns MP&M industry sectors relative rankings and does not imply that they face high 

or low barriers to competition in absolute terms. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

risk level. The risk normalized return on assets measures the additional profit that firms earn above and beyond what their 

risk level predicts. EPA used data from Marketguide.com to calculate a risk normalized ROA. The agency calculated risk 

normalized ROA by dividing each firm’s ROA by its asset beta (a measure of the relative riskiness of the firm’s common 

stock) and averaging over the five-year period from 1996 to 2000. 

The electronic equipment, printed circuit board, and office machine industries had the lowest risk normalized ROA’s, 

indicating relatively weaker barriers to entry or exit for these industries. The instrument, other metal products, mobile 

industrial equipment, and motor vehicle industries had the highest ROA’s. These industries are likely to have significant 

barriers to entry and exit. 

Table 3.18 presents the average risk normalized return on assets for the period from 1996 to 2001, based on data from 

Marketguide.com. 

Table 3.18: Average Risk Normalized Return on Assets, 1996 to 2001 

Sector 

Risk-Normalized ROA (%) 

Value Rank 

Aerospace 13.19 8 

Aircraft 16.15 13 

Bus & Truck 12.31 7 

Electronic Equipment 7.21 1 

Hardware 17.18 15 

Household Equipment 12.02 5 

Instruments 19.64 18 

Iron and Steel 11.38 4 

Job Shop 13.44 9 

Mobile Industrial Equipment 18.13 17 

Motor Vehicle 18.10 16 

Office Machine 9.58 3 

Ordnance 12.30 6 

Other Metal Products 26.60 19 

Precious Metals and Jewelry 14.43 10 

Printed Circuit Boards 7.50 2 

Railroad 14.62 11 

Ships and Boats 16.11 12 

Stationary Industrial Equipment 16.78 14 

Source: www.marketguide.com 

3.6 CHARACTERISTICS OF MP&M FACILITIES 

This section uses survey data to characterize MP&M facilities. It includes data on facility revenue sources, discharge type, 

small business status, market type, and financial performance. These data are organized according to MP&M regulation 

subcategories based on unit operations performed and the nature of the waste generated. EPA determined that a basis exists 

for dividing the MP&M category into the following subcategories: General Metals, Non-Chromium Anodizing, Metal 

Finishing Job Shops, Printed Wiring Boards, Steel Forming and Finishing, Oily Wastes, Railroad Line Maintenance, and 

Shipbuilding Dry Dock. EPA did not generally define subcategories in terms of industrial sectors because many facilities 

perform operations covered by multiple sectors and, as a result, the industrial sectors are too broad for subcategorization. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.19 shows the national number of MP&M facilities that sell products to different combinations of sectors. The table 

shows that many MP&M facilities operate in multiple market sectors. Almost every combination of sectors shows overlap, 

and some MP&M facilities report revenues from three or more sectors. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of 

Table 3.19: Overlap of Sectors 

Sector 

Aerospace 

Aircraft 

Bus and Truck 

Electronic Equipment 

Hardware 

Household Equipment 

Instrument 

Mobile Industrial Equipment 

Motor Vehicle 

Office Machine 

Ordnance 

Other Metal Products 

Precious Non-Precious Metals 

Printed Circuit Boards 

Railroad 

Aerospace 1,828 

Aircraft 0 2,350 Bus and Truck 129 169 5,574 

Electronic Equipment 1,327 1,318 824 4,073 

Hardware 345 399 914 1,129 7,075 Household Equipment 289 317 477 898 1,600 2,635 

Instrument 1,046 1,126 398 1,680 678 610 4,965 

Mobile Industrial Equipment 47 116 1,511 704 738 417 404 2,467 Motor Vehicle 157 220 1,790 619 823 678 524 1,089 13,853 

Office Machine 265 349 198 622 515 477 356 159 223 1,088 Ordnance 132 119 52 204 86 77 202 80 153 89 481 

Other Metal Products 289 321 457 850 1,450 1,393 475 438 695 329 36 5,359 

Precious and NonPrecious Metals 47 47 0 36 47 24 47 12 36 36 0 92 1,651 

Printed Circuit Boards 160 164 0 164 160 160 4 0 0 375 0 160 0 1,229 Railroad 16 61 95 86 143 67 69 124 154 91 58 81 12 26 1,132 

Ship and Boat 102 0 237 146 191 156 104 138 245 138 25 78 12 0 48 

Stationary Industrial Equipment 

1,169 1,255 714 1,818 1,151 687 1,293 688 530 486 130 469 39 164 109 

Unknown 

Source: U.S. EPA analysis. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

The remainder of this profile focuses on MP&M industry facilities that discharge effluent. Out of a total population of 

638,696 MP&M industry establishments reported in the Statistics of U.S. Businesses for 1996, approximately seven percent, 

or 43,858 facilities, are effluent dischargers as identified by the MP&M surveys. 

