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January 27, 2012 Economic Analysis for the TSCA Title VI Implementation Rule 

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# Economic Analysis of the Formaldehyde Standards 7 

# for Composite Wood Products Act 8 

# Implementing Regulations Proposed Rule 9

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# RIN 2070-AJ92 12

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# EO 12866 REVIEW DRAFT 18

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## Economic and Policy Analysis Branch 24 

## Economics, Exposure and Technology Division 25 

## Office of Pollution Prevention and Toxics 26 

## Office of Chemical Safety and Pollution Prevention 27 

## U.S. Environmental Protection Agency 28
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January 27, 2012 Economic Analysis for the TSCA Title VI Implementation Rule 

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# Acknowledgment 42
43 EPA acknowledges the analytical and draft preparati on support of Abt Associates Inc. of Cambridge, 44 Massachusetts in the preparation of this re port, provided under Contract No. EP-W-08-10. 45

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# Notice

This document was prepared to provide economic information for the rulemaking process, and to meet various administrative and legislative requirements. Due to the
nature of the information available to EPA, the document contains various assumptions that may not reflect the regulator y determinations that an individual firm or organization would make were it to a pply the rule's requirements to its specific
circumstances. This is not an official guidance document and should not be relied upon to determine applicable regulatory requi rements. Persons seeking information on specific regulatory require ments should consult 40 CFR Part 767, and the preamble for the regulatory action.

Mention of the names of specific companie s, organizations, or entities does not constitute an endorsement by EPA.

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# Table of Contents 1

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ES Executive Summary .......................................................................................................... .......... ES-1 3
1 Problem Definition and the Justification for Regulation ........................................................... 1-1 4
1.1 Problem with Formaldehyde Emissions from Composite Wood Products ..................................... 1-2 5 1.2 Regulatory Background ......................................................................................................... .......... 1-3 6 1.3 Justification for Regulation .................................................................................................. ........... 1-5 7 1.4 Alternative Regulatory Approaches for Reduci ng Exposure to Formaldehyde Emissions from 8 Composite Wood Products ....................................................................................................... ....... 1-7 9 2 Costs ......................................................................................................................... ....................... 2-1 10
2.1 Estimated Number of Affected Entities ......................................................................................... .. 2-4 11 2.2 Third Party Testing and Certification Costs .................................................................................. 2-34 12 2.3 Estimated Costs for Stock Hardwood Plywood, MDF, and Particleboa rd Producers ................... 2-65 13 2.4 Estimated Costs for Wood Veneer Laminated Product Producers ................................................ 2-84 14 2.5 Recordkeeping, Labeling, Supplier Notifica tion, and Rule Familiarization Costs ..................... 2-102 15 2.6 Total Costs of the Proposed TSCA T itle VI Implementation Rule ............................................. 2-141 16 3 Benefits ...................................................................................................................... ..................... 3-1 17
3.1 Estimating the Changes in Exposure by Analytical Option ............................................................ 3-4 18 3.2 Time Frame for the Analysis ................................................................................................... ........ 3-5 19 3.3 Assessing the Change in Cancer Risk ........................................................................................... .. 3-7 20 3.4 Estimating the Value of Reductions in Cancer Risk ..................................................................... 3-14 21 3.5 Estimating the Value of Non-cancer Risk Reductions .................................................................. 3-41 22 3.6 Estimated Numbers of Affected Individuals ................................................................................. 3-5 7 23 3.7 Results of Benefits Assessment ................................................................................................ ..... 3-62 24 4 Net Benefits .................................................................................................................. .................. 4-1 25
4.1 Discounting and Time Frame for the Analysis ................................................................................ 4- 3 26 4.2 Summary of Ne t Benefits ....................................................................................................... ......... 4-5 27 5 Small Business Impacts ........................................................................................................ ......... 5-7 28
5.1 Small Business Impacts for Stock Panel Producers ........................................................................ 5-9 29 5.2 Small Business Impacts for Wood Veneer Lami nated Product Producers (including firms making 30 products defined as hardwood plywood ) ...................................................................................... 5 -12 31 5.3 Small Business Impacts for Fabricators, Wholesalers, and Retailers ............................................ 5-25 32 5.4 Summary of Small Business Impacts ............................................................................................ 5-31 33 6 Environmental Justice a nd Other Impacts ................................................................................. 6-1 34
6.1 Environmental Justice ......................................................................................................... ............ 6-2 35 6.2 Employment Impact Analysis .................................................................................................... ... 6-12 36 6.3 Paperwork Burden Analysis ..................................................................................................... ..... 6-18 37 6.4 Unfunded Mandates Reform Act (UMRA) ................................................................................... 6-20 38 6.5 Executive Order 13132 - Federalism ............................................................................................ . 6-21 39 6.6 Executive Order 13175 - Tribal Implications ................................................................................ 6- 22 40 6.7 Executive Order 13045 - Protection of Children ........................................................................... 6-23 41 6.8 Executive Order 13211 - Energy Effects ....................................................................................... 6-24 42 6.9 National Technology Transfer and Advancement Act .................................................................. 6-25 43 R References .................................................................................................................. ................... R-1 44

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# Executive Summary 48
49 This report presents an economic analysis of th e U.S. Environmental Protection Agency (EPA)’s 50 proposed TSCA Title VI Implementation Rule. The Formaldehyde Standards for Composite Wood 51 Products Act, which created Title VI of the Toxic Substances Control Act (TSCA), established 52 formaldehyde emission standards for composite wood products (hardwood pl ywood, medium-density 53 fiberboard (MDF), and particleboard) sold, supplie d, offered for sale or manufactured in the United 54 States. Under TSCA Title VI, manufacturers of co mposite wood products must comply with specific 55 formaldehyde emission standards, and their compliance mu st be verified by a third-party certifier (TPC). 56 Congress directed EPA to consider a number of elemen ts for inclusion in implementing the regulations. 57 These elements include: labeling, chain of custody requirements, sell-through provisions, ultra low58 emitting formaldehyde resins, no-added formaldehyde-based resins, finished goods, third-party testing 59 and certification, auditing and reporting of TPCs, reco rdkeeping, enforcement, laminated products, and 60 exceptions from the requirements of regulations prom ulgated for products and components containing de 61 minimis amounts of composite wood products. 62 63 The sections of this executive summary below include an overview of the entities subject to 64 the rule, the analytical options cons idered in the analysis, and the estim ated costs, benefits, net benefits, 65 and small business, environmental justice, a nd children’s health impacts of the rule. 66 67 

## Entities Subject to the Rule and their Baseline Status 68 69 The TSCA Title VI rule regulates panel producers, fabricators, distributors, and retailers of 70 composite wood products. Panel producers manuf acture composite wood products. Fabricators 71 incorporate composite wood products into component parts or into finished goods. Wholesalers (referred 72 to in the rule as distributors) supply composite wood products, component parts, or finished goods to 73 others. And retailers sell composite wo od products directly to consumers. 74 75 Due to the similarities between this proposal and the 2008 rule known as the Air Toxics Control 76 Measure (ATCM) to reduce formaldehyde emissions from composite wood products that was 77 promulgated by the California Air Resources Board (CA RB), the incremental costs and benefits of this 78 proposal are determined in part by the degree to whic h firms are already complying with the ATCM. So 79 the following discussion of the number of entities subject to the TSCA Title VI rule includes an estimate 80 of baseline compliance with the CARB ATCM. 81 82 Stock Panel Producers . Stock panel producers (also referre d to as manufacturers) make hardwood 83 plywood, MDF, or particleboard pane ls that would be classified as a composite wood products under both 84 TSCA Title VI and the CARB ATCM. They are referred to as stock panel producers to differentiate them 85 from custom hardwood plywood producers, which ar e not considered to be composite wood product 86 manufacturers under the CARB ATCM. (Custom hard wood plywood producers are a type of wood 87 veneer laminated product producers, which are considered to be fabricators rather than manufacturers of 88 composite wood products under the CARB ATCM. Wood veneer laminated product producers are 89 discussed in the next section.) 90 91 As shown in Table ES-1, there are approximately 90 stock panel mills in the U.S. operated by 54 92 firms. This figure excludes mills and firms that onl y make products that are statutorily excluded from the 93 TSCA Title VI rule (and that are also exempt ed from the CARB ATCM) such as curved plywood, 94 military specified plywood, structural pl ywood, and wood-based structural-use panels. 95 96

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### A total of 79 of the 90 U.S. stock panel mills have been certified as meeting the CARB Phase 2 97 standards for at least one of their composite wood produ cts. (The Phase 2 standards are equivalent to the 98 emissions standards in the TSCA Title VI rule.) Th e CARB certified mills are responsible for virtually 99 all the U.S. production volume of composite wood pr oducts. Approximately 99.6% of stock hardwood 100 plywood produced in the U.S. is certified as mee ting the CARB Phase 2 emissions standard, as is 100% 101 of the MDF and 98% of the particleboard. 102 103 There are 16 U.S. stock panel mills making at least one product that is not certified as meeting the 104 CARB Phase 2 standards. (Some of the 90 stock pa nel mills make both product lines that are certified 105 under the CARB ATCM and product lines that are not certified because they are not intended to be sold 106 in California.) 107 108 Wood Veneer Laminated Product Producers. Wood veneer laminated pr oduct producers (also referred 109 to as laminators) make products by gluing a wood or woody grass veneer to the face and/or back of a 110 purchased particleboard, MDF, or veneer core plat form to produce a component part used in the 111 construction or assembly of a finished good. 1 

### Wood veneer laminated product producers are considered 112 fabricators rather than hardwood plywood manufacture rs under the CARB ATCM. In order to be sold in 113 California, such products must be made using certif ied composite wood products as platforms, and they 114 must comply with the labeling and chain of cu stody requirements in the CARB ATCM. But these 115 products are not certified or tested for emissions. 116 117 TSCA Title VI includes laminated products in the definition of hardwood plywood, and directs 118 EPA to conduct a rulemaking process to determine whether to exempt any of these products from the 119 definition. If EPA does not exempt laminated produc ts from the definition of hardwood plywood, then 120 laminated products will have to be certified, tested, and meet the TSCA Title VI emissions standards, in 121 addition to being made with certified platforms. Thus, the TSCA Title VI rulemaking will determine 122 which wood veneer laminated product manufacturers are considered composite panel producers and 123 which are considered solely fabricators. 124 125 There are 7,000 to 14,000 wood veneer laminated product producers in the U.S. making products 126 such as custom hardwood plywood and architectural panels, windows, doors, kitchen cabinets, furniture, 127 architectural woodwork and millwork, engineered wood flooring, and other goods made by affixing 128 veneer to purchased platforms as part of the production process. 129 130 The estimate of 7,000 to 14,000 laminators excl udes firms that use veneer to make products that 131 are exempted from the definition of hardwood plywood because they do not create panels (flat or raised 132 rectangular pieces of composite wood product) during the production process; the products are made by 133 affixing veneer to substrates other th an particleboard, MDF, or veneer co re platforms; or the products are 134 statutorily exempted by TSCA Title VI (including products used in boats and aircraft, and products not 135 intended for interior use) or otherwise do not qualify as regulated hardwood plywood (such as curved 136 plywood, military specified plywood, and structural plywood). 137 138 Fabricators. Fabricators use composite wood products to produce component parts or finished goods 139 such as architectural components, cabinets, and furnitur e. There are 66,000 to 73,000 firms in the U.S. 140 that are fabricators but not laminators, because th ey are using composite wood products to make goods 141

1 This analysis calls th ese products “wood veneer laminated products” to diff erentiate them from products that the industry commonly calls “laminates”, which are products that are laminated with materials other than veneer, such as high pressure laminate, thermally fused paper, vinyl film, decorative foil, or polypropylene film. Such products are not considered to be hardwood plywood under any of the options in this analysis. Firms making such products are considered fabricators under the rule, and are not counted as laminators.

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### without affixing veneer themselves. These 66,000 to 73,000 firms and the 7,000 to 14,000 laminators 142 make up the 80,000 firms in the U.S. producing go ods from composite wood products. Under the CARB 143 ATCM, fabricated products sold in California must be made using certifie d composite wood products, 144 and fabricators must comply with the ATCM’s labelin g and chain of custody requirements. Nationwide, 145 approximately 32,000 fabricators (including some lami nators) are estimated to comply with the labeling 146 and chain of custody requirements in the CARB ATCM b ecause their products may be sold in California. 147 148 Wholesalers and Retailers . Wholesalers and retailers sell com posite wood products. Approximately 149 86,000 wholesalers (including importers) and 759,000 retailers in the U.S. are estimated to sell goods 150 containing composite wood products . Approximately 32,000 of th e wholesalers and 101,000 of the 151 retailers have at least one facility in California, a nd thus must comply with the labeling and chain of 152 custody requirements in the CARB ATCM. 153 154 Table ES-1. Number of Entities in the United States Subject to the Rule Type TSCA Universe 1 Baseline Condition (CARB ATCM Universe) 2 Stock panel producers (i.e., manufacturers) 90 mills operated by 54 firms 79 mills have been certified by CARB for at least one product, but 16 mills make at least one product that is not CARB certified. Depending on the product type, 98% to 100% of U.S. production volume is CARB certified. Wood veneer laminated product producers (i.e., laminators) 7,000 to 14,000 firms 3 Wood veneer laminated product producers are considered fabricators under the CARB ATCM. Nationally, 32,000 of the combined group are subject to CARB ATCM requirements. Fabricators 66,000 to 73,000 firms 3

Wholesalers 86,000 firms, of which 24,000 are importers. 32,000 are subject to CARB ATCM requirements, of which 9,000 are importers. Retailers 759,000 firms 101,000 are subj ect to CARB ATCM requirements. Total 925,000 firms

1 The TSCA universe represents the estimated number of firms in the U.S. selling regulated com posite wood products.

2 The CARB ATCM universe represen ts the estimated number of fi rms handling regulated composit e wood products that may be sold in California. This represents the baseline for the TSCA Title VI rule.

3 The 7,000 to 14,000 wood veneer laminated product producers and th e 66,000 to 73,000 fabricators that are not laminators sum to a total of 80,000 firms. 

### 155 

## Analytical Options Considered 156 157 Table ES-2 presents the analytical options that are considered in this economic analysis. The 158 analytical options can be grouped into two basic categories. The first category contains analytical options 159 with emissions standards at the levels required by TS CA Title VI. Within this category there are several 160 different options for how to regulate wood veneer laminated products. The second category contains 161 emissions standards other than the levels required by TSCA Title VI. There is one set of options with the 162 same emissions standards as Phase 1 of the CARB ATCM, and another set of options requiring all 163 products to meet the NAF emissions standards. This document discusses options with alternative 164 emissions standards simply for informational purposes. The breadth of the discussion here should not 165 necessarily imply that EPA has corresponding flexibility in implementing the statute. 166 167 

## Costs 168 169 The cost of compliance with the rule includ es changes to production process and raw materials 170 that are needed to meet the emissions standards, as well as the costs of the testing, third-party 171 certification, labeling, and chain of custody activities required by the rule. The total cost estimates are 172 presented with low and high end scenarios, reflecti ng both the range in the estimated number of wood 173 veneer laminated product producers (7,000 to 14,000 fi rms) and an assumption that they will certify and 174 test either one or two different cate gories of product lines per firm. 175

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### Table ES-2 Analytical Options Considered in the Economic Analysis Analytical Option Emissions Standards NotesAnalytical options with emissions standards at the levels required by TSCA Title VI Option SE: Statutory emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.05 ppm 0.11 ppm 0.13 ppm 0.09 ppm Same emissions standards as Phase 2 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option SI: Statutory emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM. Option SP: Statutory emissions standards where wood veneer laminated products other than Custom and Architectural Panel products are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SN: Statutory emissions standards where wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SC: Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using no-added formaldehyde (NAF) resins are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SCR: Proposed Option. Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using NAF resins are exempt from the definition of hardwood plywood. Reducedrecordkeeping requirements for nonmfgrs. compared to other options. Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood

Distributors and retailers that are not manufacturers under TSCA would only be required to keep invoices and bills of lading. Other recordkeeping equivalent to CARB ATCM. No supplier notification required.Analytical options withemissions standardsother than the levels required by TSCA TitleVICARB Phase 1levels Option CE: CARB 1 emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.08 ppm 0.21 ppm 0.21 ppm 0.18 ppm Same emissions standards as Phase 1 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option CI: CARB 1 emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 1 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.NAF emission levels Option NE: NAF emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood : 90% of samples < 0.04 ppm. All samples < 0.05 ppm. MDF and particleboard : 90% of samples < 0.04 ppm. All samples < 0.06 ppm Requires all composite wood product manufacturers to meet NAF emission standards. Recordkeeping and s upplier notification equivalent to CARB ATCM.

Option NI: NAF emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood Same as above Requires all composite wood product manufacturers to meet NAF emission standards, with a different definition of hardwood plywood. CARB recordkeeping and supplier notification. Note: This document discusses various opti ons with respect to formaldehyde and co mposite wood products, in cluding emissions sta ndards that are different from those set in TSCA Title VI. This documen t discusses alternative emissions standards simply for informat ional purposes. The breadth of the discussion here should not necessarily im ply that EPA has corresponding flexibility in implementin g the statute.

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### Table ES-3 summarizes the first year, subsequent year, and annualized costs of the different 176 analytical option. For the options with emissions requirements that are consistent with TSCA Title VI 177 (Options SE, SI, SP, SN, SC, and SCR), the first year costs range from $435 million to $1,254 million 178 and the annualized costs range from $72 million to $2 93 million per year. The proposed option (Option 179 SCR) has first year costs of $435 million to $447 m illion. The annualized costs under Option SCR range 180 from $72 million to $81 million per year, which is $23 to $32 million less than the next least expensive 181 option with emissions requirements that are consistent with the statute (Option SE). The annualized costs 182 under Options SCR are about 35 percent lower compared to Option SC. The primary difference between 183 the costs under Option SCR (the proposed option) and Option SC is that Option SCR has reduced 184 recordkeeping requirements for wholesalers and reta ilers that are not manufacturers under TSCA (i.e., 185 that do not import, produce, or manufacture composite wood products). 186 187 Options CE and CI, the least stringent options in terms of emissions standards (which are 188 presented for information purposes since they are not c onsistent with the emissions requirements of the 189 statute), have estimated annualized costs ranging fro m $99 to $292 million per year. The estimated costs 190 under Options CE and CI are similar to the estimated costs under the options with emissions requirements 191 consistent with the statute, because recordkeeping, la beling, testing and certification are the primary cost 192 drivers and loosening emissions standards does not affect these costs. 193 194 Options NE and NI, the most stringent options in terms of emissions standards (which are also 195 presented for information purposes since they are not c onsistent with the emissions requirements of the 196 statute), have estimated annualized costs ranging from $379 to $573 million. The additional costs 197 associated with changes to raw materials and pro duction processes account for the difference between the 198 costs under these options compared to the options with emissions requirements that are consistent with 199 the statute (SE, SI, SP, SN, SC, and SCR). 200 201 Table ES-4 summarizes the total annualized costs using both a 3 percent and a 7 percent discount 202 rate. The results are similar under both discount rates. 203 204 Table ES-5 presents the costs by type of entit y for the proposed option (Option SCR). Stock 205 panel producers represent a small share of total costs, reflecting both the small number of firms and their 206 high rate of baseline compliance with the CARB ATCM emission levels. Retailers represent the largest 207 number of firms subject to the rule and the largest share of total first year costs due to rule familiarization. 208 In subsequent years retailers are only required to keep invoices and bills of lading. These records are 209 typically kept as a customary business practice, so no sub sequent year costs are attributed to retailers. As 210 a result, retailers represent a small share of annuali zed costs. Fabricators and laminators make up the 211 largest share of the total annualized costs. These costs are largely driv en by the certification and testing 212 requirements for laminators that are considered pa nel producers under the rule, and by the additional 213 recordkeeping required to comply with the rule’s chain of custody requirements. 214 215 Under the proposed option, wood veneer lamina ted products are regulated as hardwood plywood 216 unless they are made using no-added formaldehyde (NAF) resins to affix the veneer to compliant and 217 certified platforms. Of the 7,000 to 14,000 wood veneer laminated product producers in the U.S., 2,700 218 to 4,000 are assumed to be using formaldehyde-based resi ns. It is generally less expensive for a laminator 219 to switch to a NAF resin than to pay for the certificat ion and product testing required for panel producers. 220 As a result, nearly all laminators using formaldehyde -based resins are likely to switch to NAF resins in 221 order to qualify for the exemption from the definition of hardwood plywood. 2 

### It is assumed that only 222

2 Composite wood platforms sold in the U.S. for use in wood veneer laminated products are assumed to be compliant and certified once the TSCA Title VI rule is implemented. Lami nators using NAF resins to affix veneer to compliant and certified platforms will be regulated as fabricators.

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### about 150 to 300 U.S. laminated product producers will continue using formaldehyde-based resins, and 223 thus will need to certify and test their products as a result of this proposal. 224 225 226 Table ES-3: Total Costs by Option (millions 2010$, 3 percent discount rate)

Analytical Option First Year Subsequent Years Annualized Cost

Low End Scenario High End Scenario Low End Scenario High End Scenario Low End Scenario High End ScenarioAnalytical options with emissions standards at the levels required by thestatute Option SE: Statutory emissions standards where all wood veneer laminated products are exempt from the definition of hardwood plywood $595 $595 $79 $79 $100 $100

Option SI: Statutory emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood $919 $1,254 $177 $258 $194 $293

Option SP: Statutory emissions standards where all laminated products other than Custom Plywood and Architectural Panels are exempt from the definition of hardwood plywood $600 $600 $83 $83 $104 $104

Option SN: Statutory emissions standards where all wood veneer laminate d products made using
NAF resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood. $654 $689 $136 $168 $143 $185

Option SC: Statutory emissions standards where laminated products made with compliant platforms and NAF resins are exempt from the definition of hardwood plywood. $609 $621 $91 $101 $112 $121

Option SCR: Proposed Option. Statutory emissions standards where laminated products made with compliant pl atforms and NAF resins are exempt from the definition of hardwood plywood. Reduced recordkeeping requirements for non-manufacturers compared to other options. $435 $447 $57 $66 $72 $81Analytical options with emissionsstandards other than the levelsrequired by the statuteCARB Phase 1 Option CE: CARB 1 emissions standards where all wood veneer laminated products are exempt from the definition of hardwood plywood $593 $593 $78 $78 $99 $99

Option CI: CARB 1 emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood $918 $1,253 $176 $257 $192 $292NAF emissionlevels Option NE: NAF emissions standards where all wood veneer laminated products are exempt from the definition of hardwood plywood $889 $889 $372 $372 $379 $379

Option NI: NAF emissions standards where all wood veneer laminated pr oducts are included in the definition of hardwood plywood $1,214 $1,549 $471 $552 $473 $573

Option SCR is the proposed option. 

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### Table ES-4: Total Annualized Costs by Analytical Option (millions, 2010$)

Analytical Option 3 Percent Discount Rate 7 Percent Discount Rate

Low End Scenario High End Scenario Low End Scenario High End Scenario
Option SE $100 $100 $112 $112 Option SI $194 $293 $208 $311 Option SP $104 $104 $115 $115 Option SN $143 $185 $154 $195 Option SC $112 $121 $123 $132 Option SCR (Proposed Option) $72 $81 $81 $89 Option CE $99 $99 $111 $111 Option CI $192 $292 $207 $310 Option NE $379 $379 $383 $383 Option NI $473 $573 $480 $582 Option SCR is the proposed option. 

### 228 229 Table ES-5: Costs for Proposed Option by Type of Entity (millions 2010$, 3 percent discount rate) 1

Analytical Option Entity Type First Year Subsequent Years Annualized Cost

Low End Scenario High End Scenario Low End Scenario High End Scenario Low End Scenario High End Scenario Option SCR: Proposed Option. Statutory emissions standards where laminated products made with compliant platforms and NAF resins are exempt from the definition of hardwood plywood. Reduced paperwork requirements compared to other options. Stock Panel Producers $3 $3 $2 $2 $2 $2
Fabricators 2 $91 $57 $24 $20 $26 $21
Retailers $215 $215 $0 $0 $10 $10
Wholesalers $71 $71 $14 $14 $16 $16
Laminators 3 $55 $102 $17 $30 $18 $32

Total $435 $447 $57 $66 $72 $81

Option SCR is the proposed option.

1 Low and high end scenarios reflect the es timated number of laminators and the number of product lines cert ified per firm, not the low and high costs for each category of entities.

2 To avoid double-counting, this row represents costs to fabricators that are not la minators. Costs under the “Low End Scenario” reflect the low end of the estimated numbe r of laminators (approximately 7,000 firm s), and costs under the “High End Scenario” reflect the high end estimate of the number of laminators (approximately 14,000 firms). The estimated number of fabricators th at are not laminators is inversely proportional to the estimated number of laminators. So in the Low End Scenario there are 73,000 fabricators that are not laminators, and in the High End Scenario there are 66,000 firms that are not laminators. As a result, the costs to fabricators that are not laminators are higher under the “L ow End Scenario” then under the “High End Scenario”.

3 Costs to laminators represent the costs to all firms that affi x a wood or woody grass veneer to a purchased particleboard, MDF or veneer core platform. This includes bot h laminators that are consid ered panel producers under the proposed rule and laminators that are considered fabricators under the proposed rule. 

### 230 

## Benefits 231 232 Evidence for health effects associ ated with formaldehyde exposure is provided by a wide variety 233 of human clinical, epidemiology, and animal studies. In 2010, EPA released a draft IRIS assessment of 234 adverse cancer and non-cancer health effects from inha lation of formaldehyde. The draft IRIS assessment 235 identified seven categories of non-cancer health outcom es: (1) sensory irritation; (2) upper respiratory 236 tract pathology; (3) pulmonary function effects; (4) asthma and allergic sensitization (atopy); (5) immune 237 function effects; (6) neurological and behavioral toxicity; and (7) devel opmental and reproductive 238 toxicity. At this time, only three of the non-cancer he alth effect categories were judged to have sufficient 239 data for quantitative concentration -response modeling in support of the benefits assessment: sensory 240 irritation, asthma, and female reproductive toxicity. Therefore, this analysis predicts the number of cases 241 avoided and monetizes the benefits for four health ef fects: (1) nasopharyngeal cancer for individuals of 242 all ages, (2) eye irritation for individuals of all ages, (3) asthma in children ages 2 to 17 and 6 to 17, and 243

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### (4) female reproductive toxicity (i.e. reduced fertility ) in women ages 20 to 40. Table ES-6 presents the 244 estimated annual number of cases of each of these health effect avoided due to the different analytical 245 options. 246 247 248
Table ES-6: Annual Number of Cases Avoided by Analytical Option and Health Effect

Analytical

Option Cancer Eye Irritation Asthma Reduced Fertility Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE 9 21 22,133 170,214 2,469 3,416 1,501 Option SI 10 24 23,650 191,590 2,799 3,864 1,696 Option SN 11 25 24,154 198,950 2,915 4,019 1,765 Option SC 10 24 23,650 191,590 2,799 3,864 1,696 Option SCR (Proposed) 10 24 23,650 191,590 2,799 3,864 1,696 Option CE 7 16 18,015 130,720 1,899 2,627 1,144 Option CI 8 19 19,563 148,389 2,166 2,988 1,301 Option NE 39 92 58,492 626,726 9,554 13,235 6,566 Option NI 40 97 58,494 645,678 9,968 13,800 6,874 Option SCR is the proposed option. Bene fits were not estimated for Option SP. 

### 249 The benefit of avoiding a fatal case of cancer wa s estimated using a value of $8.01 per micro-risk 250 reduction (i.e., a reduction of 1 in 1 million of the risk of mortality). The value of avoiding a non-fatal 251 case of cancer was estimated using a cost of illness approach. The estimates vary depending on the stage 252 of the cancer when it is first diagnosed, the individual’ s age at the time of diagnosis, and the individual’s 253 employment status (since the value of time lost to illness depends on this status), resulting in a value of a 254 micro-risk reduction that ranges from $0.09 to $0.14. Based on willingness to pay estimates, the analysis 255 uses $26 as the value of an avoided case of eye irrita tion, $35,443 to $66,06 4 for an avoided case of 256 asthma incidence. The analysis uses $1,969 to $5,3 36 per case of reduced fertility avoided based on the 257 cost of fertility treatments for patients who ultimately become pregnant. 258 259 Reductions of formaldehyde emissions from com posite wood products bene fits individuals who 260 reside, work, or otherwise spend a substantial am ount of time where new composite wood products are 261 introduced to an indoor space. Benefits are calcula ted using an age-dependent exposure analysis that 262 includes formaldehyde exposure from homes, daycare, schools, workplace, vehicles, and outdoors. For 263 each option, there are 3,300 different exposure scen arios derived from 22 different composite wood 264 product age/source combinations, 5 structure types (d etached housing, attached housing, apartments, 265 manufactured housing, and recreational vehicles, campers, and trailers), 5 climate zones, and 6 individual 266 age/employment status combinations. Changes in exposure are estimated by changing the two broad 267 categories where a substantial amount of new com posite wood products might be introduced: new home 268 construction and major renovations that include kitchen remodeling. 269 270 Table ES-7 and Table ES-8 present the total benefits by health eff ect and analytical option using 271 3 and 7 percent discount rates, respectively. Option SN (which would require la minated products to be 272 made using NAF resins and platforms in order to be exempt from the definition of hardwood plywood, 273 and is the most protective option with emissions stan dards that are consistent with TSCA Title VI) has 274 benefits that are less than 20 percent larger than th e benefits of the least protective option with emissions 275 standards that are consistent with the TSCA Title VI statute (Option SE, which exempts all laminated 276 products from the definition of hardwood plywood). 277 278 The benefits under the proposed option (Option SCR, which would exempt laminated products 279 from the definition of hardwood plywood if they are made by using NAF resins to attach veneers to 280

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### compliant platforms) are only slightly lower those of Option SN, the difference being less than 5 percent. 281 Benefits from options SI and SC are equivalent to those from Option SCR because it is assumed that most 282 laminators would switch to NAF resins under all of these options. 283 284 Analytical options that would require NAF resins (Options NE and NI) would result in benefits 285 between three and four times larger than under the anal ytical options with emissi ons standards consistent 286 with TSCA Title VI. Analytical options with emissi ons standards consistent with TSCA Title VI would 287 result in benefits that are about 15 to 50 percent higher than options that would require less stringent 288 emissions standards (Options CE and CI). 289 290 About 85 percent of the total benefits of the propo sed rule are attributable to reductions in asthma 291 risk and about 14 percent are attributable to reducti ons in cancer risk. Approximately 2 percent of the 292 total benefits are attributable to avoiding eye irritation and reduced fertility. 293 294 The cancer-related benefits are generally higher for composite wood products that have been 295 more recently installed, new housing compared to renovated housing, warmer and more humid climate 296 zones, younger individuals, and individuals who work in the composite wood products industry. 297 298 The non-cancer benefits are generally higher for populations exposed to composite wood 299 products that have been more recently installed, new housing compared to re novated housing, warmer and 300 more humid climate zones, younger individuals, a nd individuals who work in the composite wood 301 products industry. For eye irritation and asthma, th e avoided risks for the small number of individuals 302 living in recreational vehicles or camper/trailers and individuals working in the composite work products 303 industry were notably higher compared to other exposure groups. 304 305
Table ES-7: Total Annualized Benefits for All Options (millions 2010$, 3 percent discount rate)

Analytical

Option Cancer Eye Irritation Asthma Reduced Fertility Total Benefits Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $17.28 $37.66 $0.53 $4. 07 $143.03 $201.84 $1.45 $162.29 $245.02 Option SI $19.65 $43.04 $0.57 $4.59 $162.45 $228.65 $1.64 $184.31 $277.92 Option SN $20.48 $44.93 $0.58 $4. 76 $169.21 $237.99 $1.71 $191.97 $289.38 Option SC $19.65 $43.04 $0.57 $4.59 $162.45 $228.65 $1.64 $184.31 $277.92 Option SCR (Proposed) $19.65 $43.04 $0.57 $4.59 $162.45 $228.65 $1.64 $184.31 $277.92
Option CE $13.21 $28.73 $0.43 $3. 12 $109.87 $154.97 $1.10 $124.62 $187.92 Option CI $15.10 $33.02 $0.47 $3. 55 $125.53 $176.60 $1.25 $142.36 $214.42 Option NE $75.00 $163.07 $1.35 $14. 92 $556.08 $785.79 $6.37 $638.80 $970.15 Option NI $78.54 $171.02 $1.35 $15.37 $580.33 $819.48 $6.66 $666.89 $1,012.53 Option SCR is the proposed option. Bene fits were not estimated for Option SP. 

### 306
307

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### Table ES-8: Total Annualized Benefits for A ll Options (millions 2010$, 7 percent discount rate)

Analytical

Option Cancer Eye Irritation Asthma Reduced Fertility Total Benefits Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $7.72 $16.64 $0.50 $3. 81 $70.83 $99.17 $1.31 $80.35 $120.93 Option SI $8.80 $19.12 $0.53 $4.29 $80.59 $112.55 $1.48 $91.41 $137.44 Option SN $9.18 $19.99 $0.55 $4. 46 $83.99 $117.20 $1.54 $95.26 $143.19 Option SC $8.80 $19.12 $0.53 $4.29 $80.59 $112.55 $1.48 $91.41 $137.44 Option SCR (Proposed) $8.80 $19.12 $0.53 $4.29 $80.59 $112.55 $1.48 $91.41 $137.44
Option CE $5.89 $12.69 $0.40 $2. 92 $54.32 $76.01 $0.99 $61.61 $92.62 Option CI $6.76 $14.67 $0.44 $3. 32 $62.19 $86.81 $1.13 $70.53 $105.93 Option NE $33.63 $72.16 $1.22 $13. 87 $276.73 $388.08 $5.77 $317.36 $479.88 Option NI $35.24 $75.78 $1.22 $14. 30 $288.86 $404.80 $6.04 $331.37 $500.92 Option SCR is the proposed option. Bene fits were not estimated for Option SP. 

### 308 

## Net Benefits 309 310 Table ES-9 and Table ES-10 present the total annuali zed net benefits by analytical option and 311 discount rate. The estimated net benefits under the anal ytical options that have emissions standards that 312 are consistent with TSCA Title VI range from negative $109 million to positive $206 million using a 313 three percent discount rate. Of these analytical opti ons, Option SI is the only option where net benefits 314 are negative under the lower estimate of net benefits using the three percent discount rate. Option SCR 315 (the proposed option) is the only option that has emi ssions standards that are c onsistent with TSCA Title 316 VI where both the lower and the higher estimate for ne t benefits is positive usin g the 7 percent discount 317
rate. 318 319 There are smaller net benefits (smaller positive and larger negative net benefits) under Options 320 CE and CI (the analytical options with emissions st andards lower than those that are consistent with 321 TSCA Title VI). Net benefits are lower under these options because the estimated benefits are 322 substantially lower while the estimated costs are only modestly lower (because the costs are largely 323 driven by the certification, testing, and chain of custody requirements, which are not affected by the 324 emissions standards). 325 326 Options NE and NI (which have emissions limits that are more stringent than those required by 327 the statute) have substantially higher costs and benefits than the options with emissions standards that are 328 consistent with TSCA Title VI. Net benefits are positive under these options using a 3 percent discount 329 rate, and are positive for the higher estimate of net benefits using a 7 percent discount rate but are 330 negative for the lower estimate using a 7 percent discount rate. 331 332

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### Table ES-9: Total Annualized Costs, Benefits, a nd Net Benefits for All Options (millions 2010$, 3 percent discount rate)

Analytical Option 

### Costs Benefits Net Benefits


### Low End Estimate High End
Estimate Lower Estimate Higher
Estimate Lower Estimate Higher
Estimate Option SE $100 $100 $162 $245 $62 $145 Option SI $194 $293 $184 $278 ($109) $84 Option SP $104 $104 Not estimated Not es timated Not es timated Not estimated Option SN $143 $185 $192 $289 $7 $146 Option SC $112 $121 $184 $278 $63 $166 Option SCR (proposed) $72 $81 $184 $278 $103 $206 Option CE $99 $99 $125 $188 $25 $89 Option CI $192 $292 $142 $214 ($150) $22 Option NE $379 $379 $639 $970 $259 $591 Option NI $473 $573 $667 $1,013 $94 $540 Option SCR is the proposed option. Pare ntheses indicate negative net benefits. Lower estimate of net benefits is ca lculated by subtracting high end cost estimate from lower benefits estimate. Higher estimate of net benefits is ca lculated by subtracting low end cost estimate from higher benefits estimate. 

### 333
334
Table ES-10: Total Annualized Co sts, Benefits, and Net Benefits for All Options (millions 2010$, 7 percent discount rate)

Analytical Option Costs Benefits Net Benefits

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $112 $112 $80 $121 ($31) $9 Option SI $208 $311 $91 $137 ($220) ($71) Option SP $115 $115 Not estimated Not estim ated Not estimated Not estimated Option SN $154 $195 $95 $143 ($99) ($11) Option SC $123 $132 $91 $137 ($41) $14 Option SCR (proposed) $81 $89 $91 $137 $2 $57 Option CE $111 $111 $62 $93 ($49) ($18) Option CI $207 $310 $71 $106 ($239) ($101) Option NE $383 $383 $317 $480 ($66) $97 Option NI $480 $582 $331 $501 ($251) $21 Option SCR is the proposed option. Parent heses indicate nega tive net benefits. Lower estimate of net benefits is ca lculated by subtracting high end cost estimate from lower benefits estimate. Higher estimate of net benefits is ca lculated by subtracting low end cost estimate from higher benefits estimate. 

### 335 

## Small Business Impacts 336 337 Table ES-11 presents a summary of the small bus iness impacts of the proposed option (Option 338 SCR). There are 878,798 small firms affected by th e rule. As indicated, 851,296 small firms (about 97 339 percent) are expected to have costs impacts that ar e less than one percent of their revenues, 23,133 firms 340 (about 3 percent) are expected to experience impacts at levels between one and three percent of their 341 revenue, and 4,369 firms (less than 1 percent) are exp ected to incur costs exceedi ng three percent of their 342

revenues. 343 344 Note that many of the firms with cost impacts above 1 percent of their revenues are fabricators, 345 wholesalers, and retailers with annualized costs of l ess than $250. This implies that their revenues were 346 below $25,000. These firms account for 92 percent of th e firms with cost impacts that are between 1 and 347 3 percent and 42 percent of the firms with cost impacts that exceed 3 percent. 348

. 349 350

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### Table ES-11: Summary of Small Business Impacts

Firm Type Number of Affected Small Firms Number of Firms by Cost-Impact Ratio <1% 1-3% >3% Stock Panel Producer 31 25 5 1
Wood Veneer Laminated Product 7,486 5,532 795 1,159
Fabricator 72,357 66,360 4,017 1,977
Wholesale 84,936 80,730 2,975 1,231
Retail 713,989 698,648 15,341 -
All Firms 878,798 851,296 23,133 4,369 

### 351 

## Environmental Justice Impacts 352 353 Table ES-12 presents a summary of the environmental justice impacts of the proposed option 354 (Option SCR). Minority and low-income groups account for a larger proportion of the total benefits than 355 their share of the affected population. Minorities repr esent about 35 percent of the population affected by 356 the rule and are estimated to accrue about 46 percen t of the total benefits. Low-income individuals 357 compose 12 percent of the total affected population, and are estimated to accrue 18 percent of the total 358 benefits. 359 360 Table ES-12: Summary of Environmental Justice Impacts

Population Type Share of Total Population Share of Total Annualized Benefits Race and Ethnicity Non-Hispanic White 65% 54% Non-Hispanic Black 12% 15% Non-Hispanic Other 7% 8% Hispanic 15% 22% Non-Hispanic Native American or Alaskan Indian 0.6% 0.7%
All Individuals 100% 100%
Income Individuals Living Below Poverty Line 12% 18% Individuals Living Above Poverty Line 87% 81%
All Individuals 100% 100% The number of individuals above and below the p overty line does not sum to the total number of individuals because pove rty status could not be determined for some individuals. 

