MEMORANDUM 

DATE: October 28, 2010 

SUBJECT: Affordability of Add-on Controls for Shipbuilding and Ship Repair Source 

Category 

FROM: Kaye Whitfield, EPA/OAQPS/SPPD/NRCG 

TO: Docket No.: EPA-HQ-OAR-2010-0786 

Section 112(f)(2) of the Clean Air Act (CAA) directs EPA to assess the risk remaining (residual 

risk) after the application of maximum achievable control technology (MACT) standards under 

section 112(d). EPA is to promulgate more stringent standards for a category or subcategory of 

sources subject to MACT standards under section 112(d) if promulgation of such standards is 

necessary to protect public health with an ample margin of safety or to prevent (taking into 

consideration various factors) adverse environmental effects. 

In an effort to streamline the process of making residual risk decisions, EPA plans to address 

residual risk and perform a technology review simultaneously for the shipbuilding and ship 

repair (surface coating) source category. The EPA evaluated developments in practices, 

processes, and control technologies potentially applicable to this source category. This included 

a search of the RBLC Clearinghouse, the California BACT Clearinghouse, the internet, and 

correspondence with state agencies and industry. The EPA identified a ship construction facility 

that installed coating booths equipped with an add-on concentrator and a regenerative thermal 

oxidizer (RTO). The purpose of this memo is to document the affordability of a coating booth 

system equipped with a concentrator/RTO for ship coating operations. 

The use of spray booths at a facility is generally only applicable to large facilities that coat ship 

parts indoors (usually during new ship construction as smaller components are put together into 

larger modules and spray painted) and not during shipside coating operations. Spray booths can 

vary significantly in size, number, and exhaust rates. Some spray booths are partially enclosed, 

so emissions may not be fully captured by the enclosure. In general, facilities that use compliant 

coatings do not have add-on controls on spray booths. 

Nationwide, based on recently awarded contracts for new ship construction, it is estimated that 

fewer than 20 facilities have significant new ship construction business and are large enough to 

build or retrofit large spray booths. The estimated annualized cost of installing booths equipped 
with concentrator/RTO is $731,000 with an estimated cost-effectiveness of $305,000 per ton of 

HAP (if installed at the approximately 20 facilities large enough to use the technology).1 

Six large shipyards with available revenue data were chosen for the affordability analysis. The 

cost of the concentrator/RTO option, as a percentage of revenue, is a rough indicator of 

affordability. The reported revenues of the 6 facilities were based on revenue data from the 2003 

information request sent to shipbuilding facilities and online databases. Using the cost of the 

concentrator booth/RTO option, the cost-to-sales ratio for the 6 facilities averaged 7 percent. The 

results of these analyses are shown in Table 1. 

Based on the facility-level cost-to-sales ratio, it was determined that the add-on controls option is 

not affordable for at least some shipyard facilities, and additional information would be needed 

for a more complete economic/cost impact analysis. Additionally, the large add-on controls 

would require a substantial amount of fuel, which produces NOX emissions, a byproduct of 

combustion. The extra fuel use and associated NOX emissions would be negative consequences 

of the use of such add-on controls. Moreover, we believe the costs of these controls would be 

disproportionate to the emission reduction that would be achieved.

 

1

 See detailed cost analyses in Add-on Controls for Surface Coating Operations at Shipbuilding and Ship Repair 

Facilities memo dated September 2, 2010. Based on 20 facilities capable of installing spray booths. Estimated 

annualized cost $731,000 is based on cost of installing 3 booths at a facility and includes O&M costs. 
Table 1. Shipyard RTO Control Cost-to-Sales Assessment 

Facility City State

Annual Sales  

per Facility  

Cost of RTO  

per Facility  

Cost‐to‐Sales

Ratio

JEFFBOAT LLC1 Jeffersonville IN $192,888,000 $731,000 <1%

GENERAL DYNAMICS

(NASSCO)2

San Diego CA $450,130,435 $731,000 <1%

BATH IRON WORKS2 Bath ME $1,000,000,000 $731,000 <1%

ATLANTIC MARINE

FLORIDA LLC3 Jacksonville

FL $5,000,000 $731,000 15%

ATLANTIC MARINE

ALABAMA LLC3 Mobile

AL $2,500,000 $731,000 29%

NEWPORT NEWS  

SHIPYARD        

(Northrop Grumman)1

Newport

News

VA

$6,200,000,000 $1,462,0004 <1%

AVERAGE 7%

1. Data source: http://phx.corporate-ir.net/phoenix.zhtml?c=192936&p=irol-sec

2. 2003 ICR – Shipyard Database Summary. Updated to 2010 dollars: http://data.bls.gov/cgibin/dsrv 

3. Data source: Manta.com 

4. Cost of booth/RTO doubled due to large size of Newport News Shipyard.