Figure 3.2 shows the breakdown of MP &M facilities by discharge type. Of the effluent dischargers, 41,119 (94 percent) are 

indirect dischargers, meaning that they discharge into a sewer or a POTW, and 2,699 (6 percent) are direct dischargers that 

discharge directly into a surface water body. The remaining 40 facilities are both direct and indirect dischargers. 

Figure 3.2: Facilities by Discharge Type 

Source: U.S. EPA analysis. 

Figure 3.3 shows facilities by revenue source. Local governments or municipalities operate 3,785 facilities (9 percent). The 

remaining 40,073 facilities are privately owned. Of these, 17,428 facilities (40 percent) are rebuilding and maintenance 

facilities and 20,172 facilities (46 percent) are manufacturing facilities. 

Figure 3.3: Facilities by Revenue Source 

Source: U.S. EPA analysis. 

Figure 3.4 shows facilities by small entity status. Small Business Administration (SBA) thresholds were used to estimate the 

number of facilities that are likely to be owned by small businesses, as defined by the SBA. Using the methodology detailed in 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

the Small Entity Impact Analysis (see Chapter 10), EPA determined that 32,179 facilities (73 percent) are owned by small or 

potentially small entities. 

Figure 3.4: Facilities by Small Entity Status 

Source: U.S. EPA analysis. 

Figure 3.5 indicates that MP&M facilities derive approximately 22 percent of their revenues from export sales. Almost 78 

percent of MP&M revenues come from domestic non-government sources. Government purchases account for a very small 

share of MP&M revenues overall. 

Figure 3.5: 1996 Facility Revenues by Market Type (billions, 2001$) 

Export data were not available for Iron and Steel surveys. 

Source: U.S. EPA analysis. 

To characterize baseline financial performance across regulation subcategories, EPA used Pre-Tax Return on Assets 

(PTRA) as a measure of industry profitability. PTRA measures the return, before tax, to total capital that company 

management achieves from its deployed capital assets. Unlike the ROA measure noted above in section 3.5.2, the PTRA 

reported in this discussion is not adjusted for risk. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Table 3.20 shows that the printed wiring board subcategory has the highest median PTRA (13.4 percent ) of all the 

subcategories. The shipbuilding drydock subcategory has the lowest median PTRA (2.5 percent). The median PTRA for all of 

the MP&M facilities is 11.1 percent. 

Table 3.20: Financial Performance 

Subcategory Median Pre-Tax Return on Assets (PTRA) 

Shipbuilding Drydock 2.5% 

General Metals 11.5% 

Steel Forming & Finishing 9.1% 

Metal Finishing Job Shops 9.2% 

Non-Chromium Anodizer 9.0% 

Oily Wastes 9.6% 

Printed Wiring Boards 13.4% 

Railroad Line Maintenancea n/a 

a PTRA data was not available for railroad line maintenance because these facilities were treated 

as cost-centers in the survey analysis. 

Source: U.S. EPA analysis. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

GLOSSARY 

capital expenditures: expenditures for permanent additions and major alterations to facilities and equipment, as well as 

replacements and additions to capacity, which are ordinarily depreciated. Reported capital expenditures include work done on 

contract and expenditures for assets leased from other concerns through capital leases. Expenditures for land and cost of 

maintenance and repairs charged as current operating expenses are excluded 

concentration ratio: the percentage of output from a given industry that is produced by the largest firms in that industry. 

For example, the eight firm concentration ratio measures the percentage of output that is produced by the eight largest firms in 

an industry. The concentration ratio is a measure of industry competitiveness. 

employment: total number of full-time equivalent employees, including production workers and non-production workers. 

export dependence: the share of shipments by domestic producers that is exported; calculated by dividing the value of 

exports by the value of domestic shipments. 

import penetration: the share of all consumption in the U.S. that is provided by imports; calculated by dividing imports by 

reported or apparent domestic consumption (the latter calculated as domestic value of shipments minus exports plus imports). 

manufacturing: series of unit operations necessary to produce metal products; generally performed in a production 

environment. 