### 361 

## Children’s Health Impacts 362
363 As shown in Table ES-13, children aged two through fifteen represent 19 percent of the 364 individuals affected by the rule and are estimated to accrue about 75 percent of the proposed rule’s total 365 benefits. These results are driven by the benefits associated with avoiding asthma incidence. 366 367 Table ES-13: Summary of Benefits for Children (annualized at 3% rate)

Population Affected Population Affected Annually (thousands) Population Affected as Percent of Total Affected

Population Total Benefits Lower Estimate (millions 2010$) Total Benefits Higher Estimate (millions 2010$) Total Benefits Lower Estimate (% of total

affected population) Total Benefits Higher Estimate (% of total

affected population) All Individuals 106,057 100.00% $184.31 $277.92 100.00% 100.00% Children ages 0-1 4,971 4.69% $0.47 $4.79 0.26% 1.72% Children ages 2-15 19,651 18.53% $136.95 $209.99 74.31% 75.56% 

### 368

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# 1 Problem Definition and the Justification for Regulation 369 370 The purpose of this chapter is to present an overv iew of the economic justifications for federal 371 regulations to address the problem of formaldehyde emissions from composite wood products. Section 372 1.1 characterizes the formaldehyde emissions problem and discusses various sources of exposure. In 373 Section 1.2, the regulatory background associated with formaldehyde emissions from composite wood 374 products is presented. Section 1.3 discusses how ma rket failure due to externalities and incomplete 375 information result in inefficient levels of form aldehyde emissions from composite wood products. 376 Section 1.4 compares the proposed approach for addressing these market failures with alternative 377 regulatory approaches. 378 379

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## 1.1 Problem with Formaldehyde Emissi ons from Composite Wood Products 380 381 Formaldehyde is a colorless, flammable gas at r oom temperature that has a strong odor. It is 382 found in resins used in the manufacture of composite wood products ( i.e. , hardwood plywood, 383 particleboard and medium-density fiberboard). It is also found in household products such as glues, 384 permanent press fabrics, carpets, antiseptics, medicines, cosmetics, dishwashing liquids, fabric softeners, 385 shoe care agents, lacquers, plastics and paper product coatings. It is a by-product of combustion and 386 certain other natural processes. Examples of sources of formaldehyde gas inside homes include cigarette 387 smoke, unvented, fuel-burning appliances (gas stov es, kerosene space heaters), and composite wood 388 products made using formaldehyde-based resins (ATSDR 2010). 389 390 Formaldehyde is both an irritant and a k nown human carcinogen (HHS 2011). Depending on 391 concentration, formaldehyde can cause eye, nose, and th roat irritation, even when exposure is of relatively 392 short duration. In the indoor environment, sensory reactions and various symptoms as a result of mucous 393 membrane irritation are some potential effects from expos ure. There is also evidence that formaldehyde 394 may be associated with changes in pulmonary func tion and increased risk of asthma in children (ATSDR 395 2010). In addition, formaldehyde is a by-product of human metabolism; therefor e, endogenous levels are 396 present in the body. 397 398

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## 1.2 Regulatory Background 399 400 In 2007, the California Air Resources Board (C ARB) issued an Air Toxics Control Measure 401 (ATCM) to reduce formaldehyde emissions from ha rdwood plywood, medium-density fiberboard, and 402 particleboard products referred to collectively as composite wood products. The CARB ATCM was 403 approved on April 18, 2008 by the California Office of Administrative Law. The first emission standards 404 took effect on January 1, 2009. The CARB ATCM requires manufacturers to meet formaldehyde 405 emission standards for the covered co mposite wood products that are sold , offered for sale, supplied, or 406 manufactured for use in California. The CARB AT CM also requires that compliant composite wood 407 products be used in finished goods sold, offered for sale, supplied or manufactured for sale in California. 408 The CARB ATCM does not apply to hardwood plywood and particleboard materials when installed in 409 manufactured homes subject to regulations promulgated by the United States Department of Housing and 410 Urban Development (HUD). 411 412 The CARB ATCM Phase 1 emission standards for hardwood plywood veneer core, particleboard, 413 and medium-density fiberboard took effect on Ja nuary 1, 2009. The Phase 1 standard for hardwood 414 plywood composite core took effect on July 1, 2009. The more stringent Phase 2 standards first took 415 effect on January 1, 2010 for hard wood plywood veneer core. Ph ase 2 standards for medium-density 416 fiberboard and particleboard went into effect on January 1, 2011. The final Phase 2 standards to take 417 effect under the CARB ATCM are for thin medium density fiberboard on January 1, 2012 and for 418 hardwood plywood composite core, wh ich begins July 1, 2012. 419 420 The CARB ATCM requires manufacturers of the regulated composite wood products to 421 demonstrate compliance with the emission standards by having their emissions tests and quality control 422 processes certified by a third party certifier (TPC). TPCs must be approved by CARB and must follow 423 specified requirements to verify that a manufact urer’s production meets applicable formaldehyde 424 emission standards and that the manufacturers follo w prescribed quality control practices. Once approved 425 by CARB, manufacturers who use no-added formaldehyde (NAF) resin systems are exempted from 426 ongoing testing requirements after three months of tes ting in cooperation with a TPC. Manufacturers who 427 use ultra low-emitting formaldehyde (ULEF) resin systems may be approved by CARB to reduce the 428 frequency of ongoing testing or, if they meet more stringent emissions requirements, they may be 429 exempted from ongoing testing requirements for two years. The exemption based on ULEF resin is 430 granted after approval by CARB and six months of testing in cooperation with a TPC. Manufacturers 431 who receive exemptions based on NAF or ULEF resi n can reapply every two years for the exemption 432 from TPC oversight and formaldehyde emissions test ing by submitting the chemical formulation of the 433 resin and the results of at least one primary or secondary method test for each product type (based on a 434 panel or set of panels randomly selected and tested by a TPC). 435 436 Under the CARB ATCM, manufacturers of composit e wood products are required to label their 437 covered products to identify them as meeting either the Phase 1 or Phase 2 emission standards, or as being 438 made with either NAF or ULEF resins. Manufacturers must also include a statement of compliance on 439 the bill of lading or invoice for the composite wood product. The CARB ATCM also imposes 440 recordkeeping requirements on manufacturers to docum ent their compliance with the regulations. Records 441 must be kept for two years. 442 443 The CARB ATCM requires distributors, importers , fabricators, and retailers to purchase and 444 sell panels and finished goods that comply with the applicable formaldehyde emission standards. They 445 must take “reasonable precautions,” such as commun icating with their suppliers, to ensure that the 446 products they purchase are in compliance with the app licable emission standards. Like manufacturers, 447 distributors and importers must also provide a statement of compliance on the composite wood or finished 448 good product bill of lading or invoice. They must also maintain records documenting compliance for a 449

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### period of two years. Importers and fabricators must label their finished goods as compliant with the 450 applicable standards. The labeling requirement also applies to distributors if the product is in some way 451 modified. One example of a modification that would make a distributor subject to the labeling 452 requirement is if the distributor receives composite wood product panels, cuts them into different shapes 453 or sizes, and applies edge banding to them. 454 455 On March 24, 2008, 25 orga nizations and approximately 5, 000 individuals petitioned EPA 456 under section 21 of the toxic substances control act ( TSCA) to use its authority under section 6 of TSCA 457 to adopt the CARB ATCM nationally. The petitioners asked EPA to assess and re duce the risks posed by 458 formaldehyde emitted from hardwood plywood, par ticleboard, and medium-density fiberboard by 459 exercising its authority under TSCA section 6 to adopt and apply nationwide the CARB formaldehyde 460 emissions regulation for these composite wood products . In addition, petitioners requested that EPA 461 extend this regulation to include composite wood products used in manufactured homes. 462 463 On June 27, 2008, EPA issued a Federal Re gister notice in response to the TSCA section 21 464 petition (Ref. 11). The notice announced the Agency’s in tent to grant in part and deny in part the 465 petitioners’ request. EPA denied the petitioners’ request to immediately pursue a TSCA section 6 466 rulemaking, stating that the available information at the time was insufficient to support an evaluation of 467 whether formaldehyde emitted from hardwood plywood, particleboard, and medium-density fiberboard 468 presents or will present an unreasonable risk to human health (including cancer and non-cancer endpoints) 469 under TSCA section 6. As discussed in detail in th e Federal Register notice announcing EPA’s response 470 to the petition, EPA’s evaluation of the data provide d by the petitioners revealed significant information 471 gaps that would have needed to be filled to suppor t an evaluation of whether use of formaldehyde in these 472 products presents or will present an unreasonable risk under TSCA section 6. However, EPA did agree to 473 initiate a proceeding to investigate whether and wh at type of regulatory or other action might be 474 appropriate to protect against risks posed by formaldehyde emitted from pressed wood products. 475 476 Accordingly, on December 3, 2008, EPA issu ed an Advance Notice of Proposed Rulemaking 477 (ANPR) that announced EPA’s intention to investigat e whether and what regulatory or other action might 478 be appropriate to protect against risks posed by formaldehyde emitted from the products covered by the 479 CARB ATCM as well as other pressed wood products. To help inform EPA’s decision on the best ways 480 to address risks posed by formaldehyde emissions from pressed wood products, the Agency requested 481 public comments and held six half-day public meeti ngs in Research Triangle Park, NC ; Portland, OR; 482 Chicago, IL; Dallas, TX; Washington, DC; and Ne w Orleans, LA. EPA received and reviewed 483 comments submitted during the ANPR comment period, which can be found at regulations.gov under 484 docket number EPA-HQ-OPPT-2008-0627. 485 486 On July 7, 2010, President Obama signed into law the Formaldehyde Standards for Composite 487 Wood Products Act, or Title VI of TSCA, 15 U.S.C. 2697. The statute establishes formaldehyde 488 emission standards that are identical to the CARB ATCM Phase 2 standards for hardwood plywood, 489 medium-density fiberboard, and particleboard sold, supplied, offered for sale, or manufactured in the 490 United States and directs EPA to issue final implemen ting regulations by January 1, 2013. (Pursuant to 491 TSCA section 3(7), the term “manufacture” means im port, produce, or manufacture.) TSCA Title VI 492 does not give EPA the authority to raise or lowe r the established emission standards and EPA must 493 promulgate the implementing regulations in a manne r that ensures compliance with the standards. 494 Congress directed EPA to consider a number of elem ents for inclusion in the implementing regulations, 495 many of which are aspects of the CARB program. Th ese elements include: labeling, chain of custody 496 requirements, sell-through provisions, ultra low-emitti ng formaldehyde resins, no-added formaldehyde497 based resins, finished goods, third-party testing and certification, auditing and reporting of TPCs, 498 recordkeeping, enforcement, laminated products, an d exceptions from the requirements of regulations 499 promulgated for products and com ponents containing de minimis amount s of composite wood products. 500

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## 1.3 Justification for Regulation 501 502 Market failure can justify government regulation; the major types of market failures include the 503 following: 504 505

 Negative externalities, common property resources, and public goods 506

 Market power 507

 Inadequate or asymmetric information 508 509 The occurrence of any of these conditions justifi es further inquiry into the need for government 510 regulation to reduce inefficiencies in the allocation of society’s resources. This section describes why 511 negative externalities and inadequate information are present in the market for composite wood products. 512 Understanding the nature of the inefficiencies i nvolved facilitates the design of more effective 513 regulations. The specific regulatory approach consider ed here involves an emissions standard verified 514 through third party testing and certification as well as chain of custody requirements. 515 516 Economic efficiency suggests that in the absen ce of regulation the market for lower emitting 517 composite wood products would exist so long as the composite wood product purchasers’ willingness-to518 pay for low emission products equals or exceeds the in crementally higher cost of lower emitting products. 519 If the composite wood product purchasers are aware of the risks associated with formaldehyde emissions 520 and of the availability and costs of lower emitting products, then arguably they might be able to 521 accurately trade off risk and cost without the aid of government regulation. However, there are two 522 arguments for why composite wood product consumers ma y not trade off risk and cost efficiently: (1) 523 because externalities exist, and (2) because of inadequate and asymmetric information. 524

525 1.3.1 Externalities Associated with Formaldehyde Emissions from Composite Wood 526 Products 527 528 One cause of market failure in the market for low emissions composite wood products stems from 529 externalities. An efficient outcome is achieved when the marginal willingn ess-to-pay for a service is 530 equivalent to the marginal cost of providing that service. In the case of a composite wood product 531 purchase, the primary beneficiaries of lower emissi on composite wood products are the individuals who 532 live or work where the composite wood products will be installed. However, the decision about whether 533 or not to pay for lower emitting composite wood produ cts may be made by builders, employers, property 534 owners, or managers who have an in sufficient incentive to take the bene fits to the occupants into account 535 when making this decision. Externalities may also exist in cases where the purchase is made by the 536 occupant of the residence where composite wood produc ts will be installed. Wh ile the current occupant 537 may not be willing to pay more for lower emitting com posite wood products, future occupants, visitors, 538 and children receiving child care on the premises may potentially be harmed by formaldehyde emissions 539 from composite wood products. 540 541 Thus, formaldehyde emissions from composite wood products may constitute an externality. As 542 such, perfect information would not result in the efficient allocation of lower emitting composite wood 543 products because it does not correct the problem resulting from that fact that there are individuals who do 544 not have influence on the purchasing decision, but do face the risks associated with formaldehyde 545 emissions that result from it. For example, a future occupant of a housing unit for sale may experience an 546 increased exposure to formaldehyde if a renovation occurs where high emitting composite wood products 547 are installed before they move in. While a future o ccupant might be willing to pay to reduce or eliminate 548 this exposure, they would not be consulted by the current occupant making the decision. As another 549

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### example, children cannot express their willingness-to-pay for risk reduction and rely on their parents’ or 550 the property owners’ willingness-to-pay. 551 552 1.3.2 Inadequate Information 553 554 A second cause of market failure associated with the formaldehyde emissions from composite 555 wood products is due to inadequate information about the emissions le vels of composite wood products 556 and the risks associated with formaldehyde emissions from composite wood produc ts. Full information is 557 an important prerequisite to the lower emitting composite wood products because the consumer must 558 know the risks associated with composite wood products with higher formaldehyde emissions in order to 559 make an informed decision about whether lower emitting composite wood products are worth the extra 560 cost. Inadequate information can lead to inefficient outcomes. W ithout knowing the differences in the 561 relative risks between lower and higher formalde hyde emitting composite w ood products, the consumer 562 will not be able to weigh these differences in risk with the differences in price. 563 564 1.3.3 Justification for Regulation at the Federal Level 565 566 Many composite wood products are distributed in commerce across state lines. It is more 567 efficient for companies manufacturing, fabricating, di stributing, and retailing composite wood products to 568 comply with a single standard rather than a patchwor k of different state regulations. Under TSCA Title 569 VI, Congress directed EPA to promulgate regulati ons to implement national formaldehyde emission 570 standards. While the TSCA Title VI does not preven t states from developing their own regulations, states 571 are less likely to promulgate regulations if there is a federal regulation in place. 572 573

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## 1.4 Alternative Regulatory Approaches for Reducing Exposure to 574 

## Formaldehyde Emissions from Composite Wood Products 575 576 This section examines alternative approaches for addressing the market failures discussed in the 577 previous section. The proposed rule utilizes a pe rformance standard approach, which is required by 578 statute. The statute requires that all producers mu st meet a specific emissions standard but does not 579 prescribe a specific technology for achieving the emis sions standard. The advantage of a performance 580 standard over a technology standard is that firms ha ve more incentive to develop lower cost technologies 581 for achieving the standard. 582 583 The primary alternative to a performance standard is a market based regulatory approach that 584 includes a mechanism to force market participants to incorporate the social cost of the formaldehyde 585 emissions from composite wood products into their priv ate costs. This approach is not allowable under 586 the statute, and would not be desirable or practi cal in the case of formaldehyde from composite wood 587 products. Emissions reductions under a performance standard (such as the proposed rule) generally 588 achieve a more uniform reduction in emissions acr oss sources compared to the emissions reductions 589 under a market based approach where higher emissi ons from some sources can be offset by lower 590 emissions from other sources. Thus, market based a pproaches are generally only effective if “hot spots” 591 are not a concern (Stavins 2001) – i.e., the negative po llution impacts are not locali zed near the releases. 592 But “hot spots” are an issue for composite wood produ cts because the products are used inside of homes, 593 offices, schools, and other buildings. Exposures in i ndividual buildings can be very different from the 594 average exposures due to the cumulative regional or national emissions from composite wood products. 595 596 Another possible alternative regulatory approach is an information provision approach. In the 597 case of formaldehyde emissions from composite wood prod ucts, this type of approach could be a labeling 598 requirement for composite wood products. Since the purchaser of the composite wood products may not 599 be the person who will ultimately be exposed to th e formaldehyde emissions from the products (i.e., an 600 externality exists), information provision does not force market participants to in corporate the social cost 601 of the formaldehyde emissions from composite wood prod ucts into their private costs, and therefore is 602 unlikely to correct the market failure. Furthermore, an effective information provision requirement would 603 need to include testing, certification, and chain of custody requirements in order for products to be 604 credibly labeled as lower emission products. Thus, the regulatory cost of a labeling requirement is likely 605 to be similar to the cost of the proposed rule given th at most of the costs of the regulation are attributable 606 to these activities (see Chapter 2). 607

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# 2 Costs 608 609 This chapter discusses the potential costs to businesses of complying with the proposed 610 regulatory requirements under TSCA Title VI, and vari ous other analytical options. The methods for 611 estimating the number of affected entities and the resu lting estimates are presented in section 2.1. The 612 per-mill testing and certification costs for stock hard wood plywood panel producers (including engineered 613 wood flooring producers), medium density fiberboard (MDF) producers, and particleboard producers are 614 presented in section 2.2. Section 2.3 describes the total costs to these produ cers for changes to raw 615 materials, production processes, and third party testing and certification. Section 2.4 presents the total 616 costs to wood veneer laminated product producers for changes to raw materials, production processes, and 617 third party testing and certification. Section 2.5 presents the costs associated with rule familiarization, 618 recordkeeping, labeling, supplier notif ication, and rule familiarization. Fi nally, 2.6 presents the total costs 619 of the regulation. 620 621 The general approach of this analysis is to: (1) estimate the number of affected entities and the 622 quantity of affected production; (2) estimate the direct compliance costs on a per entity or per unit of 623 production basis; and (3) combine the per entity and per production costs with the number of affected 624 entities and the quantity of affected production, respectively, to calculate the total direct compliance costs. 625 626 The potential costs of the proposed TSCA Title VI Implementation Rule are estimated for several 627 analytical options which are presented in Table 2- 1. This document discusses various options with 628 respect to formaldehyde and compos ite wood products. In some instances, the statute chose an option and 629 this document discusses an alternative simply for in formational purposes. The breadth of the discussion 630 here should not imply that EPA necessarily has co rresponding flexibility in implementing the statute. 631 632 In order to estimate costs that are comparable to the estimated benefits, this analysis estimates the 633 costs of each analytical option over a 30 year peri od. This time frame was selected to be as short as 634 possible while being long enough to capture the importan t benefit effects of the policy. In general, the 635 downside of choosing a longer analysis time frame is that uncertainties about both the baseline and policy 636 scenarios increase with time. For ex ample, the likelihood that alternative technologies for manufacturing 637 composite wood products might be developed increases over time (which could result in lower 638 formaldehyde emission rates for products and/or lo wer costs for reducing formaldehyde emissions). 639 Similarly, uncertainties about changing demographi cs, treatments for adverse health effects, and 640 consumer preferences with respect to composite wood products all increase with time. However, 641 selecting a time frame that is too short would not cap ture all of the important effects of the policy 642 scenarios under consideration. 643 644 The present discounted value for the annualized va lue of the thirty year stream of costs is 645 estimated using discount rates of 3 and 7 percent. Costs are discounted (for the discount rate r = 3% and r 646 = 7%) back to the beginning of the 30-year period, as follows: 647 648 

## ෍ൌ ݁ݑܸ݈ܽ ݁݀ݐ݊ݑ݋ܿݏ݅ܦ ݐ݁݊ݏ݁ݎܲ ሻ݁ݑܸ݈ܽ ݁݀ݐ݊ݑ݋ܿݏܷ݊݀݅ሺ ௧ 

## ሺ1 ൅ rሻ ௧ ଷ଴

௧ୀ଴ (1)



### 649 650
651

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### Table 2-1: Analytical Options Considered in Cost Analysis Analytical Option Emissions Standards NotesAnalytical options with emissions standards at the levels required by TSCA Title VI Option SE: Statutory emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.05 ppm 0.11 ppm 0.13 ppm 0.09 ppm Same emissions standards as Phase 2 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option SI: Statutory emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM. Option SP: Statutory emissions standards where wood veneer laminated products other than Custom and Architectural Panel products are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SN: Statutory emissions standards where wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SC: Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using no-added formaldehyde (NAF) resins are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SCR: Proposed Option. Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using NAF resins are exempt from the definition of hardwood plywood. Reducedrecordkeeping requirements for nonmfgrs. compared to other options. Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood

Distributors and retailers that are not manufacturers under TSCA would only be required to keep invoices and bills of lading. Other recordkeeping equivalent to CARB ATCM. No supplier notification.Analytical options withemissions standardsother than the levels required by TSCA TitleVICARB Phase 1levels Option CE: CARB 1 emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.08 ppm 0.21 ppm 0.21 ppm 0.18 ppm Same emissions standards as Phase 1 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option CI: CARB 1 emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 1 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.NAF emission levels Option NE: NAF emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood : 90% of samples < 0.04 ppm. All samples < 0.05 ppm. MDF and particleboard : 90% of samples < 0.04 ppm. All samples < 0.06 ppm Requires all composite wood product manufacturers to meet NAF emission standards. Recordkeeping and s upplier notification equivalent to CARB ATCM.

Option NI: NAF emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood Same as above Requires all composite wood product manufacturers to meet NAF emission standards, with a different definition of hardwood plywood. CARB recordkeeping and supplier notification. Note: This document discusses various opti ons with respect to formaldehyde and co mposite wood products, in cluding emissions sta ndards that are different from those set in TSCA Title VI. This documen t discusses alternative emissions standards simply for informat ional purposes. The breadth of the discussion here should not necessarily im ply that EPA has corresponding flexibility in implementin g the statute. 

### 652

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### The present discounted value co sts are annualized as follows: 653 654



## ሺ ܣ ݊݊ݑ݈ܽ݅ݖ݁݀ ݏݐݏ݋ܥሻ ൌ ሺܲܦܸ ଷ଴ ௬௘௔௥ ௖௢௦௧ ௦௧௥௘௔௠ 

## ሻ כ ݎ כ ሺ1 ൅ ݎሻ ଷ଴ 

## ሺ1 ൅ ݎሻ ଷଵ 

## െ 1 (2)



### 655

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## 2.1 Estimated Number of Affected Entities 656 657 This section summarizes the number of establishmen ts and firms that will be affected by the 658 proposed TSCA Title VI Implementation Rule. An es tablishment is a single physical location at which 659 business is conducted and a firm is business orga nization or entity consisting of one domestic 660 establishment or more under common ownership or control. Both the estimated numbers of 661 establishments and firms are presented here because some of the cost elements estimated for this analysis 662 are estimated on a per establishment basis and others are estimated on a per firm basis. 663 664 The numbers of affected entities are categorized into the following categories based on the types 665 of requirements they will face under TSCA Title VI: 666 667

 Panel producers are defined as the entities that pr oduce composite wood pane ls (hardwood plywood, 668 MDF and particleboard) as defined by TSCA Title VI and are subject to emissions standards, third 669 party testing and certification, chain of custody requirements, and labeling requirements (see section 670 2.1.1); 671

 Wood veneer laminated product producers produce hardwood plywood by gluing a wood or woody 672 grass veneer to the face and/or back of a purchased platform to produce a component part used in the 673 construction or assembly of a finished good. 3 

### Wood veneer laminated product producers are 674 considered composite wood product fabricators rather than hardwood plywood producers under the 675 CARB ATCM, and they are not required to meet the ATCM’s emissions standards. TSCA Title VI 676 includes laminated products in the definition of hardwood plywood, and directs EPA to conduct a 677 rulemaking process to determine whet her to exempt any of these products from the definition. If EPA 678 does not exempt laminated products from the de finition of hardwood plywood, then laminated 679 products will have to meet TSCA Title VI’s emissi ons standards (in additio n to being made with 680 certified platforms) (see section 2.1.2); and 681

 Fabricators are entities that use composite wood prod ucts to produce other goods (see section 2.1.3); 682

 Wholesalers and Retailers are entities that sell composite wood products. Both types of entities are 683 subject to chain of custody requirements and wholesalers are potentially subject to labeling 684 requirements (see section 2.1.4). 685
686 2.1.1 Estimated Number of Stock Panel Producers 687 688 Table 2-2 presents the total number of stock hardwood plywood, MDF, and particleboard 689 establishments (mills) and firms subject to TSCA Title VI’s emissions requirements. 4 

### The total number 690 of MDF and particleboard mills and firms include all those identified for the EPA survey of composite 691 wood product producers (described in section 2.1.1.1) a nd are consistent with data in other publically 692 available sources (see CPA 2011). The search to identify stock hardwood plywood mills (including 693 engineered wood flooring) mills resulted in the identifi cation of 41 mills. This analysis assumes that all 694 U.S. hardboard mills use PF or NAF resins and w ould qualify to be exempted from the TSCA Title VI 695 emission standards. 696

3 The laminated products discu ssed here do not include products that are so lely laminated with materials other than veneer, such as high pressure laminate, thermally fused pape r, vinyl film, decora tive foil, or polypropylene film.

4 Stock hardwood plywood does not include wood veneer lami nated products that qualify as hardwood plywood. In

addition, some hardwood plywood (such as military specifi ed plywood, curved plywood, exterior plywood, etc.) is statutorily exempted in TSCA Title VI, and thus is not subject to the emission requirements.

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### 697 Table 2-2: Stock Hardwood Plywood, MDF, and Particleboard Firms and Mills Directly Subj ect to Emission Requirements

Sector Total Number in Industry
Firms Mills Hardwood Plywood 32 41
MDF 14 22
Particleboard 16 30
Total 62 93 Note that because mills and firms producing two different types of composite wood products are expected to incur sepa rate costs for each product type, the estimates of 93 mills and 62 firms used to estimate costs are derived by counting mills and firms that produce two different types of composite wood products twice. There are 90 unique mills and 54 unique firms that produce composite wood panels. 

### 698 2.1.1.1 Respondent Identification for the EPA Pressed Wood Manufacturing Industry Survey 

### 699 700 The universe of composite wood product manuf acturing mills was developed from a list EPA 701 developed for a 1998 industry survey conducted for the Plywood and Composite Wood Product (PCWP) 702 National Emissions Standards for Hazardous Air Poll utants (NESHAP). Through a 1998 information 703 collection request (ICR), mills potentially affected by the NESHAP were identified. This included 704 industries in three categories based on their Standard Industrial Classification (SIC) or North American 705 Industry Classification System (NAICS) classificati ons: softwood plywood and veneer, reconstituted 706 wood products, and structural wood members. The ICR surveyed 416 potentially affected mills (EPA 707 1998), and an additional 15 mills we re identified that either did not respond to the survey or have 708 commenced operation since the date of the survey (EPA 2002). 709 710 EPA updated the 1998 mill list to reflect the curre nt universe of mills based on information from 711 trade journals, company websites, press releases, trad e association websites, and other sources to reflect 712 mill closures, mill openings, mergers and acquisitions, and similar changes that have occurred over the 713 past decade. A total of 343 U.S. composite wood product manufacturing mills were identified for an 714 initial survey mailing list – a universe of mills that included hardboard and structural composite wood 715 product producers not regulated under TSCA Title VI. 716 717 In addition to the initial list of composite w ood product producers, several approaches were 718 employed to identify additional composite wood product mills that may have been excluded originally. 719 These approaches are described below. 720 721 A variety of composite wood product lists were identified and searched, and a review was 722 conducted of the company websites of mills listed in EPA’s Envirofacts aggregated mills database under 723 the relevant NAICS codes (see Table 2-3). A multisystem facility search was performed in the 724 Envirofacts database, which queries multiple environm ental databases for facility information, for four 725 NAICS codes, and results were cross-checked agains t the original OAQPS list. The four NAICS codes 726 searched were: 727 728

o 321211: Hardwood Veneer and Plywood Mfg.; 729

o 321212: Softwood Veneer and Plywood Mfg.; 730

o 321213: Engineered Wood Member (exc. truss) Mfg.; and 731

o 321219: Reconstituted Wood Product Mfg. 732
733

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### The additional facility search resulted in 192 pot ential new mills operated by companies not on 734 the initial list, of which 52 were confirmed to be potentially in-sco pe. Scope was determined in two 735 phases. First, company websites of these mills we re viewed to determine whether the companies 736 appeared to be within the scope of our survey. Afte r notification letters were sent to all potentially in737 scope respondents, respondent identif ication calls were placed to this group of mills to further confirm 738 scope. Because many companies and mills lacked comple te or up-to-date websites, not all mills could be 739 categorized as definitively in or out of scope. Fo llowing respondent identification calls, these additional 740 mills were sent survey packages in two batches later th an the original survey distribution. Table 2-3 gives 741 the full list of sources checked in order to identify additional mills. 742 743 Table 2-3: Composite Wood Product Produ cer Lists for Mill Identification Facility Directories 

### 2009 Big Book. Random Lengths Publications Oregon Forest Industry Directory List of Certified Mills: Composite Wood Products Airborne Toxic Control Measure (as of June 14, 2010) PanelWorld 2009 Annual Directory & Buyers’ Guide 2009 Big Book. Random Lengths Publications Wood Product Manufacturing Associations 

### The Engineered Wood Association (APA) The Composite Panel Association (CPA) – website membership directory The American Institute of Timber Construction (AITC) The American Hardboard Association (AHA)
The Wood I-Joist Manufact urers Association (WIJMA) The Western Wood Products Association (WWPA) The Engineered Wood Products Association (EWPA) Harwood Panel and Veneer Association (HPVA) personal communication with EPA North American Laminate Flooring Association (NALFA) National Wood Flooring Association (NWFA)
Other Sources 

### EPA Envirofacts Facility Data


### 744 2.1.2 Number of Wood Veneer Laminated Product Producers 745 746 Wood veneer laminated product producers are cons idered composite wood product fabricators 747 rather than hardwood plywood producers under the CARB ATCM, and they are not required to meet the 748 ATCM’s emissions standards. TSCA Title VI includ es laminated products in the definition of hardwood 749 plywood, and directs EPA to conduct a rulemaking pro cess to determine whether to exempt any of these 750 products from the definition. If EPA does not ex empt laminated products from the definition of 751 hardwood plywood, then laminated pr oducts will have to meet TSCA T itle VI’s emissions standards (in 752 addition to being made with certified platforms). 753 754 The number of wood veneer laminated product pr oducers is based on discussions with industry 755 associations and a series of interviews with hard wood veneer manufacturers and wholesalers. The 756 information gathered from discussions with industry a ssociations indicated that there are relatively few 757 wood veneer laminated product pr oducers, with the exception of business and household furniture 758 manufacturing. To gather more information EPA co nducted interviews with veneer manufacturers and 759 wholesalers in order to learn more about their cu stomers that are wood veneer laminated product 760 producers. 761 762

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### The firms that were interviewed were se lected from a Hardwood Veneer and Plywood 763 Association (HPVA) list 5 

### and the companies listed as “Face Veneer Suppliers” at www.veneernet.com. 764 Based on information gathered from company and third party websites, firms on this list were categorized 765 into four types: (1) specialized in hardwood veneer manufacture, (2) specialized in hardwood veneer and 766 plywood manufacture, (3) specialized in hardwood veneer wholesale, and (4) wholesalers of hardwood 767 veneer and other wood products. Fi rms on each of these four lists were sorted in random order and phone 768 calls were placed until two entities in each category participated in an interview. 6 

### One additional set of 769 calls was placed until one additional entity on the ha rdwood veneer wholesale list participated in an 770 interview. This group was selected for the extra interv iew because the prior interviews indicated that this 771 group appeared to have more small customers, a group where little information was available. 772 773 There was wide disagreement over the number of businesses in the U.S. that are wood veneer 774 laminated product producers. Three respondents thought this number was less than 1,000; two estimated 775 that it was between 1,000 and 10,000; and three estimat ed it was tens of thousands. One respondent did 776 not provide an estimate. Of those respondents that pu t the number in the tens of thousands, one suggested 777 that it was more than 50,000, and another suggested this number was about 100,000. 778 779 Based on the interviews, the number of potentia l wood veneer laminated product producers is 780 likely to be between 7,000 and 14,000. The respondents that estimated that there were fewer businesses 781 may not be aware of these smaller operations because th ey do not cater to these smaller customers. Part 782 of the reason that some respondents estimated that there were more wood veneer laminated product 783 producers may be because these respondents were thinki ng of businesses that would be exempt from the 784 rule’s requirements (e.g., veneering something to create a product that would not be considered a 785 composite panel 7 

### , veneering to substrates (such as metal) th at do not qualify as composite wood products, 786 using veneer to make products that are statutorily ex empt from the rule (such as boats, autos, products not 787 intended for interior use, etc.). Nevertheless, publica lly available data and other information that EPA has 788 obtained from industry associations is not consistent with more th an about 14,000 businesses making 789 wood veneer laminated products. 790 791 The following NAICS have been identified as th e primary consumers of hardwood veneer (i.e., 792 they consume enough veneer such that the value of raw veneer material is re ported in Economic Census 793 data): 794 795

 321211 Hardwood veneer a nd plywood manufacturing 796

 321911 Wood window and door manufacturing 797

 337211 Wood office furniture manufacturing 798

 337110 Wood kitchen cabinet and countertop manufacturing 799

 337121 Upholstered household furniture manufacturing 800

 337122 Nonupholstered wood household furniture manufacturing 801

 337127 Institutional furniture manufacturing 802

 337129 Wood television, radio, and sewing machine cabinet manufacturing 803

 337212 Custom architectural w oodwork and millwork manufacturing 804

 337215 Showcase, partition, shelving, and locker manufacturing 805

5 HPVA Veneer Manufacturer/Sales Memb ers. Available at: http://www.hpva.org/s ites/default/files/ HPVAVeneer.pdf (Accessed April 18, 2011)

6 Note that one of the respondents on the veneer manufacturer list identified themselves as a re-manufacturer of veneer

and was categorized as the second vene er manufacturer for the purpose of selec ting the sample. A respondent on the veneer and plywood manufacturer list identified themselves as a manufacturer of hardwood veneer and other wood products and was categorized as the se cond veneer and plywood manufacturer for the purpose of selecting the sample.

7 Where a panel means a flat or raised re ctangular piece of co mposite wood product.

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### 806 In addition, businesses in the following industr ies may also do their own veneering (although 807 many of them – indicated with a “*” – would be statutorily exempt from the TSCA Title VI rule even if 808 they do their own veneering 8 

### : 809 810

 321920 Wood container and pallet manufacturing* 811

 336111 Automobile manufacturing* 812

 336411 Aircraft manufacturing* 813

 336611 Ship building and repairing* 814

 336612 Boat building* 815

 321999 All other miscellane ous wood product manufacturing 816

 339920 Sporting and athletic goods manufacturing 817

 339932 Game, toy, and children's vehicle manufacturing 818

 339992 Musical instrument manufacturing 819

 811420 Reupholstery and furniture repair 820 821 There are 35,846 employer establishments and 46,704 nonemployer establishments in these 822 industries. Thus, it is estimated that the total num ber of establishments, including nonemployers, in these 823 industries is 82,550. 824 825 Assumptions for High End and Low End Estimates of Wood Veneer Laminated Product Producers 

### 826 827 Two sets of estimates, a high end estimate and a low end estimate, were made for the number of 828 entities that make wood veneer laminated products and thus are potentially subject to the TSCA Title VI 829 rule as hardwood plywood producers. Table 2-4 pr esents the underlying data, assumptions and resulting 830 estimates for the high end estimate of the number of wood veneer laminated product producers. These 831 assumptions are described in more detail below. 832 833 Windows and Doors . There are about 1,500 employer establishments and 2,200 nonemployer 834 establishments in this industry (NAICS 321911). Because no information was available about how many 835 companies making wood windows or doors affix veneer to platforms themselves (as opposed to buying 836 veneered components from suppliers), the analysis assumes all producers affix veneer. This assumption 837 may overestimate the number of entities potentially subject to the rule as panel producers. 9 

### 838 839 Furniture . There are about 6,300 employer establishments in the furniture industry (NAICS 840 337211, 337121, 337122, and 337127) and about 5,00 0 nonemployer establishments. Note that the 841 Census does not report the number of nonemployer estab lishments at the 6-digit NAICS level, so the 842 number of establishments reported he re is estimated by applying the proportions of the 6-digit NAICS as 843 a share of the broader NAICS for employer establishm ents to the number of nonemployers in the broader 844 NAICS. 845 846 The furniture industry is the only sector where tr ade associations reported that it is common for 847 companies to affix veneer to their products. The Business and Institutional Furniture Manufacturing 848

8 Section 601(a)(3)(i) of TSCA l imits the term “hardwood plywood” to panels that are intended for interior use. Section 601(c)(9) exempts packaging products. And Section 601(c)(10) exempts certain vehicles (other than recreational vehicles), rail cars, boats, aerospace craft, and aircraft.

9 Note that depending on the process fo r laminating the hardwood veneer, window ma nufacturers in particular may not be

producing what the rule defines as a “panel,” in which case they would only be subject to the requirements for fabricators. However, windows cont aining less than 5% by volume of co mposite wood product and exterior doors containing less than 3% by volume of composite wood product are statutorily exempt from the rule’s requirements.

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### Association (BIFMA) indicated that “many if not most” business and institutional furniture producers 849 would make products that were ma de with wood veneer and about 75 percent of those would affix the 850 veneer themselves (BIFMA 2010). The American Home Furnishing Alliance (AHFA) indicated that 851 most domestic furniture producers would affix wood ve neer themselves, but estimated that there were 852 about 250 firms that do this (AHFA 2010). To develop a high end estimate for the number of wood 853 furniture producers that affix veneer and thus ma ke wood veneer laminated products, the analysis 854 assumed that 50 percent of establishments in these in dustries manufacture products that contain veneer 855 and 75 percent of those establishments do the laminating themselves. 856 857 Kitchen Cabinets . There are about 9,700 employer establishments and 7,800 nonemployer 858 establishments in this industry (NAICS 337110). It is worth noting that NAICS 337110, and thus these 859 establishment counts, includes both cabinet manufact urers (who may laminate hardwood veneer) and 860 countertop manufacturers (who do not use hardwood ven eer). The Cabinet Makers Association, which 861 generally represents smaller custom cabinet manufact urers, said “very, very few” would do their own 862 veneering (CMA 2010). The Kitchen Cabinet Manuf acturers Association (KCMA), which generally 863 represents larger stock cabinet manufacturers, said 5 percent or less of cabinet manufacturers would do 864 their own veneering (KCMA 2010). The Architectural Woodwork Institute (AWI) did not think any of its 865 members would do their own veneering. 10 

### Thus, the analysis assumes that 5 percent of these 866 establishments affix veneers and thus ma ke wood veneer laminated products. 867 868 Other Products . Because the other manufacturing sectors that may include establishments that 869 laminate their own hardwood veneers consist of a very diverse group of manufacturers, including 870 establishments that do not even use composite w ood products let alone lami nate their own hardwood 871 veneer, the analysis assumes that 5 percent of these est ablishments laminate their own hardwood veneers. 872 873 High End Estimate . The assumptions about the percentages of establishments in different 874 industries that are laminating their own hardwood ven eer results in a high end estimate that as many as 875 14,000 establishments might laminate hardwood veneer, as shown in Table 2-4. However, this estimate 876 conflicts with information provided in the intervie ws with nine companies that sell hardwood veneer, 877 described earlier. That information indicated that no more than 30 percent of businesses laminating their 878 own hardwood veneer are nonemployer operations. However, the estimate of 14,000 businesses that do 879 their own veneering is based on about 7,000 nonemployer operations (50% of the total). Therefore, the 880 high end estimate of 14,000 establishments may ove restimate the number of wood veneer laminated 881 product manufacturers. 882 883 Low End Estimate . To derive a low end estimate for the number of domestic entities that 884 laminate hardwood veneer, the analysis extrapolat ed to the total number of wood veneer laminated 885 product establishments from the employer establishments by assuming that 30 percent of the total are 886 nonemployer establishments, based with information provi ded in the interviews with nine companies that 887 sell hardwood veneer, described earlier. In addition, it was assumed that 1 percent of manufacturers in 888 the miscellaneous manufacturing sectors laminate their ow n veneer as compared to the 5 percent that was 889 assumed for the upper bound estimate. Other assumptions were the same as for the upper bound estimate. 890 Table 2-5 presents the underlying data, assumptions and resulting estimates for the lower bound estimate 891 of domestic entities that laminate hardwood veneer. 892 893 894

10 Note that participants in the vene er sales interviews did think this wa s common for architectural woodwork and millwork manufacturers, but there are only about 4,000 entities in this sector.*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-10Table 2-4: High End Estimate for Entities that Laminate Hardwood VeneerEmployer NAICSNonemployerNAICSEstablishments inAffected NAICSEntities Doing Own VeneeringDescription of AssumptionsEmployersNon-employersEmployersNon-employersAllEntities321211: Hardwood veneer and plywoodmanufacturing321: Woodproductmanufacturing303 456 68 - 6850 Custom panel producers and 18engineered wood flooring producers.321911: Wood window and door manufacturing 1,493 2,246 1,493 2,246 3,739Assume all wood window and doorproducers do their own veneering.321920: Wood container and pallet manufacturing 2,918 4,390 - - - Assume statutorily exempt.321999: All other miscellaneous wood productmanufacturing1,971 2,965 739 1,112 1,851Assume 50 percent use veneer and 75percent of those laminate the veneerthemselves.337110: Wood kitchen cabinet and countertopmanufacturing337: Furnitureand relatedproductmanufacturing9,701 7,769 485 388 873 Assume 5 percent do their own veneering.337211: Wood office furniture manufacturing 457 366 171 137 308Assume 50 percent use veneer and 75percent of those laminate the veneerthemselves.337121: Upholstered household furnituremanufacturing1,641 1,314 615 493 1,108337122 Nonupholstered wood household furnituremanufacturing3,414 2,734 1,280 1,025 2,305337127: Institutional furniture manufacturing 776 621 291 233 524337129: Wood television, radio, and sewing machinecabinet manufacturing265 212 99 80 179337212: Custom architectural woodwork andmillwork manufacturing2,235 1,790 838 671 1,509337215: Showcase, partition,shelving, and lockermanufacturing1,375 1,101 516 413 929336111: Automobile manufacturing336:Transportationequipmentmanufacturing188 98 - - - Assume statutorily exempt.336411: Aircraft manufacturing 265 138 -- - Assume statutorily exempt.336611: Ship building and repairing 674 350- - - Assume statutorily exempt.336612: Boat building 1,117 580 - - - Assume statutorily exempt.339920: Sporting and athletic goods manufacturing339:Miscellaneousmanufacturing1,881 3,925 94 196 290 Assume 5% do their own veneering.339932: Game, toy, and children's vehiclemanufacturing639 1,333 32 67 99Assume 5% do their own veneering.339992: Musical instrument manufacturing 600 1,25230 63 93 Assume 5% do their own veneering.811420: Reupholstery and furniture repair4,69322,549 - - - Assume statutorily exempt.Total36,606 56,189 6,751 7,124 13,875895*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-11Table 2-5: Low End Estimate for Entities that Laminate Hardwood VeneerNAICSNonemployerNAICSEstablishments inAffected NAICSEntities Doing Own VeneeringDescription of AssumptionsEmployersNon-employersEmployersNon-employersAllEntities321211: Hardwood veneer and plywoodmanufacturing321: Woodproductmanufacturing303 456 686850 Custom panel producers and 18engineered wood flooring producers.321911: Wood window and door manufacturing 1,493 2,246 1,493 640 2,133Assume all wood window and doorproducers do their own veneering.321920: Wood container and pallet manufacturing 2,9184,390 Assume statutorily exempt.321999: All other miscellaneous wood productmanufacturing1,971 2,965 99 42 141Assume 50 percent use veneer and 75percent of those laminate the veneerthemselves.337110: Wood kitchen cabinet and countertopmanufacturing337: Furnitureand relatedproductmanufacturing9,701 7,769 485 208 693Assume 5 percent do their ownveneering.337211: Wood office furniture manufacturing 457 366 171 73 244Assume 50 percent use veneer and 75percent of those laminate the veneerthemselves.337121: Upholstered household furnituremanufacturing1,641 1,314 615 264 879337122 Nonupholstered wood household furnituremanufacturing3,414 2,734 1280 549 1,829337127: Institutional furniture manufacturing 776 621 291 125 416337129: Wood television, radio, and sewing machinecabinet manufacturing265 212 99 42 141337212: Custom architectural woodwork andmillwork manufacturing2,235 1,790 112 48 160337215: Showcase, partition,shelving, and lockermanufacturing1,375 1,101 516 221 737336111: Automobile manufacturing336:Transportationequipmentmanufacturing188 98 0 - Assume statutorily exempt.336411: Aircraft manufacturing 265 1380 - Assume statutorily exempt.336611: Ship building and repairing 674 3500 - Assume statutorily exempt.336612: Boat building 1,117 580 0 - Assume statutorily exempt.339920: Sporting and athletic goods manufacturing339:Miscellaneousmanufacturing1,881 3,925 19 8 27 Assume 1% do their own veneering.339932: Game, toy, and children's vehiclemanufacturing639 1,333 6 3 9Assume 1% do their own veneering.339992: Musical instrument manufacturing 600 1,2526 3 9 Assume 1% do their own veneering.811420: Reupholstery and furniture repair4,693 22,549- - -Assume exempt.Total36,606 56,189 5,260 2,226 7,486896

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### 2.1.3 Estimated Number of Affected Fabricator Establishments 897 898 Table 2-6 presents the estimated number of affected fabricator establishments and firms in each 899 industry. NAICS that reported using composite wood products as raw materials were identified as being 900 fabricators (U.S. Census Bureau 2009d). Unlike for wholesale and retail entities (see section 2.1.4), it is 901 assumed that all fabricator entities sell goods containing composite wood products. 902 903 Table 2-6: Number of Affected Fabricat or Establishments and Firms, by NAICS

NAICS NAICS Description Employer
Estab. NonEmployer

Estab. Total Number of

Estab. Number of
Firms
321211 /
321219 Decorative and custom panel producers a - 85 85 71

321911 Wood window and door manufactur ing 1,493 2,246 3,739 3,582 321918 Other millwork including flooring manufacturing 2,110 3,175 5,285 5,214 321991 Manufactured home (mobile home) manufacturing 379 570 949 798 321992 Prefabricated wood building manufacturing 818 1,231 2,049 1,930 321999 Other miscellaneous wood product manuf acturing 1,971 2,965 4,936 4,822 336213 Motor home manufacturing 79 41 120 112 336214 Travel Trailer and Campers manufacturing 862 447 1,309 1,203 337110 Wood kitchen cabinets and countertop manufacturing 9,701 7,769 17,470 17,360 337121 Upholstered household furniture ma nufacturing 1,641 1,314 2,955 2,790 337122 Nonupholstered wood household furniture manufacturing 3,414 2,734 6,148 6,061 337124 Metal household furniture manufacturing 329 263 592 579 337127 Institutional furniture manufacturing 776 621 1,397 1,367

337129 Wood television, radio, an d sewing machine cabinet manufacturing 265 212 477 476

337211 Wood office furniture manufacturing 457 366 823 804 337212 Custom architectural woodwork and millwork manufacturing 2,235 1,790 4,025 3,991 337214 Office furniture (non-wood) manufacturing 290 232 522 486 337215 Showcase, partition, shelving, and locker manufacturing 1,375 1,101 2,476 2,415 339950 Sign manufacturing 6,406 19,627 26,033 25,917 Total 34,601 46,789 81,390 79,978
a. Affected establishment and firm counts for decorative and custom panel producers (NAICS 321211 and 321219) were estimated fr om the list of laminators and coaters in the Composite Panel Associ ation's 2011 Surface and Panel Buyers Guide (CPA 2011). Sources: Composite Panel Association 201 1, U.S. Census Bureau 2009b, 2010i 

### 904 As indicated in Table 2-6, an estimated 79,978 fabricator firms comprising 81,390 establishments 905 will be affected by the proposed TSCA Title VI rule. 906 907 2.1.4 Estimated Number of Affected Wholesale and Retail Establishments 908 909 This section describes the process used to adjust the number of firms and establishments in 910 affected retail and wholesale industries to account for the fact that not all entities in these industries sell 911 composite wood products. This is necessary because not all establishments in affected industries are 912 expected to sell composite wood products. For exampl e, some retail stores in the Floor Covering Stores 913 industry (NAICS 442210) might only sell carpet and rugs , and therefore would not be affected by the 914 TSCA Title VI rule’s requirements. 915 916 2.1.4.1 Description of the Data 

### 917 918 Data from the 2007 Economic Census’ Product Line s Subject Series were used to estimate the 919 number of wholesale and retail establishments that sel l composite wood products in affected industries 920

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### (U.S. Census Bureau 2010j, 2011). Product line data we re not available at the firm level; however, ratios 921 of firms to establishments by NAICS are used to estimate the numbers of affected firms. Census 922 describes product lines as “major categories of product s” (U.S. Census Bureau 2010k) and classifies them 923 with products and services codes (product line codes), which “represent various types of products carried 924 or services rendered by an establishment” (U.S. Census Bureau 2010l). The Census datasets provide the 925 number of establishments selling specified product lines, by product line and NAICS code. For example, 926 the retail dataset shows that of the 28,834 establis hments classified in the furniture stores industry 927 (NAICS 442110), 9,968 sell the product line “office furnitu re, including computer-related furniture” (U.S. 928 Census Bureau 2010j). 929 930 Different product line codes are used in the retail and wholesale sectors. In addition, they can 931 represent broad or detailed product lines. 11 

### Broad product lines offer a more general category of products 932 and/or services, and are comprised of detailed produc t lines. For example, the broad product line 933 “flooring and floor coverings” contains the detaile d product lines “hardwood flooring” and “other hard 934 surface floor coverings and accessories, including tile and sheet goods,” as well as others. These detailed 935 product lines provide greater insight for making assumptions and increase the accuracy of the 936 establishment estimates. Detailed product line data, however, are not available for all broad product lines 937 in the Census datasets. 938 939 2.1.4.2 Methodology 

### 940 941 The first step for refining the estimates of re tailers and wholesalers that sell composite wood 942 products was to develop a list of the product line c odes for the establishments in affected industries. 943 Based on their descriptions, these unique product line c odes were then categorized according to whether 944 they are expected to contain composite wood products . Because Census does not always provide data at 945 the detailed product line level, a broad product lin e was categorized as containing composite wood 946 products if it contained at least one detailed prod uct line expected to be made with composite wood 947 products. This process led to the creation of two sep arate keys – one for retail and one for wholesale – 948 which were then applied to the corr esponding Census data (See Appendix A). 949 950 Table 2-7 provides an example of the product lin es sold in an affected industry, as well as 951 whether the product line is broad or detailed, and whether it is expected to contain composite wood 952 products. 953 954

11 In the datasets, broad product lines are in dicated by a zero in the final digit.

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### Table 2-7: Example of Affected Establishm ent Count using Product Line Analysis: Window Treatment Store Industry (NAICS 442291)

Product Line Code Meaning of Product Line code Product Line Level Includes Composite Wood
Products? 20000 Industry total Total Yes 20200 Men's wear, including accessories Broad 20220 Women's, juniors', and misses' w ear, including accessories Broad 20270 Sewing, knitting materials & supplies, needlework goods, etc Broad 20280 Curtains, draperies, blinds, slipco vers, bed & table coverings Broad 20281 Curtains & draperies Detailed 20282 Vertical & horizontal blinds, wove n wood blinds, & shades Detailed 20283 Furniture coverings, including ready-made & custom-made Detailed 20284 Domestics, incl towels, sheets, bl ankets, table linens, etc Detailed

20330 Audio equip, musical instr, radios, stereos, CDs, records, etc Broad 20340 Furniture, sleep equipment & ou tdoor/patio furniture Broad Yes 20360 Flooring & floor coverings Broad Yes 20361 Soft-surface (textile) floor coverings & accessories Detailed 20363 Hardwood flooring Detailed Yes
20364 Other hard-surface floor coveri ngs & accessories Detailed 20380 Kitchenware & home furnishings Broad Yes 20381 Cookware & cooking accessories Detailed 20382 Dinnerware, china, glassware, tableware, giftware Detailed 20383 Decorative accessories, incl lamps, lampshades, mirrors, etc Detailed Yes 20384 All other kitchenware & home furnishings Detailed 20400 Jewelry, incl watches, watch a ttach, novelty jewelry, etc Broad
20420 Books Broad 20460 Toys, hobby goods, & games Broad Yes 20600 Hardware, tools, & plumbing & electrical supplies Broad 20620 Lawn, garden, & farm equipment & supplies Broad 20640 Dimensional lumber & oth bldg/struc tural materials & supplies Broad Yes
20670 Paint & sundries Broad 20690 Wallpaper & other flexible wallcoverings Broad
20850 All other merchandise Broad 20863 Art goods, including original pictures & sculptures Detailed 20877 Souvenirs & novelty items Detailed
20878 Seasonal decorations Detailed 20879 Artificial/silk flowers, plants, & trees Detailed
29810 All other merchandise Broad
29900 All nonmerchandise receipts Broad 29904 Labor charges for work performed by this establishment Detailed 29905 Labor charges for work contracted out to other establishments Detailed
29908 Parts & materials used in furniture repair or upholstery work Detailed 29911 Delivery & installation charges Detailed 29936 Carpet cleaning receipts for work performed by this establishment Detailed 29972 All other nonmerchandise receipts Detailed 

### 955 Figure 2-1 presents a description of the process u sed to estimate the number of establishments 956 selling composite wood product lines using a hypothetical example. Within affected industries, the 957 number of establishments selling composite wood pr oduct lines was estimated as the minimum of: 958 959

 The total number of establishments in the industry, or 960

 The cumulative sum of the minimum of: 961

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### o the broad product line count, or 962

o the sum of the affected detailed product line counts 963 for each affected broad product line. 964 965*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-16966Figure 2-1: Hypothetical Example of MethodUsed to Refine Establishment Counts967

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### As indicated in the hypothetical example in Figure 2-1, the furniture industry sells two broad 968 product lines containing composite wood products: hou sehold furniture and office furniture. There are 969 14,000 establishments that sell the former line and 15,000 that sell the latter. Within the household 970 furniture line, two detailed product lines are so ld; 8,000 establishments sell “chairs” and 8,000 971 establishments sell “sofas.” Because the sum of th e establishment counts for the detailed product lines 972 (16,000) is greater than the total number of establishm ents in the broad product line (14,000), the latter 973 line count is used. Within the office furniture line, two detailed product lines are sold; 6,000 974 establishments sell “desks” and 6,000 sell “chairs.” Because the sum of the establishment counts within 975 the detailed product lines (12,000) is less than the broa d product line total (15,000), the former count is 976 used. The composite wood product lines are summed ( 26,000) and compared with the industry total. 977 This value represents the estimated number of estab lishments in the furniture industry selling composite 978 wood products. It is used in conjunction with the industry total to determine the proportion of the 979 affected establishments within the industry, a value which is then applied to firm data to calculate 980 industry-specific estimates for the number of affected firms. 981 982 It is important to note that the estimated numbe r of entities that sell composite wood products is 983 likely to be overstated after employing this method of estimation. Using the above example, if the data 984 indicate that 14,000 establishments sell household furnitu re and 12,000 sell office furniture, it is estimated 985 that the number of establishments that sell household or office furniture is the sum of these two, or 986 26,000. Thus, the analysis assumes that there is no overlap because the number of establishments that sell 987 both household and office furniture is not known; th at is, no establishments are assumed to sell both 988 household and office furniture. 989 990 The results are presented here for the six digit NAICS, but the calculations described above were 991 performed at either the six or seven digit level, de pending on which was the most detailed level available 992 in the Census data. 993 994 2.1.4.3 Results 

### 995 996 This section summarizes the results of the process used to adjust the firm and establishment 997 counts to account for the fact that not all entities in the affected wholesale and retail industries sell 998 composite wood products. Employer establishment a nd firm counts are presented first, nonemployer data 999 second, and finally, summary data. 1000 1001 Employer Establishments 

### 1002 1003 Table 2-8 presents estimates of the number of affected wholesale employer establishments by 1004 NAICS. This is estimated from the percentage of affected establishments in each industry, which is 1005 calculated from Census data on the number of establis hments selling product lines that are expected to 1006 contain composite wood products. The pe rcentage of affected establishmen ts within each industry is also 1007 used to adjust the firm counts in Table 2-10, since product line data are not collected at the firm level. 1008 Note that the total establishment counts in Table 2-8 do not include manufacturers’ sales branches and 1009 offices. Generally, Census categorizes wholesale establis hments into one of two types of operation: 1) 1010 manufacturers' sales branches and offices, which are “p rimarily maintained by manufacturing, refining, 1011 and mining companies apart from their plants or min es for marketing their products at wholesale” (U.S. 1012 Census Bureau 2010e), and 2) merchant wholesalers, except manufacturers' sales branches and offices. 1013 Manufacturers’ sales branches and offices are excluded from this analysis, since these firms are already 1014 counted as fabricators. 1015 1016

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### Table 2-8: Number and Percentage of Affected Wholesale Employer Establishments, by Affected NAICS

NAICS NAICS Description Establishments, except Manufacturers' Sales Branches

and Offices Affected
Establishments
as a Percent of
Total Affected
Establishments 423210 Furniture merchant wholesalers 6,640 100.00% 6,640 423220 Home furnishing merchant w holesalers 7,540 47.21% 3,560

423310 Lumber, plywood, millwork, and wood panel merchant
wholesalers 8,428 100.00% 8,428

423320 Brick, stone, and related cons truction material merchant
wholesalers 3,383 10.20% 345

423330 Roofing, siding, and insulation material merchant wholesalers 2,587 78.08% 2,020
423390 Other construction material mercha nt wholesalers 3,383 84.92% 2,873 423410 Photographic equipment and supplies merchant wholesalers 1,019 3.83% 39 423420 Office equipment merchant wholesalers 4,837 2.69% 130 423430 Computer and software mercha nt wholesalers 10,668 1.76% 188 423440 Other commercial equi pment merchant wholes alers 4,352 20.01% 871 423450 Medical equipment merchant wholesalers 8,282 0.81% 67

423490 Other professional equipmen t and supplies merchant wholesalers 2,297 3.66% 84

423510 Metal service centers and other metal merchant wholesalers 10,148 12.22% 1,240 423610 Elec. equip. and wi ring merchant wholesalers 13,277 0.78% 103 423620 Electric appliance merchant wholesalers 3,110 2.38% 74 423690 Other electronic parts and equipment merchant wholesalers 13,223 0.82% 109
423710 Hardware merchant w holesalers 6,828 13.96% 953 423720 Plumbing equip. merchant w holesalers 6,939 26.52% 1,840 423730 HVAC equip. merchant wholesalers 5,071 16.55% 839 423740 Refrigeration equipment and supplies merchant wholesalers 1,265 8.77% 111 423810 Construction equipment merchant wholesalers 4,694 0.49% 23

423820 Farm and garden machinery and equipment merchant
wholesalers 8,320 5.13% 427

423830 Industrial machinery and equipment merchant wholesalers 29,838 1.60% 476 423840 Industrial supplies merchant wholesalers 8,361 3.56% 298

423850 Service establishment equipm ent and supplies merchant
wholesalers 4,576 14.16% 648

423910 Sporting and recreational goods and supplies merchant wholesalers 6,192 58.28% 3,609

423920 Toy and hobby goods and supplies merc hant wholesalers 2,497 100.00% 2,497 423930 Recyclable material mercha nt wholesalers 7,377 0.08% 6 423940 Jewelry merchant wholesalers 7,792 0.71% 55 423990 Other miscellaneous durable goods me rchant wholesalers 10,185 20.70% 2,108 424110 Printing and writing paper merc hant wholesalers 1,174 2.47% 29 424120 Stationery and office supplies merc hant wholesalers 5,513 21.75% 1,199 424130 Industrial and personal service paper merchant wholesalers 4,679 2.78% 130 424210 Drugs and druggists' sundries merc hant wholesalers 8,040 1.57% 126

424310 Piece goods, notions, and other dry goods merchant
wholesalers 3,445 4.33% 149

424320 Men's and boys' clothing and furnishings merchant
wholesalers 4,204 5.14% 216

424330 Women's and children's clothing me rchant wholesalers 7,650 1.49% 114 424340 Footwear merchant wholesalers 1,649 3.15% 52 424410 General line grocery merchant wholesalers 2,547 12.92% 329

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January 27, 2012 2-19 

### Table 2-8: Number and Percentage of Affected Wholesale Employer Establishments, by Affected NAICS

NAICS NAICS Description Establishments, except Manufacturers' Sales Branches

and Offices Affected
Establishments
as a Percent of
Total Affected
Establishments 424420 Packaged frozen food merchant wholesalers 3,282 1.34% 44 424450 Confectionery merchant wholesalers 1,938 0.41% 8
424460 Fish and seafood merchant wholesalers 2,012 0.35% 7 424480 Fresh fruit and vegetable mercha nt wholesalers 5,074 0.18% 9 424490 Other grocery and related products merchant wholesalers 10,562 1.81% 191 424510 Grain and field bean merchant wholesalers 4,851 0.39% 19

424610 Plastics materials and basic forms and shapes merchant wholesaler 3,248 13.73% 446

424690 Other chemical and allied products merchant wholesalers 8,530 1.08% 92 424910 Farm supplies merchant wholesalers 7,432 0.98% 73 424920 Book, periodical, and newspaper me rchant wholesalers 2,644 2.38% 63

424930 Flower, nursery stock, & florists' supplies merchant wholesalers 4,213 1.42% 60

424940 Tobacco and tobacco product merchant wholesalers 1,305 0.46% 6 424950 Paint, varnish, and supplies me rchant wholesalers 1,649 4.73% 78 424990 Other miscellaneous nondurable goods me rchant wholesalers 12,492 6.47% 808 Total in Affected NAICS 321,242 44,909 Sources: U.S. Census Bureau 2010m, 2011 

### 1017 As indicated in Table 2-8, there are a total of 321,242 wholesale employer establishments not 1018 including manufacturers’ sales branches and offices. Of this total, an estimated 44,909 establishments 1019 (approximately 14 percent) sell product lines expected to contain composite wood products. By industry, 1020 the percent of wholesale establishments selling aff ected product lines ranges from 0.1 percent (NAICS 1021 423930) to 100.0 percent (multiple industries). 1022 1023 Table 2-9 presents estimates of the number of affected employer establishments in the retail trade 1024 industries. It also presents the proportions of a ffected establishments within each industry (i.e., the 1025 percentage selling product lines expected to contain co mposite wood products), which are used to adjust 1026 retail employer firm counts in Table 2-11. 1027

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### Table 2-9: Number and Percentage of Affected Retail Employer Establishments, by Affected NAICS

NAICS NAICS Description Total Establishments Affected
Establishments
as a Percent of
Total Affected
Establishments 441110 New car dealers 24,888 5.77% 1,437 441210 Recreational vehicle dealers 3,100 100.00% 3,100 441221 Motorcycle, ATV, and personal wa tercraft dealers 6,137 13.33% 818 441229 All other motor vehicle dealers 2,266 10.90% 247 441320 Tire dealers 20,127 0.16% 32 442110 Furniture stores 28,834 100.00% 28,834 442210 Floor covering stores 14,534 87.71% 12,748 442291 Window treatment stores 2,652 22.55% 598 442299 All other home furnishings stores 19,124 100.00% 19,124 443111 Household appliance st ores 9,336 24.21% 2,260 443112 Radio, television, and other elec tronics stores 29,051 47.83% 13,896 443120 Computer and software stores 10,428 7.11% 741 443130 Camera and photographic s upplies stores 1,988 0.91% 18 444110 Home centers 6,953 100.00% 6,953 444120 Paint and wallpaper stores 7,860 15.70% 1,234 444130 Hardware stores 16,454 100.00% 16,454 444190 Other building material dealers 39,551 78.80% 31,166 444210 Outdoor power equipment stores 4,357 11.59% 505 444220 Nursery, garden center, and farm supply stores 15,895 62.42% 9,922 445110 Supermarkets and other grocery (excep t convenience) stores 64,881 29.48% 19,128 445120 Convenience stores 25,510 28.96% 7,387 445210 Meat markets 6,009 1.63% 98 445220 Fish and seafood markets 2,063 3.34% 69 445230 Fruit and vegetable markets 2,938 3.81% 112 445291 Baked goods stores 4,290 0.79% 34 445292 Confectionery and nut stores 3,404 7.31% 249 445299 All other specialty food stores 5,504 10.94% 602 445310 Beer, wine, and liquor stores 31,485 3.33% 1,047 446110 Pharmacies and drug stores 42,045 74.76% 31,431 446120 Cosmetics, beauty supplies, a nd perfume stores 13,584 0.76% 103 446130 Optical goods stores 13,149 0.07% 9 446191 Food (health) supplement stores 8,999 2.28% 205 446199 All other health and personal care stores 10,675 0.16% 17 447110 Gasoline stations with convenience stores 97,508 4.80% 4,680 447190 Other gasoline stations 21,248 1.18% 251 448110 Men's clothing stores 8,321 6.57% 547 448120 Women's clothing stores 36,220 9.57% 3,467
448130 Children's and infants' clothi ng stores 7,102 39.96% 2,838 448140 Family clothing stor es 28,254 74.85% 21,147 448150 Clothing accessories stores 7,494 3.70% 277 448190 Other clothing stores 12,034 8.08% 972 448210 Shoe stores 28,076 10.19% 2,861 448310 Jewelry stores 27,745 8.93% 2,478 448320 Luggage and leather goods stores 1,222 14.98% 183 451110 Sporting goods stores 22,254 72.13% 16,051 451120 Hobby, toy, and game stores 9,357 100.00% 9,357 451130 Sewing, needlework, and piece goods stores 5,663 91.95% 5,207
451140 Musical instrument and s upplies stores 4,510 0.31% 14

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### Table 2-9: Number and Percentage of Affected Retail Employer Establishments, by Affected NAICS

NAICS NAICS Description Total Establishments Affected
Establishments
as a Percent of
Total Affected
Establishments 451211 Book stores 9,955 36.57% 3,641 451212 News dealers and newsstands 1,523 19.24% 293 451220 Prerecorded tape, compact disc, and record stores 4,153 56.54% 2,348 452111 Department stores (exc ept discount department stores) 3,533 100.00% 3,533 452112 Discount department st ores 5,001 100.00% 5,001 452910 Warehouse clubs and super centers 4,260 100.00% 4,260 452990 All other general merchandise stores 33,061 100.00% 33,061 453110 Florists 19,822 76.57% 15,177 453210 Office supplies and stationery stores 9,558 94.50% 9,032 453220 Gift, novelty, and souvenir stores 31,391 68.31% 21,442 453910 Pet and pet supplies stores 8,782 0.74% 65 453920 Art dealers 6,677 12.88% 860 453930 Manufactured (mobile) home dealers 3,878 100.00% 3,878 453991 Tobacco stores 6,539 6.73% 440 453998 All other miscellaneous store retailers (except tobacco stores) 17,270 28.99% 5,006 454111 Electronic shopping 14,185 35.67% 5,060 454113 Mail-order houses 7,324 33.78% 2,474 454210 Vending machine operators 5,194 0.79% 41 454311 Heating oil dealers 4,055 30.92% 1,254 454312 Liquefied petroleum gas (bottled gas) dealers 5,980 25.23% 1,509 454390 Other direct selling estab lishments 22,077 24.80% 5,475 Total in Affected NAICS 1,039,297 404,758 Sources: U.S. Census Bureau 2010j, n 

### 1028 As indicated in Table 2-9, an estimated 404,758 of the 1,039,297 establishments in the affected 1029 retail industries (approximately 39 percent) sell product lines expected to contain composite wood 1030 products. By industry, the percent of retail estab lishments selling affected product lines ranges from 0.1 1031 percent (NAICS 446130) to 100.0 percent (multiple industries). 1032 1033 Employer Firms 

### 1034
1035 Table 2-10 presents estimates of the number of a ffected wholesale employer firms. Total firm 1036 counts were adjusted using corresponding establishm ent ratios to exclude manufacturers’ sales branches 1037 and offices and prevent potential double-counting of manufacturing firms that have branch offices 1038 designated as wholesale establishments. Counts we re then multiplied by the corresponding affected 1039 establishment ratios in Table 2-8 to estimat e the number of affected employer firms. 1040

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-22 

### Table 2-10: Number of Affected Wholesal e Employer Firms, by Affected NAICS

NAICS NAICS Description Total Firms in
Affected NAICS Manufacturers' Sales Branches

and Offices

Ratio a Number of Firms Not Including
Manufacturer's Sales Branches

and Offices Affected Entity
Ratio b Number of
Affected

Firms
A B C = (AxB) D E = (CxD)
423210 Furniture merchant wholesal ers 6,172 97.10% 5,993 100.00% 5,993 423220 Home furnishing merchant wholes alers 6,491 98.48% 6,393 47.21% 3,018

423310 Lumber, plywood, millwork, and wood panel
merchant wholesalers 6,475 93.81% 6,074 100.00% 6,074

423320 Brick, stone, and relate d construction material
merchant wholesalers 2,796 82.37% 2,303 10.20% 235

423330 Roofing, siding, and insulation material merchant wholesalers 1,121 92.26% 1,034 78.08% 807

423390 Other construction ma terial merchant wholesalers 2,514 89.81% 2,258 84.92% 1,918

423410 Photographic equipment and supplies
merchant wholesalers 886 95.95% 850 3.83% 33

423420 Office equipment merchant whol esalers 2,895 75.40% 2,183 2.69% 59 423430 Computer and software merchant wholesalers 8,509 92.40% 7,863 1.76% 139

423440 Other commercial e quipment merchant
wholesalers 3,962 97.93% 3,880 20.01% 777

423450 Medical equipment merchant w holesalers 7,197 96.29% 6,930 0.81% 56

423490 Other professional equipment and supplies
merchant wholesalers 2,041 96.51% 1,970 3.66% 72

423510 Metal service centers and other metal
merchant wholesalers 7,973 93.69% 7,470 12.22% 913

423610 Elec. equip. and wiri ng merchant wholesalers 8,622 95.19% 8,207 0.78% 64 423620 Electric appliance merchant wholesalers 2,576 98.76% 2,544 2.38% 61

423690 Other electronic parts and equipment merchant wholesalers 10,483 94.51% 9,908 0.82% 82

423710 Hardware merchant wholes alers 5,154 97.74% 5,037 13.96% 703 423720 Plumbing equip. merchant whol esalers 3,584 98.75% 3,539 26.52% 938 423730 HVAC equip. merchant wholes alers 2,336 94.33% 2,203 16.55% 364

423740 Refrigeration equipment and supplies
merchant wholesalers 758 95.98% 728 8.77% 64

423810 Construction equipment merchant wholesalers 3,075 95.72% 2,943 0.49% 14

423820 Farm and garden machinery and equipment merchant wholesalers 6,316 98.99% 6,252 5.13% 321

423830 Industrial machinery and equipment merchant
wholesalers 24,357 95.09% 23,160 1.60% 369

423840 Industrial supplies merchant wh olesalers 5,808 94.47% 5,487 3.56% 196

423850 Service establishment equipment and supplies
merchant wholesalers 3,669 96.97% 3,558 14.16% 504

423910 Sporting and recreational goods and supplies
merchant wholesalers 5,661 98.63% 5,583 58.28% 3,254

423920 Toy and hobby goods and supplies merchant wholesalers 2,398 99.72% 2,391 100.00% 2,391

423930 Recyclable material merchant wholesalers 6,218 100.00% 6,218 0.08% 5 423940 Jewelry merchant wholesal ers 7,570 99.82% 7,556 0.71% 53

423990 Other miscellaneous dur able goods merchant
wholesalers 9,460 99.17% 9,382 20.70% 1,942

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-23 

### Table 2-10: Number of Affected Wholesal e Employer Firms, by Affected NAICS

NAICS NAICS Description Total Firms in
Affected NAICS Manufacturers' Sales Branches

and Offices

Ratio a Number of Firms Not Including
Manufacturer's Sales Branches

and Offices Affected Entity
Ratio b Number of
Affected

Firms
A B C = (AxB) D E = (CxD)

424110 Printing and writing paper merchant
wholesalers 801 90.94% 728 2.47% 18

424120 Stationery and office supplies merchant
wholesalers 4,620 94.00% 4,343 21.75% 945

424130 Industrial and personal se rvice paper merchant
wholesalers 4,058 94.74% 3,844 2.78% 107

424210 Drugs and druggists' sundries merchant wholesalers 6,261 94.20% 5,898 1.57% 92

424310 Piece goods, notions, and other dry goods
merchant wholesalers 3,150 97.54% 3,072 4.33% 133

424320 Men's and boys' clothing and furnishings
merchant wholesalers 3,927 98.87% 3,883 5.14% 200

424330 Women's and children's clothing merchant
wholesalers 7,237 99.69% 7,214 1.49% 108

424340 Footwear merchant wholes alers 1,557 99.40% 1,548 3.15% 49 424410 General line grocery merchant w holesalers 2,208 100.00% 2,208 12.92% 285 424420 Packaged frozen food merchant w holesalers 2,994 93.72% 2,806 1.34% 38 424450 Confectionery merchant whol esalers 1,798 88.45% 1,590 0.41% 7

424460 Fish and seafood merchant w holesalers 1,924 99.51% 1,914 0.35% 7

424480 Fresh fruit and vegetable merchant
wholesalers 4,646 100.00% 4,646 0.18% 8

424490 Other grocery and related products merchant
wholesalers 9,668 80.82% 7,814 1.81% 141

424510 Grain and field bean merchant wholesalers 2,469 100.00% 2,469 0.39% 10

424610 Plastics materials and basic forms and shapes
merchant wholesaler 2,734 94.97% 2,597 13.73% 357

424690 Other chemical and allied products merchant
wholesalers 6,527 84.14% 5,492 1.08% 59

424910 Farm supplies merchant whol esalers 4,543 96.05% 4,363 0.98% 43

424920 Book, periodical, and newspaper merchant
wholesalers 2,049 93.99% 1,926 2.38% 46

424930 Flower, nursery stock, & florists' supplies merchant wholesalers 3,635 99.88% 3,631 1.42% 52

424940 Tobacco and tobacco product merchant
wholesalers 1,135 95.26% 1,081 0.46% 5

424950 Paint, varnish, and supplies merchant
wholesalers 1,168 80.05% 935 4.73% 44

424990 Other miscellaneous nondurable goods
merchant wholesalers 12,118 98.88% 11,982 6.47% 775

Total in Affected NAICS 258,304 245,881 34,948

a 

### Firm counts were adjusted to prevent potential double-counting of manufacturing firms that have branch offices designated as wholesale establishments. The counts we re adjusted according to th e percentage of wholesale establishments that are not manufact urers’ sales branches and offices.

b 

### Firm counts were also adjusted to exclude firms that do not sell any composite wood products, based on the percentage of affected establishments in Table 2-8. Sources: U.S. Census Bureau 2010c, m, 2011

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-24 

### As indicated in Table 2-10, there are an estimated 245,881 wholesale employer firms not 1041 including manufacturers’ sales branches and offices. Of this total, it is estimated that 34,948 firms 1042 (approximately 14 percent) sell product lin es containing composite wood products. 1043 1044 Table 2-11 presents estimates of the number of aff ected retail employer firms. Total firm counts 1045 were adjusted using the corresponding affected estab lishment ratios in Table 2-9 to estimate the number 1046 of affected employer firms. 1047
1048
Table 2-11: Number of Affected Retail Employer Firms, by Affected NAICS

NAICS NAICS Description Total Firms in
Affected NAICS Affected
Establishment
Ratio Affected Firms

441110 New car dealers 21,489 5.77% 1,241 441210 Recreational vehicle dealers 2,749 100.00% 2,749 441221 Motorcycle, ATV, and personal wa tercraft dealers 5,763 13.33% 768 441229 All other motor vehicle dealers 2,154 10.90% 235 441320 Tire dealers 11,346 0.16% 18 442110 Furniture stores 19,714 100.00% 19,714 442210 Floor covering stores 12,965 87.71% 11,372 442291 Window treatment stores 2,278 22.55% 514 442299 All other home furnishings stores 11,560 100.00% 11,560 443111 Household appliance st ores 7,805 24.21% 1,889 443112 Radio, television, and other elec tronics stores 14,679 47.83% 7,021 443120 Computer and software stores 5,550 7.11% 394 443130 Camera and photographic supplies stores 788 0.91% 7 444110 Home centers 2,664 100.00% 2,664 444120 Paint and wallpaper stores 2,399 15.70% 377 444130 Hardware stores 12,152 100.00% 12,152 444190 Other building material dealers 30,467 78.80% 24,008 444210 Outdoor power equipment stores 4,146 11.59% 481 444220 Nursery, garden center, and farm supply stores 12,804 62.42% 7,993 445110 Supermarkets and other grocery (excep t convenience) stores 41,885 29.48% 12,348 445120 Convenience stores 22,168 28.96% 6,419 445210 Meat markets 5,502 1.63% 90 445220 Fish and seafood markets 2,022 3.34% 68 445230 Fruit and vegetable markets 2,851 3.81% 109 445291 Baked goods stores 3,126 0.79% 25 445292 Confectionery and nut stores 2,149 7.31% 157 445299 All other specialty food stores 4,258 10.94% 466 445310 Beer, wine, and liquor stores 27,421 3.33% 912 446110 Pharmacies and drug stores 19,067 74.76% 14,254 446120 Cosmetics, beauty supplies, a nd perfume stores 6,861 0.76% 52 446130 Optical goods stores 5,398 0.07% 4 446191 Food (health) supplement stores 5,123 2.28% 117 446199 All other health and personal care stores 7,612 0.16% 12 447110 Gasoline stations with convenience stores 53,375 4.80% 2,562 447190 Other gasoline stations 15,666 1.18% 185 448110 Men's clothing stores 4,952 6.57% 326 448120 Women's clothing stores 13,582 9.57% 1,300
448130 Children's and infants' clothi ng stores 2,724 39.96% 1,089 448140 Family clothing stor es 8,299 74.85% 6,211 448150 Clothing accessories stores 3,618 3.70% 134

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-25 

### Table 2-11: Number of Affected Retail Employer Firms, by Affected NAICS

NAICS NAICS Description Total Firms in
Affected NAICS Affected
Establishment
Ratio Affected Firms

448190 Other clothing stores 7,952 8.08% 642 448210 Shoe stores 6,867 10.19% 700 448310 Jewelry stores 18,692 8.93% 1,669 448320 Luggage and leather goods stores 637 14.98% 95 451110 Sporting goods stores 17,556 72.13% 12,663 451120 Hobby, toy, and game stores 5,748 100.00% 5,748 451130 Sewing, needlework, and piece goods stores 4,124 91.95% 3,792
451140 Musical instrument and s upplies stores 3,585 0.31% 11 451211 Book stores 4,643 36.57% 1,698 451212 News dealers and newsstands 1,306 19.24% 251 451220 Prerecorded tape, compact disc, and record stores 2,343 56.54% 1,325 452111 Department stores (e xcept discount department stores) 21 100.00% 21 452112 Discount department stores 14 100.00% 14 452910 Warehouse clubs and supercenters 12 100.00% 12 452990 All other general merchandise stores 8,862 100.00% 8,862 453110 Florists 19,038 76.57% 14,577 453210 Office supplies and stationery stores 5,317 94.50% 5,024 453220 Gift, novelty, and souvenir stores 24,106 68.31% 16,466 453910 Pet and pet supplies stores 5,914 0.74% 44 453920 Art dealers 6,403 12.88% 825 453930 Manufactured (mobile) home dealers 2,774 100.00% 2,774 453991 Tobacco stores 4,940 6.73% 332 453998 All other miscellaneous store retailers (except tobacco stores) 14,743 28.99% 4,274 454111 Electronic shopping 13,888 35.67% 4,954 454113 Mail-order houses 6,471 33.78% 2,186 454210 Vending machine operators 4,651 0.79% 37 454311 Heating oil dealers 3,442 30.92% 1,064 454312 Liquefied petroleum gas (bottled gas) dealers 2,297 25.23% 580 454390 Other direct selling estab lishments 20,370 24.80% 5,052
Total in Affected NAICS 657,847 247,689 The affected establishment ratio is based on the percentages in Table 2-9. Sources: U.S. Census Bureau 2010j, n. 

### 1049 As indicated in Table 2-11, an estimated 247,689 of the 657,847 employer firms in the affected 1050 retail industries (approximately 38 percent) sell product lines containing composite wood products. 1051 1052 Nonemployer Establishments 

### 1053
1054 Table 2-12 and Table 2-13 present estimates of the number of affected nonemployer 1055 establishments in the wholesale and retail trade sector s, respectively. As with employers, nonemployer 1056 counts were calculated by applying the affected est ablishment ratios calculated in Table 2-8 and Table 2-9 1057 to the total number of nonemployer establishments. 1058 1059

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-26 

### Table 2-12: Number of Affected Wholesale None mployer Establishments, by Affected NAICS

NAICS NAICS Description Total Nonemployer Establishments

in Affected

NAICS a Affected Establishment Ratio Affected Nonemployer Establishments

423210 Furniture merchant wholesalers 6,487 100.00% 6,487 423220 Home furnishing merchant w holesalers 7,366 47.21% 3,478

423310 Lumber, plywood, millwork, and wood panel merchant wholesalers 4,056 100.00% 4,056

423320 Brick, stone, and related cons truction material merchant wholesalers 1,628 10.20% 166
423330 Roofing, siding, and insulation materi al merchant wholesalers 1,245 78.08% 972 423390 Other construction material mercha nt wholesalers 1,628 84.92% 1,382 423410 Photographic equipment and supplie s merchant wholesalers 328 3.83% 13 423420 Office equipment merchant wholesalers 1,555 2.69% 42 423430 Computer and software mercha nt wholesalers 3,430 1.76% 61 423440 Other commercial equi pment merchant wholes alers 1,399 20.01% 280 423450 Medical equipment merchant wholesalers 2,663 0.81% 22 423490 Other professional equipment and supp lies merchant wholesalers 739 3.66% 27 423510 Metal service centers and other meta l merchant wholesalers 3,103 12.22% 379 423610 Elec. equip. and wi ring merchant wholesalers 4,828 0.78% 37 423620 Electric appliance merchant wholesalers 1,131 2.38% 27 423690 Other electronic parts and equipment merchant wholesalers 4,809 0.82% 39 423710 Hardware merchant w holesalers 1,685 13.96% 235 423720 Plumbing equip. merchant wholesalers 1,713 26.52% 454 423730 HVAC equip. merchant wholesalers 1,252 16.55% 207 423740 Refrigeration equipment and supplie s merchant wholesalers 312 8.77% 27 423810 Construction equipment merchant wholesalers 1,530 0.49% 7 423820 Farm and garden machinery and equipm ent merchant wholesalers 2,712 5.13% 140 423830 Industrial machinery and equipment merchant wholesalers 9,728 1.60% 156 423840 Industrial supplies merchant wholesalers 2,726 3.56% 97

423850 Service establishment equipm ent and supplies merchant wholesalers 1,492 14.16% 211

423910 Sporting and recreational goods and supplies merchant wholesalers 11,126 58.28% 6,485
423920 Toy and hobby goods and supplies merc hant wholesalers 7,410 100.00% 7,410 423930 Recyclable material mercha nt wholesalers 8,691 0.08% 7 423940 Jewelry merchant wholesalers 22,883 0.71% 162 423990 Other miscellaneous durable goods me rchant wholesalers 57,264 20.70% 11,852 424110 Printing and writing paper me rchant wholesalers 695 2.47% 17 424120 Stationery and office supplies me rchant wholesalers 3,264 21.75% 710 424130 Industrial and personal service paper merchant wholesalers 2,770 2.78% 77 424210 Drugs and druggists' sundries merc hant wholesalers 2,796 1.57% 44 424310 Piece goods, notions, and other dry goods merchant wholesalers 4,610 4.33% 199 424320 Men's and boys' clothing and furnishi ngs merchant wholesalers 5,626 5.14% 289 424330 Women's and children's clothing me rchant wholesalers 10,238 1.49% 153 424340 Footwear merchant wholesalers 2,207 3.15% 70 424410 General line grocery merchant wholesalers 2,287 12.92% 295 424420 Packaged frozen food merchant wholesalers 2,948 1.34% 40 424450 Confectionery merchant wholesalers 1,741 0.41% 7 424460 Fish and seafood merchant wholesalers 1,807 0.35% 6 424480 Fresh fruit and vegetable mercha nt wholesalers 4,557 0.18% 8 424490 Other grocery and related products merchant wholesalers 9,486 1.81% 171 424510 Grain and field bean merchant wholesalers 3,326 0.39% 13

424610 Plastics materials and basic forms and shapes merchant wholesaler 1,010 13.73% 139
424690 Other chemical and allied products merchant wholesalers 2,651 1.08% 28 424910 Farm supplies merchant wholesalers 2,473 0.98% 25

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-27 

### Table 2-12: Number of Affected Wholesale None mployer Establishments, by Affected NAICS

NAICS NAICS Description Total Nonemployer Establishments

in Affected

NAICS a Affected Establishment Ratio Affected Nonemployer Establishments

424920 Book, periodical, and newspaper me rchant wholesalers 14,119 2.38% 336 424930 Flower, nursery stock, & florists' supp lies merchant wholesalers 7,906 1.42% 113 424940 Tobacco and tobacco product merchant wholesalers 1,219 0.46% 6 424950 Paint, varnish, and supplies me rchant wholesalers 1,769 4.73% 84 424990 Other miscellaneous nondurable goods merc hant wholesalers 44,263 6.47% 2,864 Total in Affected NAICS 310,687 50,612

a Some of these nonemployer total number of establishments were estimated based on the proportions observed in the employer data because information was not available at the 6 digit level, for each of the NAICS codes. The affected establishment ratio is based on the percentage of affected entities in Table 2-8. Sources: U.S. Census Bureau 2010o, 2011 

### 1060 As indicated in Table 2-12, an estimated 50,612 of the 310,687 nonemployer establishments in 1061 the affected wholesale trade industries (approximately 16 percent) sell product lines containing composite 1062 wood products. 1063 1064 Table 2-13: Number of Affected Retail Nonemployer Establishments, by Affected NAICS

NAICS NAICS Description Total Nonemployer Establishments in Affected NAICS a Affected Establishment Ratio Affected Nonemployer Establishments
441110 New car dealers 47,324 5.77% 2,732 441210 Recreational vehicle dealers 4,294 100.00% 4,294 441221 Motorcycle, ATV, and personal watercraft dealers 4,171 13.33% 556 441229 All other motor vehicle dealers 22,751 10.90% 2,480 441320 Tire dealers 12,149 0.16% 19 442110 Furniture stores 16,399 100.00% 16,399 442210 Floor covering stores 11,267 87.71% 9,882 442291 Window treatment stores 2,056 22.55% 464 442299 All other home furnishings stores 14,825 100.00% 14,825 443111 Household appliance stores 6,164 24.21% 1,492 443112 Radio, television, and other electronics stores 13,548 47.83% 6,480 443120 Computer and software stores 9,256 7.11% 658 443130 Camera and photographic supplies stores 1,744 0.91% 16 444110 Home centers 2,412 100.00% 2,412 444120 Paint and wallpaper stores 1,945 15.70% 305 444130 Hardware stores 4,931 100.00% 4,931 444190 Other building material dealers 17,959 78.80% 14,152 444210 Outdoor power equipment stores 2,386 11.59% 277 444220 Nursery, garden center, and farm supply stores 8,704 62.42% 5,433 445110 Supermarkets and other grocery (ex cept convenience) stores 32,676 29.48% 9,633 445120 Convenience stores 12,847 28.96% 3,720 445210 Meat markets 3,264 1.63% 53 445220 Fish and seafood markets 2,522 3.34% 84 445230 Fruit and vegetable markets 7,972 3.81% 304 445291 Baked goods stores 10,637 0.79% 84 445292 Confectionery and nut stores 8,440 7.31% 617 445299 All other specialty food stores 13,647 10.94% 1,493 445310 Beer, wine, and liquor stores 12,021 3.33% 400 446110 Pharmacies and drug stores 5,738 74.76% 4,289

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-28 

### Table 2-13: Number of Affected Retail Nonemployer Establishments, by Affected NAICS

NAICS NAICS Description Total Nonemployer Establishments in Affected NAICS a Affected Establishment Ratio Affected Nonemployer Establishments
446120 Cosmetics, beauty supplies, and perfume stores 82,071 0.76% 622 446130 Optical goods stores 2,758 0.07% 2 446191 Food (health) supplement stores 22,062 2.28% 503 446199 All other health and personal care stores 26,171 0.16% 42 447110 Gasoline stations with convenience stores 7,762 4.80% 373 447190 Other gasoline stations 1,692 1.18% 20 448110 Men's clothing stores 4,131 6.57% 272 448120 Women's clothing stores 16,616 9.57% 1,590
448130 Children's and infants' cl othing stores 7,090 39.96% 2,833 448140 Family clothing st ores 13,541 74.85% 10,135 448150 Clothing accessories stores 20,002 3.70% 739 448190 Other clothing stores 26,645 8.08% 2,152 448210 Shoe stores 5,018 10.19% 512 448310 Jewelry stores 41,651 8.93% 3,720 448320 Luggage and leather goods stores 2,194 14.98% 329 451110 Sporting goods stores 21,420 72.13% 15,450 451120 Hobby, toy, and game stores 14,625 100.00% 14,625 451130 Sewing, needlework, and pi ece goods stores 15,910 91.95% 14,629
451140 Musical instrument and supplies stores 6,071 0.31% 19 451211 Book stores 10,189 36.57% 3,727 451212 News dealers and newsstands 11,964 19.24% 2,302 451220 Prerecorded tape, compact disc, and record stores 3,972 56.54% 2,246 452111 Department stores (e xcept discount departme nt stores) 2,541 100.00% 2,541 452112 Discount department stores 3,597 100.00% 3,597 452910 Warehouse clubs and supe rcenters 3,064 100.00% 3,064 452990 All other general mercha ndise stores 23,777 100.00% 23,776 453110 Florists 24,122 76.57% 18,469 453210 Office supplies and stati onery stores 6,054 94.50% 5,721 453220 Gift, novelty, and souve nir stores 53,729 68.31% 36,700 453910 Pet and pet supplies stores 8,329 0.74% 62 453920 Art dealers 17,447 12.88% 2,247 453930 Manufactured (mobile) home dealers 2,211 100.00% 2,211 453991 Tobacco stores 30,326 6.73% 2,041 453998 All other miscellaneous store retailers (except tobacco stores) 80,095 28.99% 23,217 454111 Electronic shopping 53,677 35.67% 19,148 454113 Mail-order houses 27,714 33.78% 9,362 454210 Vending machine operators 27,595 0.79% 218 454311 Heating oil dealers 1,233 30.92% 381 454312 Liquefied petroleum gas (bottled gas) dealers 1,819 25.23% 459 454390 Other direct selling es tablishments 696,865 24.80% 172,819 Total in Affected NAICS 1,741,799 511,359

a Some of these nonemployer total number of establishments were estimated because info rmation was not available at the 6 digit level, for each of the NAICS codes. The affected establishment ratio is based on the percentage of affected entities in Table 2-9. Sources: U.S. Census Bureau 2010j, o 

### 1065 As indicated in Table 2-13, an estimated 511,359 of the 1,741,799 nonemployer establishments in 1066 the affected retail trade industries (approximately 29 percent) sell product lines containing composite 1067 wood products. 1068

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-29 

### 1069 Summary 

### 1070 1071 As indicated in Table 2-14 and Table 2-15, an estimated 85,560 firms comprising 95,521 1072 establishments in the wholesale trade sector are estimated to sell composit e wood products or goods 1073 containing composite wood products, while an estimated 759,048 firms comprising 916,117 1074 establishments in the retail trade sector are estimated to sell such items. 1075 1076

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-30 

### 1077 Table 2-14: Total Affected Wholesal e Entities, by Affected NAICS

NAICS NAICS Description Affected Employers Affected Nonemp. Total Affected

Estab. Firms Firms = Estab. Estab. Firms A B C D = A+C E= B+C 423210 Furniture merchant wholesaler s 6,640 5,993 6,487 13,127 12,480 423220 Home furnishing merchant wholesal ers 3,560 3,018 3,478 7,038 6,496

423310 Lumber, plywood, millwork, and wood panel merchant wholesalers 8,428 6,074 4,056 12,484 10,130

423320 Brick, stone, and relate d construction material merchant wholesalers 345 235 166 511 401

423330 Roofing, siding, and insu lation material merchant wholesalers 2,020 807 972 2,992 1,779

423390 Other construction material merchant wholesalers 2,873 1,918 1,382 4,255 3,300

423410 Photographic equipment and supplies merchant wholesalers 39 33 13 52 46
423420 Office equipment merchant wholesalers 130 59 42 172 101 423430 Computer and software merchant wholesalers 188 139 61 249 200 423440 Other commercial equipm ent merchant wholesal ers 871 777 280 1,151 1,057 423450 Medical equipment mercha nt wholesalers 67 56 22 89 78

423490 Other professional equipmen t and supplies merchant wholesalers 84 72 27 111 99

423510 Metal service centers an d other metal merchant wholesalers 1,240 913 379 1,619 1,292
423610 Elec. equip. and wiring merc hant wholesalers 103 64 37 140 101 423620 Electric appliance mercha nt wholesalers 74 61 27 101 88

423690 Other electronic parts and equipment merchant wholesalers 109 82 39 148 121

423710 Hardware merchant w holesalers 953 703 235 1,188 938 423720 Plumbing equip. merchant whol esalers 1,840 938 454 2,294 1,392 423730 HVAC equip. merchant wholesalers 839 364 207 1,046 571

423740 Refrigeration equipment and supplies merchant wholesalers 111 64 27 138 91
423810 Construction equipment merchant wholesalers 23 14 7 30 21

423820 Farm and garden machinery and equipment merchant wholesalers 427 321 140 567 461

423830 Industrial machinery and equipment merchant wholesalers 476 369 156 632 525
423840 Industrial supplies merchant wholesalers 298 196 97 395 293

423850 Service establishment equipment and supplies merchant wholesalers 648 504 211 859 715

423910 Sporting and recreational goods and supplies merchant wholesalers 3,609 3,254 6,485 10,094 9,739

423920 Toy and hobby goods and supplies merchant wholesalers 2,497 2,391 7,410 9,907 9,801
423930 Recyclable material merc hant wholesalers 6 5 7 13 12 423940 Jewelry merchant wholesalers 55 53 162 217 215

423990 Other miscellaneous dur able goods merchant wholesalers 2,108 1,942 11,852 13,960 13,794
424110 Printing and writing paper merchant wholesalers 29 18 17 46 35 424120 Stationery and office supplies mercha nt wholesalers 1,199 945 710 1,909 1,655

424130 Industrial and personal se rvice paper merchant wholesalers 130 107 77 207 184
424210 Drugs and druggists' sundries me rchant wholesalers 126 92 44 170 136

424310 Piece goods, notions, and other dry goods merchant wholesalers 149 133 199 348 332

424320 Men's and boys' clothing and furnishings merchant wholesalers 216 200 289 505 489

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### Table 2-14: Total Affected Wholesal e Entities, by Affected NAICS

NAICS NAICS Description Affected Employers Affected Nonemp. Total Affected

Estab. Firms Firms = Estab. Estab. Firms A B C D = A+C E= B+C

424330 Women's and children's clothing merchant wholesalers 114 108 153 267 261

424340 Footwear merchant wholesalers 52 49 70 122 119 424410 General line grocery merchant wholesalers 329 285 295 624 580 424420 Packaged frozen food merchant wholesalers 44 38 40 84 78 424450 Confectionery merchant wholesalers 8 7 7 15 14 424460 Fish and seafood mercha nt wholesalers 7 7 6 13 13 424480 Fresh fruit and vegetable merc hant wholesalers 9 8 8 17 16

424490 Other grocery and related products merchant wholesalers 191 141 171 362 312

424510 Grain and field bean merchant wholesalers 19 10 13 32 23

424610 Plastics materials and basic forms and shapes merchant wholesaler 446 357 139 585 496

424690 Other chemical and allied products merchant wholesalers 92 59 28 120 87
424910 Farm supplies merchant wholesalers 73 43 25 98 68

424920 Book, periodical, and newspaper merchant wholesalers 63 46 336 399 382

424930 Flower, nursery stock, & florists' supplies merchant wholesalers 60 52 113 173 165
424940 Tobacco and tobacco product merchant wholesalers 6 5 6 12 11 424950 Paint, varnish, and supplies merchant wholesalers 78 44 84 162 128

424990 Other miscellaneous nondur able goods merchant wholesalers 808 775 2,864 3,672 3,639
Total in Affected NAICS 44,909 34,948 50,612 95,521 85,560 Sources:U.S. Census Bureau 2010c, i, m, 2011

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### 1078
Table 2-15: Total Affected Reta il Entities, by Affected NAICS