North American Industry Classification System: classification system adopted beginning in 1997 to replace SIC 

codes. NAICS codes will be used throughout North American and allow for greater comparability with the International 

Standard Industrial Classification System (ISIC), which is developed and maintained by the United Nations. The new system 

also better reflects the structure of today’s economy, including the growth of the service sectors and new technologies. 

nominal values: dollar values expressed in current dollars. 

operating margin: measure of the relationship between input costs and the value of production, as an indicator of financial 

performance and condition. Everything else being equal, industries and firms with lower operating margins will generally have 

less flexibility to absorb the costs associated with a regulation than those with higher operating margins. Operating margins 

were calculated in this profile by subtracting the cost of materials and total payroll from the value of shipments. Operating 

margin is only an approximate measure of profitability, since it does not consider capital costs and other costs. It is used to 

examine trends in revenues compared with production costs within an industry; it should not be used for cross-industry 

comparisons of financial performance. 

pre-tax return on assets (PTRA): the ratio of cash operating income (net income plus depreciation) to the book value of 

total assets. This ratio is a measure of facility profitability. 

producer price index (PPI): a family of indexes that measures the average change over time in selling prices received by 

domestic producers of goods and services (Bureau of Labor Statistics, PPI Overview). Used in this profile to convert nominal 

values into real dollar values. 

real values: nominal values normalized using a price index to express values in a single year’s dollars. Removes the effects 

of price inflation when evaluating trends in dollar measures. 

rebuilding/maintenance: unit operations necessary to disassemble used metal products into components, replace the 

components or subassemblies or restore them to original function, and reassemble the metal product. These operations are 

intended to keep metal products in operating condition and can be performed in either a production or a non-production 

environment. 

return on assets: the profit the firm earns from investing in assets. Generally firms in riskier industries have higher returns 

on assets. A risk normalized return on assets (RNRO A) measures the additional profit that firms earn above and beyond what 

their risk level predicts. The RNROA is a measure of industry competitiveness. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

Standard Industrial Classification: classification system used for all establishment-based Federal economic statistics 

classified by industry. Each establishment is assigned a 4-digit SIC code based on its principal product, or service. Last 

revised in 1987 and currently being replaced by the NAICS. 

value added: measure of manufacturing activity, derived by subtracting the cost of purchased inputs (materials, supplies, 

containers, fuel, purchased electricity, contract work, and contract labor) from the value of shipments (products manufactured 

plus receipts for services rendered), and adjusted by the addition of value added by merchandising operations (i.e., the 

difference between the sales value and the cost of merchandise sold without further manufacture, processing, or assembly) plus 

the net change in finished goods and work-in-process between the beginning-and end-of-year inventories. Value added avoids 

the duplication in value of shipments as a measure of economic activity that results from the use of products of some 

establishments as materials by others. Value added is considered to be the best value measure available for comparing the 

relative economic importance of manufacturing among industries and geographic areas. 

value of shipments: net selling values of all products shipped as well as miscellaneous receipts. Includes all items made 

by or for an establishment from materials owned by it, whether sold, transferred to other plants of the same company, or 

shipped on consignment. Value of shipments is a measure of the dollar value of production, and is often used as a proxy for 

revenues. This profile uses value of shipments to indicate the size of a market and how the size differs from year to year, and 

to calculate operating margins. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP&M Industry Sectors 

ACRONYMS 

NAICS: North American Industry Classification System
 


PPI: producer price index
 


PTRA: pre-tax return on assets
 


ROA: return on assets
 


SIC: Standard Industrial Classification
 


VA: value added
 


VOS: value of shipments
 


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Marketguide.com. 1992. Risk Normalized Return on Assets. http://www.marketguide.com. 

U.S. Bureau of Labor Statistics. 2000. Producer Price Index. 

U.S. Department of Commerce. 1992. Bureau of the Census. Census of Manufacturers, Census of Transportation, Census of 

Wholesale Trade, Census of Retail Trade, Census of Service Industries. 

U.S. Department of Commerce. 1996. Bureau of the Census. Annual Survey of Manufacturers. 

U.S. Department of Commerce. 2000. Bureau of the Census. Foreign Trade Data. 

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Sector Notebook Project. EPA 310-R-95-009. http://es.epa.gov/oeca/sector/index.html 

U.S. Environmental Protection Agency. 1995e. Printed Wiring Board Industry and Use Cluster Profile. Design for the 

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U.S. Environmental Protection Agency. 1997. Profile of the Shipbuilding and Repair Industry. EPA Office of Compliance 

Sector Notebook Project. EPA 310-R-97-008. http://es.epa.gov/oeca/sector/index.html 

U.S. Environmental Protection Agency. 1998. Profile of the Aerospace Industry. EPA Office of Compliance Sector 

Notebook Project. EPA 310-R-98-001. http://es.epa.gov/oeca/sector/index.html 

U.S. Small Business Administration. Statistics of U.S. Businesses. http://www.sba.gov/advo/stats/int_data.html 

Value Line Investment Survey. Industry Reports. Value Line Publishing, Inc: December 2001. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

Chapter 4: Regulatory Options
 


INTRODUCTION 

The preamble for the final rule describes the regulatory 

options considered by EPA for the final MP&M effluent 

guidelines. This chapter provides a brief summary of the 

subcategories and the regulatory options. 

4.1 SUBCATEGORIZATION 

EPA may divide a point source category into subcategories 

to address variations in products, raw materials, processes, 

CHAPTER CONTENTS 

4.1 orization ................. ......... 4-1 

4.2 y Options ................. ....... 4-3 

4.3 T Options for Direct Dischargers ........ 4-3 

4.4 or Indirect Dischargers .......... 4-3 

4.5 NS Options for New Sources ....... 4-4 

4.6 Summary of the Final Rule and Regulatory 

Alternatives ................. ............. 4-4 

Glossary ................. ................. ... 4-5 

Acronyms ................. ................. .. 4-6 

Subcateg 

Technolog 

BPT/BA 

PSES Options f 

NSPS and PS 

and other factors that result in distinctly different effluent characteristics. Defining subcategories makes it possible to 

establish effluent limitations that take into account technological achievability and economic impacts unique to each 

subcategory. EPA considered the following factors in defining MP&M subcategories: 

� unit operation, � nature of the waste generated,
 

� activity, � econo mic impacts,
 

� raw materials, � treatment costs,
 

� products, � total energy requirem ents,
 

� size of site, � air pollution control method s,
 

� location, � solid waste generation and disposal, and
 

� age, � publicly-owned treatment work (POTW)
 

burd en. 

In a way similar to the proposed rule, EPA established subcategories for the final MP &M rule based on unit operations 

performed. The subcategories are defined in part based on the type of wastewater that facilities discharge, including: 

facilities that discharge wastewaters with high metals content, with or without oil and grease (O&G); and 

� facilities that discharge wastewaters containing mainly O&G, with limited metals and other associated organic 

constituents. 

The subcategories identified by EPA in each group are: 

Metal-bearing (with or without O&G): 

� General Metals, 

� Metal Finishing Job Shops, 

� Non-Chromium Anodizing, 

� Printed Wiring Board, 

� Steel Forming & Finishing; and 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

Oil-bearing only: 

� Oily Wastes, 

� Railroad Line Maintenance, and 

� Shipbuilding Dry Docks. 

For the final rule, EPA is establishing limitations and standards only for direct dischargers in the Oily Wastes subcategory. 

The other subcategories were considered at proposal and for some of the alternative regulatory options but are not further 

regulated under the final rule. Section VI.B of the preamble accompanying the final rule describes the basis for defining these 

subcategories. The following are brief summaries of each subcategory: 

General Metals: The General Metals subcategory includes facilities that perform operations that generate metal-bearing 

wastewater.1 At a minimum, wastewater at these sites requires metals removal and may also require the preliminary treatment 

steps of oil/water separation, chromium reduction, and cyanide destruction. For example, wastewater generated from most 

manufacturing operations and heavy rebuilding operations (e.g., aircraft/aerospace, bus/truck, railroad, ship, industrial 

equipment) would be regulated under the General Metals subcategory as well as sites performing surface finishing operations 

at a captive shop (i.e., not a metal finishing job shop) including continuous electroplating as defined in today’s rule. 

Metal Finishing Job Shops: These facilities must perform one or more of the six operations regulated by the existing Metal 

Finishing (40 CFR 433) and Electroplating (40 CFR 413) effluent guidelines, and must meet the definition of a job shop. 