NAICS NAICS Description Affected Employers Affected Nonemp. Total Affected

Estab. Firms Firms = Estab. Estab. Firms A B C D = A+C E= B+C 441110 New car dealers 1,437 1,241 2,732 4,169 3,973 441210 Recreational vehicle dealers 3,100 2,749 4,294 7,394 7,043 441221 Motorcycle, ATV, and personal wate rcraft dealers 818 768 556 1,374 1,324 441229 All other motor vehicle dealers 247 235 2,480 2,727 2,715 441320 Tire dealers 32 18 19 51 37 442110 Furniture stores 28,834 19,714 16,399 45,233 36,113 442210 Floor covering stores 12,748 11,372 9,882 22,630 21,254 442291 Window treatment stores 598 514 464 1,062 978 442299 All other home furnishings stores 19,124 11,560 14,825 33,949 26,385 443111 Household appliance stores 2,260 1,889 1,492 3,752 3,381 443112 Radio, television, and other electronics stores 13,896 7,021 6,480 20,376 13,501 443120 Computer and software stores 741 394 658 1,399 1,052 443130 Camera and photographic supplies stores 18 7 16 34 23 444110 Home centers 6,953 2,664 2,412 9,365 5,076 444120 Paint and wallpaper stores 1,234 377 305 1,539 682 444130 Hardware stores 16,454 12,152 4,931 21,385 17,083 444190 Other building material dealer s 31,166 24,008 14,152 45,318 38,160 444210 Outdoor power equipment stores 505 481 277 782 758 444220 Nursery, garden center, and farm suppl y stores 9,922 7,993 5,433 15,355 13,426

445110 Supermarkets and other grocery (except convenience) stores 19,128 12,348 9,633 28,761 21,981
445120 Convenience stores 7,387 6,419 3,720 11,107 10,139 445210 Meat markets 98 90 53 151 143 445220 Fish and seafood markets 69 68 84 153 152 445230 Fruit and vegetable markets 112 109 304 416 413 445291 Baked goods stores 34 25 84 118 109 445292 Confectionery and nut stores 249 157 617 866 774 445299 All other specialty food stores 602 466 1,493 2,095 1,959 445310 Beer, wine, and liquor stores 1,047 912 400 1,447 1,312 446110 Pharmacies and drug stores 31,431 14,254 4,289 35,720 18,543 446120 Cosmetics, beauty supplies, and perfume stores 103 52 622 725 674 446130 Optical goods stores 9 4 2 11 6 446191 Food (health) supplement stores 205 117 503 708 620 446199 All other health and personal care stores 17 12 42 59 54 447110 Gasoline stations with convenien ce stores 4,680 2,562 373 5,053 2,935 447190 Other gasoline stations 251 185 20 271 205 448110 Men's clothing stores 547 326 272 819 598 448120 Women's clothing stores 3, 467 1,300 1,590 5,057 2,890 448130 Children's and infants' clothing st ores 2,838 1,089 2,833 5,671 3,922 448140 Family clothing stores 21, 147 6,211 10,135 31,282 16,346 448150 Clothing accessories stores 277 134 739 1,016 873 448190 Other clothing stores 972 642 2,152 3,124 2,794 448210 Shoe stores 2,861 700 512 3,373 1,212 448310 Jewelry stores 2,478 1,669 3,720 6,198 5,389 448320 Luggage and leather goods stores 183 95 329 512 424 451110 Sporting goods stores 16,051 12,663 15,450 31,501 28,113 451120 Hobby, toy, and game stores 9,357 5,748 14,625 23,982 20,373 451130 Sewing, needlework, and piece goods st ores 5,207 3,792 14,629 19,836 18,421 451140 Musical instrument and supplies stores 14 11 19 33 30 451211 Book stores 3,641 1,698 3,727 7,368 5,425 451212 News dealers and newsstands 293 251 2,302 2,595 2,553 451220 Prerecorded tape, compact disc, and reco rd stores 2,348 1,325 2,246 4,594 3,571

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### Table 2-15: Total Affected Reta il Entities, by Affected NAICS

NAICS NAICS Description Affected Employers Affected Nonemp. Total Affected

Estab. Firms Firms = Estab. Estab. Firms A B C D = A+C E= B+C

452111 Department stores (excep t discount department stores) 3,533 21 2,541 6,074 2,562
452112 Discount department stores 5,001 14 3,597 8,598 3,611 452910 Warehouse clubs and supercente rs 4,260 12 3,064 7,324 3,076 452990 All other general merchandise stor es 33,061 8,862 23,776 56,837 32,638 453110 Florists 15,177 14,577 18,469 33,646 33,046 453210 Office supplies and stationery stor es 9,032 5,024 5,721 14,753 10,745 453220 Gift, novelty, and souvenir stores 21,442 16,466 36,700 58,142 53,166 453910 Pet and pet supplies stores 65 44 62 127 106 453920 Art dealers 860 825 2,247 3,107 3,072 453930 Manufactured (mobile) home dealers 3,878 2,774 2,211 6,089 4,985 453991 Tobacco stores 440 332 2,041 2,481 2,373

453998 All other miscellaneous store retailers (except tobacco stores) 5,006 4,274 23,217 28,223 27,491
454111 Electronic shopping 5,060 4,954 19,148 24,208 24,102 454113 Mail-order houses 2,474 2,186 9,362 11,836 11,548 454210 Vending machine operators 41 37 218 259 255 454311 Heating oil dealers 1,254 1,064 381 1,635 1,445 454312 Liquefied petroleum gas (bottled ga s) dealers 1,509 580 459 1,968 1,039 454390 Other direct selling establishmen ts 5,475 5,052 172,819 178,294 177,871 Total in Affected NAICS 404,758 247,689 511,359 916,117 759,048 Sources: U.S. Census Bureau 2010i, j, n 

### 1079

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## 2.2 Third Party Testing and Certification Costs 1080 1081 This analysis presents cost estimates assuming th at the costs of complying with certification 1082 requirements under TSCA Title VI will be the same as complying with the requirements of the CARB Air 1083 Toxics Control Measure (ATCM) to reduce formaldehyde emissions from composite wood products. It is 1084 also assumed that mills that are certified by a CARB- approved TPC will not have to generate new testing 1085 data or incur significant costs to become certified by a TPC under the TSCA Title VI rule. TSCA Title 1086 VI requires composite panel producers to perform formaldehyde emission testing on their composite 1087 wood products and attain certification from an accr edited third-party certifier (TPC). Producers must 1088 undergo qualifying tests at a TPC lab, obtain an on-site audit from a TPC, implement quality control 1089 systems, and train quality control employees in order to receive initial certification. Once a TPC certifies 1090 a mill’s products, that mill is re quired to conduct on-going quality contro l testing, submit monthly reports 1091 to the TPC, and receive quarterly on-site audits and te sting by its TPC to maintain its certified status. 1092 Mills that manufacture products made with no-added formaldehyde (NAF) resins that meet more stringent 1093 emissions limits may apply for exemptions from so me of the on-going testing requirements. 1094 1095 CARB has accredited nine U.S. third-party certif iers to offer formaldehyde certification and 1096 testing programs. However, about 90 percent of the U. S. mills that have been certified to produce CARB1097 compliant products have the Composite Panel Asso ciation (CPA) or the Hardwood Plywood and Veneer 1098 Association (HPVA) as their TPC. Therefore, this analysis relies on the prices charged by CPA and 1099 HPVA for TPC services in order to estimate the co sts associated with obtaining and maintaining 1100 certification under TSCA Title VI. 1101 1102 2.2.1 Certification Fees 1103 1104 CPA and HPVA charge administrative fees to mills for certifying their products. CPA charges a 1105 quarterly fee of $1,500 regardless of NAF or ULEF stat us, which is equivalent to $6,000 per year. HPVA 1106 charges an annual program fee of $4,50 0 to $5,500 (depending on membership status) to mills that are not 1107 NAF or ULEF certified. Mills with ULEF or NAF certif ications are required to pay the standard annual 1108 program fee in the first year and an annual fee of $2, 700 to $3,700 in all subsequent years. For simplicity, 1109 this analysis assumes that the annual certification f ee for mills without an NAF or ULEF exemption is 1110 $6,000, and that the fees for mills with a ULEF- or NAF exemption are $6,000 for the initial year, and 1111 $3,700 in all subsequent years. 12 

### 1112 1113 Table 2-16: Certification Fees

Cost Category Certification Type Fee

Initial Fee All $6,000

Annual Fee Standard $6,000 NAF/ULEF $3,700 

### 1114 2.2.2 Qualifying Test and Statistical Correlation 1115 1116 Under TSCA Title VI, a composite panel producer is required to obtain qualifying tests for each 1117 product type (e.g., hardwood plywood – veneer co re) and production line from the mill for which 1118 certification is sought. A TPC employee must select a nd mark the panels to be tested during the initial 1119 mill audit, with at least one panel being selected for each test. After panel selection has occurred, the mill 1120

12 NAF and ULEF certifications apply to product lines, and not necessarily to the entire facility. Mills with multiple product lines could have one or more lines certified as NAF or ULEF, and other lines that are not. The NAF and ULEF testing costs do not apply to any product lines that are not NAF or ULEF certified.

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### must ship the marked panels to the TPC for testing at the TPC facility. This testing can be performed 1121 using the ASTM E-1333-10 test method (which is co mmonly referred to as a large chamber or large scale 1122 test, and which is termed the primary test me thod under the CARB ATCM). Testing can also be 1123 performed under the TSCA Title VI rule using th e ASTM D-6007-02 test method (which is commonly 1124 referred to as a small chamber test, and which is termed the secondary test method under the CARB 1125 ATCM), upon a showing of equivalence with ASTM E-1333-10. However this analysis assumes that all 1126 qualifying testing is performed using the large chambe r test method. Results from the five large chamber 1127 tests must not exceed the emission standard s for each product type and production line. 1128 1129 In addition to the qualifying testing performed via the large chamber test method, a mill must 1130 perform on-going quality control testing on the applicable products. Quality control testing is typically 1131 performed under the CARB ATCM using a small cham ber test (ASTM D6007) or desiccator test (ASTM 1132 D5582), and it is assumed that these will be the mo st commonly used quality control tests under the 1133 TSCA Title VI rule. These tests require smaller test samples and can be conducted at the TPC facility, 1134 contract lab, or on-site at a TPC-approved lab at the composite wood mill. The TPC must develop a 1135 statistical correlation between the large chamber and small scale test methods using a minimum of five 1136 data pairs. It is assumed that mills will need to obtai n all five data pairs during qualifying testing, though 1137 it is possible that some mills may be able to use pr evious test results or data obtained from the resin 1138 manufacturer. Each large chamber test requires resu lts from one small chamber test or three desiccator 1139 tests to calculate the correlation. TSCA Title VI requires producers to obtain quality control test results 1140 for a production lot before product from that lot can be shipped, so it is likely that producers will perform 1141 quality control testing on-site to minimize the time taken to obtain testing results. This analysis assumes 1142 that producers not currently performing testing on-si te will purchase and operate a small chamber testing 1143 unit for quality control testing. 1144 1145 CPA and HPVA charge between $400 and $480 13 

### , though this analysis assumes that mills will 1146 incur the higher cost of $480 for each test. Produ cers that perform quality c ontrol testing on-site will 1147 need to perform a small chamber equivalence test fo r each large chamber test. It is assumed that each 1148 equivalence test will ta ke two hours to perform. 1149 1150 In addition to the testing fee, mills will also in cur costs associated with shipping panels to the 1151 TPC, lost product, and labor time needed to prepare the panels 14 

### for shipping. Mills are expected to ship 1152 at least five 4’ x 8’ panels for each product type vi a a commercial shipping carrier. Panels must be dead1153 stacked (i.e., having no layers betwee n panels), bundled air-tight, wrappe d in polyethylene, and protected 1154 by cover sheets. Based on conversations with CPA a nd with CARB-certified mills, the total shipping cost 1155 for the qualifying tests is estimated to be approximately $200 per product line. 1156 1157 This analysis estimated the cost of each panel us ing the average cost per square foot of hardwood 1158 plywood, $0.49 and particle board, $0.28 (RISI 2010). Assuming a pane l size of 32 sq. ft., each hardwood 1159 plywood panel will cost the mill $15.68, and each par ticleboard panel will cost $8.96. The analysis 1160 assumes that it will take a managerial-level employee half an hour to prepare the panels for shipping. 1161 Using data published by the U.S. Bureau of Labor Statistics (BLS), EPA estimated the average loaded 1162 hourly wage for a managerial position within the Veneer, Plywood, and Engineered Wood Products 1163 Industry to be $71.36. 15 

### Table 2-17 summarizes the initial unit tes ting costs, including fees, preparation, 1164 lost product, and shipping. 1165

13 This is the rate charged by HPVA’s Reston Lab to non-me mbers for testing panels. This lab charges non-members $660 to test doors, $840 to test finished engineered w ood flooring, and $480 to test furniture and cabinets.

14 The panels for the qualifying tests are se lected during the initial on-site audit.

15 The Occupational Employment Statistics (published by BLS for May, 2009) reports the average hourly wage for all

management occupations in NAICS 321200 to be $44.46. Em ployer Costs for Employee Compensation (ECEC) data (also published by BLS) for all private industry occupations we re used to inflate the wage to $44.88 in 2010 dollars.

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### 1166 Table 2-17: Qualifying Test Costs

Cost Category Description Unit Cost Number of Units Cost for PB/MDF Cost for
HWPW Large Scale Testing Large Chamber $480 

### 5 tests $2,400 $2,400 Small Scale Testing at Mill Labor 

### $71.36 10 hours $714 $714

Shipping Five 4' x 8' panels $200 

### 1 shipment $200 $200 Labor $71.36 

### 0.5 hours $36 $36

Lost Product PB/MDF 

### $8.96 5 panels $45 N/A

HWPW 

### $15.68 5 panels N/A $78

Total 

### $3,394 $3,428 Sources: BLS 2010; Communications with CPA and HPVA; RISI 2011. 

### 1167 2.2.3 Quality Control Procedures 1168 1169 Under TSCA Title VI, mills will be required to ensure that all manufactured composite wood 1170 products meet the formaldehyde emission standards by implementing routine quality control procedures 1171 and receiving periodic quality control reviews from a th ird-party certifier. The following sections provide 1172 details of the requirements and costs associated with receiving on- and off-site audits, developing quality 1173 control systems, and conducting routine quality control testing. 1174 1175 2.2.3.1 Quality Control Audits 

### 1176 1177 The TPC is responsible for conducting on-site vi sits to certified mills. Before the initial 1178 certification, the TPC is expected to make at least one trip to the mill to inspect the mill’s quality control 1179 and quality assurance systems and employees. During the initial visit, the TPC will assist the mill in 1180 setting up quality control systems, including the quality control testing facility, if applicable, and methods 1181 for selecting samples. After certification has been gr anted, the TPC is obligated to perform an on-site 1182 audit at least once quarterly, unless the mill obtains NAF certification. Audits typically do not take more 1183 than one day of travel and visitation, though if the mill requires a substantial number of modifications or 1184 is unprepared, the duration of the visit may be longer (HPVA 2011). TPCs may also conduct periodic 1185 “desk audits,” which are quality control checks pe rformed over the phone in which the mill’s quality 1186 control testing procedures and data are reviewed. 1187 1188 The cost of the audit is borne by the compos ite panel producer and has two components: audit 1189 fees and travel costs. Site audit fees can range from $300 to $450 for initial visits and from $400 to $450 1190 for quarterly visits, depending on the TPC. Travel costs can vary depending on the relative location of the 1191 mill to the TPC; mills within a close proximity may not incur any travel costs, whereas a mill across the 1192 country may incur travel costs of up to $2,000 per visi t. It is assumed that travel is only necessary for the 1193 annual audits, as other intermediate a udits can be performed by contracting inspectors closer to the mill. 1194 The fees for the desk audits range from $200 to $250 per audit, and no travel is required. Based on these 1195 ranges, this analysis assumes that initial site audits will cost a mill $1,950 per vi sit ($450 fee plus $1,500 1196 travel), quarterly audits will cost $450 per visit, and desk audits will cost $250 pe r review. In addition to 1197 the fees charged by the TPC, mills will also incur la bor costs associated with the audit process. This 1198 analysis assumes that a managerial-level employee w ill be present for eight hour s during the initial on-site 1199 audit, four hours for every on-site audit thereafte r, and one hour for each desk audit. Table 2-18 1200 summarizes the audit costs described above. 1201

ECEC data were also used to estimate that benefits acc ounted for approximately 29.3 percent of total compensation. Assuming a 17 percent rate of overhead on wages (not includi ng benefits), total hourly comp ensation is estimated to be $71.36.

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### 1202 Table 2-18: Quality Control Audit Costs Cost Category Unit Cost Number of Units Travel Cost Total Cost
TPC Fees
Initial Audit $450 

### 1 audit $1,500 $1,950
Annual On-Site Audit $450 

### 1 audit $1,500 $1,950
Other On-Site Audit $450 

### 1 audit $0 $450
Desk Audit $250 

### 1 audit $0 $250
Mill Labor Costs Initial Audit $71.36 

### 8 hours N.A. $571
Annual On-Site Audit $71.36 

### 4 hours N.A. $285
Other On-Site Audit $71.36 

### 4 hours N.A. $285
Desk Audit $71.36 

### 1 hour N.A. $71 Sources: BLS 2010; Communications with CPA and HPVA. 

### 1203 2.2.3.2 Quality Control Manual and Personnel 

### 1204 1205 Mills are required to implement quality control pr ocedures to ensure that all certified products 1206 consistently meet the applicable emissions standards. In addition, the rule requires each mill to designate 1207 a quality control manager and quality control employees, if needed. The quality control manager must 1208 have adequate training or experience to handle all quality control proce dures, including on-site testing and 1209 shipping samples for TPC testing. All qualit y control procedures and designated quality control 1210 personnel must be identified in a quality control manua l. Prior to the mill’s initial certification, the TPC 1211 will assist mills in developing and documenting appropriate quality control procedures. In some cases, 1212 the mill’s resin supplier will also help to trai n quality control employees and develop quality control 1213 procedures. 1214 1215 Based on conversations with CPA, HPVA, and co mposite panel producers, it is assumed that 1216 training, implementing quality control systems, and developing the quality c ontrol manual could take 1217 between one and five days to comp lete, depending on the mill’s existi ng quality control systems. HPVA 1218 and CPA noted that smaller mills often do not have quality control systems in place and that developing 1219 these systems can be a time-consuming process. This analysis estimates that a managerial-level employee 1220 will spend forty hours training, becoming familiarized with the testing and certification requirements, 1221 writing the quality control manual, and setting up qu ality control systems and testing procedures. 1222 1223 2.2.3.3 Routine Quality Control Testing 

### 1224 1225 To maintain certification, a mill must perform routine quality control testing for each certified 1226 product type and production line. Quality control testing is typically performed using one of the 1227 correlated small scale test methods described in Sec tion 2.2.1 – a small chamber test (ASTM D6007) or a 1228 desiccator (ASTM D5582). 1229 1230 The frequency of the required quality control t esting depends on the product type and, for 1231 hardwood plywood, the production volume. Hardwo od plywood plants producing 100 thousand square 1232 feet (msf) or less per week are required to test once per 100 msf; plants more than 100 msf but less than 1233 200 msf per week must test once per week; plants pr oducing more than 200 msf but less than 400 msf per 1234 week are required to test twice per week; and those producing 400 msf or more per week are required to 1235 test four times per week. Particleboard and MDF producers must test samples at least once per eight or 1236 twelve hour shift, but this frequency may be reduced to one test per forty-eight hours if the plant or 1237 production line has shown cons istent operations and low variability of test results. This analysis makes 1238

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### the simplifying assumption that all producers will test each production line once daily. This results in a 1239 conservative estimate of the cost of quality cont rol testing for hardwood plywood producers. 1240 1241 Mills have the option of constructing an on-s ite lab and having it approved by a TPC, or 1242 contracting with a certified third-party lab to perfo rm their quality control testing. The decision to 1243 perform on-site testing is dependent on the relative co sts of building and running an on-site lab, and the 1244 fees and shipping costs associated with hiring a th ird-party lab. According to CPA and HPVA, 1245 particleboard and MDF mills already have their own on -site labs to test for formaldehyde (because they 1246 have to test their products on a daily basis under the CARB ATCM), while most smaller hardwood 1247 plywood mills pay their TPC to conduct their quality control testing (In part because hardwood plywood 1248 mills often use ULEF or NAF resins to qualify fo r exemptions from some of the on-going testing 1249 requirements under the CARB ATCM). However, the CARB ATCM allows mills to ship panels from 1250 certified product lines before test results are availabl e. By contrast, the proposed TSCA rule requires 1251 mills to wait until test results indicate that the emis sions standards have been met before shipping a lot 1252 that has been tested. It is uncertain how often mills currently ship product from a lot being tested before 1253 the test results are available and therefore it is uncertain how mills will choose to comply with this 1254 requirement. It may be the case that some mills norma lly maintain a level of inventory where they would 1255 typically not ship any panels before test results have been determined for that lot, but other mills may ship 1256 out panels on the same day they are produced. This analysis assumes that all mills that do not already do 1257 so will opt to set up and operate a quality control test ing facility on-site, in order to minimize the time 1258 spent waiting for test results, and to maximize their flex ibility to ship out panels shortly after they have 1259 been produced (Assuming that mills conduct on-site testi ng may overstate the costs of this requirement if 1260 some mills find it more cost effective to hold products in inventory until test results have been determined 1261 by an outside lab). 1262 1263 Panel producers that have not already set up thei r own quality control testing facilities due to the 1264 CARB ATCM will incur the cost of setting up a controlled lab environment, purchasing testing 1265 equipment, and operating the lab on an on-going basis. It is assumed that each mill will incur an initial 1266 cost of $10,000 to create a lab and purchase small chambe r or desiccator testing units. It is assumed that 1267 the quality control manager will spend two hours each da y performing routine quality control testing at a 1268 loaded wage rate of $71.36 per hour. It is also assu med that one panel will be needed for testing from 1269 each production line at a cost of $15.68 per hardwood plywood panel and $8.96 pe r particleboard panel. 1270 (See Section 2.2.2 for a description of how these costs were estimated.) 1271 1272 Table 2-19: Routine Small Scale Testing Costs Cost Category Unit Cost Number of Units Time Period Total Cost Hardwood Plywood Producers Performing Their Own Daily Small Scale Testing a Setup Lab $10,000 

### 1 lab One-Time $10,000
Lost Product $15.68 

### 1 panel Daily $15.68
Labor $71.36 

### 2 hours Daily $143 Particleboard Producers Performing Their Own Daily Small Scale Testing Setup Lab $10,000 

### 1 lab One-Time $10,000
Lost Product $8.96 

### 1 panel Daily $8.96
Labor $71.36 

### 2 hours Daily $143 a. It is assumed that hardwood plywood producers th at are not CARB certified have a production volume that would require testing on weekly basis. The produc ers could have the products tested at a third-party lab, but it is assumed they will choose to perform da ily tests at their own sma ll scale lab because of the requirement in the TSCA Title VI rule that production lo ts that have been tested cannot be shipped until the
test results indicate the emissions standards have been met.

Sources: BLS, 2010; Communications with CPA and HPVA; RISI, 2010. 

### 1273

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### 2.2.4 NAF and ULEF Certifications 1274 1275 Under the proposed option, products made with NAF resins may be eligible for reduced large 1276 chamber and small scale testing frequencies. The a pplication process for NAF certification includes an 1277 initial quality control testing period, and quarterly tests to be performed by the TPC. The results from 1278 these tests must meet the emissions limits for NAF cer tification specified by TSCA Title VI in order for a 1279 product line to be exempt from quarterly TPC testi ng and/or to have reduced testing frequencies. The 1280 proposed option does not provide for reduced testi ng frequencies for products made with ULEF resins. 1281 1282 2.2.4.1 NAF and ULEF Emissions Standards 

### 1283 1284 Product lines certified as using NAF resins may be exempt from some of the quarterly TPC 1285 testing and routine QC testing. NAF certification can be achieved by performing three months of routine 1286 quality control testing and one quarterly large or smal l chamber test at the TPC. Ninety percent of the 1287 results from routine testing and the result from the quarterly TPC test must be no higher than 0.04 ppm; 1288 all test results must be no higher than 0.05 ppm fo r hardwood plywood, and 0.06 ppm for particleboard, 1289 MDF, and thin MDF. Product lines approved for NAF certification are exempt from routine quality 1290 control testing and quarterly TPC testing for two year s. After two years, the mill may reapply for NAF 1291 certification based on the results of at least one large or small chamber test. 1292 1293 The CARB ATCM also allows for reduced tes ting frequencies for ULEF products. As the TSCA 1294 Title VI proposed option does not include reduced t esting allowances for ULEF product lines, mills with 1295 ULEF certification would incur higher testing and cer tification costs under the proposed rule. The CARB 1296 ATCM requires a mill to perform quality control testing on the ULEF product type for the first sixth 1297 months after the initial certification and two quarterly large or small chamber TPC tests. For hardwood 1298 plywood products to be exempt from additional quarte rly TPC testing and routine quality control testing, 1299 the two initial quarterly TPC tests and ninety percent of the initial quality control tests must have 1300 emissions no higher than 0.04 parts pe r million (ppm), and all tests results must be no higher than the cap 1301 value of 0.05 ppm. A hardwood plywood product lin e meeting these requirements would be exempt from 1302 quarterly TPC testing and routine quality control t esting for the two year duration of the approval. 1303 Product lines that do not meet the target value of 0. 04 ppm may receive approval for semiannual, rather 1304 than quarterly, large or small chamber TPC testing if all results are below the cap value of 0.05 ppm. For 1305 particleboard, MDF, and thin MDF product lines, ninety percent of the results from the quality control 1306 test results and the results of the two quarterly test s must be no higher than the ULEF-target values listed 1307 in Table 2-20; all results must be lower than the ULEF-cap values. Particleboard, MDF, and thin MDF 1308 products that meet the exemption values may be a pproved for an exemption from the quarterly TPC 1309 testing and routine quality control testing for two year s. Products that meet the quality control testing 1310 reduction values may be approved for a reduction in TPC testing (semiannually instead of quarterly), and 1311 in quality control testing frequency (weekly instead of once per eight to twelve hour shift). ULEF 1312 certifications expire after two years, at which time a mill may reapply by submitting test results from at 1313 least two large or small chamber tests. 1314 1315 Table 2-20 summarizes the TSCA Title VI and CARB ATCM emissions standards for each 1316 product type and certification type. Table 2-21 presents the amount of testing and the results required to 1317 apply for each type of NAF/ULEF certification under TSCA Title VI and the CARB ATCM. 1318 1319

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### Table 2-20: Summary of Emissions Standa rds by Product Type (parts per million)

Product Type Standard Certification NAF ULEF (Quarterly TPC
Test Exemption) c ULEF (QC Testing Reduction) c Target Values a Hardwood Plywood 0.05 0.04 0.04 0.05

Particleboard 0.09 0.04 0.04 0.05

MDF 0.11 0.04 0.04 0.06

Thin MDF 0.13 0.04 0.04 0.08 Cap Values b
Hardwood Plywood 0.05 0.05 0.05 0.05

Particleboard 0.09 0.06 0.06 0.08

MDF 0.11 0.06 0.06 0.09

Thin MDF 0.13 0.06 0.06 0.11 a. Ninety percent of routine quality cont rol test results, and all quarterly TPC te st results must be no higher than these values. b. All routine quality control and quarterly TPC test results must be no higher than these values. c. As prescribed by the CARB ATCM. The proposed option under TSCA Title VI does not include reduced testing for ULEF products. 

### 1320 Table 2-21: NAF and ULEF Certificati on Testing Requirements (Results in ppm)

NAF ULEF a

Product Type Routine Quality Control Testing Quarterly Large or Small Chamber TPC Testing Routine Quality Control Testing Quarterly Large or Small Chamber TPC Testing Testing Requirements HWPW Weekly b for 3 months One test Weekly b for 6 months Two tests

PB/MDF/Thin MDF Once per 8-12 hour
shift for 3 months One test Once per 8-12 hour
shift for 6 months Two tests Results Needed for TPC and QC Testing Exemption

HWPW 90% ≤ 0.04
100% ≤ 0.05 1 test ≤ 0.04 90% ≤ 0.04
100% ≤ 0.05 2 tests ≤ 0.04

PB/MDF/Thin MDF 90% ≤ 0.04
100% ≤ 0.06 1 test ≤ 0.04 90% ≤ 0.04
100% ≤ 0.06 2 tests ≤ 0.04 Results Needed for QC Testing Frequency Reduction
HWPW N/A N/A 100% ≤ 0.05 2 tests ≤ 0.05

Particleboard N/A N/A 90% ≤ 0.05
100% ≤ 0.08 2 tests ≤ 0.08

MDF N/A N/A 90% ≤ 0.06
100% ≤ 0.09 2 tests ≤ 0.09

Thin MDF N/A N/A 90% ≤ 0.08
100% ≤ 0.11 2 tests ≤ 0.11

a. As prescribed by the CARB ATCM. Th e proposed option under TSCA Title VI does not include reduced testing for ULEF products. b. Testing frequency for HWPW de pends on production volume. Testing is assumed to be weekly for purposes of this analysis. 

### 1321 The CARB ATCM sets a minimum threshold for quality control testing requirements for NAF 1322 and ULEF products but, based on communications w ith HPVA and with CARB-certified mills, some 1323 TPCs may have more stringent requirements. For ex ample, HPVA requires mills to have on-site audits 1324 and large chamber tests annually for NAF-certified products, and quarterly for ULEF-certified products, 1325 which is more frequently than the CARB rule requires. This analysis therefore assumes that TPCs test 1326

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### and audit mills with NAF or ULEF-certified prod uct lines more frequently than the CARB ATCM or 1327 TSCA Title VI requires. 16 

### As noted in Section 2.2.1, it is assumed that mills will pay reduced recurring 1328 administrative fees to the TPC after achieving ULEF or NAF certification status. Table 2-22 summarizes 1329 the differences between how TPCs are assumed to implement a standard certification and a certification 1330 with an NAF or ULEF exemption. 1331 1332 Table 2-22: Testing and Certification Freque ncies Assumed to be Implemented by TPCs
Category Standard NAF ULEF

Certification Fee Annual Annual (reduced fee after first year) Annual (reduced fee after first year) Qualifying Testing One-time One-time One-time

TPC Audit Quarterly Twice initiall y and annually thereafter Twice initiall y and annually thereafter

TPC Audit Travel First audi t each year Annual Annual Large Chamber TPC Testing Quarterly Once initially and annually
thereafter Once initially and quarterly
thereafter

QC Testing On-going First 3 months and exempt
thereafter First 6 months and exempt or
reduced thereafter

Desk Audit Monthly (excludes audit months) First 2 months and exempt thereafter First 4 months and exempt thereafter 

### 1333 2.2.5 Average Certification and Testing Costs per Mill 1334 1335 As described at the beginning of this section, all U.S. hardwood plywood mills that are not CARB 1336 certified in the baseline are assumed to apply for NAF certification, but particleboard mills are less likely 1337 to become NAF- certified. However, as some mills may not become NAF-certified in practice, the next 1338 section presents a range of certification costs. To si mplify the analysis, testing and certification costs for 1339 a “typical” mill were estimated using the unit cost s described above. This analysis assumes that a 1340 hardwood plywood mill will produce tw o product types (i.e., hardwood pl ywood with veneer core and 1341 composite core) and not exceed a production volume of 200 msf per week. The typical particleboard or 1342 MDF mill is assumed to produce two product types and test once daily for five days each week. 1343 1344 Some mills with existing CARB-certified produc t lines might certify an additional product line 1345 under TSCA Title VI or change certification types (e .g., without exemptions for NAF). These mills 1346 would be paying certification fees in the baseline and so would not incur the total cost of fees as a result 1347 of TSCA Title VI. It is assumed that mills will coordinate audits needed for certifying a new product 1348 under TSCA Title VI with the audits already being pe rformed for CARB certified products. Note that 1349 particleboard and MDF mills having ULEF certifications in the baseline are assumed to be exempt from 1350 routine testing requirements after the first six months under the CARB ATCM. Though some mills may 1351 only have reduced testing frequencies, this assumpti on results in a higher incremental cost to mills 1352 switching from ULEF certifications. 1353 1354 This analysis also presents estimated testing and certification costs for wood veneer laminated 1355 product producers in the event that th ey are subject to these requirements. 17 

### Wood veneer laminators are 1356 assumed to have testing and certification costs that are similar to stock hardwood plywood mills. Many 1357 wood veneer laminated product producers produce pane ls in small batches according to customer 1358

16 While the TSCA Title VI rule does not allow ULEF certifications, the cost is relevant here in order to calculate the incremental cost of the TSCA rule for mills that ma ke products with a ULEF cer tification under the CARB ATCM.

17 A wood veneer laminated product is defined for this anal ysis as hardwood plywood where the producer glues a wood

veneer to the face and/or back of a pur chased platform to produce a finished product or co mponent part (other than a stock hardwood plywood panel).

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### specifications, and therefore their production may include more variety in terms of core types and face 1359 veneers compared to stock panel producers. Neve rtheless, the analysis assumes that wood veneer 1360 laminated product producers can limit the number of product lines requiring certification to no more than 1361 two – one veneer core product line and one composite core product line. 1362 1363 The following tables present the costs to mills fo r each type of certification scenario. The tables 1364 are organized by each type of product and type of certification under the CARB ATCM and the TSCA 1365 Title VI rule as follows. 1366 1367

 Hardwood Plywood Mills: 1368

 Table 2-23, two uncertified products (i.e., not certified under the CARB ATCM) 1369 receiving NAF certifications under the TSCA Title VI rule; 1370

 Table 2-24, two uncertified products under the CARB ATCM receiving standard (i.e., 1371 Phase 2) certifications under the TSCA Title VI rule; 1372

 Table 2-25, two products with standard certifications under the CARB ATCM receiving 1373 NAF certifications under the TSCA Title VI rule; 1374

 Table 2-26, two products with standard certifications under the CARB ATCM receiving 1375 standard certifications under the TSCA Title VI rule; 1376

 Table 2-27, two products with ULEF certif ications under the CARB ATCM receiving 1377 standard certifications under the TSCA Title VI rule; 1378

 Table 2-28, one product with ULEF certification under the CARB ATCM receiving NAF 1379 certification under the TSCA Title VI rule, and a second product with NAF certification 1380 under the CARB ATCM receiving NAF certification under the TSCA Title VI rule. 1381

 Table 2-29, one product with ULEF certification and one product with NAF certification 1382 under the CARB ATCM both receiving standard certifications under the TSCA Title VI 1383 rule; and 1384

 Table 2-30, two products with ULEF cer tifications under the CARB ATCM rule 1385 receiving NAF certifications under the TSCA Title VI rule. 1386

 Particleboard and MDF: 1387

 Table 2-31, one uncertified product under the CARB ATCM receiving standard 1388 certification under the TSCA Title VI rule, a nd one product with standard certification 1389 receiving standard certification under the TSCA Title VI rule; 1390

 Table 2-32, two products with ULEF certif ication under the CARB ATCM receiving 1391 standard certifications under the TSCA Title VI rule; 1392

 Table 2-33, one product with ULEF certif ication and a second product with NAF 1393 certification both receiving standard certifi cations under the TSCA Title VI rule; 1394

 Table 2-34, one uncertified product and a second product with standard certification both 1395 receiving NAF certifications under the CARB ATCM; 1396

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###  Table 2-35, two products with ULEF certif ications under the CARB ATCM receiving 1397 NAF certifications under the TSCA Title VI rule; 1398

 Table 2-36, two products with standard certifications under the CARB ATCM receiving 1399 NAF certifications under the TCA Title VI rule; 1400

 Table 2-37, one product with ULEF certif ication and a second product with NAF 1401 certification under the CARB ATCM both receiving NAF certification under the TSCA 1402 Title VI rule; and 1403

 Table 2-38, one product with standard certification and a second product with NAF 1404 certification under the CARB ATCM both receiving NAF certification under the TSCA 1405 Title VI rule. 1406

 Wood Veneer Laminated Product Producers: 1407

 Table 2-39, one product not certified under the CARB ATCM receiving standard 1408 certification under the TSCA Title VI rule; 1409

 Table 2-40, two products not certified under the CARB ATCM receiving standard 1410 certifications under the TSCA Title VI rule; 1411

 Table 2-41, one product not certified under the CARB ATCM receiving NAF 1412 certification under the TSCA Title VI rule; and 1413

 Table 2-42, two products not certified under the CARB ATCM receiving NAF 1414 certifications under the TSCA Title VI rule. 1415

1416 The cost estimates presented in the tables represen t the actual costs incurred by a mill in the first 1417 year of a product’s certification and each subsequent y ear, thereafter. However, mills that have existing 1418 CARB-certified products will already be incurring some of these costs in the baseline. Therefore, the 1419 incremental testing and certification costs of comply ing with TSCA Title VI requirements will be lower 1420 for these mills. Table 2-43 presents the summary of incremental costs (actual costs minus baseline costs) 1421 for obtaining certification by product type, number of product lines, and baseline certification status. 1422 1423

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### 1424 Table 2-23: Annual Testing and Certif ication Costs for Hardwood Plywood Mills a 

### Existing Certification(s): Two Uncertified Products New Certification(s): Two NAF Products

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 2 $4,800 Equivalence Test $71.36 10 hours 2 $1,427 Qualifying Test Shipping $200 1 test 2 $400 TPC Audit $450 2 audits 1 $900 TPC Audit Travel $1,500 1 audits 1 $1,500 TPC Testing $480 1 test 2 $960 TPC Testing Shipping $50 1 shipment 2 $100 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 2 audits 1 $500 Mill Labor b $71.36 185 hours 1 $13,202 Lost Product c $15.68 71 panels 2 $2,227 

### First Year Total $42,015 Subsequent Years Re-certification Fee $3,700 1 fee 1 $3,700 TPC Audit $450 1 audit 1 $450 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 1 test 2 $960 TPC Testing Shipping $50 1 shipment 2 $100 Mill Labor d $71.36 4.5 hours 1 $321 Lost Product e $15.68 1 panel 2 $31 

### Subsequent Year Total $7,062

a. NAF certification can be achieved based on testing results from one quarte rly TPC test (using large or small chamber test) and 3 months (i.e ., 13 weeks) of routine quality control tes ting. Testing frequencies are those required by the TPC and may be more frequent than TSCA Title VI requires. b. 8 hours for the initial audit, 0.5 hours to prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2 months, and 2 hours a day to test samples for 13 weeks of quality control testing. c. 5 panels for qualifying testing, 1 panel a day for 13 we eks of quality control testing, and 1 panel for the second large chamber TPC test. d. 4 hours for the on-site audit and 0.5 hours to ship samples. e. 1 panel for annual large chamber TPC testing. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010. 

### 1425

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### 1426 Table 2-24: Annual Testing and Certifi cation Costs for Hardwood Plywood Mills Existing Certification(s): Two Uncertified Products New Certification(s): Two Standard Products

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 2 $4,800 Equivalence Test $71.36 10 hours 2 $1,427 Qualifying Test Shipping $200 1 shipment 2 $400 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 3 tests 2 $2,880 TPC Testing Shipping $50 3 shipments 2 $300 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 8 audits 1 $2,000 Mill Labor a $71.36 590 hours 1 $42,102 Lost Product b $15.68 268 panels 2 $8,404 First Year Total $81,614 