The six metal finishing operations are electroplating, electroless plating, anodizing, coating, chemical etching and milling, and 

printed circuit board manufacture. A job shop is a facility that owns no more than 50 percent of the materials undergoing 

metal finishing. EPA proposes to regulate Printed W iring Board facilities that are job shops under this subcategory, but is 

seeking comment on this proposal. 

Non Chromium Anodizing: This subcategory includes facilities that perform aluminum anodizing without the use of chromic 

acid or dichromate sealants. The wastewater generated at these facilities contains very low levels of metals (except for 

aluminum) and toxic organic pollutants. 

Printed Wiring Board: These facilities manufacture, maintain, and repair printed wiring boards (i.e., circuit boards), not 

including job shops. They perform some unique operations, including applying, developing, and stripping of photoresist; 

lead/tin soldering; and wave soldering. 

Steel Forming & Finishing: This subcategory applies to facilities that perform MP&M operations or cold forming operations 

on steel wire, rod, bar, pipe, or tube. Other operations on steel, including any hot forming operations for steel, or cold 

forming, electroplating, or continuous hot dip coating of other steel products, will be regulated under the revisions to the 

existing Iron and Steel Manufacturing effluent guidelines (40 CFR 420). 

Oily Wastes: The Oily Wastes subcategory is a “catch-all” for sites that discharge wastewater exclusively from oily 

operations and are not otherwise covered by the Railroad Line Maintenance or Shipbuilding Dry Dock subcategory. Oily 

operations for the this subcategory are defined in today’s final rule as: alkaline cleaning for oil removal, aqueous or solvent 

degreasing, corrosion preventative coating (as specified in § 438.21(b)); floor cleaning; grinding; heat treating; deformation 

by impact or pressure; machining; painting (spray or brush); steam cleaning; and testing (such as hydrostatic, dye penetrant, 

ultrasonic, magnetic flux); iron phosphate conversion coating; abrasive blasting, alkaline treatment without cyanide; 

assembly/disassembly; tumbling/barrel finishing/mass finishing/vibratory finishing; burnishing; electrical discharge 

machining; polishing, thermal cutting; washing of final products; welding; wet air pollution control for organic constituents; 

adhesive bonding; and calibration. 

Railroad Line Maintenance: This is one of two specific subcategories that discharge only oil-bearing wastewaters (as 

defined above for the Oily Wastes subcategory). The Railroad Line Maintenance subcategory includes facilities that 

discharge from performing routine cleaning and light maintenance on railroad engines, cars, car-wheel trucks, or similar parts 

or machines. Facilities engaged in the manufacture, overhaul or heavy maintenance of railroad engines, cars, car-wheel 

1 These sites may also perform operations that generate oil-bearing wastewater. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

trucks, or similar parts or machines are not covered by this subcategory and depending on the operations performed may be 

covered by either the General Metals or Oily Wastes subcategory. 

Shipbuilding Dry Docks: This is the second of two specific subcategories that discharge only oil-bearing wastewaters (as 

defined above for the Oily Wastes subcategory). The Shipbuilding Dry Dock subcategory applies to discharges of process 

wastewater generated in or on dry docks and similar structures, such as graving docks, building ways, marine railways and lift 

barges at shipbuilding facilities (or shipyards). When generated by operations from within a dry dock or similar structure, this 

subcategory covers process wastewater generated inside and outside the vessel (including bilge water) and wastewater 

generated from barnacle removal conducted as preparation for ship maintenance, rebuilding or repair. Wastewaters generated 

from other operations at shipyards are not included in this subcategory. 

4.2 TECHNOLOGY OPTIONS 

EPA defined specific effluent limitations guidelines and standards for consideration in developing the regulation based on a 

statistical analysis of the performance of several wastewater treatment technology options. This analysis is described in 

Section 9 of the Technical Development Document and the Statistical Support Document. 

EPA is establishing BPT pH limitations and daily maximum limitations for two pollutants, oil and grease as hexane 

extractable material (O&G (as HEM)) and total suspended solids (TSS), for direct dischargers in the Oily Wastes subcategory 

based on the proposed technology option (Option 6). The technology requirements include the following treatment measures: 

(1) in-process flow control and pollution prevention; and (2) oil-water separation by chemical emulsion breaking and 

skimming (see Section 9 of the TDD). This technology is available technology readily applicable to all facilities in the Oily 

Wastes subcategory. Approximately 42% of the direct discharging facilities in the Oily Wastes subcategory currently employ 

this technology already. 