### Subsequent Years Re-certification Fee $6,000 1 fee 1 $6,000 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 4 tests 2 $3,840 TPC Testing Shipping $50 4 shipments 2 $400 Desk Audit $250 8 audits 1 $2,000 Mill Labor c $71.36 546 hours 1 $38,963 Lost Product d $15.68 264 panels 2 $8,279 Subsequent Year Total $62,782 a. 8 hours for the initial audit, 0.5 hours to prepare shipping for the qualifying te st, 40 hours for developing the quality co ntrol systems, 4 hours for other quarterly audits, 1 hour per desk audit for the other 8 months, and 2 hours a day to test samples for 52 weeks of quality control testing. b. 5 panels for qualifying testing, 1 panel a day for 52 weeks of quality control testing, and 1 panel for each quarterly large chamber TPC test. c. 4 hours for other quarterly audits, 1 hour per desk audit for the other 8 months, and 2 hours a day to test samples for 52 weeks of quality control testing. d. 1 panel a day for 52 weeks of quality control testing, and 1 panel for each quarterly large chamber TPC test. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010.*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-461427Table 2-25: Annual Testing and Certification Costs for Hardwood Plywood MillsExisting Certification(s): Two Standard Products – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertifyProduct Line(s)First YearInitial Certification Fee $6,000 1 fee 1 $6,000 $6,000 $0Qualifying Test $480 0 tests 2 $0 $0 $0Correlation Test $71.36 0 tests 2 $0 $0 $0Qualifying Test Shipping $200 0 shipment 2 $0 $0 $0TPC Audit $450 4 audits 1 $1,800 $1,800 $0TPC Audit Travel $1,500 1 audit 1 $1,500 $1,500 $0TPC Testing $480 4 test 2 $3,840 $3,840 $0TPC Testing Shipping $50 4 shipment 2 $400 $400 $0Weekly QC Testing $154 0 tests 2 $0 $32,032 ($32,032)Weekly QC TestingShipping $50 0 shipments 2 $0 $5,200 ($5,200)Small Chamber TestingUnit $10,000 1 unit 1 $10,000 $0 $10,000Desk Audit $250 8 audits 1 $2,000 $2,000 $0Mill Labora$71.36 546 hours 1 $38,963 $7,421 $31,541Lost Productb$15.68 264 panels 2 $8,279 $1,756 $6,523First Year Total$72,782 $61,950 $10,832Subsequent YearsRe-certification Fee $6,000 1 fee 1 $6,000 $6,000 $0TPC Audit $450 4 audit 1 $1,800 $1,800 $0TPC Audit Travel $1,500 1 audit 1 $1,500 $1,500 $0TPC Testing $480 4 test 2 $3,840 $3,840 $0TPC Testing Shipping $50 4 shipment 2 $400 $400 $0Weekly QC Testing $154 0 tests 2 $0 $32,032 ($32,032)Weekly QC TestingShipping $50 0 shipments 2 $0 $5,200 ($5,200)Desk Audit $250 8 audits 1 $2,000 $2,000 $0Mill Labora$71.36 546 hours 1 $38,963 $7,421 $31,541Lost Productb$15.68 264 panel 2 $8,279 $1,756 $6,523Subsequent Year Total$62,782 $61,950 $832a. 4 hours for other quarterly audits, 1 hourper desk audit for the other 8 months, and2hours aday to testsamples for 52 weeks of quality control testing.b. 1 panel adayfor 52 weeks of quality control testing, and 1panel for each quarterly large chamber TPC test.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-47Table 2-26: Annual Testing and Certification Costs for Hardwood Plywood MillsaExisting Certification(s): Two Standard Products – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertifyProduct Line(s)First YearInitial Certification Fee $6,000 1 fee 1 $6,000$6,000 $0Qualifying Test $480 5 tests 2 $4,800$0 $4,800Correlation Test $71.36 10 tests 2 $1,427$0 $1,427Qualifying Test Shipping $200 1 shipment 2 $400$0 $400TPC Audit $450 2 audits 1 $900$1,800 ($900)TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment 2 $100$400 ($300)Weekly QC Testing $154 0 tests 2 $0$32,032 ($32,032)Weekly QC TestingShipping $50 0 shipments 2 $0$5,200 ($5,200)Small Chamber TestingUnit $10,000 1 unit 1 $10,000 $0 $10,000Desk Audit $250 2 audits 1 $500$2,000 ($1,500)Mill Laborb$71.36 141 hours 1 $10,062$7,421 $2,640Lost Productc$15.68 71 panels 2 $2,227$1,756 $470First Year Total$38,876 $61,950 ($23,074)Subsequent YearsRe-certification Fee $3,700 1 fee 1 $3,700$6,000 ($2,300)TPC Audit $450 1 audit 1 $450$1,800 ($1,350)TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment 2 $100$400 ($300)Weekly QC Testing $154 0 tests 2 $0 $32,032 ($32,032)Weekly QC TestingShipping $50 0 shipments 2 $0 $5,200 ($5,200)Desk Audit $250 0 audits 1 $0 $2,000 ($2,000)Mill Labord$71.36 4.5 hours 1 $321$7,421 ($7,100)Lost Producte$15.68 1 panel 2 $31$1,756 ($1,725)Subsequent Year Total$7,062 $61,950 ($54,887)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. 4 hours for the initial and second audit,0.5 hours to prepare shipping for the qualifying test and second audit, 1 hour perdesk audit for 2 months for NAF products, and2hours adaytotestsamples for 13 weeks of quality control testing.c. 5 panels for qualifying testing, 1 panel adayfor 13 weeks of small scale testing, and 1 panel for the second large scale test.d. 4 hours for the on-site audit and 0.5 hours to ship samples.e. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-48Table 2-27: Annual Testing and Certification Costs for Hardwood Plywood MillsExisting Certification(s): Two ULEF Products – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyAdditional ProductLine(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify AdditionalProduct Line(s)First YearInitial Certification Fee $6,000 1 fee 1 $6,000$3,700 $2,300Qualifying Test $480 0 tests 2 $0$0 $0Correlation Test $71.36 0 tests 2 $0$0 $0Qualifying Test Shipping $200 0 shipments 2 $0$0 $0TPC Audit $450 4 audits 1 $1,800$450 $1,350TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 4 tests 2 $3,840$3,840 $0TPC Testing Shipping $50 4 shipments 2 $400$400 $0Small Chamber TestingUnit $10,000 1 unit 1 $10,000 $0 $10,000Desk Audit $250 8 audits 1 $2,000$0 $2,000Mill Labora$71.36 546 hours 1 $38,963$642 $38,320Lost Productb$15.68 264 panels 2 $8,279$125 $8,154First Year Total$72,782 $10,658 $62,124Subsequent YearsRe-certification Fee $6,000 1 fee 1 $6,000$3,700 $2,300TPC Audit $450 4 audits 1 $1,800$450 $1,350TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 4 tests 2 $3,840$3,840 $0TPC Testing Shipping $50 4 shipments 2 $400$400 $0Desk Audit $250 8 audits 1 $2,000 $0 $2,000Mill Labora$71.36 546 hours 1 $38,963$642 $38,320Lost Productb$15.68 264 panels 2 $8,279$125 $8,154Subsequent Year Total$62,782 $10,658 $52,124a. 4 hours for other quarterly audits, 0.5 to prepare shipping, 1 hour per desk audit for the other 8 months, and2hours adaytotestsamples for 52 weeks of quality control testing.b. 1 panel a day for 52 weeks of small scale testing, and 1 panel for each quarterly large scale test.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1428*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-491429Table 2-28: Annual Testing and Certification Costs for Hardwood Plywood MillsaExisting Certification(s): One ULEF Product and One NAF Product – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $3,700 1 fee 1 $3,700$3,700 $0Qualifying Test $480 5 tests 1 $2,400$0 $2,400Correlation Test $71.36 10 tests 1 $714$0 $714Qualifying Test Shipping $200 1 shipment 1 $200$0 $200TPC Audit $450 2 audits 1 $900$450 $450TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment 1 $50$200 ($150)Small Chamber TestingUnit $10,000 1 unit 1 $10,000 $642 $9,358Desk Audit $250 2 audits 1 $500$0 $500Mill Laborb$71.36 141 hours 1 $10,062$642 $9,420Lost Productc$15.68 71 panels 1 $1,113$63 $1,051First Year Total$31,619 $9,117 $22,501Subsequent YearsRe-certification Fee $3,700 1 fee 1 $3,700$3,700 $0TPC Audit $450 1 audit 1 $450$450 $0TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment 1 $50$200 ($150)Mill Labord$71.36 4.5 hours 1 $321$642 ($321)Lost Producte$15.68 1 panel 1 $16$63 ($47)Subsequent Year Total$6,517 $8,475 ($1,958)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. 4 hours for the initial and second audit,0.5 hours to prepare shipping for the qualifying test and second audit, 1 hour perdesk audit for 2 months for NAF products, and2hours adaytotestsamples for 13 weeks of quality control testing.c. 5 panels for qualifying testing, 1 panel a dayfor 13 weeks of small scale testing, and 1 panel for the second large scale test.d. 4 hours for the on-site audit and 0.5 hours to ship samples.e. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1430*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-501431Table 2-29: Annual Testing and Certification Costs for Hardwood Plywood MillsExisting Certification(s): One ULEF Product and One NAF Product – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $6,000 1 fee 1 $6,000$3,700 $2,300Qualifying Test $480 0 tests 2 $0$0 $0Correlation Test $71.36 0 tests 2 $0$0 $0Qualifying Test Shipping $200 0 shipments 2 $0$0 $0TPC Audit $450 4 audits 1 $1,800$450 $1,350TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 4 tests 2 $3,840$2,400 $1,440TPC Testing Shipping $50 4 shipments 2 $400$250 $150Small Chamber TestingUnit $10,000 1 unit 1 $10,000 $78 $9,922Desk Audit $250 8 audits 1 $2,000$0 $2,000Mill Labora$71.36 546 hours 1 $38,963$642 $38,320Lost Productb$15.68 264 panels 2 $8,279$78 $8,201First Year Total$72,782 $9,099 $63,683Subsequent YearsRe-certification Fee $6,000 1 fees 1 $6,000$3,700 $2,300TPC Audit $450 4 audits 1 $1,800$450 $1,350TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 4 tests 2 $3,840$2,400 $1,440TPC Testing Shipping $50 4 shipments 2 $400$250 $150Desk Audit $250 8 audits 1 $2,000 $0 $2,000Mill Labora$71.36 546 hours 1 $38,963$642 $38,320Lost Productb$15.68 264 panels 2 $8,279$78 $8,201Subsequent Year Total$62,782 $9,021 $53,761a. 4 hours for other quarterly audits, 0.5 to prepare shipping, 1 hour per desk audit for the other 8 months, and2hours adaytotestsamples for 52 weeks of quality control testing.b. 1 panel a week for 52 weeks of small scale testing, and 1 panel for each quarterly large scale test.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1432*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-51Table 2-30: Annual Testing and Certification Costs for Hardwood Plywood MillsaExisting Certification(s): Two ULEF Products – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $3,700 1 fee 1 $3,700$3,700 $0Qualifying Test $480 5 tests 2 $4,800$0 $4,800Correlation Test $71.36 10 tests 2 $1,427$0 $1,427Qualifying Test Shipping $200 1 shipment 2 $400$0 $400TPC Audit $450 2 audits 1 $900$450 $450TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment 2 $100$400 ($300)Small Chamber TestingUnit $10,000 1 unit 1 $10,000$2,000 $8,000Desk Audit $250 2 audits 1 $500$0 $500Mill Laborb$71.36 141 hours 1 $10,062$642 $9,420Lost Productc$15.68 71 panels 2 $2,227$125 $2,101First Year Total$36,576 $12,658 $23,918Subsequent YearsRe-certification Fee $3,700 1 fee 1 $3,700$3,700 $0TPC Audit $450 1 audit 1 $450$450 $0TPC Audit Travel $1,500 1 audit 1 $1,500$1,500 $0TPC Testing $480 1 test 2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment 2 $100$400 ($300)Mill Labord$71.36 4.5 hours 1 $321$642 ($321)Lost Producte$15.68 1 panel 2 $31$125 ($94)Subsequent Year Total$7,062 $10,658 ($3,595)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. 4 hours for the initial and second audit,0.5 hours to prepare shipping for the qualifying test and second audit, 1 hour perdesk audit for 2 months for NAF products, and2hours adaytotestsamples for 13 weeks of quality control testing.c. 5 panels for qualifying testing, 1 panel adayfor 13 weeks of small scale testing, and 1 panel for the second large scale test.d. 4 hours for the on-site audit and 0.5 hours to ship samples.e. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1433*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-521434Table 2-31: Annual Testing and Certification Costs for Particleboard/MDF MillsExisting Certification(s): One Uncertified Product and One Standard Product – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyAdditional ProductLine(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify AdditionalProduct Line(s)First YearInitial Certification Fee $6,000 1 fee1 $6,000$6,000 $0Qualifying Test $480 5 tests1 $2,400$0 $2,400Correlation Test $71.36 10 hours1 $714$0 $714Qualifying Test Shipping $200 1 shipments1 $200$0 $200TPC Audit $450 4 audits1 $1,800$1,800 $0TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 3 tests1 $1,440$0 $1,440TPC Testing Shipping $50 3 shipments1 $150$0 $150Small Chamber TestingUnit $10,000 0 units1 $0$0 $0Desk Audit $250 8 audits1 $2,000$2,000 $0Mill Labora$71.36 546 hours1 $38,962$38,962 $0Lost Productb$8.96 268 panels1 $2,401$0 $2,401First Year Total$57,567 $50,262 $7,305Subsequent YearsRe-certification Fee $6,000 1 fee1 $6,000 $6,000 $0TPC Audit $450 4 audits1 $1,800 $1,800 $0TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 4 tests1 $1,920$0 $1,920TPC Testing Shipping $50 4 shipments1 $200$0 $200Desk Audit $250 8 audits1 $2,000$2,000 $0Mill Laborc$71.36 546 hours1 $38,962$38,962 $0Lost Productd$8.96 264 panels1 $2,365$0 $2,365Subsequent Year Total$54,748 $50,262 $4,485a. 4 hours for the initial audit, 0.5 hours toprepare shipping for the TPC tests, 4hours for 3 quarterly audits, 1 hour per desk audit for 8 months, and 2 hours a day, 5 days a week, for 52 weeks ofsmall scale testing.b. 5 panels for qualifying testing, 1 panel each day, 5 days a week for small scale testing, and 1 panel for the quarterly large scale tests.c. 4 hours for 4 quarterly audits, 0.5 hours to prepare shippingfor TPC tests,1 hour per desk audit for 8 months, and 2 hoursa day, 5 days a week, for 52 weeks of small scale testing.d. 1 panel each day, 5 days a week for small scale testing, and 1 panel for the quarterly large scale tests.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1435*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-531436Table 2-32: Annual Testing and Certification Costs for Particleboard/MDF MillsExisting Certification(s): Two ULEF Products – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyAdditional ProductLine(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify AdditionalProduct Line(s)First YearInitial Certification Fee $6,000 1 fee 1 $6,000 $3,700 $2,300Qualifying Test $480 0 tests 2 $0 $0 $0Correlation Test $71.36 0 hours 2 $0 $0 $0Qualifying Test Shipping $200 0 shipments 2 $0 $0 $0TPC Audit $450 4 audits 1 $1,800 $450 $1,350TPC Audit Travel $1,500 1 audit 1 $1,500 $1,500 $0TPC Testing $480 4 tests 2 $3,840 $3,840 $0TPC Testing Shipping $50 4 shipments 2 $400 $400 $0Small Chamber TestingUnit $10,000 0 units 1 $0 $0 $0Desk Audit $250 8 audits 1 $2,000 $0 $2,000Mill Labora$71.36 546 hours 1 $38,962 $642 $38,320Lost Productb$8.96 264 panels 2 $4,731 $72 $4,659First Year Total$59,233 $10,604 $48,629Subsequent YearsRe-certification Fee $6,000 1 fee1 $6,000 $3,700 $2,300TPC Audit $450 4 audits1 $1,800 $450 $1,350TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 4 tests2 $3,840 $3,840 $0TPC Testing Shipping $50 4 shipments2 $400 $400 $0Desk Audit $250 8 audits1 $2,000 $0 $2,000Mill Labora$71.36 546 hours1 $38,962 $642 $38,320Lost Productb$8.96 264 panels2 $4,731 $72 $4,659Subsequent Year Total$59,233 $10,604 $48,629a. 4 hours for 4 quarterly audits, 0.5 hours to prepare shippingfor TPC tests,1 hour per desk audit for 8 months, and 2 hoursa day, 5 days a week, for 52 weeks of small scale testing.b. 1 panel each day, 5 days a week for small scale testing, and 1 panel for the quarterly large scale tests.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1437*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-541438Table 2-33: Annual Testing and Certification Costs for Particleboard/MDF MillsExisting Certification(s): One NAF Product and One ULEF Product – New Certification(s): Two Standard ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyAdditional ProductLine(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify AdditionalProduct Line(s)First YearInitial Certification Fee $6,000 1 fee1 $6,000 $3,700 $2,300Qualifying Test $480 0 tests2 $0 $0 $0Correlation Test $71.36 0 hours2 $0 $0 $0Qualifying Test Shipping $200 0 shipments2 $0 $0 $0TPC Audit $450 4 audits1 $1,800 $450 $1,350TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 4 tests2 $3,840 $2,400 $1,440TPC Testing Shipping $50 4 shipments2 $400 $250 $150Small Chamber TestingUnit $10,000 0 units1 $0 $0 $0Desk Audit $250 8 audits1 $2,000 $0 $2,000Mill Labora$71.36 546 hours1 $38,962 $642 $38,320Lost Productb$8.96 264 panels2 $4,731 $45 $4,686First Year Total$59,233 $8,987 $50,246Subsequent YearsRe-certification Fee $6,000 1 fee1 $6,000 $3,700 $2,300TPC Audit $450 4 audits1 $1,800 $450 $1,350TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 4 tests2 $3,840 $2,400 $1,440TPC Testing Shipping $50 4 shipments2 $400 $250 $150Desk Audit $250 8 audits1 $2,000 $0 $2,000Mill Labora$71.36 546 hours1 $38,962 $642 $38,320Lost Productb$8.96 264 panels2 $4,731 $45 $4,686Subsequent Year Total$59,233 $8,987 $50,246a. 4 hours for 4 quarterly audits, 0.5 hours to prepare shippingfor TPC tests,1 hour per desk audit for 8 months, and 2 hoursa day, 5 days a week, for 52 weeks of small scale testing.b. 1 panel each day, 5 days a week for small scale testing, and 1 panel for the quarterly large scale tests.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1439*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-551440Table 2-34: Annual Testing and Certification Costs for Particleboard/MDF MillsaExisting Certification(s): One Uncertified Product and One Standard Product – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyAdditional ProductLine(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify AdditionalProduct Line(s)First YearInitial Certification Fee $6,000 1 fee1 $6,000 $6,000 $0Qualifying Test $480 5 tests2 $4,800 $0 $4,800Correlation Test $71.36 10 hours2 $1,427 $0 $1,427Qualifying Test Shipping $200 1 shipment2 $400 $0 $400TPC Audit $450 2 audits1 $900 $1,800 ($900)TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 1 test2 $960 $1,920 ($960)TPC Testing Shipping $50 1 shipment2 $100 $200 ($100)Small Chamber TestingUnitb$10,000 0 units1 $0 $0 $0Desk Audit $250 2 audits1 $500 $2,000 ($1,500)Mill Laborc$71.36 141 hours1 $10,062 $38,962 ($28,900)Lost Productd$8.96 71 panels2 $1,272 $2,365 ($1,093)First Year Total$27,921 $54,748 ($26,826)Subsequent YearsRe-certification Fee $3,700 1 fee1 $3,700 $6,000 ($2,300)TPC Audit $450 1 audit1 $450 $1,800 ($1,350)TPC Audit Travel $1,500 1 audit1 $1,500 $1,500 $0TPC Testing $480 1 test2 $960 $1,920 ($960)TPC Testing Shipping $50 1 shipment2 $100 $200 ($100)Desk Audit $250 0 audits1 $0 $2,000 ($2,000)Mill Labore$71.36 4.5 hours1 $321 $38,962 ($38,641)Lost Productf$8.96 1 panel2 $18 $2,365 ($2,348)Subsequent Year Total$7,049 $54,748 ($47,699)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. Purchasing and setting up a small chamber testhas a one-time cost of approximately $10,000.c. 8 hours for the initial audit, 0.5 hoursto prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2months, and 2 hours a day, 5 days a week to testsamples for 13 weeks of quality control testing.d. 5 panels for qualifying testing, 5 panelsa week for 13 weeks of small scale testing, and 1 panel for the second large scaletest.e. 4 hours for the on-site audit and 0.5 hours to ship samples.f. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1441*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-561442Table 2-35: Annual Testing and Certification Costs for Particleboard/MDF MillsaExisting Certification(s): Two ULEF Products – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $3,700 1 fee1 $3,700$3,700 $0Qualifying Test $480 5 tests2 $4,800$0 $4,800Correlation Test $71.36 10 hours2 $1,427$0 $1,427Qualifying Test Shipping $200 1 shipments2 $400$0 $400TPC Audit $450 2 audits1 $900$450 $450TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment2 $100$400 ($300)Small Chamber TestingUnitb$10,000 0 units1 $0$0 $0Desk Audit $250 2 audits1 $500$0 $500Mill Laborc$71.36 141 hours1 $10,062$642 $9,419Lost Productd$8.96 71 panels2 $1,272$72 $1,201First Year Total$25,621 $10,604 $15,017Subsequent YearsRe-certification Fee $3,700 1 fee1 $3,700$3,700 $0TPC Audit $450 1 audit1 $450$450 $0TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment2 $100$400 ($300)Desk Audit $250 0 audits1 $0 $0 $0Mill Labore$71.36 4.5 hours1 $321 $642 ($321)Lost Productf$8.96 1 panel2 $18 $72 ($54)Subsequent Year Total$7,049 $10,604 ($3,555)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. Purchasing and setting up a small chamber testhas a one-time cost of approximately $10,000.c. 8 hours for the initial audit, 0.5 hoursto prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2months, and 2 hours a day, 5 days a week to testsamples for 13 weeks of quality control testing.d. 5 panels for qualifying testing, 5 panelsa week for 13 weeks of small scale testing, and 1 panel for the second large scaletest.e. 4 hours for the on-site audit and 0.5 hours to ship samples.f. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1443*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-571444Table 2-36: Annual Testing and Certification Costs for Particleboard/MDF MillsaExisting Certification(s): Two Standard Products – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $6,000 1 fee1 $6,000$6,000 $0Qualifying Test $480 5 tests2 $4,800$0 $4,800Correlation Test $71.36 10 hours2 $1,427$0 $1,427Qualifying Test Shipping $200 1 shipment2 $400$0 $400TPC Audit $450 2 audits1 $900$1,800 ($900)TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment2 $100$400 ($300)Small Chamber TestingUnitb$10,000 0 units1 $0$0 $0Desk Audit $250 2 audits1 $500$2,000 ($1,500)Mill Laborc$71.36 141 hours1 $10,062$38,962 ($28,900)Lost Productd$8.96 71 panels2 $1,272$4,731 ($3,459)First Year Total$27,921 $59,233 ($31,312)Subsequent YearsRe-certification Fee $3,700 1 fee1 $3,700$6,000 ($2,300)TPC Audit $450 1 audit1 $450$1,800 ($1,350)TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test2 $960$3,840 ($2,880)TPC Testing Shipping $50 1 shipment2 $100$400 ($300)Desk Audit $250 0 audits1 $0 $2,000 ($2,000)Mill Labore$71.36 4.5 hours1 $321 $38,962 ($38,641)Lost Productf$8.96 1 panel2 $18 $4,731 ($4,713)Subsequent Year Total$7,049 $59,233 ($52,184)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. Purchasing and setting up a small chamber testhas a one-time cost of approximately $10,000.c. 8 hours for the initial audit, 0.5 hoursto prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2months, and 2 hours a day, 5 days a week to testsamples for 13 weeks of quality control testing.d. 5 panels for qualifying testing, 5 panelsa week for 13 weeks of small scale testing, and 1 panel for the second large scaletest.e. 4 hours for the on-site audit and 0.5 hours to ship samples.f. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1445*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-581446Table 2-37: Annual Testing and Certification Costs for Particleboard/MDF MillsaExisting Certification(s): One NAF Product and One ULEF Product – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $3,700 1 fee1 $3,700$3,700 $0Qualifying Test $480 5 tests1 $2,400$0 $2,400Correlation Test $71.36 10 hours1 $714$0 $714Qualifying Test Shipping $200 1 shipment1 $200$0 $200TPC Audit $450 2 audits1 $900$450 $450TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment1 $50$200 ($150)Small Chamber TestingUnitb$10,000 0 units1 $0$0 $0Desk Audit $250 2 audits1 $500$0 $500Mill Laborc$71.36 141 hours1 $10,062$642 $9,419Lost Productd$8.96 71 panels1 $636$36 $600First Year Total$21,141 $8,448 $12,693Subsequent YearsRe-certification Fee $3,700 1 fee1 $3,700$3,700 $0TPC Audit $450 1 audit1 $450$450 $0TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment1 $50$200 ($150)Desk Audit $250 0 audits1 $0 $0 $0Mill Labore$71.36 4.5 hours1 $321 $642 ($321)Lost Productf$8.96 1 panel1 $9 $36 ($27)Subsequent Year Total$6,510 $8,448 ($1,938)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. Purchasing and setting up a small chamber testhas a one-time cost of approximately $10,000.c. 8 hours for the initial audit, 0.5 hoursto prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2months, and 2 hours a day, 5 days a week to testsamples for 13 weeks of quality control testing.d. 5 panels for qualifying testing, 5 panelsa week for 13 weeks of small scale testing, and 1 panel for the second large scaletest.e. 4 hours for the on-site audit and 0.5 hours to ship samples.f. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.1447*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-591448Table 2-38: Annual Testing and Certification Costs for Particleboard/MDF MillsaExisting Certification(s): One NAF Product and One Standard Product – New Certification(s): Two NAF ProductsCost Category Unit Cost Number of UnitsRepetitions forProduct TypesTotal Cost to CertifyProduct Line(s)Cost Incurred inBaseline for ExistingCertification(s)Incremental Cost toCertify Product Line(s)First YearInitial Certification Fee $6,000 1 fee1 $6,000$6,000 $0Qualifying Test $480 5 tests1 $2,400$0 $2,400Correlation Test $71.36 10 hours1 $714$0 $714Qualifying Test Shipping $200 1 shipment1 $200$0 $200TPC Audit $450 2 audits1 $900$1,800 ($900)TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment1 $50$200 ($150)Small Chamber TestingUnitb$10,000 0 units1 $0$0 $0Desk Audit $250 2 audits1 $500$2,000 ($1,500)Mill Laborc$71.36 141 hours1 $10,062$38,962 ($28,900)Lost Productd$8.96 71 panels1 $636$2,365 ($1,729)First Year Total$23,441 $54,748 ($31,306)Subsequent YearsRe-certification Fee $3,700 1 fee1 $3,700$6,000 ($2,300)TPC Audit $450 1 audit1 $450$1,800 ($1,350)TPC Audit Travel $1,500 1 audit1 $1,500$1,500 $0TPC Testing $480 1 test1 $480$1,920 ($1,440)TPC Testing Shipping $50 1 shipment1 $50$200 ($150)Desk Audit $250 0 audits1 $0 $2,000 ($2,000)Mill Labore$71.36 4.5 hours1 $321 $38,962 ($38,641)Lost Productf$8.96 1 panel1 $9 $2,365 ($2,356)Subsequent Year Total$6,510 $54,748 ($48,237)a. NAF certification can be achieved basedon testing results from one quarterly test(using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale testing. Testingfrequencies are those required by the TPC and may be more frequent than TSCA Title VI requires.b. Purchasing and setting up a small chamber testhas a one-time cost of approximately $10,000.c. 8 hours for the initial audit, 0.5 hoursto prepare shipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for the second audit, 1 hour per desk audit for 2months, and 2 hours a day, 5 days a week to testsamples for 13 weeks of quality control testing.d. 5 panels for qualifying testing, 5 panelsa week for 13 weeks of small scale testing, and 1 panel for the second large scaletest.e. 4 hours for the on-site audit and 0.5 hours to ship samples.f. 1 panel for annual large scale testing.Sources: BLS, 2010; Communicationswith CPA and HPVA, 2011; RISI, 2010.

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### Table 2-39: Annual Testing and Certification Costs for Wood Veneer Laminators Existing Certification(s) : One Uncertified Product – New Certification(s) : One Standard Product

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 1 $2,400 Correlation Test $71.36 10 tests 1 $714 Qualifying Test Shipping $200 1 shipment 1 $200 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 3 tests 1 $1,440 TPC Testing Shipping $50 3 shipments 1 $150 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 8 audits 1 $2,000 Mill Labor a $71.36 590 hours 1 $42,102 Lost Product b $15.68 268 panels 1 $4,202 First Year Total $72,508 

### Subsequent Years Re-certification Fee $6,000 1 fee 1 $6,000 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 4 tests 1 $1,920 TPC Testing Shipping $50 4 shipments 1 $200 Desk Audit $250 8 audits 1 $2,000 Mill Labor c $71.36 546 hours 1 $38,963 Lost Product d $15.68 264 panels 1 $4,140 Subsequent Year Total $56,522 a. 8 hours for the initial audit, 0.5 hours to prepare shipping for the qualifying te st, 40 hours for developing the quality co ntrol systems, 4 hours for other quarterly audits, 1 hour per desk audit for the other 8 months, and 2 hours a day to test samples for 52 weeks of quality control testing. b. 5 panels for qualifying testing, 1 panel a day for 52 weeks of small scale testing, and 1 panel for each quarterly large scale

test. c. 4 hours for other quarterly audits, 1 hour per desk audit for the other 8 months, and 2 hours a day to select and ship samples for 52 weeks of quality control testing. d. 1 panel a day for 52 weeks of small scale testing, and 1 panel for each quarterly large scale test. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010. 

### 1449

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### 1450 Table 2-40: Annual Testing and Certification Costs for Wood Veneer Laminators Existing Certification(s) : Two Uncertified Products – New Certification(s) : Two Standard Products

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 2 $4,800 Correlation Test $71.36 10 tests 2 $1,427 Qualifying Test Shipping $200 1 shipment 2 $400 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 3 tests 2 $2,880 TPC Testing Shipping $50 3 shipments 2 $300 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 8 audits 1 $2,000 Mill Labor a $71.36 590 hours 1 $42,102 Lost Product b $15.68 268 panels 2 $8,404 First Year Total $81,614 

### Subsequent Years Re-certification Fee $6,000 1 fee 1 $6,000 TPC Audit $450 4 audits 1 $1,800 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 4 tests 2 $3,840 TPC Testing Shipping $50 4 shipments 2 $400 Desk Audit $250 8 audits 1 $2,000 Mill Labor c $71.36 546 hours 1 $38,963 Lost Product d $15.68 264 panels 2 $8,279 Subsequent Year Total $62,782 a. 8 hours for the initial audit, 0.5 hours to prepare sh ipping for the qualifying test, 40 hours for developing the quality control systems, 4 hours for other quarterly audits , 1 hour per desk audit for the other 8 months, and 2 hours a day to test samples for 52 weeks of quality control testing. b. 5 panels for qualifying testing, 1 panel a day for 52 weeks of small scale testing, and 1 panel for each quarterly large scale test. c. 4 hours for other quarterly audits, 1 hour per desk audi t for the other 8 months, and 2 hours a day to select and ship samples for 52 weeks of quality control testing. d. 1 panel a day for 52 weeks of sm all scale testing, and 1 panel for each quarterly large scale test. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010. 

### 1451

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### 1452 Table 2-41: Annual Testing and Certification Costs for Wood Veneer Laminators a 

### Existing Certification(s) : One Uncertified Product – New Certification(s) : One NAF Product

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 1 $2,400 Correlation Test $71.36 10 tests 1 $714 Qualifying Test Shipping $200 1 shipment 1 $200 TPC Audit $450 2 audits 1 $900 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 1 test 1 $480 TPC Testing Shipping $50 1 shipment 1 $50 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 2 audits 1 $500 Mill Labor b $71.36 185 hours 1 $13,202 Lost Product c $15.68 71 panels 1 $1,113 First Year Total $37,058 

### Subsequent Years Re-certification Fee $3,700 1 fee 1 $3,700 TPC Audit $450 1 audit 1 $450 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 1 test 1 $480 TPC Testing Shipping $50 1 shipment 1 $50 Mill Labor d $71.36 4.5 hours 1 $321 Lost Product e $15.68 1 panel 1 $16 Subsequent Year Total $6,517
a. NAF certification can be achieved base d on testing results from one quarterly te st (using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale te sting. Testing frequencies ar e those required by the TPC and may be more frequent than TSCA Title VI requires. b. 8 hours for the initial audit, 0.5 hours to prepare shipping for the qualifyi ng test, 40 hours for developing the quality co ntrol systems, 4 hours for the second audit, 1 hour per desk audit for 2 months, and 2 hours a day to test samples for 13 weeks of quality control testing. c. 5 panels for qualifying testing, 1 panel a day for 13 weeks of small scale testing, a nd 1 panel for the second large scale test. d. 4 hours for the on-site audit and 0.5 hours to ship samples. e. 1 panel for annual large scale testing. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010. 

### 1453

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### 1454 Table 2-42: Annual Testing and Certification Costs for Wood Veneer Laminators a 

### Existing Certification(s) : Two Uncertified Products – New Certification(s) : Two NAF Products

Cost Category Unit Cost Number of Units Repetitions for Product Types Total Cost
First Year Initial Certification Fee $6,000 1 fee 1 $6,000 Qualifying Test $480 5 tests 2 $4,800 Correlation Test $71.36 10 tests 2 $1,427 Qualifying Test Shipping $200 1 shipment 2 $400 TPC Audit $450 2 audits 1 $900 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 1 test 2 $960 TPC Testing Shipping $50 1 shipment 2 $100 Small Chamber Testing Unit $10,000 1 unit 1 $10,000 Desk Audit $250 2 audits 1 $500 Mill Labor b $71.36 185 hours 1 $13,202 Lost Product c $15.68 71 panels 2 $2,227 First Year Total $42,015 

### Subsequent Years Re-certification Fee $3,700 1 fee 1 $3,700 TPC Audit $450 1 audit 1 $450 TPC Audit Travel $1,500 1 audit 1 $1,500 TPC Testing $480 1 test 2 $960 TPC Testing Shipping $50 1 shipment 2 $100 Mill Labor d $71.36 4.5 hours 1 $321 Lost Product e $15.68 1 panel 2 $31 Subsequent Year Total $7,062
a. NAF certification can be achieved base d on testing results from one quarterly te st (using a primary or secondary test method) and 3 months (i.e., 13 weeks) of routine small scale te sting. Testing frequencies ar e those required by the TPC and may be more frequent than TSCA Title VI requires. b. 8 hours for the initial audit, 0.5 hours to prepare shipping for the qualifyi ng test, 40 hours for developing the quality co ntrol systems, 4 hours for the second audit, 1 hour per desk audit for 2 months, and 2 hours a day to test samples for 13 weeks of quality control testing. c. 5 panels for qualifying testing, 1 panel a day for 13 weeks of small scale testing, a nd 1 panel for the second large scale test. d. 4 hours for the on-site audit and 0.5 hours to ship samples. e. 1 panel for annual large scale testing. Sources: BLS, 2010; Communications with CPA and HPVA, 2011; RISI, 2010. 

### 1455 2.2.5.1 Summary of Estimated T esting and Certification Costs 

### 1456 1457 Table 2-43 summarizes the estimated actual a nd incremental costs incurred by mills for 1458 complying with the testing and certification requireme nts of TSCA Title VI. As described above, mills 1459 with existing CARB-certified product lines will be incu rring some testing and certifications costs in the 1460 baseline. The incremental costs of the rule represent the actual costs minus baseline costs. 1461 1462

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### Table 2-43: Summary of Annual Testing and Certification Costs by Mill Type First Year Subsequent Years Existing Certifications Certificat ion Sought Actual Costs Incremental Costs Actual Costs Incremental Costs Hardwood Plywood Mills a nd Wood Veneer Laminators 2 Uncertified Change 2 to NAF $42,015 $42,015 $7,062 $7,062 2 Uncertified Change 2 to Nonexempt $81,614 $81,614 $62,782 $62,782 2 Nonexempt Change 2 to NAF $38,876 ($23,074) $7,062 ($54,887) 2 ULEF Change 2 to None xempt $72,782 $62,124 $62,782 $52,124 1 ULEF and 1 NAF Change ULEF to NAF $31,619 $22,501 $6,517 ($1,958) 1 ULEF and 1 NAF Change 2 to Nonexempt $72,782 $63,683 $62,782 $53,761 2 ULEF Change 2 to NAF $36,576 $23,918 $7,062 ($3,595) 

### Particleboard and MDF Mills 2 Uncertified Change 2 to Nonexempt $78,012 $78,012 $59,233 $59,233 2 Uncertified Change 2 to NAF $41,061 $41,061 $7,049 $7,049 1 Uncertified and 1 N onexempt Change Uncertified to N onexempt $57,567 $7,305 $54,748 $4,485
2 ULEF Change 2 to None xempt $59,233 $48,630 $59,233 $48,630 1 ULEF and 1 NAF Change 2 to Nonexempt $59,233 $50,246 $59,233 $50,246 1 Uncertified and 1 N onexempt Change 2 to NAF $27,921 ($26,827) $7,049 ($47,699)
2 ULEF Change 2 to NAF $25,621 $15,017 $7,049 ($3,555) 2 Nonexempt Change 2 to NAF $27,921 ($31,312) $7,049 ($52,184) 1 ULEF and 1 NAF Change ULEF to NAF $21,142 $12,693 $6,510 ($1,938) 1 Nonexempt and 1 N AF Change Nonexempt to N AF $23,442 ($31,306) $6,510 ($48,238)



### Wood Veneer Laminated Product Producers 1 Uncertified Change 1 to Nonexempt $72,508 $72,508 $56,522 $56,522 2 Uncertified Change 2 to Nonexempt $81,614 $81,614 $62,782 $62,782 1 Uncertified Change 1 to NAF $37,058 $37,058 $6,517 $6,517 2 Uncertified Change 2 to NAF $42,015 $42,015 $7,062 $7,062 

### 1463 1464

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## 2.3 Estimated Costs for Stock Hardw ood Plywood, MDF, and Particleboard 1465 

## Producers 1466 1467 This section presents the potential costs to stoc k hardwood plywood, medium density fiberboard 1468 (MDF) and particleboard producers under several analyt ical options. Section 2.3.1 presents the estimated 1469 costs to composite wood panel producers for making ch anges to raw materials. Section 2.3.2 presents the 1470 estimated costs of testing and third party certifica tion for composite wood panel producers. Finally, the 1471 total estimated costs for composite wood pane l producers are presented in section 2.3.3. 1472 1473 2.3.1 Costs of Changes to Raw Materials for Composite Wood Panel Producers 1474 1475 This section presents the estimated costs to stock hardwood plywood (section 2.3.1.1), MDF 1476 (section 2.3.1.2), and particleboa rd (section 2.3.1.3) producers fo r making changes to production 1477 processes and raw materials. 1478 1479 2.3.1.1 Stock Hardwood Plywood Producers Production Processes and Raw Materials Costs 

### 1480 1481 For stock hardwood plywood producers that are not compliant with the emissions standards in the 1482 baseline, the costs associated with changing prod uction processes and raw materials are estimated as the 1483 costs of switching from UF to PVA resin system s and switching from conventional to lower emitting 1484 cores . Because the emissions standard for hardwood plywood (0.05 ppm) is lower than the standards for 1485 particleboard (0.09 ppm) and MDF (0.11 to 0.13 ppm), hardwood plywood made with a certified 1486 particleboard or MDF core could conceivably exceed the emission standard even if a NAF resin such as 1487 PVA was used to affix the veneer to the core. (Whether this occurs in practice depends on how 1488 effectively the veneer acts as a barrier to the release of formaldehyde, and how far below the standards the 1489 actual emissions from the core are.) 1490 1491 This analysis uses the term “ low emission cores ” to mean cores with emissions low enough that 1492 hardwood plywood made from them meets the app licable emission standard. For the standard 1493 certification, low emission cores are assumed to incl ude certified veneer core, particleboard and MDF 1494 cores certified as ULEF under the CARB ATCM, and pa rticleboard and MDF cores certified as NAF. 1495 For analytical options requiring all products to meet NAF emission levels, low emission cores would 1496 include particleboard, MDF and veneer cores certified as NAF. 1497 1498 Hardwood plywood producers switching from UF to PVA resins and low emission cores would 1499 not need to make any significant modifications or upgrades to existing equipment or processes because 1500 PVA resins are generally a “drop-in” technology for mills currently using UF. Thus, the estimated raw 1501 material costs are only for purchasing the more expens ive resins and cores. Note that switching to PVA 1502 resins is just one possibility for achieving complianc e. Some producers may achieve compliance by using 1503 enhanced urea formaldehyde resins, melamine-urea-fo rmaldehyde (MUF) resins, soy-based resins, or 1504 other resin systems. However, the cost of switching to PVA resins can provide a reasonable 1505 approximation for the compliance cost associated wi th changing raw materials and production processes 1506 and therefore is the basis for the cost estimates in this analysis. Note also that not all mills will 1507 necessarily have to switch to NAF or ULEF cores in order to meet the Phase 2 emissions standard for 1508 hardwood plywood. 1509 1510 Number of Hardwood Plywood Mills and Affected Production Volume 

### 1511
1512 EPA identified 33 mills (owned by 27 firms) th at appear to manufacture stock hardwood plywood 1513 panels subject to the TSCA Title VI emissions re quirements. Based on a review of CARB’s list of 1514 certified mills, 26 of the 33 hardwood plywood stock panel mills identified by EPA are certified to 1515

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### produce CARB compliant products (2011c). This impli es that there are 7 stock plywood mills that are 1516 not CARB certified and that are expected to incur co mpliance costs to become certified due to the TSCA 1517 Title VI regulation. For the purpose of this analysis it is also assumed that all 7 of these mills are three1518 ply mills (which buy cores and fini sh them with hardwood veneer). 1519 1520 In addition to the 33 hardwood pl ywood mills, EPA identified anothe r 8 mills (owned by 7 firms) 1521 that manufacture engineered wood flooring. Based on a review of CARB’s list of certified mills, 4 are 1522 certified to produce CARB compliant products (2011c). 1523 1524 According to CARB’s (2011c) list of certified mills, 12 mills (including engineered wood 1525 flooring mills) are certified to produce NAF hardwood plywood – for the purpose of this analysis these 1526 mills are assumed to produce NAF product exclusively. Note that additional CARB certified mills might 1527 have compliance costs if they produce some product lines that are not certified when the TSCA Title VI 1528 requirements take effect in 2013. EPA is not aware of any mills in this situation, but the compliance costs 1529 for individual mills producing some CARB certified product and some product not CARB certified would 1530 be expected to be lower than the costs presented here. 1531 1532 According to U.S. ITC (2008), hardwood plywood production in 2006, including engineered 1533 wood flooring, was estimated to be 1,786 thousand cubic meters, or 2,007 mmsf on a 3/8" basis. 1534 Engineered wood flooring production was estimated to be 258 mmsf in 2006 and it is estimated that about 1535 30 percent of engineered wood flooring production is manufactured as a wood veneer laminated product 1536 (Personal Communication with HPVA 2011) and therefore 77 mmsf of engineered wood flooring 1537 production is accounted for as wood veneer lamina ted product instead of hardwood plywood for the 1538 purpose of this analysis. Thus, excluding the wood veneer laminated product results in an estimated 2006 1539 domestic production for hardwood plywood of 1,930 million square feet on a 3/8" basis. It is estimated 1540 that current production levels are about 60 percent of their 2006 levels, or about 1,158 mmsf on a 3/8" 1541 basis. 1542 1543 Table 2-44 presents the estimated production affected by analytical option. These results are 1544 estimated by combining the production estimates descri bed above and the emissions standards and levels 1545 reported by mills in EPA’s (2010a) Pressed Wood Manufacturing Industry Survey (PWMIS). EPA 1546 administered this survey between June and Oc tober 2010 to domestic producers of composite wood 1547 panels. The survey achieved a response from 33 ha rdwood plywood mills that received the survey. 18 

### The 1548 survey asked about current emissions levels and about planned levels. Since many composite wood 1549 product mills were in the midst of modifying their production technology and raw materials to achieve 1550 compliance with Phase 2 of the CARB ATCM when they completed the questionnaire, using data on their 1551 emission levels at the time they responded to the su rvey would not accurately reflect the 2013 baseline. 1552 Instead, baseline emission levels are estimated usi ng responses to a question in the survey about the 1553 emissions levels mills planned to achieve within the next three years of when they completed the survey 1554 (i.e., three years from 2010). These emissions levels we re weighted by the production levels the mills 1555 reported in the survey, in order to estimate the aver age emission levels by certification standard. The 1556 survey data were also used to estimate the shar e of total production volume represented by products 1557 meeting each of the emissions standards. 1558 1559

18 The number of mills for each product type is limited to t hose that are subject to TSCA Title VI, and does not include mills that only produce products that are exempted or not otherwise covered by TSCA Title VI (such as curved plywood, wood packaging, and molded products that do not qua lify as panels). The respons e rate includes mills that only responded to a brief phone questionna ire, which collected information a bout the compliance standards being achieved, but not specif ic emissions levels.

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### Table 2-44: Hardwood Plywood Production Af fected By Analytical Option (mmsf)

Baseline Emission Standard Production Share Production
Level Affected Production Options SI, SE,

SP, SC, and SCR Options CI and CE Options NI and
NE

None 0.40% 

### 4.6 4.6 4.6 4.6

CARB 1 - 

### - - - - CARB 2 and CARB ULEF a 60.20% 

### 697.1 - - 697.1

CARB NAF 39.40% 

### 456.3 - - - Total 100.00% 

### 1,158.0 4.6 4.6 701.7

a Hardwood plywood mills meeting CARB 2 and CARB ULEF were grouped together in the CARB 2 category. Several hardwood plywood mills appeared to be meeting CARB ULEF standards but did not report this in their response. For example, they listed certification standard as “CARB 2” bu t resin type as “ULEF” and/or reported maximum emissions that satisfy ULEF requirements. Due to difficulties in distinguishing between CARB 2 and CARB ULEF product lines in the survey responses, and the fact that emissions levels appeared similar among mills reporting either CARB 2 or CARB ULEF certification standards, these mills were grouped together.

Option SCR is the proposed option.

Source:U.S. Environmental Protection Agency 2010a. 

### 1560 Hardwood Plywood Producer Costs for Changing Raw Materials 

### 1561
1562 For cost estimation purposes, it is assumed that m ills using urea formaldehyde (UF) resins in the 1563 baseline will switch to polyvinyl acetate (PVA) resins in order to meet the emissions standards. 19 

### Some 1564 mills may also have to switch to a low emitting core to meet the emissions standard. The main steps to 1565 estimating the cost increase resulting from the TSCA Title VI rule for stock hardwood plywood mills 1566 without baseline CARB certification are presented below: 1567 1568 1. Estimate the total production volume from facilities that are expected to continue to use UF resins 1569 in the absence of a national rule. 1570

2. Estimate the unit cost of switching from UF to PVA resins. 1571

3. Estimate unit cost of switching from a CARB certified core to a low emission core. 1572

4. Estimate the cost of third party certification and compliance testing. 1573

5. Estimate the average cost per firm by multip lying the unit costs with the typical production 1574 volume per firm under different scenarios for the ra w materials changes that firms may need to 1575 make to become certified. 1576
Note that switching to PVA resins is just one possibility for achieving compliance. Some 1577 producers may achieve compliance by using enhanc ed urea formaldehyde resins, melamine-urea1578 formaldehyde (MUF) resins, soy-based resins, or other resin systems. However, the cost of switching to 1579 PVA resins can provide a reasonable approximation for the compliance cost associated with changing raw 1580 materials and production processes and therefore is the basis for the cost estimates in this analysis. 1581 1582 1583 1584

19 Note that switching to a resin system other than PVA may be a lower cost compliance strategy. Using enhanced UF resins and soy-based resins are proven compliance strategies that may be less costly for some manufacturers.

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### 1585 Production Volume Switching to PVA Resins 1586 1587 As described above, it is estimated that only 0. 4 percent of domestic baseline hardwood plywood 1588 production will not be CARB certified in the absence of th e TSCA Title VI rule. For the purpose of this 1589 analysis it is assumed that about half of the produc t that is not CARB certified is already being produced 1590 using PVA resins. It is assumed that these products already meet the CARB Phase 2 emission standards, 1591 but that the producers have not chosen to incur th e costs of CARB’s third-party certification program 1592 because the products are not sold into California. 1593 1594 It is assumed that the other half of the uncertif ied product is being produced with UF resins, and 1595 that the product exceeds the CARB Phase 2 emission limits. Thus, 0.2 percent of stock hardwood 1596 plywood production, or 2,300 msf, is assumed to be subject to costs associated with changing resin 1597 systems under the statutory option. Under options NI and NE, in addition to the 2,300 msf of uncertified 1598 production switching resins, the 697,100 msf of produc tion that is currently CARB 2 certified but not 1599 NAF certified is assumed to need to switch resin sy stems, for a total of 699,400 msf switching to NAF 1600 resins. Firms using UF resins in the baseline are as sumed to switch to PVA resins to meet the TSCA Title 1601 VI emissions standards. PVA resins are a comm on resin choice of smaller mills, and are a no-added 1602 formaldehyde (NAF) resin. 1603 1604 Additional Cost of PVA Resins 1605 1606 Hardwood plywood mills switching from UF to PVA resins would not need to make any 1607 significant modifications or upgrades to existing equipment or processes because PVA resins are 1608 generally a “drop-in” technology for mills curren tly using UF. The only costs estimated are for 1609 purchasing the more expensive resin. 1610 1611 The additional cost to hardwood plywood mills for switching from UF to PVA resin depends on 1612 the glue spread and the total surface area of the finish ed panels produced. It is assumed that these mills 1613 apply two glue lines: one to adhere the face panel and the other to ad here the back panel. The weight of 1614 each glue line is about 30 pounds per thousand square feet (msf) of plywood produced, and PVA resin 1615 costs about $0.50 per pound more than UF resin. It is assumed that the panels made by these mills 1616 average 5/8 inches thick. 20 

### Therefore, the extra cost of using PVA can be estimated on a 5/8” basis as 1617 follows: 1618 1619 Additional cost of PVA (5/8” basis) = (30 pounds/msf of glue line) x (2 glue lines) x ($0.5) = $30 1620 per msf of plywood produced. 1621
1622 Since hardwood plywood production volume is tabulated on a 3/8 inches basis, the following conversion 1623 is needed to estimate the additional cost of PVA: 1624
1625 Additional cost of PVA (3/8” basis) = ($30/msf) x (.625”/.375”) = $50/msf of plywood produced. 1626
1627 As a result, these small mills converting their production from UF resins to PVA resins would 1628 incur an additional cost of $50/msf of plywood produced on a 3/8” basis. 1629 1630 1631

20 Common panel thicknesses range from 3/8 inch to 3/4 inch. A 5/8 inch basis is used to represent the average across all mills.

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### 1632 Production Volume Switching to Low Emission Cores 1633 1634 Since nearly all domestic core suppliers ar e manufacturing only CARB certified products, 1635 virtually the only source of cores that are not CARB certified would be imports. Given this, the baseline 1636 level of production using cores that are not certified ma y be near zero. However, in order to meet the 1637 hardwood plywood emissions standards, some hardwood plywood producers using CARB certified 1638 particleboard or medium density fiberboard (MDF ) cores may need to switch to ultra-low emitting 1639 formaldehyde (ULEF) or NAF cores. This is because the emissions standards are higher for particleboard 1640 and MDF than for hardwood plywood. 21 

### In addition, 2 percent of engineered wood flooring producers 1641 utilize composite cores (Personal Communication with HPVA 2011), and would need to make the switch 1642 to low emission cores, as well. 1643 1644 This analysis estimates the percentage of hardwood plywood and engineered wood flooring 1645 production that would need to switch to low emission cores in three steps: 1646 1647 1. The percentage of hardwood plywood and engin eered wood flooring production that use MDF 1648 and particleboard for cores are estimated from the 2007 U.S. Economic Census (2009d) data on 1649 the value of raw materials used for production 22 

### 1650 2. These percentages are adjusted to account for th e baseline use of NAF or ULEF cores with the 1651 percentage of domestic MDF and particleboard production that is estimated to be CARB NAF or 1652 ULEF certified, estimated from EPA’s (2010a) su rvey of composite wood product producers. 1653 3. The estimated percentage of cores that must be switched to low emission cores is applied to the 1654 estimated total production volume. 1655 1656 Table 2-45 presents the estimated production that would need to switch to low emission cores by 1657 analytical option. The resulting estimates and a de tailed description of the underlying calculations are 1658 presented below in Table 2-45. 1659

21 The Phase 2 standards are 0.05 ppm for hardwood plywood, 0.09 ppm for particleboard, 0.11 ppm for MDF, and 0.13 ppm for thin MDF.

22 The mix of composite wood products consumed was estimated using U.S. Ce nsus data on the value of materials

consumed. Values were converted to volumes using prices of $495, $535, and $335 for hardwood plywood, MDF, and particleboard, respectively. The price of hardwood pl ywood was estimated using the total 2007 export values and quantities from U.S. ITC (2011) (HTS codes 441232, 441299, and 441231). The pric e of MDF and particleboard are from Crow’s February 18, 2011 Weekly Panel Prices (RISI 2011b).*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-701660Table 2-45: Hardwood Plywood Production Switching to Low Emission CoresAnalyticalOptionProduction(mmsf,3/8”)ProductionSwitching toLow EmissionCoresDescription of Estimated Percentagesa, b(%) (mmsf)Options SI,SE, SP, SC,and SCR4.632.3%1.5Based on conversations with HPVA (2011),40% of hardwood plywood stock panels and 2% of engineered wood flooring arecomposite core. It was estimated that the mix of MDF and particleboard consumed in the Hardwood Veneer and PlywoodIndustry (NAICS 321211) is about 40.9% MDF and 59.1% particleboard. It was also estimated that 86.1% and 90.5% ofMDF and particleboard are notmade with NAF or ULEF resins, respectively. Thus, thepercentage of hardwood plywoodstock panels switching to low emission cores (35.48%) is calculated as the sum ofthe two products of: (1) 40%, 40.9%, and86.1%, and (2) 40%, 59.1%, and 90.5%. Similarly, the percentage of engineered wood flooring switching to low emissioncores (1.77%) is calculated as the sum of the two products of: (1) 2%, 40.9%, and 86.1%, and (2) 2%, 59.1%, and 90.5%.Since engineered wood flooring represents about 9.4% ofhardwood plywood production, the percentage of productionswitching to low emission cores overall is32.3%, calculated as the sum of thetwo products: (1) 1.77% and 9.4% and (2)35.48% and 90.6%.Options CIand CE - - -All mills are assumed to be able to meet these emissions standards without any changes to production processes or rawmaterials.Options NIand NE 701.7 72.1% 505.9Based on conversations with HPVA (2011),40% of hardwood plywood stock panels and 2% of engineered wood flooring arecomposite core. It was estimated that the mix of MDF and particleboard consumed in the Hardwood Veneer and PlywoodIndustry (NAICS 321211) is about 40.9% MDF and 59.1% particleboard. Thus, the mixof veneer core, MDF andparticleboard for stock hardwood plywood panels is about60.0% hardwood plywood, 16.4%MDF and 23.6% particleboard.Similarly, the mix of veneer core, MDF and particleboardfor engineered wood flooring isabout 98.0% hardwood plywood,0.8% MDF and 1.2% particleboard. It was also estimated that 60.6%, 90.7%, and 93.3% of HWPW, MDF and particleboarduse added formaldehyde resins, respectively. Thus, the percentage of hardwood plywood stock panels switching to NAFcores (73.25%) is calculated as the sum ofthe three products: (1) 60% and 60.6%,(2) 16.4% and 90.7%, and (3) 23.6% and93.3%. Likewise, the percentage of engineered wood flooring switching to NAF cores (61.23%) iscalculated as the sum ofthe three products: (1) 98% and 60.6%, (2) 0.8% and 90.7%,and (3) 1.2% and 93.3%. Since engineered wood flooringrepresents about 9.4% of hardwood plywood production, the percentage of production switching to NAF cores overall is72.1%, calculated as the sum of the two products: (1) 61.23% and 9.4% and (2) 73.25% and 90.6%.aThe mix of composite wood products consumedwere estimated using 2007 U.S. Census(2009d)data on the value of materials consumed. Valueswere converted to volumes using 2007$ prices of$480, $445, and $315 for hardwood plywood, MDF,and particleboard, respectively. Theprice of hardwood plywood was estimated using the total 2007 export valuesand quantities from U.S. ITC(2011)data (HTS codes 441232, 441299,and 441231). The price of MDFand particleboard utilized areJuly 2007 prices from RISI’s(2009)MDF and Particleboard Commentary.bThe percentages of composite platforms not made with NAF or ULEFresins was estimated from EPA’s (2010a) survey of composite wood product producers.This analysis uses the term “low emission cores” to mean cores with emissions low enough that hardwood plywood made from them meets the applicable emission standard. For thestandardcertification, low emission cores are assumedto include certified veneer core, particleboard and MDF cores certified as ULEF under the CARB ATCM, and particleboard and MDF cores certified asNAF. For analytical options requiring all products to meet NAFemission levels, low emission cores would include particleboard, MDF and veneer cores certified as NAF.Option SCR is the proposed option.1661

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### Additional Cost of Low Emission Cores 1662 1663 The average cost of a Phase 2 certified core is approximately $300/msf, and NAF cores currently 1664 cost 15 to 20 percent more than Phase 2 platforms. 23 

### So a high end estimate of the additional cost 1665 associated with purchasing low emission cores is estimated at $45/msf-$60/msf. Although there is 1666 uncertainty about the extent to which hardwood pl ywood producers would need to switch to low emitting 1667 cores in order to meet the emissions standards, th is analysis adopts the conservative assumption (in terms 1668 of being careful not to understate costs) that th e cost for switching to low emission cores is $60/msf. 1669 1670 Summary of Hardwood Plywood Producer Costs for Changing Raw Materials 1671 1672 Table 2-46 presents the estimated costs of changing raw materials for hardwood plywood product 1673 producers under the various analytical options. Under options CI and CE there are no estimated material 1674 costs because it is assumed that all mills can ach ieve CARB 1 emissions requirements with minimal 1675 production and raw materials changes. The total co sts are highest under options NI and NE because a 1676 larger share of the production would need to switch to NAF cores. Note that the estimated cost of 1677 switching to either the ULEF or NAF core is the same amount ($60). It is assumed that there would not be 1678 a large difference between the cost of ULEF and NAF cores. 1679 1680 Table 2-46: Estimated Costs of Raw Material Changes for Hardwood Plywood Producers, by Analytical Option

Analytical

Option Production Switching to PVA (msf) Cost of Switching to
PVA (2010$/msf) Production Switching to
Low Emission

Cores (msf) Cost of Switching to
Low Emission Cores (2010$/msf) Total Annual Cost of Changing Raw

Materials (thousands

2010$) Options SI, SE, SP, SC a 2,300 $50 1,500 $60 $205 Options CI and
CE - - - - - Option NI and
NE b 699,400 $50 505,900 $60 $65,324

a For analytical options SI, SE , SP, SC, and SCR the production switching to a PV A resin was calculated as 1/2 of the uncertifie d production because it was assumed that half of the uncertif ied product is already being produced using PVA resins.

b For analytical options NI and NE, the production switching to a PVA resin was calculated as the sum of half of the uncertified production share and the CARB 2 certified production share. This analysis uses the term “ low emission cores ” to mean cores with emissions low enough that hardwood plywood made from them meets the applicable emission standard. For the standard certif ication, low emission cores are assumed to include certified ve neer core, particleboard and MDF cores certified as ULEF under the CARB ATCM, and particleboard and MDF cores certified as NAF. For analytical options requiring all products to meet NAF emi ssion levels, low emission cores w ould include particleboard, MDF and veneer cores certified as NAF.

Option SCR is the proposed option. 

### 1681 2.3.1.2 MDF Producers Production Processes and Raw Materials Costs 

### 1682 1683 This section presents the estimated costs to MD F producers that are not compliant with a 1684 specified emission standard in the baseline for making the changes to production processes and raw 1685 materials that would be necessary to achieve that sta ndard. First the number of mills and the volume of 1686

23 The price and availability of NAF pl atforms may improve over time as the market adjusts to the CARB rule and TSCA Title VI.

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### production where changes to production processes and ra w materials would be necessary are estimated. 1687 Then the estimated increases in production and raw material costs to MDF producers are presented. 1688 1689 Number of MDF Mills and Affected Production Volume 

### 1690 1691 The MDF market is still recovering from a significa nt slump that began in 2008. According to 1692 RISI (2011a), MDF consumption w as 2,350 million square feet (mmsf) in 2010 and is forecast to increase 1693 1.8 percent in 2011 to 2,390 mmsf and a further 9.7 percent to 2,620 mmsf in 2012. Since the rule is 1694 scheduled to be implemented in 2013 this analysis u ses the RISI (2011a) value for 2012, the final year in 1695 the forecast, to estimate the affected domestic MDF production. To estimate U.S. production, the 1696 consumption figure is reduced to account for the 37 pe rcent of domestic consumption that is attributable 1697 to imports according to RISI’s (2011a) forecast share of MDF consumption from imports for 2011. The 1698 resulting estimate of U.S. production utili zed in this analysis is 1,850 mmsf. 1699 1700 Table 2-47presents the estimated production affected for each analytical optio n. These results are 1701 estimated by combining the production estimates descri bed above and the emissions standards and levels 1702 reported by mills in EPA’s (2010a) Pressed Wood Manufacturing Industry Survey (PWMIS). EPA 1703 administered this survey between June and Oc tober 2010 to domestic producers of composite wood 1704 panels. The survey achieved a response from all 20 MDF mills that received the survey (there are 22 1705 domestic MDF mills). 24 

### The survey asked about current emissions levels and about planned levels. Since 1706 many composite wood product mills are in the mids t of modifying their production technology and raw 1707 materials to achieve compliance with Phase 2 of the CARB ATCM, current emission levels would not 1708 accurately reflect the 2013 baseline emissions levels. Therefore, baseline emission levels are estimated 1709 using responses to a question in the survey about the em issions levels mills planned to achieve within the 1710 next three years. These emissions levels were weight ed by the production levels the mills reported in the 1711 survey, in order to estimate the average emission leve ls by certification standard. The survey data were 1712 also used to estimate the share of total production volume represented by products meeting each of the 1713 emissions standards. 1714 1715 Note that all mills reported that they pla nned to manufacture only CARB certified products. 1716 Thus, their production costs would only be affected u nder the analytical option where NAF resins were 1717 required. According to CARB’s list of certified mills , 22 mills are CARB certified, including 7 certified 1718 to produce NAF MDF. Of the 7 mills that are NAF certified, 2 are also certified to produce CARB 2 1719 product manufactured using resins with added-formaldehyde. 1720 1721

24 One mill was not included in the sample because it was brand new and a second MDF mill was not identified until after the survey was conducted. Both mills are CARB 2 certified. The number of mills for each product type is limited to those that are subject to the TSCA Title VI emission stan dards, and does not include mills that only produce products that are exempted or not ot herwise covered by TSCA Titl e VI (such as curved plywood, wood packaging, and molded products that do not qualify as panels). The response rate includes mills that only responded to a brief phone questionnaire during which information was collected about the compliance st andards being achieved, but not the specific emissions levels.

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### Table 2-47: MDF Production Affected By Analytical Option (mmsf)

Baseline Emission Standard Production Share Production
Level Affected Production 

### Options SI, SE, SP, SC,

and SCR Options CI and CE Options NI
and NE

CARB Phase 2 86.10% 

### 1,593 - - 1,593

CARB ULEF 4.60% 

### 85 - - 85

CARB NAF 9.30% 

### 172 - - - Total 100% 

### 1,850

- - 1,678
Option SCR is the proposed option.
Sources: U.S. Environmental Pr otection Agency 2010a and RISI 2011a 

### 1722 1723 Estimated Costs for Changing Production Processes and Raw Materials 

### 1724 1725 This analysis assumes that producing NAF MDF is 20 percent more expensive than CARB 2 1726 MDF, or about $110 per msf. 25 

### 1727 1728 Table 2-48: Incremental Increase in Production Costs for MDF By Analytical Option

Baseline Emission Standard Affected Production (mmsf) Incremental Increase in Production Costs (millions, 2010$)

Options SI, SE, SP, SC,

and SCR Options CI and CE Options
NI and NE Options SI, SE, SP, SC, and SCR ($0/msf) Options CI and CE ($0/msf) Options NI and NE ($110/msf)

CARB Phase 2 

### - - 1,593 - - $175

CARB ULEF 

### - - 85 - - $9

CARB NAF 

### - - - - - - Total 

### - - 1,678 - - $185
Option SCR is the proposed option.
Sources: U.S. Environmental Pr otection Agency 2010a and RISI 2011a 

### 1729 2.3.1.3 Costs of Changes to Production Processes and Raw Materials for Particleboard Producers 

### 1730 1731 This section presents the estimated costs to partic leboard producers that are not compliant with a 1732 specified emission standard in the baseline for making the changes to production processes and raw 1733 materials that would be necessary to achieve that st andard. First the number of mills and the volume of 1734 production where changes to production processes and ra w materials would be necessary are estimated. 1735 Then the estimated increases in production and raw material costs to particleboard producers are 1736 presented. 1737 1738 Number of Particleboard Mills and Affected Production Volume 

### 1739 1740 The particleboard market is still recovering fro m a significant slump that began in 2008. 1741 According to RISI (2011a), partic leboard consumption was 2,570 million square feet (mmsf) in 2010 and 1742 is forecast to increase 3.3 percent in 2011 to 2,65 0 mmsf and a further 10.3 percent to 2,930 mmsf in 1743

25 The analysis assumes that NAF MDF is 20 percent more expe nsive. The MDF price was es timated based on prices of about $567 and $523 msf for the West and East United States, respectively, from the RISI (2011) MDF forecast for March 2012, the final month included. Twenty percent of the average of these two prices is about $110 msf.

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### 2012. Since the rule is scheduled to be implemented in 2013 this analysis uses the RISI (2011a) estimate 1744 for 2012 to estimate the affected domestic particleboard production, which is the final year included in 1745 RISI’s (2011a) forecast. To estimate U.S. production, the consumption figure is reduced to account for 1746 the 15 percent of domestic consumption that is attr ibutable to imports according to RISI’s (2011a) 1747 forecast of particleboard consumption from imports for 2011. The resulting estimate of U.S. production 1748 which is used in this analysis is 2,490 mmsf. 1749 1750 Table 2-49 presents the estimated production affect ed for each analytical option. These results 1751 are estimated by combining the production estimates described above and the emissions standards and 1752 levels reported by mills in EPA’s (2010a) Pressed Wood Manufacturing Industry Survey (PWMIS). EPA 1753 administered this survey between June and Oc tober 2010 to domestic producers of composite wood 1754 panels. The survey achieved a response from all 30 pa rticleboard mills that we re identified as operating 1755 in the U.S. 26 

### The survey asked about current emissions le vels and about planned levels. Since many 1756 composite wood product mills are in the midst of modifying their production technology and raw 1757 materials to achieve compliance with Phase 2 of the CARB ATCM, current emission levels would not 1758 accurately reflect the 2013 baseline emissions levels. Therefore, baseline emission levels are estimated 1759 using responses to a question in the survey about the em issions levels mills planned to achieve within the 1760 next three years. These emissions levels were weight ed by the production levels the mills reported in the 1761 survey, in order to estimate the average emission leve ls by certification standard. The survey data were 1762 also used to estimate the share of total production volume represented by products meeting each of the 1763 emissions standards. 1764 1765 Note that the mills that reported manufacturing pr oduct that was not CARB certified also reported 1766 that they planned to manufacture product that met th e CARB 2 emissions requirements. That is, they 1767 reported that it was not worthwhile for them to pay for testing and third party certification even though 1768 their products are being manufactured to meet the em issions standards. Thus, their production costs would 1769 only be affected under the analytical option where NAF resins were required. 1770 1771

26 The number of mills for each product type is limited to thos e that are subject to the TSCA Title VI emission standards, and does not include mills that only produce products that are exempted or not otherwise covered by TSCA Title VI (such as curved plywood, wood packaging, and molded products that do not qualify as panels). The response rate includes mills that only responded to a brief phone quest ionnaire during which information was collected about the compliance standards being achieved, but not the specific emissions levels.

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### Table 2-49: Particleboard Production Af fected By Analytical Option (mmsf)

Baseline Emission Standard Production Share Production
Level Affected Production Options SI, SE,

SP, SC, and SCR Options CI and CE Options NI and
NE

None a 0.2% 

### 5 - - 5

CARB Phase 1 b 1.8% 

### 45 45 - 45

CARB Phase 2 88.5% 

### 2,204 - - 2,204

CARB ULEF 2.8% 

### 70 - - 70

CARB NAF 6.7% 

### 167 - - - Total 100% 

### 2,490 45

- 2,323

a Note that mills reporting manufacturing product that wa s not CARB certified were meeting the CARB 2 emissions levels, which explains why productio n is only affected under Option NAF.

b Some mills producing product currently certified under CARB 1 reported that they would continue this product line after the CARB 2 effective date (although it would no longer be certified as CARB 1). Option SCR is the proposed option.

Sources: RISI 2011a, d, U.S. Envi ronmental Protection Agency 2010a 

### 1772 Industry market reports indicate that panels that are not CARB 2 certified are generally not 1773 available (RISI 2011), implying that few mills are offering product that is not CARB 2 certified. The 1774 analysis assumes that between 10 and 25 percent of the 30 U.S. mills, or between 3 and 7 mills, are 1775 offering product that is not CARB certified and uses the midpoint number of 5 mills for estimating the 1776 cost impacts 1777 1778 According to CARB’s list of certified mills, four m ills are certified to produce NAF particleboard 1779 – two of these mills are certified to produce both CARB 2 and CARB NAF particleboard. 1780 1781 Estimated Costs for Changing Production Processes and Raw Materials 

### 1782 1783 This analysis estimates the incr eased costs for changing production processes and raw materials 1784 to meet the more stringent emissions requirements us ing RISI’s (2011d) data fo r industrial particleboard 1785 prices in the southeast, where RISI reported producers were more successful in passing through the higher 1786 costs of producing CARB 2 certified particleboard. A ccording to RISI, mills were partially successful in 1787 passing along the higher costs in the fourth quarter of 2010, and are expected to be more successful in 1788 passing along these costs in the first quarter of 2011, as almost all particleboard supply will be CARB 2 1789 certified as of 2011 (RISI 2011b, d). RISI’s (RISI 2011c) historical prices for particleboard indicate that 1790 particleboard prices in the Southeast increased fro m about $315/msf to $335/msf between October 1, 1791 2010 and March 18, 2011, an increase of about $20/msf. RISI attributes this increase primarily to the 1792 transition to CARB 2, and therefore this analysis will use $20/msf as the estimated increased cost of 1793 manufacturing CARB 2 particleboard for these mills (RISI 2011b, d). 1794 1795 This analysis assumes that producing NAF partic leboard has twice the incremental costs of 1796 producing CARB 2 particleboard, or $20/msf to tr ansition from CARB 2 to CARB NAF and $40/msf to 1797 switch from production that does not meet CARB 2 emissions standards to CARB NAF production. 1798 1799

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### Table 2-50: Incremental Increase in Production Costs for Particleboard By Analytical Option

Baseline
Emissions Standard Affected Production (mmsf) Incremental Increase in Production Costs (millions, 2010$)
Options SI, SE, SP, SC, and SCR Options CI and

CE Options
NI and

NE Options SI, SE, SP, SC,

and SCR 

### ($20/msf) Options CI and

CE 

### ($0/msf) Options NI and NE 

### ($20/msf from CARB 2; $40/msf from CARB 1 or None)

None a - - 5 - - $0.2

CARB Phase 1 45 - 45 $0.9 - $1.8

CARB Phase 2 - - 2,204 - - $44.1

CARB ULEF - - 70 - - $1.4

CARB NAF - - - - - -
Total 45 - 2,323 $0.9
- $47.5

a Note that mills reporting manufacturing product in the “None” category for emissions standards because they were not certifying their production also reported that their emissions were below the Title VI emission requirements, and this is why this production is only affected under options NI and NE.

b Some mills producing product currently certified under CARB 1 reported that they would continue this product line after the CARB 2 effective date (although it would no longer be certified as CARB 1). Option SCR is the proposed option.

Sources: RISI 2011a, b, U.S. Envi ronmental Protection Agency 2010 

### 1800 1801 2.3.1.4 Summary of Production Process and Raw Material Costs for Composite Wood Panel 

### 1802 Producers 

### 1803 1804 Table 2-51 presents a summary of the annualized increase in production process and raw material 1805 costs for composite wood panel producers by analytical option. 1806 1807 Table 2-51: Summary of Incremental Increase in Production Costs for Composite Panel Producers

Product Type Incremental Increase in Annual Production Costs (millions, 2010$) 30-Year Annualized
Increase in Production

Costs (3% discount rate, millions 2010$) 30-Year Annualized
Increase in Production Costs (7% discount rate, millions 2010$) Options SI, SE, SP, SC,

and SCR Options CI and

CE Options
NI and

NE Options SI, SE, SP, SC,

and SCR Options CI and

CE Option
s NI
and NE Options SI, SE, SP, SC,

and SCR Options CI and

CE Options
NI and

NE

Hardwood Plywood $0.2 - $65.3 $0.2 - $62.2 $0.2 - $60.5

MDF - - $185.0 - - $176.0 - - $171.2

Particleboard $0.9 - $47.5 $0.9 - $45.2 $0.8 - $43.9 Option SCR is the proposed option.



### 1808 1809 1810 1811

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### 2.3.2 Certification and Testing Costs for Composite Wood Panel Producers 1812 1813 Table 2-52 presents a summary of the incremental initial, subsequent year, and annualized costs 1814 associated with testing and certification for the differe nt analytical options under various scenarios for the 1815 products affected. See section 2.2 for a descr iption of how these costs were estimated. 1816 1817 To determine the baseline product certification stat us all mills were assumed to have two product 1818 lines, and the baseline certification status of their pr oduct lines was determined by their certification status 1819 according to CARB’s (2011b) list of certified mills and CARB’s (2011a) list of no-added formaldehyde 1820 (NAF) and ultra low emitting formaldehyde (ULEF) exem ptions. For example, if a mill only had a Phase 1821 2 certification listed, it was assumed that they had tw o product lines with the standard certification. 1822 (Standard certification refers to certification where mills are not exempt from any routine testing 1823 requirements, i.e., not NAF or ULEF certification.) Another example is a mill that is listed as Phase 2 1824 certified and also listed as having NAF exempt status would be assumed to ha ve one NAF line and one 1825 standard certification line (NAF certified mills are exempt from some routine testing requirements). The 1826 exception to this is particleboard, where it is assumed th at 5 of the 25 particleboard mills with standard 1827 certification status also produce a product line that is not certified. Mills that certify their products as 1828 ULEF under the CARB ATCM are exempt from some routine testing requirements under the CARB 1829 ATCM. Under the proposed TSCA Title VI rule thes e ULEF exemptions will not be available so these 1830 mills will no longer be exempt from some routine testing unless they obtain NAF certification. The 1831 analysis assumes that mills will seek standard cer tification for baseline uncertified and baseline ULEF 1832 product lines – with the exception of mills that have one product line that is ULEF certified and another 1833 product line that is NAF certified in the baseline. These mills are assumed to seek NAF certification for 1834 their product line that was ULEF certified in the base line, so they will have two product lines with NAF 1835 certification. Note that switching to NAF certification results in an estimated certification and testing cost 1836 savings because NAF products are not required to be tested as frequently as products with other 1837 certifications. 1838
1839 Under the CARB ATCM mills may ship panels fro m certified product lines before test results are 1840 available, but under the proposed rule they would have to wait until test results indicate that the emissions 1841 standards have been met before shipping a lot that has been tested. MDF and particleboard mills are all 1842 assumed to conduct daily quality control testing on site, so this requirement is not expected to adversely 1843 affect these mills. (Once a quarter these mills will also have to store lots for wh ich a sample has been sent 1844 to a TPC for large chamber testing until the test resu lts indicate that the emissions standards have been 1845 met for the lot that has been t ested.) However, CARB certified hardwood plywood mills are assumed to 1846 outsource quality control testing to their TPC. It is uncertain how often hardwood plywood mills ship 1847 product from a lot being tested before the test results are available and therefore it is uncertain how mills 1848 will choose to comply with this requirement. It may be the case that some mills normally maintain a level 1849 of inventory where they would typically not ship any pa nels before test results have been determined for 1850 that lot, but other mills may ship out panels on th e same day they are produced. This analysis estimates 1851 the costs of this requirement as the incremental cost of installing a lab on site and conducting daily quality 1852 control testing rather than outsourcing weekly qua lity control testing to a TPC. (Once a quarter these 1853 mills will also have to store lots for which a sample has been sent to a TPC for large chamber testing until 1854 the test results indicate that the emissions standards have been met for the lot that has been tested.) 1855 Assuming that mills conduct daily on-site testing may ove rstate the costs of this requirement if some mills 1856 find it more cost effective to hold products in invent ory until test results have been determined by an 1857 outside lab. 1858

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### 1859 To be comparable with the benefits estimates, wh ich were estimated for 30 year period, all costs 1860 were annualized over a 30 year period. The results presented in Table 2-53 are calculated by multiplying 1861 the number of affected entities by the corresponding cost increase or savings presented in Table 2-52. 1862*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-791863Table 2-52: Per Mill Costs for Certifying and TestingProducts, by change in product line certification 2010$)AnalyticalOptionProduct TypeBaseline Product Lines(CARB ATCM certification)Post-Rule Product Lines(TSCA Title VI certification)First YearCostsSubsequentYear Costs30-Year AnnualizedCosts (Annualized over30 Years Using 3Percent Discount Rate3 Percent 7 PercentSI, SE, SP,SC, andSCRHardwood Plywood2 prod. with standard cert.2 prod. with standard cert.$14,097$14,097$13,413$13,046Hardwood Plywood2 prod. without cert.2 prod. with NAF cert.$42,015$7,062$8,367$8,972Particleboard1 prod. without cert.; 1 prod. with standard cert.2 prod. with standard cert.$7,305$4,485$4,401$4,347Hardwood Plywood2 prod. with ULEF cert.2 prod. with standard cert.$62,124$52,124$50,065$48,934MDF2 prod. with ULEF cert.2 prod. with standard cert.$48,630$48,630$46,269$45,003Particleboard2 prod. with ULEF cert.2 prod. with standard cert.$48,630$48,630$46,269$45,003Hardwood Plywood1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.$22,501($1,958)($710)($107)MDF1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.$12,693($1,938)($1,154)($774)CI and CEHardwood Plywood 2 prod. without cert. 2 prod.with standard cert. $81,614 $62,782 $60,622 $59,412Particleboard 1 prod. without cert.; 1prod. with standard cert. 2 prod. with standard cert. $7,305 $4,485 $4,401 $4,347NI and NEHardwood Plywood 2 prod. without cert. 2prod. with NAF cert. $42,015 $7,062 $8,367 $8,972Particleboard 1 prod. without cert.; 1prod. with standard cert. 2 prod. with NAF cert. ($26,827) ($47,699) ($44,400) ($42,687)Hardwood Plywood 2 prod. with ULEF cert. 2 prod. with NAF cert. $23,918 ($3,595) ($2,124) ($1,409)MDF 2 prod. with ULEF cert. 2 prod. with NAF cert. $15,017 ($3,555) ($2,507) ($1,995)Particleboard 2 prod. with ULEF cert. 2 prod. with NAF cert. $15,017 ($3,555) ($2,507) ($1,995)Hardwood Plywood 2 prod. with standard cert. 2prod. with NAF cert. ($23,074) ($54,887) ($50,723) ($48,577)MDF 2 prod. with standardcert. 2 prod. with NAF cert. ($31,312) ($52,184) ($48,668) ($46,838)Particleboard 2 prod. with standard cert. 2prod. with NAF cert. ($31,312) ($52,184) ($48,668) ($46,838)Hardwood Plywood 1 prod. with NAF cert.; 1 prod. with ULEF cert. 2 prod. with NAF cert. $22,501 ($1,958) ($710) ($107)MDF 1 prod. with NAF cert.; 1 prod. with ULEF cert. 2 prod. with NAF cert. $12,693 ($1,938) ($1,154) ($774)MDF 1 prod. with standardcert.; 1 prod. with NAF cert. 2 prod. with NAF cert. ($31,306) ($48,238) ($45,098) ($43,460)Particleboard 1 prod. with standard cert.; 1 prod. with NAF cert. 2 prod. with NAF cert. ($31,306) ($48,238) ($45,098) ($43,460)Note: Numbers in parentheses represent cost savings. Standard certification refers to certification where mills are not exemptfrom any ongoing testing requirements (i.e., not ULEFor NAF certification). NAF certification refers to mills thatare certifying their products asNAF; these mills will be exemptfrom some of the routine testing requirements. ULEFcertification is available under the CARB ATCMand ULEF certified mills are exempt fromsome of the routine testing requirements under the CARB ATCM.Option SCR is the proposed option.186418651866*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-80Table 2-53: Annualized Costs for Certifying and Testing Products, by analyticaloption and number of affected mills (thousands,2010$)AnalyticalOptionProduct TypeBaseline Product Lines(CARB ATCM certification)Post-Rule Product Lines(TSCA Title VI certification)Number ofAffectedFirmsNumber ofAffected Mills30-Year AnnualizedCosts (Annualized over30 Years Using 3Percent Discount Rate3 Percent 7 PercentSI, SE, SP,SC, andSCRHardwood Plywood2 prod. with standard cert.2 prod. with standard cert.810$134$130Hardwood Plywood2 prod. without cert.2 prod. with NAF cert.911$92$99Particleboard1 prod. without cert.; 1 prod. with standard cert.2 prod. with standard cert.35$22$22Hardwood Plywood2 prod. with ULEF cert.2 prod. with standard cert.68$401$391MDF2 prod. with ULEF cert.2 prod. with standard cert.12$93$90Particleboard2 prod. with ULEF cert.2 prod. with standard cert.11$46$45Hardwood Plywood1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.45($4)($1)MDF1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.11($1)($1)Total$783$776CI and CEHardwood Plywood 2 prod. without cert. 2prod. with standard cert. 9 11 $667 $654Particleboard 1 prod. without cert.;1 prod. with standard cert. 2 prod. with standard cert. 3 5 $22 $22Total$689 $675NI and NEHardwood Plywood 2 prod. without cert.2 prod. with NAF cert. 9 11 $92 $99Particleboard 1 prod. without cert.; 1 prod. with standard cert. 2 prod. with NAF cert. 3 5 ($222) ($213)Hardwood Plywood 2 prod. withULEF cert. 2 prod. with NAF cert. 6 8 ($17) ($11)MDF 2 prod. with ULEFcert. 2 prod. with NAF cert. 1 2 ($5) ($4)Particleboard 2 prod. with ULEF cert.2 prod. with NAF cert. 1 1 ($3) ($2)Hardwood Plywood 2 prod. with standard cert. 2 prod. with NAF cert. 8 10 ($507) ($486)MDF 2 prod. with standard cert. 2 prod. with NAF cert. 8 13 ($633) ($609)Particleboard 2 prod. with standard cert. 2 prod. with NAF cert. 11 20 ($973) ($937)Hardwood Plywood 1 prod. with NAF cert.; 1 prod. withULEF cert. 2 prod. with NAF cert. 4 5 ($4) ($1)MDF 1 prod. with NAF cert.; 1 prod. with ULEFcert. 2 prod. with NAF cert. 1 1 ($1) ($1)MDF 1 prod. with standardcert.; 1 prod. with NAF cert. 2 prod. with NAF cert. 1 1 ($45) ($43)Particleboard 1 prod. with standardcert.; 1 prod. with NAF cert. 2 prod. with NAF cert. 1 2 ($90) ($87)Total($2,408) ($2,295)Note: Numbers in parentheses represent cost savings. Standard certification refers to certification where mills are not exemptfrom any ongoing testing requirements (i.e., not ULEF orNAF certification). NAF certification refersto mills that are certifying their products as NAF; these mills will be exempt from some of the routine testing requirements. ULEFcertification is available under the CARB ATCMand ULEF certified mills are exempt fromsome of the routine testing requirements under the CARB ATCM.Option SCR is the proposed option.

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### 2.3.3 Total Costs for Composite Panel Producers 1867 1868 The incremental costs associated with changing production processes and raw materials presented 1869 in Table 2-46, Table 2-48, and Table 2-50 are combin ed with the certification and testing costs presented 1870 in Table 2-52 and Table 2-53 to estimate the total fi rst and subsequent year costs presented in Table 2-54 1871 and the 30-year annualized costs presented in Table 2-55. Note that the production process and raw 1872 material costs presented in Table 2-46, Table 2-48, an d Table 2-50 are assumed to be equally distributed 1873 across the mills incurring these costs to calculate the estimates presented in Table 2-54 and Table 2-55. 1874 1875 1876 1877*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-82Table 2-54: Total First and Subsequent Year Costs for CompositePanel Producers, by analytical option and number of affected mills(thousands, 2010$)AnalyticalOptionProduct TypeBaseline Product Lines(CARB ATCM certification)Post-Rule Product Lines(TSCA Title VI certification)Number ofAffectedFirmsNumber ofAffectedMillsTotal CostsFirst YearSubsequentYearsSI, SE, SP,SC, andSCRHardwood Plywood2 prod. with standard cert.2 prod. with standard cert.810$141$141Hardwood Plywood2 prod. without cert.2 prod. with NAF cert.911$667$283Particleboard1 prod. without cert.; 1 prod. with standard cert.2 prod. with standard cert.35$937$922Hardwood Plywood2 prod. with ULEF cert.2 prod. with standard cert.68$497$417MDF2 prod. with ULEF cert.2 prod. with standard cert.12$97$97Particleboard2 prod. with ULEF cert.2 prod. with standard cert.11$49$49Hardwood Plywood1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.45$113($10)MDF1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.11$13($2)Total$2,513$1,897CI and CEHardwood Plywood 2 prod. without cert. 2prod. with standard cert. 9 11 $898 $691Particleboard 1 prod. without cert.;1 prod. with standard cert. 2 prod. with standard cert. 3 5 $37 $22Total$934 $713NI and NEHardwood Plywood 2 prod. without cert.2 prod. with NAF cert. 9 11 $21,596 $21,212Particleboard 1 prod. without cert.; 1 prod. with standard cert. 2prod. with NAF cert. 3 5 $8,344 $8,240Hardwood Plywood 2 prod. withULEF cert. 2 prod. with NAF cert. 6 8 $15,562 $15,342MDF 2 prod. with ULEFcert. 2 prod. with NAF cert. 1 2 $21,795 $21,758Particleboard 2 prod. with ULEF cert.2 prod. with NAF cert. 1 1 $1,711 $1,692Hardwood Plywood 2 prod. with standard cert. 2 prod. with NAF cert. 8 10 $18,982 $18,664MDF 2 prod. with standard cert. 2prod. with NAF cert. 8 13 $141,064 $140,792Particleboard 2 prod. with standard cert. 2 prod. with NAF cert. 11 20 $33,288 $32,871Hardwood Plywood 1 prod. with NAF cert.; 1 prod. withULEF cert. 2 prod. with NAF cert. 4 5 $9,719 $9,597MDF 1 prod. with NAF cert.; 1 prod. with ULEFcert. 2 prod. with NAF cert. 1 1 $10,895 $10,880MDF 1 prod. with standard cert.; 1 prod. with NAF cert. 2 prod. with NAF cert. 1 1 $10,851 $10,834Particleboard 1 prod. with standardcert.; 1 prod. with NAF cert. 2prod. with NAF cert. 1 2 $3,329 $3,295Total$297,136 $295,176Note: Numbers in parentheses represent cost savings. Standardcertification refers to certification where mills are not exemptfrom any ongoing testing requirements (i.e., not ULEFor NAF certification). NAF certification refers to mills thatare certifying their products asNAF; these mills will be exemptfrom some of the routine testing requirements. ULEFcertification is available under the CARB ATCMand ULEF certified mills are exempt fromsome of the routine testing requirements under the CARB ATCM.Option SCR is the proposed option.1878*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-83Table 2-55: Total Annualized Costs for Composite Panel Producers, by analytical option and number of affected mills (thousands,2010$)AnalyticalOptionProduct TypeBaseline Product Lines(CARB ATCM certification)Post-Rule Product Lines(TSCA Title VI certification)Number ofAffectedFirmsNumber ofAffectedMills30-Year AnnualizedCosts (Annualized over30 Years Using 3Percent Discount Rate3 Percent 7 PercentSI, SE, SP,SC, andSCRHardwood Plywood2 prod. with standard cert.2 prod. with standard cert.810$134$130Hardwood Plywood2 prod. without cert.2 prod. with NAF cert.911$287$288Particleboard1 prod. without cert.; 1 prod. with standard cert.2 prod. with standard cert.35$878$855Hardwood Plywood2 prod. with ULEF cert.2 prod. with standard cert.68$401$391MDF2 prod. with ULEF cert.2 prod. with standard cert.12$93$90Particleboard2 prod. with ULEF cert.2 prod. with standard cert.11$46$45Hardwood Plywood1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.45($4)($1)MDF1 prod. with NAF cert.; 1 prod. with ULEF cert.2 prod. with standard cert.11($1)($1)Total$1,834$1,799CI and CEHardwood Plywood 2 prod. without cert. 2prod. with standard cert. 9 11 $667 $654Particleboard 1 prod. without cert.;1 prod. with standard cert. 2 prod. with standard cert. 3 5 $22 $22Total$689 $675NI and NEHardwood Plywood 2 prod. without cert.2 prod. with NAF cert. 9 11 $20,200 $19,657Particleboard 1 prod. without cert.; 1 prod. with standard cert. 2prod. with NAF cert. 3 5 $7,845 $7,633Hardwood Plywood 2 prod. withULEF cert. 2 prod. with NAF cert. 6 8 $14,607 $14,213MDF 2 prod. with ULEFcert. 2 prod. with NAF cert. 1 2 $20,703 $20,138Particleboard 2 prod. with ULEF cert.2 prod. with NAF cert. 1 1 $1,611 $1,567Hardwood Plywood 2 prod. with standard cert. 2 prod. with NAF cert. 8 10 $17,773 $17,294MDF 2 prod. with standard cert. 2prod. with NAF cert. 8 13 $133,971 $130,311Particleboard 2 prod. with standard cert. 2 prod. with NAF cert. 11 20 $31,295 $30,448Hardwood Plywood 1 prod. with NAF cert.; 1 prod. withULEF cert. 2 prod. with NAF cert. 4 5 $9,137 $8,890MDF 1 prod. with NAF cert.; 1 prod. with ULEFcert. 2 prod. with NAF cert. 1 1 $10,353 $10,070MDF 1 prod. with standard cert.; 1 prod. with NAF cert. 2 prod. with NAF cert. 1 1 $10,309 $10,027Particleboard 1 prod. with standardcert.; 1 prod. with NAF cert. 2prod. with NAF cert. 1 2 $3,137 $3,052Total$280,940 $273,300Note: Numbers in parentheses represent cost savings.Option SCR is the proposed option.18791880

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## 2.4 Estimated Costs for Wood Ve neer Laminated Product Producers 1881 1882 This section presents the estimated costs to wood veneer laminated product producers under 1883 several analytical options. For this analysis a wood veneer laminated product is defined as a product 1884 made by gluing a wood or woody grass veneer to the face and/or back of a purchased platform to produce 1885 a finished product or component part (oth er than a stock hardwood plywood panel). 27 

### Wood veneer 1886 laminated product producers are considered composite wood product fabricators rather than hardwood 1887 plywood manufacturers under the CARB ATCM, and they are not required to meet the ATCM’s 1888 emissions standards. 1889 1890 TSCA Title VI includes laminated products in th e definition of hardwood plywood, and directs 1891 EPA to conduct a rulemaking process to determine whether to exempt any of these products from the 1892 definition. If EPA does not exempt laminated produc ts from the definition of hardwood plywood, then 1893 laminated products will have to me et TSCA Title VI’s emissions sta ndards (in addition to being made 1894 with certified platforms). 1895 1896 The estimated number of companies making wo od veneer laminated products was presented 1897 above in Section 2.1.2. Section 2.3.1 presents the estimated costs to wood veneer laminated product 1898 producers for making changes to raw materials. Sectio n 2.4.2 presents the estimated costs of testing and 1899 third party certification for wood veneer laminated product producers. Finally, the total estimated costs 1900 for wood veneer laminated product produ cers are presented in section 2.4.3. 1901 1902 2.4.1 Costs of Changes to Raw Materials for Wood Veneer Laminated Product 1903 Producers 1904 1905 This section presents the estimated costs to wood veneer laminated product producers for making 1906 changes to raw materials. These cost s are estimated as the costs of switching face resins from UF to PVA 1907 resin systems and switching from conventi onal to lower emitting platforms . 1908 1909 Because the emissions standard for hardwood plyw ood (0.05 ppm) is lower than the standards for 1910 particleboard (0.09 ppm) and MDF (0.11 to 0.13 ppm), wood veneer laminated products included in the 1911 definition of hardwood plywood could conceivably ex ceed the emission standard even if a NAF resin 1912 such as PVA was used to affix the veneer to a certif ied particleboard or MDF platform. (Whether this 1913 occurs in practice depends on how effectively the ven eer acts as a barrier to the release of formaldehyde, 1914 and how far below the standards the actual emissions from the platform are.) 1915 1916 This analysis uses the term “ low emission platforms ” to mean platforms with emissions low 1917 enough that wood veneer laminated pr oducts made from them meets th e applicable hardwood plywood 1918 emission standard. For the standard certification, lo w emission platforms are assumed to include certified 1919 veneer platforms, particleboard and MDF plat forms certified as ULEF under the CARB ATCM, and 1920 particleboard and MDF platforms certified as NAF. For analytical options requiring wood veneer 1921 laminated products to meet NAF emission levels, low emission platforms would include particleboard, 1922 MDF and veneer platforms certified as NAF. 1923 1924 1925 Wood veneer laminated product producers switchi ng from UF to PVA face resins and purchasing 1926 low emission platforms would not need to make any significant modifications or upgrades to existing 1927 equipment or processes because PVA resins are gene rally a “drop-in” technology for plants currently 1928

27 The laminated products discu ssed here do not include products that are so lely laminated with materials other than veneer, such as high pressure laminate, thermally fused pape r, vinyl film, decora tive foil, or polypropylene film.