4.3 BPT/BAT OPTIONS FOR DIRECT DISCHARGERS 

EPA selected the Best Practicable Control Technology Currently Available (BPT) for direct dischargers in each 

subcategory based on the average of the best performances within the industry from operations of various ages, sizes, 

processes, and other characteristics. The Agency considered the cost of these treatment technologies relative to the effluent 

reductions achieved to assess the cost-reasonableness of these limitations. EPA then considered application of the Best 

Available Technology Economically Achievable (BAT) for priority and nonconventional pollutants and Best 

Conventional Pollutant Control Technology (BCT) for conventional pollutants. EPA is promulgating BCT equivalent 

to BPT for facilities in the Oily Wastes subcategory and has decided not to establish BAT limitations. 

Table 4.1 shows the technology basis for the selected option for BPT, BCT and BAT for the Oily Wastes subcategory. 

Table 4.1: Selected Options For Direct Dischargers: BPT, BCT and BAT 

Subcategory BPT Option BCT/BAT 

For oil-bearing wastes 

Oily Wastes 6 BCT = 6 

BAT not promulgated 

Source: U.S. EPA analysis. 

4.4 PSES OPTIONS FOR INDIRECT DISCHARGERS 

EPA considered Pretreatment Standards for Existing Sources (PSES) options for regulating existing indirect 

dischargers under today’s final rule. EPA has selected no further regulation for indirect dischargers in all of the defined 

subcategories. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

Wastewater discharges to POTWs from facilities in all subcategories will continue to be regulated by local limits, general 

pretreatment standards, and 40 CFR 413 or 433, as appropriate. 

4.5 NSPS AND PSNS OPTIONS FOR NEW SOURCES 

EPA is promulgating New Source Performance Standards (NSPS) for new direct dischargers in the Oily Wastes 

subcategory at the BPT and BCT levels. New facilities have the opportunity to incorporate the best available demonstrated 

technologies, including process changes, in-plant controls, and end-of-pipe treatment technologies, without the cost of 

retrofitting. EPA considered the same technologies discussed previously for BPT/BAT and PSES as the basis for new source 

technology. In addition, because new sites may be able to install pollution prevention and pollution control technologies more 

cost-effectively then existing sources, the Agency strongly considered more advanced treatment options. EPA is not 

promulgating Pretreatment Standards for New Sources (PSNS) for new indirect dischargers. 

Table 4.2 lists the technology options and exclusions for new direct and indirect dischargers. 

Table 4.2: Options For New Direct Dischargers (NSPS) and 

Indirect Dischargers (PSNS) 

Subcategory 

NSPS 

Technology 

Option 

PSNS Technology 

Option 

For oil-bearing wastes 

Oily Wastes 6 No further regulation 

Source: U.S. EPA analysis. 

4.6 SUMMARY OF THE FINAL RULE AND REGULATORY ALTERNATIVES 

The following describes the final rule and the three alternative regulatory options considered by EPA: 

� Final Rule: technology Option 6 applied only to direct dischargers in the Oily Wastes subcategory; 

�	 	 NODA/Proposal Option: applies limitations and standards for direct dischargers in all eight MP&M subcategories 

and pretreatment standards for all indirect dischargers in three subcategories (i.e., Metal Finishing Job Shops, Printed 

Wiring Board, and Steel Forming & Finishing); pretreatment standards for facilities above a certain wastewater flow 

volume in two subcategories (i.e., General Metals and Oily Wastes); and no national pretreatment standards for 

facilities in three subcategories (i.e., Non-Chromium Anodizing, Railroad Line Maintenance, and Shipbuilding Dry 

Docks); 

�	 	 Direct Dischargers + 413 to 433 Upgrade Option: applies the same technology requirements for direct dischargers 

as the final rule and includes new requirements for indirect dischargers in the General Metals, Printed Wiring Board, 

and Metal Finishing Job Shops subcategories currently regulated under the Electroplating regulations (40 CFR 413); 

and 

�	 	 Direct Dischargers + 413 plus 50% Local Limits Upgrade Option: applies the same technology requirements for 

direct dischargers as the final rule and includes new requirements for indirect dischargers in the General Metals, 

Printed Wiring Board, and Metal Finishing Job Shops subcategories currently regulated under the Electroplating 

regulations (40 CFR 413) and also includes new requirements for indirect dischargers in the General Metals 

subcategory that are currently regulated by local limits or general pretreatment standards. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