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### using UF face resins. Thus, the estimated raw material costs are only for purchasing the more expensive 1929 face resins and platforms. Note that switching to PVA face resins is just one possibility for achieving 1930 compliance. Some producers may achieve complianc e by using enhanced urea formaldehyde resins, 1931 melamine-urea-formaldehyde (MUF) resins, soy-based resi ns, or other resin systems. However, the cost 1932 of switching to PVA resins can provide a reasonabl e approximation for the compliance cost associated 1933 with changing raw materials and production processes a nd therefore is the basis for the cost estimates in 1934 this analysis. 1935 1936 Section 2.4.1.1 presents the estimated production of wood veneer lamina ted products. This 1937 information is used to estimate the increase in raw material costs as a r esult of the proposed rule. Section 1938 2.4.1.2 presents the estimated raw material costs to wood veneer laminate d product producers by 1939 analytical option. 1940 1941 2.4.1.1 Wood Veneer Laminated Product Production Volume 

### 1942 1943 This analysis estimates the production volume of wood veneer laminated product producers 1944 separately for the following primary categories of wood veneer laminated product producers listed below: 1945 1946

 Custom Panel Producers 1947

 Engineered Wood Flooring Producers 1948

 Composite Wood Product Fabricators 1949

 Cabinet Manufacturers 1950

 Household Furniture Manufacturers 1951

 Office and Institutional Furniture Manufacturers 1952

 Window and Door Manufacturers 1953

 Architectural Woodwork and Millwork Manufacturers 1954
1955 Custom Panel Manufacturers 

### 1956 1957 Custom panel producers are defined here as pr oducers that make custom hardwood plywood 1958 panels to order by affixing veneer to purchased platfo rms. They make hundreds of different combinations 1959 of platform types (particleboard, MDF, veneer-core), platform characteristics (e.g., moisture resistance, 1960 fire resistance, density, other mechanical properti es, and formaldehyde emissions), platform thickness, 1961 species of veneer, etc. A firm might use more than a dozen different types of particleboard and MDF 1962 platforms (not counting differences in thickness, si ze, density, etc.), and a much larger number of 1963 different types of veneer-core platforms. The specifi c characteristics of each order are determined by the 1964 customer. Custom panel producers might make as little as four or five sheets of a given product, and can 1965 make dozens or even hundreds of different combinati ons of platform type, thickness, and veneer species 1966 in a single day. They often manufacture and ship a product within a few days of receiving an order. 1967 Custom panel producers are generally small businesses. 1968 1969 Consultations with industry members indicate th at there are about 50 custom panel producers, 1970 although estimates ranged from 20 to 100. Industry members estimated that the typical production 1971 volume for these producers ranges from less than 1 million to 15 million square feet (mmsf) per year, 1972 with the production of most producers falling near the lower end of this range. Therefore, it is assumed 1973 that average mill production volume is 2 mmsf on a 5/ 8” basis, resulting in an estimate that total 1974 production volume by custom panel producers is 100 mmsf per year on a 5/8” basis. 1975 1976 1977 1978

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### Engineered Wood Flooring Producers 

### 1979 1980 According to U.S. International Trade Commission (2008), engineered wood flooring production 1981 was estimated to be 258 mmsf in 2006. Based on c onversations with HPVA, it is estimated that 2010 1982 production levels for the hardwood plywood industry ove rall are about 60 percent of their 2006 levels, 1983 which would imply engineered wood flooring production of about 155 mmsf on a 3/8" basis. About 30 1984 percent of engineered wood flooring production is estimated to be manufactured as a wood veneer 1985 laminated product (while the other 70 percent of pr oduction is manufactured as a product meeting the 1986 CARB definition of hardwood plywood). Thus, th e quantity of engineered wood flooring made as a 1987 wood veneer laminated product is estimated to be about 47 mmsf on a 3/8” basis, or 28 mmsf if calculated 1988 on a 5/8” basis. Since it is estimated that there are about 18 domestic engineered wood flooring producers 1989 making wood veneer laminated products, it follows that the estimated average production volume per 1990 firm is about 1.6 mmsf per year on a 5/8” basis. 1991 1992 Other Wood Veneer Laminated Product Producers 

### 1993 1994 The production volume of other wood veneer lamina ted products (other than other than custom 1995 panel and engineered wood flooring ) is estimated based on Census data on the quantity of veneer 1996 consumed in the industry. Figure 2-2 presents the methodology employed for estimating the consumption 1997 of hardwood veneer by these other wood veneer lami nated product manufactures. First, the data on the 1998 dollar value of total hardwood veneer produced is obt ained and the average cost per square foot of 1999 hardwood veneer is estimated. These data are combined to estimate the total quantity of hardwood veneer 2000 produced. Next, the quantity of hardwood veneer th at is imported is adde d to the total domestic 2001 hardwood veneer production, and then the quantity of hardwood veneer that is exported is subtracted. 2002 This total reflects the estimated domestic consumpti on of hardwood veneer. Then, the dollar value of 2003 hardwood veneer consumed by hardwood veneer and plywood producers is combined with the estimated 2004 average hardwood veneer cost per square foot to generate the estimated consumption of hardwood by 2005 hardwood veneer and plywood producers. To estimate the quantity of veneer consumed by wood veneer 2006 laminated product producers, the quantity of hard wood veneer consumed by hardwood veneer and 2007 plywood producers is subtracted from the quantity of total hardwood veneer consumed domestically. 2008 Note that this may overstate the quantity of wood veneer laminated product pr oduction because veneer is 2009 also used in the manufacture of items that are not covered by the rule, such as statutorily exempt items, 2010 hobbyist uses, and furniture repair. 2011 2012 The total dollar value of hardwood veneer produ ced is $1,075,909 thousand according to the 2007 2013 Economic Census (U.S. Census Bur eau 2009c). The corresponding cost per square foot of veneer is 2014 estimated using U.S. ITC trade data on the value and quantity of veneer exported in 2007. According to 2015 the U.S. ITC, 972,952,757 square feet of veneer was exported in 2007, with a value of $438,302 2016 thousand. 28 

### This results in an average veneer cost of $0.45 per square foot. Veneer costs vary widely 2017 depending on the species, cut or pattern, and quality of the wood. While some laminators may primarily 2018 use veneer that is priced higher than the estimated av erage of $0.45 per square foot, other laminators will 2019 use veneer that is below this average cost. By combining the total dollar value of hardwood veneer 2020 produced ($1,075,909 thousand) and the average price of hardwood veneer ($0.45), the analysis estimates 2021 that domestic production of hardwood veneer is 2,390,909 thousand square feet (msf). 2022 2023 Data on hardwood veneer imports and exports was obtained from the U.S. ITC Interactive Tariff 2024 and Trade Dataweb. According to U.S. ITC trade data , the quantity of U.S. hardwood veneer imports for 2025 2007 was 656,721 msf, while the quantity of U.S. hardwood veneer exports was 986,223 msf. 29 

### The 2026

28 Excludes tropical hardwood veneer.

29 Includes “Tropical Hardwood Veneer.”

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### estimated domestic hardwood veneer c onsumption of 2,061,407 msf is ca lculated by adding the imports 2027 and subtracting the exports from the do mestic hardwood veneer production. 2028 2029 The dollar value of hardwood veneer consumed by hardwood veneer and plywood manufacturers, 2030 $626,244 thousand, is available from the 2007 Econ omic Census (U.S. Census Bureau 2009g). The 2031 corresponding cost per square foot of veneer for hardwood plywood manufacture rs is estimated using 2032 U.S. ITC trade data on the value and quantity of ven eer exported in 2007. By combining the total dollar 2033 value of hardwood veneer consumed by the hard wood veneer and plywood manufacturers ($626,244 2034 thousand) and the average price of exported hardwo od veneer ($0.45), the analysis estimates that 2035 consumption of hardwood veneer by plywood manufacturers is 1,391,6 53 msf. Thus, total domestic 2036 veneer consumption by wood veneer laminated product producers is estimated to be 669,753 msf. 2037*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 2-882038Figure 2-2: Estimating Quantity of Harwood Veneer Consumedby Other Wood Veneer Laminated Product Producers (excludingengineered wood flooring and custom panel producers)2039Step1:Estimatedomestichardwoodveneerproduction(2,390,909 msf)(Dollarvalueofhardwoodveneerproduceddividedbyestimatedcostpersquarefootforhardwoodveneer)$1,075,909/$0.45Obtaindataonthedollarvalueofhardwoodveneerproducedfrom2007EconomicCensus.Productcode3212111:Hardwoodveneer,includingbackedw/paper/cloth/etc.EstimatecostpersquarefootofveneerbyusingU.S.ITCtradedataonthevalueandquantityofveneerexportedin2007.(quantityofhardwoodveneerexportedin2007dividedbytheestimatedvalueofthehardwoodveneerexportedin2007)Step 2: Estimate domestichardwood veneer consumption(2,061,407 msf)(TotalProduction[Step1]+Imports–Exports)2,390,909+656,721‐986,223Step 3: Estimate domesticconsumption of hardwood veneerby hardwood plywoodmanufacturers(1,391,653 msf)(Dollarvalueofhardwoodveneerconsumedbyhardwoodveneerandplywoodmanufacturersdividedbyestimatedcostpersquarefootforhardwoodveneer)$626,244/$0.45Step 4: Estimate domesticconsumption of hardwood veneerby laminators.(669,753 msf)(Subtractestimateddomesticconsumptionofhardwoodveneerbyhardwoodplywoodmanufacturers[Step3]fromtheestimateddomestichardwoodveneerconsumption[Step2])2,061,406‐1,391,653Obtaindataonimportsofhardwoodveneerfromthe2007U.S.ITCInteractiveTariffandTradeDataweb.Obtaindataonexportsofhardwoodveneerfromthe2007U.S.ITCInteractiveTariffandTradeDataweb.440890Veneersheetsandsheetsforplywood,etc.whetherofnotplanned,etc.,notover6mm(.236in.)thick,ornon‐coniferouswood,nesoi.440831Veneersheetsandsheetsforplywoodandotherwoodsawnlengthwise,slickedorpeeled,thicknessnotexceeding6mm,dark/lightmeranti&merantibakau440839Veneersheetsandsheetsforplywoodandotherwoodsawnlengthwise,slickedorpeeled,thicknessnotexceeding6mm,othertropicalwood,nesoi440890Veneersheetsandsheetsforplywood,etc.whetherofnotplanned,etc.,notover6mm(.236in.)thick,ornon‐coniferouswood,nesoi.440831Veneersheetsandsheetsforplywoodandotherwoodsawnlengthwise,slickedorpeeled,thicknessnotexceeding6mm,dark/lightmeranti&merantibakauObtaindataonthedollarvalueofhardwoodveneerconsumed byhardwoodveneerandplywoodmanufacturersfromthe2007EconomicCensus:Sector31:EC0731I3:Manufacturing:IndustrySeries:MaterialsConsumedbyKindfortheUnitedStates:2007.EstimatecostpersquarefootofveneerbyusingU.S.ITCtradedataonthevalueandquantityofveneerimportedin2007.(quantityofhardwoodveneerimportedin2007dividedbytheestimatedvalueofthehardwoodveneerimportedin2007)

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### To estimate the volume of wood veneer lamina ted product produced per volume of veneer 2040 consumed it is assumed that about 30 percent of the veneer is lost during the production process due to 2041 trimming, etc. It is also assumed that all wood ve neer laminated product producers affix both a face and a 2042 back veneer, so for each square foot of veneer consum ed, 0.35 (0.35 = half of 70%) square feet of wood 2043 veneer laminated product is produced. Note that wood veneer laminated product producers may often 2044 only affix a face veneer, but the estimated costs of switching adhesives are not affected by this 2045 assumption since the number of glue lines assumed and the estimated quantity of product manufactured 2046 are inversely related; 30 

### however, the estimates of platform costs are affected by this assumption. 2047 2048 Table 2-56 presents the estimated production of wood veneer laminated products other than 2049 custom panels and engineered wood flooring, usi ng the estimate of domestic consumption of hardwood 2050 veneer by laminators. 2051 2052 Table 2-56: Production Volume of Other Wood Veneer Laminated Products Product Category Estimated Square Footage of Hardwood Veneer Consumed (msf) Surface Area of Wood
Veneer Laminated Product Produced per Square Foot of
Hardwood Veneer Consumed Estimated Surface Area
of Wood Veneer
Laminated Product

Produced (msf)

Wood Veneer Laminated
Product Other than Custom

Panels and Engineered Wood Flooring 669,754 0.35 234,414

Sources: U.S. Census Bureau 2009c, U.S. Cens us Bureau 2009g, U.S. ITC 2011b, U.S. ITC 2011a 

### 2053 The estimated production of 307,032 msf from Table 2-56 is disaggregated in Table 2-57 2054 according to the relative share of the total va lue of hardwood veneer consumed by employer 2055 establishments in the various wood veneer laminated product industries. 2056

30 For a given quantity of veneer, a manufacturer that affixes only a face veneer produces twice the square footage of laminated product as a manufacture r affixing both face and back veneers. But the former incurs half the cost per square foot for glue compared to the latter. Thus, both manufacturers have the same cost for glue.

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### Table 2-57: Production Volume of Other Wood Veneer Laminated Product Producers Product Type NAICS Code and Description Value of Hardwood Veneer Consumed (thousands, 2007$) Percent of
Veneer Consumed Estimated Surface Area of
Wood Veneer

Laminated

Product Produced (msf)

Cabinets Wood Kitchen Cabinet and Countertop Manufacturing (337110) $95,058

Wood Television, Radio, and Sewing Machine Cabinet Manufacturing (337129) $1,262

Subtotal – Cabinets $96,320 24% 56,259

Household Furniture Upholstered House Furniture Manufacturing (337121) $11,737

Non-upholstered Wood Household Furniture Manufacturing (337122) $69,525

Subtotal – Household
Furniture $81,262 21% 49,227

Office and Institutional Furniture Institutional Furniture Manufacturing (337127) $24,948

Wood Office Furniture Manufacturing (337211) $37,840

Showcase, Partition, Shelving, and Locker Manufacturing (337215) $10,626

Subtotal –Office and
Institutional Furniture $73,414 19% 44,539

Window and Door
Producers Wood Window and Door Manufacturing ( 321911) $91,989 23% 53,915

Architectural Woodwork and Millwork Custom Architectural Woodwork and Millwork Manufacturing (337212) $53,149 13% 30,474

Total $396,134 100% 234,414 Sources: U.S. Census Bureau 2009c, U.S. Cens us Bureau 2009g, U.S. ITC 2011b, U.S. ITC 2011a 

### 2057 2058 2.4.1.2 Estimated Raw Materials Costs for Wood Veneer Laminated Product Producers 

### 2059 2060 Since wood veneer laminated product producers make higher value-added products compared to 2061 stock hardwood plywood panels, keeping resin costs low is not as critical to their competitiveness as it is 2062 for stock panel producers. Many producers of wood ve neer laminated products are believed to use PVA, 2063 which is a NAF resin, as a face adhesive. PVA resin is more expensive than UF resin, but it has a number 2064 of advantages: PVA is easy to work with, easy to cl ean up, and the press temperature can be kept low. 2065 However, some producers still use UF resins. For th e purpose of cost estimation, it is assumed that if 2066 wood veneer laminated products are not excluded from the definition of hardwood plywood, virtually all 2067 producers using UF resins will switch adhesive technol ogies in order to meet the emissions standards in 2068 TSCA Title VI. 2069 2070

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### The main steps to estimating the change in raw material costs to wood veneer laminated product 2071 producers under an analytical option where switching to NAF resins is the likely compliance strategy are 2072 as follows: 2073 2074 1. Estimate the total production volume from facilities that are expected to continue to use UF resins 2075 in the absence of a national rule. 2076

2. Assuming that mills using UF resins will switch to PVA resins, estimate unit cost of switching 2077 from UF to PVA resins. 2078

3. Estimate the production volume that will need to switch to low emission platforms in order to 2079 achieve the hardwood plywood emission standard. 2080

4. Estimate unit cost of switching to a low emission platform to achieve the hardwood plywood 2081 emission standard. 2082

5. Estimate total cost of switching from UF to PVA resins and low emission platforms by 2083 multiplying the unit costs with the production volume that is subject to the changes. 2084
Note that switching to PVA face resins is just one possibility for achieving compliance with the 2085 Phase 2 emissions standards. Some producers ma y achieve compliance by using enhanced urea 2086 formaldehyde resins, melamine-urea-formaldehyde (MUF) resins, soy-based resins, or other resin 2087 systems. However, the cost of switching to PVA f ace resins can provide a reasonable approximation for 2088 the compliance cost associated with changing raw materials and production processes and therefore is the 2089 basis for the cost estim ates in this analysis. 2090 2091 Production Volume Switching to PVA resins 

### 2092 2093 Table 2-58 presents the estimated quantity of wood veneer laminated products currently 2094 manufactured using UF resins, based on the estimated production volumes presented in section 2.4.1.1 2095 and on conversations with industry contacts about th e share of products made using UF resins. 2096 2097

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### Table 2-58: Estimating Wood Veneer Lamina ted Product Production Volume Manufactured Using UF Resins

Product Category Estimated Surface
Area of
Wood
Veneer Laminated

Product
Produced (msf, 5/8”) Estimated Percentage of

Production Potentially

Using Formaldehyde -Added Resins Estimated
Production

Volume Switching to
NAF Resins (msf, 5/8”) Comments

Architectural Panels / Custom Panels 100,000 25% 25,000 Some industry contacts thought using formaldehyde added resins was not
common. In order to be conservative in terms of being careful not to understate costs it is assumed that 25% of production uses UF resins.

Engineered Wood Flooring 28,000 25% 7,000 Some industry contacts thought using formaldehyde added resins was not common. In order to be conservative in terms of being careful not to understate costs it is assumed that 25% of production uses UF resins.

Cabinets 56,259 45% 25,317 About 45% of cabinet producers use UF resins according to KCMA (2010).

Household Furniture 49,227 45% 22,152 Information on resin use by household furniture producers was limited, so it is assumed that 45% of them use UF resins, similar to cabinet producers.

Office and Institutional
Furniture 44,539 5% 2,227 BIFMA (2010) reported UF resins were used very little if at all for office and institutional furniture. Thus, 5% of production is assumed to be produced with UF resins.

Wood Window and Door Manufacturing 53,915 45% 24,262 Information on resin use by window and door producers was limited, so it is assumed that 45% of producers use UF resins, similar to cabinet producers.

Custom architectural woodwork and millwork manufacturing 30,474 5% 1,524 Little information was available for
architectural woodwork and millwork producers. Thus, 5% of production is assumed to be produced with UF resins,
similar to office and institutional furniture producers. Total 362,414 107,482 

### 2098 Production Volume Switching to Low Emission Platforms 

### 2099
2100 Under options SI, CI, and NI wood veneer lami nated product producers would be considered 2101 hardwood plywood producers, and therefore producers using composite core platforms might need to 2102 switch to ULEF or NAF composite core platforms in order to meet the emissions standard. Under Option 2103 SP, this would be the case only for custom panel producers since other wood veneer laminated product 2104 producers would be considered fabricators under this option. However, under options SI, SP, CI, and NI 2105 producers using veneer core platforms that meet the CARB 2 emissions standards but are not NAF or 2106 ULEF platforms are expected to be able to achieve the emissions standards without switching platforms. 2107

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### Under Option SN, however, wood veneer laminated product producers would also have to use NAF face 2108 veneer and NAF platforms to be exempt from the definition of hardwood plywood. Under options SC 2109 and SCR (the proposed option), wood veneer laminate d products would be exem pted from the emissions 2110 standards if they were made with NAF face resins and platforms compliant with the TSCA Title VI 2111 emissions standards. But since all platforms will be compliant with the emissions standards after the Title 2112 VI rule takes effect, the only estimated incremental costs are for switching to NAF resins. It is assumed 2113 that under options SN, SC, and SCR most wood veneer laminated product producers that were not already 2114 doing so would use NAF platforms (Option SN) and/or NAF face resins (options SN, SC, and SCR) in 2115 order to avoid being categorized as hardwood plywood producers. 2116 2117 To summarize, the affected wood veneer laminate d product producers are generally expected to: 2118 2119

 switch to ULEF and NAF composite core plat forms under options SI, SP, CI, and NI 2120

 switch to using NAF face resins and NAF platforms under Option SN, and 2121

 make no changes to platforms under options SC and SCR, as TSCA Title VI compliant platforms 2122 would be needed to qualify for the exemption, but all baseline platforms are assumed to be TSCA 2123 Title VI compliant. 2124 2125 The resulting estimates and a detailed description of the underlying calculations are presented 2126 below in Table 2-59 (for options SI, SP, CI, NI), and Table 2-60 (for Option SN). 2127 2128
2129

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### Table 2-59: Wood Veneer Laminated Product Pro duction Switching to Low Emission Platforms: Options SI, SP, CI, and NI

Product Category Production (msf, 5/8”) Production Switching to Low
Emission Platforms Description of Estimated Percentages a, b

(%) (msf)

Architectural Panels /
Custom Panels 100,000 35.5% 35,500 Based on conversations with HPVA Personal Communication with HPVA 2011), 40% of hardwood plywood is composite core, and this is also assumed to be the case for custom panels. It was estimated that the mix of MD F and particleboard consumed in the Hardwood Veneer and Plywood Industry (NAICS 321211) is about 40.9% MDF and 59.1% particleboard. It was estimated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or ULEF resins, respectively. Thus, 35.5% is calculated as the sum of the two products of: (1) 40%, 40.9%, and 86.1%, and (2) 40%, 59.1%, and 90.5%.

Engineered
Wood Flooring 28,000 1.8% 504 Based on conversations with HPVA (2011), 2% of engineered wood flooring is composite core. It was estimated that the mix of MD F and particleboard consumed in the Hardwood Veneer and Plywood Industry (NAICS 321211) is about 40.9% MDF and 59.1% particleboard. It was estimated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or ULEF resins, respectively. Thus, 1.8% is calculated as the sum of the two products of: (1) 40.9%, 2%, and 86.1%, and (2) 59.1%, 2%, and 90.5%.

Cabinets 56,259 66.0% 37,131 It was estimated that the mix of Hardwood Plywood, MDF and particleboard consumed in the cabinet industries (NAICS 337110 and 337129) is 26.7% hardwood plywood, 7.5% MDF and 65.7% particleboard. It was esti mated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or UL EF resins, respectively. Thus, 66.0% is calculated as the sum of the two products of: (1) 7.5% and 86.1%, and (2) 65.7% and 90.5%.

Household
Furniture 49,227 57.9% 28,502 It was estimated that the mix of Hardwood Plywood, MDF and particleboard consumed in the Household Furniture Manufacturing Indus tries (NAICS 337121 and 337122) is 34.9% hardwood plywood, 23.4% MDF and 41.7% partic leboard. It was estimated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or ULEF resins, respectively. Thus, 57.9% is calculated as the sum of the two products of: (1) 23.4% and 86.1%, and (2) 41.7% and 90.5%.

Office and
Institutional
Furniture 44,539 55.6% 24,764 It was estimated that the mix of Hardwood Plywood, MDF and particleboard consumed in the Office and Institutional Furniture Manuf acturing Industries (NAICS 337127, 337211 and 337115) is about 37.5% hardwood plywood, 22.2% MDF and 40.3% particleboard. It was estimated that 86.1% and 90.5% of MDF a nd particleboard are not made with NAF or ULEF resins, respectively. Thus, 55.6% is cal culated as the sum of the two products of: (1) 22.2% and 86.1%, and (2) 40.3% and 90.5%.

Wood Window
and Door Manufacturing 53,915 73.3% 39,520 It was estimated that the mix of Hardwood Plywood, MDF and particleboard consumed in the Window and Door Manufacturing Industry (NAICS 321911) is 17.5% hardwood plywood, 33.1% MDF and 49.5% particleboard. It was estimated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or ULEF resins, respectively. Thus, 73.3% is calculated as the sum of the two products of: (1) 33.1% and 86.1%, and (2) 49.5% and
90.5%. Custom architectural
woodwork and millwork manufacturing 30,474 59.4% 18,102 It was estimated that the mix of Hardwood Plywood, MDF and particleboard consumed in
the Architectural Woodwork and Millwork Industry (NAICS 337212) is 33.27% hardwood plywood, 22.78% MDF and 43.95% particleboard. It was estimated that 86.1% and 90.5% of MDF and particleboard are not made with NAF or ULEF resins, respectively. Thus, 59.4% is calculated as the sum of the two products of: (1) 22.78% and 86.1%, and (2) 43.95% and 90.5%.
Total 362,414 184,023

a The mix of composite wood products consumed were estimated using U.S. Census (2009d) da ta on the value of materials consumed. Values were converted to volumes using prices of $48 0, $445, and $315 msf for hardwood plywood, MDF, and particleboard, respectively. The price of hardwood plywood was estimated using the total 2007 e xport values and quantities from U.S. ITC (2010) data (HTS codes 441232, 441299, an d 441231). The price of MDF and particleboard utilized are July 2007 prices from RISI’s (2011) MDF and Particleboard Commentary.

b The percentages of composite platforms not made with NAF or ULEF resins was estimated from EPA’s (2010a) survey of composite wo od product producers. Since the percentage of ULEF production was not disti nguished from other CARB 2 certif ied added-formaldehyde product ion in EPA’s (2010a) survey of composite wood product producers, it was estima ted that 37% of CARB 2 certifie d added-formaldehyde production is ULEF since 7 of the 19 CARB 2 certified mills that are not NAF exempt are ULEF exempt according to CARB’s lists of certified mills and ULEF and NAF mills. This analysis uses the term “ low emission platforms ” to mean platforms with emissions low enough that wood veneer laminated products made from them meets the applicable hard wood plywood emission standard.

Sources: CARB 2011, U.S. Census 2009d, U. S. EPA 2010a, U.S. ITC 2010, and RISI 2011

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### 2130 Table 2-60: Wood Veneer Laminated Product Produc tion Switching to NAF Platforms: Option SN

Product Category Production (msf, 5/8”) Production Switching to Low
Emission Platforms Description of Estimated Percentages a, b

(%) (msf)

Architectural
Panels /
Custom Panels 100,000 73.3% 73,300 Based on conversations with HPVA (2011) , 60% of hardwood plywood panels are
veneer core. It was estimated that the mi x of MDF and particleboard consumed in the Hardwood Veneer and Plywood Industry (N AICS 321211) is about 40.9% MDF and 59.1% particleboard. Thus, the estimated mi x of veneer core, MDF and particleboard platforms for custom panels is about 60. 0% hardwood plywood, 16.4% MDF and 23.6% particleboard. It was also estimated that 60.6%, 90.7%, and 93.3% of HWPW, MDF and particleboard are made using resins that are not NAF. Thus, the percentage of custom panels switching to NAF platforms (73.3%) is calculated as the sum of the three products: (1) 60% and 60.6%, (2) 16.4% a nd 90.7%, and (3) 23.6% and 93.3%.

Engineered
Wood Flooring 28,000 61.2% 17,136 Based on conversations with HPVA (2011), 2% of engineered wood flooring is composite core. It was estimated that th e mix of MDF and particleboard consumed in the Hardwood Veneer and Plywood Industry (N AICS 321211) is about 40.9% MDF and 59.1% particleboard. It was estimated that 60.6%, 90.7%, and 93.3% of hardwood plywood, MDF and particleboard are not made with NAF resins. Thus, 61.2% is calculated as the sum of the three products of: (1) 98% and 60.6%, (2) 2%, 40.9%, and 90.7%, and (3) 2%, 59.1% and 93.3%.

Cabinets 56,259 84.4% 47,483 It was estimated that the mix of Hardw ood Plywood, MDF and particleboard consumed in the cabinet industries (NAICS 337110 and 337129) is 26.71% hardwood plywood, 7.55% MDF and 65.74% particleboard. It wa s estimated that 90.7% and 93.3% of MDF and particleboard are not made with NAF resins. Thus, 84.4% is calculated as the sum of the three products of: (1) 26.71% and 60.6%, (2) 7.55% and 90.7%, and (3) 65.74% and 93.3%.

Household
Furniture 49,227 81.3% 40,022 It was estimated that the mix of Hardw ood Plywood, MDF and particleboard consumed
in the Household Furniture Manufacturi ng Industries (NAICS 337121 and 337122) is 34.9% hardwood plywood, 23.4% MDF and 41.7% particleboard. . It was estimated that 60.6%, 90.7%, and 93.3% of hardwood plywood, MDF and particleboard are not made with NAF resins. Thus, 81.3% is calculated as the sum of the three products of: (1) 34.9% and 60.6%, (2) 23.4% a nd 90.7%, and (3) 41.7% and 93.3%.

Office and
Institutional
Furniture 44,539 80.4% 35,809 It was estimated that the mix of Hardw ood Plywood, MDF and particleboard consumed in the Office and Institutional Furnitur e Manufacturing Industr ies (NAICS 337127, 337211 and 337115) is about 37.5% hard wood plywood, 22.2% MDF and 40.3% particleboard. It was estimated that 60.6 %, 90.7%, and 93.3% of hardwood plywood, MDF and particleboard are not made with NAF resins. Thus, 80.4% is calculated as the sum of the three products of: (1) 37.5% and 60.6%, (2) 22.19% and 90.7%, and (3) 40.28% and 93.3%. Wood
Window and
Door Manufacturing 53,915 86.7% 46,744 It was estimated that the mix of Hardw ood Plywood, MDF and particleboard consumed in the Window and Door Manufacturing I ndustry (NAICS 321911) is 17.45% hardwood plywood, 33.09% MDF and 49.46% particleboard. It was estimated that 60.6%, 90.7%, and 93.3% of hardwood plywood, MDF and particleboard are not made with NAF resins. Thus, 86.7% is calculated as the sum of the three products of: (1) 17.45% and 60.6%, (2) 33.09% and 90.7%, and (3) 49.46% and 93.3%. Custom architectural
woodwork and
millwork manufacturing 30,474 81.8% 24,928 It was estimated that the mix of Hardw ood Plywood, MDF and particleboard consumed in the Architectural Woodwork and M illwork Industry (NAI CS 337212) is 33.3% hardwood plywood, 22.8% MDF and 44.0% pa rticleboard. It was estimated that 60.6%, 90.7%, and 93.3% of hardwood plyw ood, MDF and particleboard are not made with NAF resins. Thus, 81.8% is calculate d as the sum of the three products of: (1) 33.3% and 60.6%, (2) 22.78% and 90 .7%, and (3) 43.95% and 93.3%.
Total 362,414 285,422 Total

a The mix of composite wood products consumed were estimated using U.S. Census ( 2009d) data on the value of materials consumed. Values were converted to volumes using prices of $48 0, $445, and $315 msf for hardwood plywood, MDF, and particleboard, respectively. The price of hardwood plywood was estimated using the total 2007 export values and quan tities from U.S. ITC ( 2010) data (HTS codes 441232, 441299, and 441231). The price of MDF and particleboard u tilized are July 2007 prices from RISI’s ( 2011) MDF and Particleboard Commentary.

b The percentages of composite platforms not made with NAF resins was estimated from EPA’s ( 2010a) survey of composite wood product producers. Sources: U.S. Census 2009d, U.S. EPA 2010a, U.S. ITC 2010, and RISI 2011 

### 2131

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### 2.4.1.3 Summary of the Costs of Changing Raw Materials for Wood Veneer Laminated Product 

### 2132 Panel Producers 

### 2133 2134 Table 2-61 presents the estimated costs of changing raw materials for wood veneer laminated 2135 product producers under the various analytical options. No material costs are incurred under options SE, 2136 CE, and NE since wood veneer laminated product producers are not subject to any emissions 2137 requirements under these analytical options. The total costs are highest under options SI, CI and NI, 2138 where all wood veneer laminated product producers w ould be considered hardwood plywood producers. 2139 Total costs are lowest under Option SP, where only custom producers would be considered hardwood 2140 plywood producers. Under Option SN, where wood ve neer laminated product producers would need to 2141 switch to NAF resins and platforms in order to avoid being classified as hardwood plywood producers, 2142 the estimated cost of changes to raw materials is about $25 million. Under options SC and SCR (the 2143 proposed option), where wood veneer laminated produc t producers would need to use NAF face resins 2144 and Title VI certified platforms in order to avoid being classified as hardwood plywood producers, the 2145 estimated cost of changes to ra w materials is about $4 million. 2146 2147

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### Table 2-61: Estimated Costs of Raw Material Changes for Wood Veneer Laminated Product Producers, by Analytical Option

Firm Type Production Switching to PVA (msf) Cost of Switching to PVA (2010$/msf) Production Switching to
Low Emission Platforms (msf) Cost of Switching to
Low Emission

Platforms (2010$/msf) Total Annual Cost of Changing Raw
Materials (thousands 2010$/msf) Options SE, CE, and NE: All Laminated Products ar e Exempt from Definition of Hardwood Plywood No changes in raw materials needed 0 $0 0 $0 $0 Option SI, CI, and NI: All Laminated Products ar e Included in Definition of Hardwood Plywood
Architectural Panels / Custom Panels 25,000 $30 35,500 $60 $2,880 Engineered Wood Flooring 7,000 $30 504 $60 $240
Cabinets 25,317 $30 37,131 $60 $2,987
Household Furniture 22,152 $30 28,502 $60 $2,375
Office and Institutional Furniture 2,227 $30 24,764 $60 $1,553
Window and Door Manufacturers 24,262 $30 39,520 $60 $3,099
Architectural Woodwork and Millwork 1,524 $30 18,102 $60 $1,132
Total Annual Costs 107,482 $30 184,023 $60 $14,266 Option SP: Laminated Products are Exempt from Definition Except for Custom Panels Architectural Panels / Custom Panels 25,000 $30 35,500 $60 $2,880 Engineered Wood Flooring - - - - -
Cabinets - - - - -
Household Furniture - - - - -
Office and Institutional Furniture - - - - -
Window and Door Manufacturers - - - - -
Architectural Woodwork and Millwork - - - - - Total Annual Costs 25,000 $30 35,500 $60 $2,880 Option SN: Laminated Products Using Added Formaldehyde Re sins or Platforms are Includ ed in the Definition of Hardwood Plywood
Architectural Panels / Custom Panels 25,000 $30 73,300 $60 $5,148 Engineered Wood Flooring 7,000 $30 17,136 $60 $1,238
Cabinets 25,317 $30 47,483 $60 $3,608
Household Furniture 22,152 $30 40,022 $60 $3,066
Office and Institutional Furniture 2,227 $30 35,809 $60 $2,215
Window and Door Manufacturers 24,262 $30 46,744 $60 $3,533
Architectural Woodwork and M illwork 1,524 $30 24,928 $60 $1,541 Total Annual Costs 107,482 $30 285,422 $60 $20,350 Options SC and SCR: Laminated Products Using Added Formal dehyde Resins and Platforms that are not Certified are Included in the Definition of Hardwood Plywood
Architectural Panels / Custom Panels 25,000 $30

- - $750 Engineered Wood Flooring 7,000 $30

- - $210
Cabinets 25,317 $30

- - $760
Household Furniture 22,152 $30

- - $665
Office and Institutional Furniture 2,227 $30

- - $67
Window and Door Manufacturers 24,262 $30

- - $728
Architectural Woodwork and Millwork 1,524 $30

- - $46
Total Annual Costs 107,482 $30

- - $3,224 This analysis uses the term “ low emission platforms ” to mean platform s with emissions low enough that wood veneer laminated products made from them meets th e applicable hardwood plywood em ission standard. For the standa rd certification, low emission platforms are assumed to include certified veneer platforms, particleboard and MDF platforms certified as ULEF under the CARB ATCM, and particleboard and MDF platforms ce rtified as NAF. For analyt ical options requiring wood veneer laminated products to meet NAF emission levels, low em ission platforms would include pa rticleboard, MDF and veneer platforms certified as NAF.

Option SCR is the proposed option. 

### 2148

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### 2.4.2 Certification and Testing Costs for Wood Veneer Laminated Product Producers 2149 2150 Estimated certification and testing costs were pr esented in Section 2.2 for entities certifying 1 and 2151 2 NAF products through a TPC, as well as for entities cer tifying 1 and 2 added formaldehyde products 2152 through a TPC. As discussed in section 2.3.1, w ood veneer laminated product producers would be likely 2153 to switch to a PVA resin technology if they are considered hardwood plywood producers under the 2154 proposed rule. Nevertheless, it is possible that some wood veneer laminated product producers may 2155 prefer to continue using added formaldehyde face resi ns for process or product reasons. Thus, testing and 2156 certification costs are estimated under each analyti cal option assuming that two percent of producers 2157 continue to use added formaldehyde resins. Ta ble 2-62 presents costs associated with testing and 2158 certification by the number of product lines that require certification. Since there is some uncertainty 2159 about the number of product lines that would require a separate certification, this analysis presents the 2160 total costs for each analytical option for certifying 1 a nd 2 different product lines. To be comparable with 2161 the benefits estimates, which were estimated for 30 year period, costs were annualized over a 30 year 2162 period. 2163 2164 Table 2-62: Estimated Wood Veneer Laminated Product Producer First and Subsequent Year Costs for Testing and Certifying Products

Number of Product

Lines Requiring

Testing and Certification First
Year Costs Subsequent Year Costs Costs Annualized Over 30 Years Using 3
Percent Discount
Rate* Costs Annualized Over 30 Years Using 7
Percent Discount
Rate*
1 NAF Product Line $37,058 $6,517 $7,640 $8,159
2 NAF Product Lines $42,015 $7,062 $8,367 $8,972
1 Added Formaldehyde Product Line $72,508 $56,522 $54,532 $53,421

2 Added Formaldehyde
Product Lines $81,614 $62,782 $60,622 $59,412

*Note that annualized costs will tend to be higher fo r higher discount rates when there are more upfront costs and lower for higher discount rates when upfront co sts are smaller or future costs are higher. This is why annualized costs are higher fo r NAF certification and lower for a dded formaldehyde certification for the 7 percent discount rate compared to the 3 percent discount rate. 

### 2165 Table 2-63 presents the estimated annualized testing and certification costs by analytical option 2166 under a variety of scenarios for the number of entities affected and the number of product lines that would 2167 require testing and certification. Under options SE, CE, and NE wood veneer laminated product 2168 producers would not be required to do any testing. Under options SI, SP, SN, SC, SCR, CI and NI, it is 2169 assumed that all but two percent of wood veneer laminated product producers would switch to NAF resin 2170 technology and/or compliant or NAF platforms in orde r to reduce testing and certification costs (options 2171 SI, SP, CI, and NI) or eliminate them (options SN, SC, and SCR). 2172 2173 2174

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### 2175 Table 2-63: Estimated Wood Veneer Laminated Product Producer Annualized Costs for Testing and Certification (thousands, 2010$)

Analytical Option Total
Number of
Affected
Entities Products Lines Requiring Testing and Certification Number of Affected Entities with Testing and Certification costs by Certification Type Costs Annualized Over
30 Years (thousands, 2010$)

3%
Discount

Rate 7% Discount

Rate Option SE, CE, and NE: All
Laminated Products are Exempt from Definition of Hardwood Plywood 0 0 None – wood veneer laminated

p roduct producers would not be required to do any testing $0 $0

Option SI, CE, and NE: All
Wood Veneer Laminated Product s are Included in the
Definition of Hardwood Plywood Low End
Estimate:

7,486 1 NAF - 7,336 Entities $56,046 $59,858 Added Formaldehyde a - 150 Entities $8,180 $8,013 All - 7,486 Entities $64,226 $67,871

2 NAF - 7,336 Entities $61,380 $65,818 Added Formaldehyde a - 150 Entities $9,093 $8,912 All - 7,486 Entities $70,473 $74,730

High End
Estimate:

13,875 1 NAF - 13,598 Entities $103,887 $110,953 Added Formaldehyde a - 277 Entities $15,105 $14,798 All - 13,875 Entities $118,992 $125,750

2 NAF - 13,598 Entities $113,774 $122,000 Added Formaldehyde a - 277 Entities $16,792 $16,457 All - 13,875 Entities $130,566 $138,457

Option SP: Wood Veneer
Laminated Products Other
Than Custom Panels are Exempt from the Definition of Hardwood Plywood MidRange Estimate:
50 1 NAF - 49 Entities $374 $400 Added Formaldehyde a - 1 Entities $55 $53 All - 50 Entities $429 $453

2 NAF - 49 Entities $410 $440 Added Formaldehyde a - 1 Entities $61 $59 All - 50 Entities $471 $499 Options SN, SC, and SCR:
Wood Veneer Laminated Products are Defined as Hardwood Plywood Producers if they use (1) added formaldehyde resins, and (2) platforms with added formaldehyde (Option SN only) Low End
Estimate:

7,486 1 Added Formaldehyde a - 150 Entities $8,180 $8,013

2 Added Formaldehyde a - 150 Entities $9,093 $8,912

High End Estimate:

13,875 1 Added Formaldehyde a - 277 Entities $15,105 $14,798

2
Added Formaldehyde a - 277 Entities $16,792 $16,457

a The number of producers using added formaldehyde resins post -rule is assumed to be 2 percent of the total number of wood veneer laminated product producers. The estimates of the total numbe r are from Table 2-4 and Table 2-5. Option SCR is the proposed option. 

### 2176 2177 2.4.3 Total Annualized Costs for Wood Veneer Laminated Product Producers 2178 2179 Table 2-64 presents the total estimated annualized costs by analytical option under a variety of 2180 scenarios for the number of entities affected and the number of product lines that would require 2181 certification. Under options SE, CE, and NE wood veneer laminated product producers would not be 2182 required to do any testing and no incremental material costs are estimated because it is assumed that they 2183 are already using compliant platforms. Under options SI, SP, SN, SC, SCR, CI, and NI it is assumed that 2184 all but two percent of wood veneer laminated pr oduct producers would switch to NAF resin technology 2185

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### and/or compliant or NAF platforms to reduce testi ng and certification costs (options SI, SP, CI, and NI) 2186 or eliminate them (options SN, SC, and SCR). 2187 2188 The results presented in Table 2-64 demonstrate that testing and certification costs are 2189 overwhelmingly the dominant drivers of the costs for wood veneer laminated product producers. Even 2190 under the scenarios with the fewest estimated number s of affected entities and product lines, the costs 2191 under Option SI far exceeds those estimated for options SN SC, and SCR, which only include testing or 2192 certification costs for two percent of wood veneer laminated product producers. The substantially lower 2193 costs under options SC and SCR compared to Option SN reflects the potentially high costs of switching 2194 platforms under option SN. Estimated costs (assuming 2 product lines require testing) are lowest under 2195 Option SP because far fewer entities are affected under this option compared to the others. 2196 2197

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### Table 2-64: Estimated Wood Veneer Laminated Product Producer Annualized Costs for Raw Materials Changes, testing, and Certification (thousands, 2010$)

Analytical Option Total Number of

Affected
Entities Products Requiring Testing and Certification Number of Affected Entities with Costs by Certification Type Costs Annualized Over 30 Years (thousands, 2010$)

3% 7% Option SE, CE, and NE: All Laminated Products Exempt from Definition of Hardwood Plywood 0 0 None – no costs for changing raw materials, testing, or certification are estimated $0 $0

Option SI, CE, and NE: All Wood
Veneer Laminated Products are
Included in the Definition of Hardwood Plywood Low End
Estimate:

7,486 1 NAF - 7,336 Entities $69,347 $72,796 Added Formaldehyde - 150 Entities $8,452 $8,278 All - 7,486 Entities $77,799 $81,073

2 NAF - 7,336 Entities $74,681 $78,756 Added Formaldehyde - 150 Entities $9,365 $9,176 All - 7,486 Entities $84,047 $87,932

High End
Estimate:

13,875 1 NAF - 13,598 Entities $117,189 $123,891 Added Formaldehyde - 277 Entities $15,376 $15,061 All - 13,875 Entities $132,565 $138,952

2 NAF - 13,598 Entities $127,076 $134,939 Added Formaldehyde - 277 Entities $17,063 $16,721 All - 13,875 Entities $144,139 $151,659

Option SP: Wood Veneer
Laminated Product s Other Than Custom Panels are Exempt from
the Definition of Hardwood Plywood Mid-Range Estimate:
50 1 NAF - 49 Entities $3,060 $3,012 Added Formaldehyde - 1 Entities $109 $107 All - 50 Entities $3,169 $3,118

2 NAF - 49 Entities $3,095 $3,052 Added Formaldehyde - 1 Entities $115 $113 All - 50 Entities $3,211 $3,164

Option SN: Wood Veneer Laminated Products are Defined as Hardwood Plywood if they use (1) added formaldehyde resins, and (2) platforms with added formaldehyde Low End
Estimate:

7,486 1 NAF - 7,336 Entities $18,974 $18,455
Added Formaldehyde - 150 Entities $8,568 $8,391

All - 7,486 Entities $27,542 $26,846

2 NAF - 7,336 Entities $18,974 $18,455
Added Formaldehyde - 150 Entities $9,481 $9,289

All - 7,486 Entities $28,455 $27,744

High End
Estimate:

13,875 1 NAF - 13,598 Entities $18,976 $18,456 Added Formaldehyde - 277 Entities $15,492 $15,174 All - 13,875 Entities $34,467 $33,630

2 NAF - 13,598 Entities $18,976 $18,456 Added Formaldehyde - 277 Entities $17,179 $16,833 All - 13,875 Entities $36,154 $35,290

Options SC and SCR: Wood
Veneer Laminated Products are Defined as Hardwood Plywood if they use added formaldehyde
resins Low End Estimate:

7,486 1 NAF - 7,336 Entities $3,006 $2,924 Added Formaldehyde - 150 Entities $8,241 $8,073 All - 7,486 Entities $11,247 $10,997

2 NAF - 7,336 Entities $3,006 $2,924 Added Formaldehyde - 150 Entities $9,155 $8,972 All - 7,486 Entities $12,161 $11,895

High End
Estimate:

13,875 1 NAF - 13,598 Entities $3,006 $2,924 Added Formaldehyde - 277 Entities $15,167 $14,857 All - 13,875 Entities $18,173 $17,781

2 NAF - 13,598 Entities $3,006 $2,924 Added Formaldehyde - 277 Entities $16,853 $16,517 All - 13,875 Entities $19,860 $19,441 Option SCR is the proposed option.

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## 2.5 Recordkeeping, Labeling, Supplier No tification, and Rule Familiarization 2198 

## Costs 2199 2200 Under TSCA Title VI, EPA must promulgate regul ations that establish labeling requirements, 2201 chain of custody requirements, and recordkeeping re quirements for industries that use composite wood 2202 products for raw materials and sell products that cont ain composite wood. Producers that use composite 2203 wood products as raw materials (hereafter referred to as fabricators), and wholesalers or distributers 2204 (including importers) of composit e wood products or regulated articles that contain composite wood 2205 products, and retailers of composite wood products or regulated articles that contain composite wood 2206 products, will be subject to chain of custody and la beling requirements. This set of firms along with 2207 producers of hardwood plywood, MDF, and particleboard will also incur costs associated with becoming 2208 familiar with the rule’s requirements. The purpose of this section is to estimate the incremental costs of 2209 rule familiarization, recordkeeping, and labeling requirements under the TSCA Title VI rule for all 2210 producers, fabricators, wholesalers, and retailers that are potentially affected by the proposed rule. 2211 2212 Note that the TSCA Title VI rule requires importe rs of articles that are composite wood products, 2213 or articles that contain composite wood products , to comply with the TSCA Section 13 import 2214 certification regulations for “Chemical Substances in Bulk and As Part of Mixtures and Articles,” as 2215 found at 19 CFR 12.118 through 12.127. Thus, any U.S. importer of composite wood products or articles 2216 that contain composite wood products would have to cer tify that all articles in the shipment either comply 2217 with all applicable rules and orders under TSCA or that all the articles in the shipment are not subject to 2218 TSCA. The statement must be on or attached to a commercial invoice or entry document belonging to the 2219 imported shipment. In practice, import certification is fulfilled by checking a box on an invoice or entry 2220 document. It is assumed that this does not generall y impose a significant additional burden or cost on the 2221 importer. Any potential burden associated with a su bmitter’s familiarization with this requirement is 2222 assumed to be included in the more general rule familiarization burden discussed below. 2223 2224 Section 2.5.1 describes telephone questionnaires th at were developed to better understand the 2225 potential costs of the labeling and recordkeeping requirements. Per-firm rule familiarization, 2226 recordkeeping, and labeling costs are presented in S ection 2.5.2. Section 2.5.3 presents the estimated 2227 number of affected entities using information on baseline compliance and the percentage of entities 2228 incurring costs, estimated from the results of a tele phone questionnaire. And finally, total incremental 2229 recordkeeping, labeling, and rule familiariza tion costs are presented in Section 2.5.4. 2230 2231 2.5.1 Telephone Questionnaire 2232 2233 The proposed recordkeeping and labeling requireme nts under the TSCA Title VI rule are similar 2234 to the requirements under the California Air Resource s Board’s (CARB) Airborne Toxic Control Measure 2235 (ATCM) to reduce formaldehyde emissions from compos ite wood products. So firms that manufacture or 2236 sell composite wood products destined for Ca lifornia markets have experience implementing 2237 recordkeeping and labeling requirements that are simila r to the TSCA Title VI rule. To learn about the 2238 experiences of the firms who are complying with the CARB ATCM requirements, two questionnaires 2239 (one for fabricators and one for wholesalers) were administered to fewer than ten respondents per 2240 questionnaire. These questionnaires asked respondents fo r descriptions of the changes they made and the 2241 costs they incurred to implement any changes. 2242 2243 Retailers are also subject to the chain of custod y and recordkeeping requirements. The California 2244 Retailers Association indicated that retailers’ cust omary business practices were generally sufficient to 2245 meet the chain of custody requirements in the CARB ATCM (California Retailers Association 2011), so 2246 retailers were not administered a questionnaire. 2247 2248

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### 2249 2.5.1.1 Questionnaire Administration 

### 2250 2251 Nine fabricator firms and seven wholesaler firm s were administered telephone questionnaires that 2252 asked about the changes that were made and the cost s that were incurred in order to achieve compliance 2253 with the CARB recordkeeping and labeling requirement s. For fabricators, a diverse group of producers 2254 was selected for the sample: one decorative panel manufacturer, two stock cabinet manufacturers, two 2255 custom cabinet manufacturers, two household furnitu re manufacturers, and two business and institutional 2256 furniture manufacturers. Most of the fabricators co ntacted were located in California, and all of them 2257 were implementing the CARB recordkeeping and labeling requirements. For wholesalers, the sample 2258 included four composite wood product wholesalers and th ree household furniture wholesalers, all located 2259 in California and complying with CARB requirements. 2260 2261 For each of these respondent types, a list of th e appropriate NAICS industries was found from 2262 one of the following sources: industry association member lists, the Dun & Bradstreet database, the 2263 Random Lengths Big Book, or the SalesGenie datab ase. From the industry association lists, industry 2264 members were assigned random numbers and contacted in ascending order by number. For the D&B 2265 database, the relevant set of companies were identified by state and NAICS code, assigned random 2266 numbers, and also contacted in ascending order. For the Random Lengths Big Book and the SalesGenie 2267 database, first page numbers were selected randomly, and then individual firms were selected randomly 2268 from that page to contact. 2269

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### 2270 Table 2-65: Sample of Firms Administered Recordkeeping and Labeling Questionnaire Category Firm List Source Number of Respondents
Fabricators
Decorative Panel Manufacturers Co mposite Panel Association (CPA).2011 Surface & Panel Buyers Guide. 1
Stock Cabinet Manufacturers in
California Kitchen Cabinet Manufacturers A ssociation (KCMA). 2010. KCMA
Cabinet Manufacturers Members in California.