GLOSSARY 

Best Practicable Control Technology Currently Available (BPT): effluent limitations for direct discharging 

facilities, addressing conventional, toxic, and nonconventional pollutants. In specifying BPT, EPA considers the cost of 

achieving effluent reductions in relation to the effluent reduction benefits. The Agency also considers the age of the 

equipment and facilities, the processes employed and any required process changes, engineering aspects of the control 

technologies, non-water quality environmental impacts (including energy requirements), and such other factors as the Agency 

deems appropriate. Limitations are traditionally based on the average of the best performances of facilities within the industry 

of various ages, sizes, processes, or other common characteristics. Where existing performance is uniformly inadequate, EPA 

may require higher levels of control than currently in place in an industrial category if the Agency determines that the 

technology can be practically applied. 

Best Available Technology Economically Achievable (BAT): effluent limitations for direct dischargers, addressing 

priority and nonconventional pollutants. BAT is based on the best existing economically achievable performance of plants in 

the industrial subcategory or category. Factors considered in assessing BAT include the cost of achieving BAT effluent 

reductions, the age of equipment and facilities involved, the processes employed, engineering aspects of the control 

technology, potential process changes, non-water quality environmental impacts (including energy requirements), economic 

achievability, and such factors as the Administrator deems appropriate. The Agency may base BAT limitations upon effluent 

reductions attainable through changes in a facility's processes and operations. Where existing performance is uniformly 

inadequate, EPA may base BAT upon technology transferred from a different subcategory within an industry or from another 

industrial category. 

Best Conventional Pollutant Control Technology (BCT): effluent limitations for direct discharging facilities, 

addressing conventional pollutants. Conventional pollutants include biochemical oxygen demand (BOD5), total suspended 

solids (TSS), fecal coliform, pH, and O&G. BCT is the equivalent of Best Available Technology (BAT) for control of 

conventional pollutants. EPA evaluates the reasonableness of BCT candidate technologies by applying a two-part cost test: 

(1) the POTW test, and (2) the industry cost-effectiveness test. In the POTW test, EPA calculates the cost per pound of 

conventional pollutant removed by industrial dischargers to upgrade from BPT to a BCT candidate technology, and then 

compares this cost to the POTW cost per pound for similar pollutant load reductions. The upgrade cost to industry must be 

less than the POTW benchmark of $0.25 per pound (in 1976 dollars). In the industry cost-effectiveness test, the ratio of the 

incremental BPT to BCT cost divided by the BPT cost for the industry must be less than 1.29 (i.e., the cost increase must be 

less than 29 percent). 

Job Shop: Facilities with more than 50 percent of their revenues coming from work on products not owned by the site. 

While there are SIC codes associated with some Metal Finishing Job Shops, they sell to a variety of markets and are not a 

market in and of themselves. 

New Source Performance Standards (NSPS): effluent limitations for new direct dischargers based on the best 

available demonstrated control technology. NSPS represents the greatest degree of effluent reduction attainable through the 

application of the best available demonstrated control technology for all pollutants (i.e., conventional, nonconventional, and 

priority pollutants). In establishing NSPS, EPA considers the cost of achieving the effluent reduction and any non-water 

quality environmental impacts and energy requirements. 

Pretreatment Standards for Existing Sources (PSES): categorical pretreatment standards for existing indirect 

dischargers, designed to prevent the discharge of pollutants that pass through, interfere with, or are otherwise incompatible 

with the operation of POTWs. Standards are technology-based and analogous to BAT effluent limitations guidelines. 

Pretreatment Standards for New Sources (PSNS): pretreatment standards for new indirect dischargers, designed to 

prevent discharges of pollutants that pass through, interfere with, or are otherwise incompatible with the operation of POTWs. 

Addresses all pollutants (i.e., conventional, nonconventional, and priority pollutants). Based on the same factors as are 

considered in promulgating NSPS. 

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MP&M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options 

ACRONYMS 

BAT: Best Available Technology Economically Achievable
 


BCT: Best Conventional Pollutant Control Technology
 


BPT: Best Practicable Control Technology Currently Available
 


NSPS: New Source Performance Standards
 


O&G: oil and grease
 


POTW: publicly-owned treatment works
 


PSES: Pretreatment Standards for Existing Sources
 


PSNS: Pretreatment Standards for New Sources
 


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