Dun and Bradstreet (D&B). 2011. Companies in California, NAICS
337110.

Note: After calls were placed to all KCMA stock cabinet members located in CA the Dun and Brad street list was utilized. There was one response
from each list. 2

Custom Cabinet Manufacturers in
California SalesGenie. 2010. Companies in California, NAICS 337110.

Dun and Bradstreet (D&B). 2011. Companies in California, NAICS
337110.

Note: After it was determined that a high percentage of respondents on the SalesGenie list were not in scope the D&B list was utilized. There was one response from each list. 2

Household Furniture Manufacturers in
California Dun and Bradstreet (D&B). 2011. Companies in California, NAICS 337122, 337121. 2

Business and Institutional Furniture
Manufacturers The Business and Institutional Furniture Manufacturer’s Association (BIFMA). 2010. BIFMA Members. 2

Wholesalers
Wood Product Wholesalers in California Random Lengths.2009 Big Book: The Buyers and Sellers Directory of the Forest Products Industry in California. 4

Household Furniture Wholesalers in California Dun and Bradstreet (D&B). 2011. Co mpanies in California, NAICS 4232. 3

Sources: Composite Panel Association 2011, Dun & Bradstreet 2010, Kitchen Cabinet Manufacturers Association 2010, Random Lengths 2009, SalesGenie 2010, The Business and Ins titutional Furniture Manufacturer’s Association 2010. 

### 2271 In order to estimate the average costs of co mplying with CARB’s recordkeeping and labeling 2272 requirements, two separate questionnaires were administered to fabricators and wholesalers. First, 2273 screener questions were administered to ensure that only firms that had made changes to comply with the 2274 CARB regulations were selected to co mplete the survey. Then, firms we re asked about the specific steps 2275 they took to comply with CARB’s recordkeeping and/or labeling requirements, and what the labor and 2276 material costs of those changes were. Figure 2-3 an d Figure 2-4 present the phone scripts that were used 2277 to administer these questionnaires. The responses to the questionnaires are included in Table 2-67 and 2278 Table 2-68. 2279

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### Figure 2-3: Fabricator Firm Recordkeeping and Labeling Costs Questionnaire



### Introduction: Hello, this is ________ calling from Abt Associates on behalf of the U.S. Environmental Protection Agency.

This past July Congress passed legislation that requires EPA to develop formaldehyde standards for composite wood products that may include recordkeeping and labeling requirements for manufacturers who fabricate composite wood products. The U.S. EPA is interested in learning from firms that have implemented labeling and recordk eeping procedures to comply with California’s formaldehyde rule to help them develop na tional recordkeeping and labeling requirements.

Screener Questions: 1a (For Decorative Panel Manufacturers). Are you a manufacturer of decorative panels that uses purchased hardwood plywood, medium density fibe rboard, or particleboard for a platform? Do you manufacture: (1) filled or coated products, (2 ) high pressure laminates, (3) hot stamp foils, (4) low basis weight papers, (5) low pressure deco rative laminates, (6) medium and high density overlays, or (7) vinyl laminates? (Note that other types of decorative panel manufacturers would be accepted as in-scope) 1b (For Other Fabricators). Is your firm a manufact urer of [stock cabinets/custom cabinets/household
furniture/business or institutional furnitur e] made using com posite wood products? 2. Have you implemented labeling and recordkeepin g procedures that meet the requirements of the California formaldehyde rule? 3. Do you follow these procedures for all products us ing composite wood platforms, including those sold outside California where the labeling and reco rdkeeping procedures would not be required? (Note that fabricators with any products that are CARB compliant are considered in-scope) 4. Most of the questions I have are about how much it cost to implement the labeling and recordkeeping procedures, are you the best person for me to ask about these costs?

Questionnaire: 1. Please describe in detail the changes you implemen ted in recordkeeping activities for complying with CARB’s requirements. Please describe the one time costs you incurred in order to implement these changes, either in terms of dollars or hour s. Can you also describe the additional recurring costs you incur because of the CARB requirements, either in terms of dollars or hours. (If hours ask what type of employee) 2. Please describe in detail the changes you implemente d to your existing labeling practices, or the new labeling practices you introduced, in order to comply with CARB requirements.
3. What was the initial cost to make changes to the labeling process? 4. If the CARB requirements increased your per-label costs, what is the additional cost per label? 5. Do you generally label each CARB-certified item you manufacture, or do you label a box or bundle of items? 6. Do you have separate CARB-certified inventor y and not-CARB-certified inventory? If so, what percentage of your inve ntory is CARB-certified?
2280

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### Figure 2-4: Wholesaler Firm R ecordkeeping Costs Questionnaire



### Introduction: Hello, this is ______ calling from Abt Associates on behalf of the U.S. Environmental Protection Agency. This past July Congress pas sed legislation that requires EPA to develop formaldehyde standards for compos ite wood products that may include recordkeeping requirements for companies that distribute composite wood products. Th e U.S. EPA is interested in learning from firms that have implemented recordkeeping procedures to co mply with California’s formaldehyde rule to help them develop national recordkeeping requirements.

Screener Questions: 1. Is your firm a wholesaler, distributor, or importer of composite wood products or products that contain composite wood? 2. Background: The California rule requires records showing the date of purchase, the supplier, as well as documentation of precautions taken to ensure that products meet emissions standards to be maintained for two years. 3. Do your recordkeeping procedures meet the requirements of the California formaldehyde rule?

Questionnaire: 1. Before this rule was implemented, were you alre ady keeping purchasing records for at least two years, or was this something new that you had to start doing? 2. Did you need to modify your existing recordkeeping system for the purpose of complying with the
California rule? 3. Please describe the one time costs you incurred in or der to implement this new system, either in terms
of dollars or hours. 4. Does maintaining the new recordkeeping system requi re more effort or additional costs compared to your previous recordkeeping system? (If yes), how much additional effort or cost is required for maintaining records under the new system? Please de scribe either in terms of dollars or hours.
2281 2.5.1.2 Questionnaire Responses and Re sulting Per-Firm Cost Estimates 

### 2282 2283 The responses presented below include qualitative descriptions of recordkeeping and labeling 2284 practice changes due to CARB Rule requirements. Ta ble 2-66 presents the fully loaded wage rates used 2285 for estimating labor costs. Table 2-67 and Table 2-68 summarize the responses to the fabricator and 2286 wholesaler questionnaires, respectively, including descrip tions of recordkeeping costs, labeling costs, and 2287 the costs estimated based on the responses. 2288 2289 Since the recordkeeping functions described by responses appeared to be tasks likely be 2290 performed by support staff, the analysis estimates these labor costs with the fully loaded wage for “office 2291 and administrative support” staff in private indus try ($24.84 for fabricator industries and $25.54 for 2292 wholesaler industries (U.S. Bureau of Labor Statistics 2010 b, c, d, e)). Since the labeling system changes 2293 described by respondents appeared to be tasks that would require technical labor, the analysis uses the 2294 fully loaded wage rates for “computer and mathem atical science” workers in private industry ($44.27, 2295 U.S. Bureau of Labor Statistics 2010c, d, e) (See Table 2-66). 31 

### 2296 2297

31 May 2009 wages are taken from Occupati on Employment Statistics (OES) data and converted into 2010 dollars using Employer Cost for Employee Compensation (ECEC) data. To calculate a loaded wage rate, average total benefits for all workers (42%) is added to the overhead rate (17%) to calculate an overall wage multiplier of 1.59.

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### Table 2-66: Hourly Wage Rate Estimation for Recordkeeping and Labeling Labor Costs

Labor Cost

Elements Industry OES Wage Data Occupation Description a May 2009 Mean Hourly Wage a 2010 Adjusted Mean Hourly Wage b 2010 Loaded Hourly Wage (x1.59) c
Fabricators

Rule
Familiarization NAICS 321000 - Wood Product Manufacturing Management Occupations $45.86 $46.29 $73.60

Supplier Notification NAICS 321000 - Wood Product Manufacturing Office and Administrative Support Occupations $15.47 $15.62 $24.84 Recordkeeping
Initial Costs Recordkeeping Recurring Costs

Labeling Initial
Costs NAICS 321000 - Wood Product Manufacturing Computer and
Mathematical
Science Occupations $27.58 $27.84 $44.27

Wholesalers
Rule
Familiarization Sector 42 – Wholesale Trade Management Occupations $58.12 $58.67 $93.29

Supplier
Notification
Sector 42 – Wholesale Trade Office and
Administrative Support Occupations $15.91 $16.06 $25.54 Recordkeeping
Initial Costs Recordkeeping Recurring Costs
Retailers
Rule Familiarization Sectors 44 and 45 – Retail Trade Management Occupations $44.06 $44.47 $70.71

Supplier
Notification Sectors 44 and 45
– Retail Trade Office and
Administrative Support Occupations $12.04 $12.15 $19.32

a Mean wages are estimated using the data from the Bureau of Labor Statistics Occupational Empl oyment Statistics, which are available for May 2009.

b Wages are inflated to 2010$ using Employer Cost for Employ ee Compensation (ECEC) wage data for all industries and occupations.

c A loading factor of 1.59 is used to add the labor costs associated with benefits and overhead. According to ECEC data benefits compensation was equal to 42% of wages and salaries data for all industries and occupa tions. Overhead costs are assumed to be equal to 17% of wages (Rice 2002). Sources: U.S. Bureau of Labor St atistics 2010a, b, c, d, e 

### 2298 As shown in Table 2-67, none of the fabricat ors reported incurring any initial set-up costs for 2299 recordkeeping, and only one of the nine reporting incurring recurring costs for recordkeeping as a result 2300 of the CARB rule. (The remaining fabricators did not incur recordkeeping co sts because their existing 2301 records were sufficient to comply with the CARB requirements.) The one respondent with recurring 2302 recordkeeping costs reported spending 10 hours per week on recordkeeping for the CARB rule. As 2303 calculated in Table 2-67, EPA estimates that 10 hours per week is equivalent to a cost of $12,917 per 2304
year. 2305 2306 This analysis assumes that the 11% of fabricator s that are not already complying with the CARB 2307 ATCM (because their products are not sold in Californi a) incur an average cost of $12,917 per year to 2308 comply with the recordkeeping requirements of the TSC A Title VI rule. (The average cost per firm is 2309

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### used in calculating total costs, but as described in Chapter 5, the small entity analysis is based on an 2310 estimate of recordkeeping costs that varies with firm size.) Because the recordkeeping requirements are 2311 similar in the CARB rule and the TSCA Title VI rule , no additional recordkeeping costs are estimated for 2312 fabricators that are already complying with the CARB ATCM. 2313 2314 As shown in Table 2-67, several of the responde nts indicated that they already had labeling 2315 systems in place and therefore they did not incur an y significant costs associated with CARB’s labeling 2316 requirements. However, this analysis assumes that these firms did in fact incur small costs associated 2317 with making small changes to their labels. One of the firms that did report minor labeling costs reported 2318 that it took “a few hours” to change over to using the new labels. The analysis assumes that “a few 2319 hours” is 3 hours for the purpose of estimating costs. The analysis also assumes that 67% of firms that 2320 are not already complying with the CARB ATCM, and all firms that are already complying with the 2321 CARB ATCM, incur the costs associated with 3 labor hours (where 67% is calculated as 4/6, since 4 of 2322 the 6 firms that reported labeling their products are as sumed to have these costs). Two other firms that 2323 responded to the questionnaire reporte d more substantial costs associated with setting up their labeling 2324 systems and therefore, it is assumed that the remaining 33% of firms that are not already complying with 2325 the CARB ATCM will incur the average costs reported by these two firms (where 33% is calculated as 2326 2/6 since 6 firms reported that they labeled their products). 2327 2328 As shown in Table 2-68, four of the seven w holesalers reported incurring initial costs to revise 2329 their recordkeeping systems to comply with the CARB ru le. Only two of the four were able to quantify 2330 the time or cost they spent revisi ng their recordkeeping systems. Ba sed on their responses, the average 2331 cost of revising recordkeeping systems is estimated at $2,511. Thus, the analysis assumed that 57% of 2332 wholesalers that are not already complying with th e CARB ATCM will incur init ial costs that average 2333 $2,511 for revising recordkeeping systems to comply with the TSCA Title VI rule. The remaining 43% 2334 of wholesalers that are not already complying with the CARB ATCM and all firms that are already 2335 complying with the CARB ATCM are assumed to have recordkeeping systems that do not need to be 2336 modified in order to comply with the TSCA Title VI rule, and thus do not incur significant initial 2337 recordkeeping costs. Because the recordkeeping re quirements are similar in the CARB rule and the 2338 TSCA Title VI rule, no additional recordkeeping cost s are estimated for wholesalers that are already 2339 complying with the CARB rule. 2340 2341 Table 2-68 also indicates that three of th e seven wholesalers reported incurring recurring 2342 recordkeeping costs due to the CARB rule, but only on e of them was able to quantify the additional time 2343 spent on recordkeeping. That respondent reported sp ending half an hour to an hour per day on CARB2344 related recordkeeping. EPA estimates this is equivalent to a cost of $4,980 per year. Therefore, this 2345 analysis assumes that 57% of the wholesalers that are not already complying with the CARB ATCM do 2346 not incur significant recurring costs, as their existi ng recordkeeping practices ar e sufficient to comply 2347 with the TSCA Title VI rule’s requirements. The remaining 43% of wholesalers that are not already 2348 complying with the CARB ATCM incur a recurring cost for recordkeeping that averages $4,980 per year. 2349 (As with fabricators, the average cost per firm is used in calculating total costs, but the small entity 2350 analysis in Chapter 5 is based on an estimate of recor dkeeping costs that varies with firm size.) Again, 2351 because the recordkeeping requirements are similar in the CARB rule and the TSCA Title VI rule, no 2352 additional recordkeeping costs are estimated for w holesalers that are already complying with the CARB 2353 ATCM. 2354 2355

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### Table 2-67: Responses and Estimates from Fabri cator Recordkeeping and Labeling Questionnaire Survey

ID Description by Fabricators of Recordkeeping and Labeling Costs EPA Estimate of Recordkeeping Costs EPA Estimate of Labeling Costs Initial Recurring Initial Recurring
Decorative Panel Manufacturers

1 Recordkeeping: No implementation cost; already a CPA member so upstream information was easy to acquire; keep records of all boards purchased that are CARB 2 compliant. Labeling: Few hours of labor for implementation ( assumed to be 3 hours f

or this analysis ); overhead cost minimum; no additional per-label cost; labeled by pallet. - - $132.81 (3
hours multiplied by $44.27) -

Stock Cabinet Manufacturers 2 Recordkeeping: No implementation cost; 10 hours per week of recordkeeping maintenance costs; CARB compliance attained through KCMA guidance. Labeling: Nothing was changed; the firm was unaware of any requirements regarding labels. - $12,916.80 (10 hours/wk multiplied by 52 weeks at

$24.84) n.a. n.a.

3 Recordkeeping: No implementation cost; mu st send vendor letters and keep invoices. Labeling: $250 implementation cost for purchasing two new stamps for labeling; no additional per-cost labels; every item is labeled. - - $250 -

Custom Cabinet Manufacturers 4 Recordkeeping: No implementation cost; must keep invoices. Labeling: Does not label. - - n.a. n.a.
5 Recordkeeping: No implementation cost; products are formaldehyde free; they must keep track of invoices. Labeling: Do not label cabinet products. - - n.a. n.a.

Household Furniture Manufacturers 6 Recordkeeping: No implementation cost; lett ers from suppliers are filed. Labeling: No extra cost; extra information required on each label, but they already had the necessary equipment to make the change; each item of upholstered furnitu re is labeled. - - No Cost Reported -

7 Recordkeeping: No extra cost; only buys from suppliers that are CARB compliant and tracks invoices. Labeling: No costs; they were labeling already for other reasons such as FSC certification; barcodes on e ach product which say CARB 2 compliant. - - No Cost Reported -

Business and Institutional Furniture Manufacturers 8 Recordkeeping: No implementation cost; must keep invoices for Forest Stewardship Council, CARB I, and CARB II. Labeling: Not a significant cost; made stickers for CARB certification; label each finished product. - - No Cost Reported -

9 Recordkeeping: Unknown exact costs; must keep track of billing, modify purchase orders, store certificates from suppliers. Labeling: Initial cost of a “couple hundred man hours” ( assumed to be 200 hours for this analysis ); internal process of changing drawings on labels; worked with BIFMA for labeling changes; no extra per-label costs; labels applied by box/container, incorporated with shipping label. - - (200 hours multiplied by $44.27) -

Firms with More Substantive Costs Percent of firms reporting more substantive costs - 11% 2/6 = 33% - Average costs for firms with more substantive costs - $12,916.80 $4,552 - Firms with Minor Costs
Percent of firms assumed to incur minor costs - - 4/6=67% - Average costs for firms reporting minor costs - - $133 - Source: Revenue data from Dun & Bradst reet 2010. Wage rates from U.S. Bureau of Labor Statistics 2010c

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### 2356 Table 2-68: Responses and Estimates from Wholesaler Recordkeeping Questionnaire Survey

ID Description by Retailers of Recordkeeping and Labeling Costs EPA Estimate of Recordkeeping Costs Initial Recurring
Wood Product Wholesalers in California 1 Implementation Cost: No significant cost; did not purchase another recordkeeping system. Recurring Cost: 0.5 to 1 hour per day; Practices to comply with CARB include: query reports to ensure everything is CARB specific; adding custom comments on purchase orders; paperwork for when they receive product; adding a field for vendor name and CARB phase in system. - $4,980.30 (0.75 hours per day multiplied by 260 days multiplied by

$25.54/hr)

2 Implementation Cost: $2,000 for a small amount of labor; requires putting new line items (“stock-keeping units” or SKUs) in computer system. Recurring Cost: No additional cost. $2,000 -

3 Implementation Cost: 40 labor hours and $2,000 in programming changes; requires changing tags and CARB-specific comment lines in already existing inventory tagging system. Recurring Cost: No additional cost. $3,021.60 (40 hours multiplied

by $25.54/hr plus $2,000) -

4 Implementation Cost: Unknown; the IT department prints CARB information on each invoice and they are in the process of getting signed forms from suppliers (at 80% currently). Recurring Cost: Unknown. Costs incurred, could not quantify. Costs incurred, could not quantify.

Household Furniture Wholesalers 5 Implementation Cost: None; they only purchase from CARB-2 certified firms, a dozen manufactu rers; did not have to modify recordkeeping system. Recurring Cost: None. - -

6 Implementation Cost: None; did not have to modify existing recordkeeping system. Recurring Cost: None. - -

7 Implementation Cost: Unknown Recurring Cost: Unknown; when purchasin g the firm asks for CARB compliance phase II; keeps invoices; suppliers must submit compliance forms. Costs incurred, could not quantify. Costs incurred, could not quantify.

Summary of Results Percent of firms reporting costs 57% 43% Average costs for firms reporting costs $2,510.80 $4,980.30 Source: Revenue data from Dun & Bradst reet 2010. Wage rates from U.S. Bureau of Labor Statistics 2010b 

### 2357 2.5.2 Recordkeeping, Labeling, Supplier Notification, and Rule Familiarization Costs per 2358 Firm 2359 2360 This section presents the total costs per fabricat or, wholesaler, and retailer firm associated with 2361 the recordkeeping and labeling requirements for the an alytical options considered for the TSCA Title VI 2362 rule. This analysis includes additional per firm cost s to those that were reported in the questionnaire, 2363 including costs associated with beco ming familiar with the rule’s requirements and sending notification 2364 letters to suppliers. 32 

### Although no fabricator or wholesaler firms quantified any costs associated with 2365

32 The CARB ATCM requires all firms th at purchase composite wood products to obtain documentation from their suppliers that the products are in compliance with the rule. Such supplier notification is included in some of the analytical options consid ered for the TSCA Title VI rule, but it is not required by the proposed option (Option SCR). The estimates he re for the analytical options incl uding supplier notification reflect th e cost for purchas ers to submit requests for documentation to their s uppliers, and the cost for the supplie rs to provide the documentation.

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### sending notification letters to supplie rs, several noted that this was necessary. Similarly, although no 2366 respondents reported costs associated with learning ab out the rule, it will be necessary for each firm to 2367 become familiar with it in order to determine whether they are subject to it, and if so, what steps will be 2368 necessary to achieve compliance. It is assumed th at the entire group of affected composite panel 2369 producer, fabricator, wholesaler, and retailer firms w ill incur costs for both rule familiarization and 2370 supplier notification. In summary, the following initial costs will be incurred in response to recordkeeping 2371 and labeling requirements: (1) rule familiarization; (2) supplier notification; (2) labeling system setup; 2372 and (3) recordkeeping system setup. There will also be recurring costs estimated on an annual basis for 2373 maintaining records. These costs are describ ed in more detail in the sections below. 2374 2375 2.5.2.1 Rule Familiarization a nd Supplier Notification Costs 

### 2376 2377 It is expected that all composite panel produ cer, fabricator, wood veneer laminated product 2378 producer, wholesaler, and retailer firms, will need to spend time familiarizing themselves with the 2379 regulation and either ensuring that their current sy stems are sufficient for the TSCA Title VI rule’s 2380 requirements or identifying necessary changes. It is assumed that every firm will require four managerial 2381 labor hours of initial rule familiarization costs. These per-firm rule familiarization costs are estimated by 2382 industry in Table 2-69. 2383 2384 Table 2-69: Per-Firm Rule Familiarization Costs

Industry Rule Familiarization Labor (hours) Managerial Occupations Wage Rate Rule Familiarization Cost Per Firm Stock Composite Panel Producers 4.0 $73.60 $294.40
Fabricators and Lamina tors 4.0 $73.60 $294.40 Wholesalers 4.0 $93.29 $373.16 Retailers 4.0 $70.71 $282.84 Sources: U.S. Bureau of Labor Statistics 2010a, b, c 

### 2385 It is assumed that all affected fabricator, w ood veneer laminated product producer, wholesaler, 2386 and retailer firms will also incur costs for sending no tification letters to all of their composite wood 2387 product suppliers. The composite wood product su ppliers will conversely need to respond to all 2388 downstream firms requesting confirmation of compliance with the TSCA Title VI rule’s requirements. It 2389 is assumed that each retailer entity will need to se nd notification letters to a total of 40 suppliers. 2390 Fabricators and wholesalers are assumed to send no tification letters to 20 suppliers. Notification 2391 responses are estimated by assuming that notification letters from downstream firms are distributed 2392 equally across the upstream firms. Each upstream firm is assumed to respond to the notification letters it 2393 receives (see Table 2-70 for the average number of notif ication and response letters sent by industry). 2394 2395 Supplier notification requires both material and labor costs. The material costs for each supplier 2396 letter include: $0.10 for a printed letter, $0.02 for an envelope, and $0.44 for a stamp for a total of $0.56 2397 in material costs per supplier letter. In terms of letter production and mailing, it is assumed that this 2398 activity will require 2 hours of initial labor plus one minute of labor for each supplier notification letter or 2399 response letter sent. The labor costs are estimated us ing the industry-specific fu lly loaded wages for the 2400 “office and administrative support” occupation (See Tabl e 2-66). Supplier notification cost elements per 2401 fabricator, wholesaler, retailer, and composite panel producer firms are presented in Table 2-70 below. 2402 The total per-firm costs is calculated as the sum of (1) material costs and (2) the number of labor hours 2403 required multiplied by the fully loaded hourly wage. 2404 2405

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### Table 2-70: Per-Firm Supplier Notification and Response Costs

Industry Notification
Letters Sent Per

Firm Notification
Letter Responses Per Firm Total
Letters Per
Firm Estimated
Labor
Burden Per
Firm (hours) Estimated
Material Cost Per Firm ($0.56 per letter) Office and
Administrative Support Wage Total PerFirm Cost

Composite Panel
Producers a 0 295 295 6.9 $165.20 $24.84 $336.60
Fabricators
and Laminators 20 282 302 7.0 $169.12 $24.84 $343.00 Wholesalers 20 277 297 7.0 $166.32 $25.54 $345.10 Retailers 40 0 40 2.7 $22.40 $19.32 $74.56 Sources: U.S. Bureau of Labor St atistics 2010b, c, e, United States Postal Service 2011 

### 2406 2.5.2.2 Labeling Costs 

### 2407 2408 Fabricators must label every finished good they produce, or every box containing finished goods, 2409 with the fabricator’s name, the date the finished good was produced, and a statement of compliance. 2410 Because this is similar to the labeling requirement in the CARB ATCM, the average labeling costs for 2411 fabricators are estimated based on the questionnaire r esults and presented in Table 2-67 of the previous 2412 section. Based on the questionnaire results, it is estimated that 33% of fabricators who are not already 2413 complying with the CARB ATCM (because their products are not sold in California) will incur average 2414 incremental costs of $4,552 in the first year to change their labels, and all other fabricators will incur an 2415 average incremental cost of $132.81. Since none of the fabricators that took part in the telephone 2416 questionnaire reported any recurring costs for labeling, no recurring labeling costs are estimated. 2417 2418 It is assumed that 1 percent of wholesalers in cur labeling costs, either because they are 2419 repackaging goods that were originally labeled on th e packaging instead of on the individual items, or 2420 because they are replacing an original label applied by the panel producer or fabricator with a label listing 2421 a different company name. It is also assumed that these wholesalers in cur the same costs as the 2422 fabricators who are assumed to incur more substan tial initial labeling costs (an average of $4,552). 2423 2424 It is assumed that panel producers, for whom product labeling is a customary business practice, 2425 will incur the incremental costs of 6 hours for changing their labels twice. They may need to change their 2426 labels once before the effective date of the rule (to in dicate that the panels were produced before that date 2427 if they are to be sold after the rule goes into effect ) and again after their product lines are certified. The 2428 first label change may be needed. 2429 2430 Table 2-71: Summary of Average Labeling Setup Costs Per-Firm

Firm Type Average Initial Costs 

### Low High Panel Producers (excl. lami nators defined as hardwood plywood producers) $149.04
Laminators defined as hardw ood plywood producers $4,552.00 Fabricators (including lami nators defined as fabricators) $132.81 $4,552.00 Wholesalers $4,552.00 -
Retailers - - 

### 2431 2432 2433

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### 2.5.2.3 Recordkeeping Costs 

### 2434 2435 Under the CARB ATCM, fabricators, importers, distributors, and wholesalers are required to take 2436 “reasonable precautions” to ensure that the composite wood products and finished goods they acquire are 2437 in compliance with the applicable emission standards. This includes instructing each supplier that the 2438 product supplied must comply with applicable emi ssions standards, and obtaining written documentation 2439 stating that. In addition, these firms must keep reco rds showing the date of purchase, the supplier, as well 2440 as all precautions taken to ensure that the product meet s emissions standards. These records must be kept 2441 for two years. The TSCA Title VI rule requires that reco rds be kept for five years but this is not expected 2442 to significantly affect the costs to regulated entities, so the cost of the additional recordkeeping has not 2443 been estimated. 2444 2445 The average initial and recurring recordkeepi ng costs for fabricators and wholesalers are 2446 estimated based on the questionnaire results and presen ted above in Table 2-67 and Table 2-68 above. 2447 Based on the questionnaire results, typical fabricat ors are not estimated to incur initial costs for 2448 recordkeeping, because their existing recordkeeping syst ems are adequate and do not need to be modified 2449 to comply with the TSCA Title VI requirements. It is estimated that 11% of the fabricators that are not 2450 currently complying with the CARB ATCM because thei r products are not sold in California will incur 2451 additional recurring recordkeeping costs. 2452 2453 The single fabricator questionnaire respondent that reported incurring recurring recordkeeping 2454 costs indicated that their recurring recordkeeping burden associated with the CARB ATCM was about 10 2455 hours per week, which this analysis estimates to be about $12,917 per year (see Table 2-67). However, 2456 the burden reported by this fabricator questionnaire respondent seems unlikely to be representative for all 2457 the fabricator firms that incur a recurring recordkeep ing burden. This fabricator questionnaire respondent 2458 was a firm with employees, but smaller firms, such as nonemployer firms, are likely to need much less 2459 time than 10 hours per week (about a quarter of a 40 hour work week) to perform the necessary 2460 recordkeeping activities. Since the recordkeeping requirements entail keeping track of composite wood 2461 materials purchased and shipments that contain comp osite wood products, it is expected that the burden 2462 associated with keeping records will typically increase with the volume of a fabricator’s sales. Thus, to 2463 estimate the recurring recordkeeping burden for nonemp loyer fabricators, the analysis assumes that there 2464 is a fixed-cost component of the recurring recordk eeping costs associated with two hours of labor and a 2465 variable cost component that is proportional to a firm’s revenue. 2466 2467 For fabricator employer firms, the recurring reco rdkeeping cost is assumed to be comprised of a 2468 fixed cost component of $49.68 (based on the cost of 2 hours of labor at fabricator firms) and a variable 2469 cost component of 0.30338 percent of revenue (cal culated by subtracting $49.68 from $12,917 and then 2470 dividing by $4,241,245, the estimated average revenue for affected employer fabricators). The average 2471 recurring recordkeeping cost for fabricator nonemployer firms is then estimated as the sum of 49.68 and 2472 0.30338 percent of average nonemployer firm revenu es ($42,690). The resulting average fabricator 2473 nonemployer firm recurring recordkeeping cost is $179.19 per year. 2474 2475 Recurring recordkeeping costs are estimated similarl y for wholesale firms. It is estimated that 2476 43% of wholesalers that are not currently complyin g with the CARB ATCM (because their products are 2477 not sold in California) will incur additional recu rring costs (see Table 2-68). The costs to those 2478 wholesalers with recurring recordkeeping costs are es timated based on the wholesaler questionnaire. The 2479 single wholesaler questionnaire respondent that reported incurring recurring recordkeeping costs indicated 2480 that their recurring recordkeeping burden associated with the CARB ATCM was about forty five minutes 2481 per day, which this analysis estimates to be about $4,980.30 per year (see Table 2-68). However, the 2482 burden reported by this wholesaler questionnaire res pondent seems unlikely to be representative for all 2483 the wholesaler firms that incur a recurring recor dkeeping burden. This wholesaler questionnaire 2484

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### respondent was a firm with employees, but smaller fi rms such as nonemployer firms, are likely to need 2485 much less time than 3.75 hours per week (nearly 10 % of a 40 hour work week) to perform the necessary 2486 recordkeeping activities. Since the recordkeeping requirements entail keeping track of composite wood 2487 materials purchased and shipments that contain comp osite wood products, it is expected that the burden 2488 associated with keeping records w ill typically increase with the volume of a wholesaler’s sales. Thus, to 2489 estimate the recurring recordkeeping burden for nonemp loyer wholesalers, the analysis assumes that there 2490 is a fixed-cost component of the recurring recordk eeping costs associated with two hours of labor and a 2491 variable cost component that is proportional to a firm’s revenue. 2492 2493 For employer firms, the recurring recordkeeping co st is assumed to be comprised of a fixed cost 2494 component of $51.08 (based on the cost of 2 hours of labor at wholesaler firms)and a variable cost 2495 component of 0.05933 percent of revenue (calcula ted by subtracting $51.08 from $4,980.30 and then 2496 dividing by $8,308,417, the estimated average revenue for affected employer wholesalers). The average 2497 recurring recordkeeping cost for nonemployer firms is then estimated as the sum of 51.08 and 0.05933 2498 percent of average nonemployer revenues ($82,542) . The resulting average wholesaler nonemployer 2499 recurring recordkeeping cost is $100.05 per year. 2500 2501 It is estimated that 57% of the wholesalers th at are not currently complying with the CARB 2502 ATCM (because their products are not sold in Califor nia) will incur an initial cost of $2,511 to change 2503 their recordkeeping systems, and that these costs w ill average $2,511 for both employer and nonemployer 2504 firms. It is assumed that the remaining wholesalers do not have to upgrade their recordkeeping systems in 2505 order to complying with the recordkeeping requirements. 2506 2507 Panel producers are assumed to incur an average labor burden of one hour per week (equivalent 2508 to $3,710.72 per year) to maintain the following records for 5 years: 2509 2510

 Records of quarterly emission testing and quality control testing that identify the 2511 accredited third-party certifier conducting or overseeing the testing and the laboratory or 2512 quality control facility actually performing the testing. These records must also include 2513 the date, the product type tested, the lot or batch number that the tested material 2514 represents, the test method used, and the test results; 2515

 Production records, including a description of the composite wood product(s), the date of 2516 manufacture, lot or batch numbers, the amount of resin use by volume and weight, the 2517 resin trade name, resin manufacturer and supplier contact information, and tracking 2518 information allowing each product to be traced to a specific lot number or batch 2519 produced; 2520

 Records demonstrating initial and continued e ligibility for the reduced testing provisions 2521 for products made with no- added formaldehyde-based resins, if applicable; 2522

 Records of changes in production, including changes in resin use, resin composition, and 2523 changes in the process, such as changes in press time; 2524

 Purchaser information for each composite w ood product, if applicable, including the 2525 name, contact person, address, phone number, e-mail address if available, purchase order 2526 or invoice number, and amount purchased; 2527

 Transporter information for each composite w ood product, if applicable, including name, 2528 contact person, address, phone number, e-mail address if available, and shipping invoice 2529 number; 2530

 Information on the disposition of non-complyi ng lots, including product type and amount 2531 of composite wood products affected, lot or batch numbers, mitigation measures used, 2532 results of retesting, and final disposition; 2533

 Copies of labels used; 2534

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###  Panel producers are required to maintain an up-to-date quality control manual on their 2535 premises; and 2536

 Panel producers are required to maintain the cr edentials of their quality control managers 2537 and quality control employees for as long as employees are serving in a quality control 2538 capacity. 2539 2540 Table 2-72: Summary of Average Recordkeeping Costs Per-Firm

Firm Type Average Recordkeeping Costs 

### Initial Costs Recurring Costs Panel Producers (excl. lamina tors defined as hardwood plywood producers) - $3,710.72 Laminators defined as hardwood plywood producers a - $16,627.52

Fabricators (incl uding laminators defined as fabricators) All firms that comply with CARB
ATCM in baseline and 89% of firms that do not comply with CARB ATCM in baseline b

- - 11% of employer firms that do not comply with CARB ATCM in
baseline b - $12,916.80 11% of nonemployer firms that do not comply with CARB ATCM in baseline b $179.19

Wholesalers All firms that comply with CARB ATCM in baseline and 57% (for initial costs) and 43% (for recurring costs) of firms that do not comply with CARB ATCM in baseline b

- - 57% (for initial costs) and 43% (for recurring costs) of employer firms that do not comply with CARB
ATCM in baseline b $2,510,80 $4,890.30 57% (for initial costs) and 43% (for recurring costs) of nonemployer firms that do not comply with
CARB ATCM in baseline b $2,510,80 $100.05
Retailers - -

a $16,627.52= 12,916.80 + $3,710.72
b Firms may not comply with the CARB ATCM in the base line if they do not sell products in California. 

### 2541 2542 2.5.3 Number of Affected Entities 2543 2544 Several industries are already universally followi ng the recordkeeping and labeling requirements 2545 under the CARB rule, while other industries have not experienced widespread implementation of these 2546 practices. In general, those industries that tend to distribute their products nationally have implemented 2547 recordkeeping and labeling systems to comply with CA RB, while regional operations generally have not. 2548 2549 Discussions with industry experts informed th e baseline compliance assumptions for most 2550 fabricators as well as all furniture wholesalers. 33 

### For the remaining fabricators baseline compliance was 2551 estimated as the percentage of total U.S. establishmen ts located in California. For retail and wholesale 2552

33 Conversations with Industry (Per sonal Communication with AHFA 2010, Personal Communication with BIFMA 2010, Personal Communication with KCMA 2010, Personal Communication with NALFA 2010) informed assumptions for the following NAICS codes: 321211, 321219, 337110, 337129, 321911, 337121, 337122, 337127, 337211, 337214, 337215, 336213, 336214, 423210, 423220.

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### firms, baseline compliance was estimated as the percentage of firms with at least one establishment 2553 located in California. Since all affected compos ite wood product producers will need to familiarize 2554 themselves with the rule as well as respond to all su pplier notification letters, baseline compliance with 2555 the CARB regulation does not need to be determined. 2556 2557 2.5.3.1 Baseline CARB Compliance of Fabricator and Wood Veneer Laminated Product Industries 

### 2558 2559 Many fabricators are already complying with the recordkeeping and labeling requirements of the 2560 CARB ATCM and therefore would not incur any incr emental costs for putting these systems in place to 2561 comply with the TSCA Title VI rule. The baseline level of CARB compliance for most fabricator and 2562 wood veneer laminated product industries was dete rmined based on conversations with industry 2563 associations. 34 

### However, baseline compliance for some fa bricator and wood veneer laminated product 2564 industries was estimated simply as the number of establis hments located in California divided by the total 2565 number of U.S. establishments in each industry. The estimated baseline CARB compliance levels for 2566 fabricators and wood veneer laminated product pr oducers are presented below in Table 2-73. 2567 2568 2569 Table 2-73: Baseline CARB Compliance of Fabricator and Wood Veneer Laminated Product Producer Industries, by Affected NAICS

NAICS NAICS Definition CA
Estab. Estab. Outside

CA Total U.S.
Estab. Baseline CARB Compliance 321211 Hardwood Veneer and Plywood Manufacturing - - - 100% 321219 Reconstituted Wood Product Manufacturing - - - 100% 337110 Wood Kitchen Cabinet and Countertop Manufacturing - - - 50%

337129 Wood Television, Radio, and Sewing Machine Cabinet Manufacturing - - - 50%

321911 Wood Window and Door Manufacturing - - - 100% 337121 Upholstered House Furniture Manufacturing - - - 100%

337122 Non-upholstered Wood Household Furniture Manufacturing - - - 100%

337124 Metal Household Furniture Manufacturing - - - 100% 337127 Institutional Furniture Manufacturing - - - 100% 337211 Wood Office Furniture Manufacturing - - - 100% 337214 Office Furniture (except Wood) Manufacturing - - - 100%

337215 Showcase, Partition, Shelving, and Locker Manufacturing - - - 100%

321918 Other Millwork (including Flooring) 194 1,907 2,101 9.23%
337212 Custom Architectural Woodwork and Millwork 219 2,009 2,228 9.83%

321999 All Other Miscellaneous Wood Product Manufacturing 154 1,810 1,964 7.84%

336213 Motor Home Manufacturing - - - 100% 336214 Travel Trailer and Camper - - - 100% 321991 Manufactured Home (Mobile Home) Manufacturing 41 335 376 10.90% 321992 Prefabricated Building Manufacturing 48 763 811 5.92% 339950 Sign Manufacturing 644 5,739 6,383 10.09% Sources: U.S. Census Bureau 2009b, 2010f 

### 2570 2571

34 Conversations with Industr y represented informed assumptions for th e following fabricator NAICS codes: 321211, 321219, 337110, 337129, 321911, 337121, 337122, 337127, 337211, 337214, 337215, 336213, and 336214.

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### 2.5.3.2 Baseline CARB Compliance of Retailer and Wholesaler Industries 

### 2572 2573 This analysis assumes that retail and wholesale firms with establishments in California are 2574 complying with the recordkeeping and labeling requirements of the CARB ATCM and therefore would 2575 not incur any incremental costs for putting these sy stems in place to comply with the TSCA Title VI 2576 proposed rule. Because retailers make the large majority of their sales in the same states where they have 2577 physical locations it is not likely that many retailers without California locations have established chain of 2578 custody systems to meet the CARB ATCM’s requirement s. Wholesalers are more likely than retailers to 2579 sell products in states where they do not have physical locations. Thus, this assumption may lead to an 2580 understatement of the level of baseline complianc e among wholesalers. Note that two wholesale 2581 industries, Furniture Merchant Wholesalers ( 423210) and Home Furnishing Merchant Wholesalers 2582 (423220) are instead assumed to be fully compliant with the CARB ATCM chain of custody requirements 2583 in the baseline. 35 

### 2584 2585 Because data on the number of firms with at least one establishment in California are not 2586 available, the following steps must be taken to es timate baseline compliance for each affected industry: 2587 (1) use 2007 Economic Census data to identify the number of affected retail and wholesale firms (U.S. 2588 Census Bureau 2009a, 2010a, b, d, g); (2) estimat e the number of single-unit firms in California; (3) 2589 estimate the number of multi-unit firms with at least one establishment in California; and (4) estimate 2590 baseline compliance as the percentage of U.S. firm s with at least one establishment in California. 2591 2592 Figure 2-5 presents an example to demonstrate how the numbers of single-unit firms located in 2593 California are estimated. 2594 2595

35 These assumptions are based on two sources: (Pers onal Communication with AHFA 2010, Personal Communication with BIFMA 2010).

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### Figure 2-5: Example Methodology for Estimating th e Number of Single-Unit Firms in California (NAICS 441210)



### 2596 Table 2-74 and Table 2-75 present the estimated number of single-unit establishments located in 2597 California for all affected wholesaler and retailer industries. 2598 2599 2600 2601 Table 2-74: The Number of Single-Unit Wholesaler Establishments in Califor nia, by Affected NAICS

NAICS NAICS Description All U.S.
Estab. in
Affected NAICS U.S.SingleUnit
Estab. Percent of U.S. Estab.

that are Single Unit All CA
Estab. CASingleUnit
Estab.

423310 Lumber, plywood, millwork, and wood panel merchant wholesalers 8,984 5,587 62.2% 836 520

423320 Brick, stone, and related cons truction material merchant
wholesalers 4,107 2,413 58.8% 447 263

423330 Roofing, siding, and insulation material merchant wholesalers 2,804 862 30.7% 175 54
423390 Other construction materi al merchant w holesalers 3,767 2,122 56.3% 394 222 423410 Photographic equipment and supplies me rchant wholesalers 1,062 767 72.2% 230 166 423420 Office equipment merchant whol esalers 6,415 2,509 39.1% 676 264 423430 Computer and software merchant whol esalers 11,545 7,689 66.6% 2,265 1,508 423440 Other commercial equipm ent merchant wholesaler s 4,444 3,600 81.0% 521 422 423450 Medical equipment merchant whol esalers 8,601 6,718 78.1% 1,194 933 423490 Other professional equipment and supp lies merchant 2,380 1,804 75.8% 309 234

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### Table 2-74: The Number of Single-Unit Wholesaler Establishments in Califor nia, by Affected NAICS

NAICS NAICS Description All U.S.
Estab. in
Affected NAICS U.S.SingleUnit
Estab. Percent of U.S. Estab.

that are Single Unit All CA
Estab. CASingleUnit
Estab.
wholesalers
423510 Metal service centers and other metal merc hant wholesalers 10,831 6,867 63.4% 1,273 807 423610 Elec. equip. and wiring merchant wholesalers 13,948 7,553 54.2% 1,910 1,034 423620 Electric appliance merchant wholesalers 3,149 2,260 71.8% 685 492 423690 Other electronic parts and equipment merchant wholesalers 13,991 9,329 66.7% 3,015 2,010
423710 Hardware merchant wholesal ers 6,986 4,581 65.6% 1,082 710 423720 Plumbing equip. merchant whol esalers 7,027 3,013 42.9% 806 346 423730 HVAC equip. merchant wholes alers 5,376 1,826 34.0% 387 131 423740 Refrigeration equipment and supplies me rchant wholesalers 1,318 625 47.4% 196 93 423810 Construction equipment merchant wholesalers 4,904 2,432 49.6% 369 183

423820 Farm and garden machinery and equipment merchant
wholesalers 8,405 5,395 64.2% 621 399

423830 Industrial machinery and equipment merchant wholesalers 31,380 21,477 68.4% 3,111 2,129 423840 Industrial supplies merchant whol esalers 8,850 4,855 54.9% 1,018 558

423850 Service establishment equipm ent and supplies merchant
wholesalers 4,719 3,258 69.0% 373 258

423910 Sporting and recreational goods and supplies merchant
wholesalers 6,278 5,300 84.4% 1,224 1,033

423920 Toy and hobby goods and supplies mercha nt wholesalers 2,504 2,262 90.3% 741 669 423930 Recyclable material merchant wholesalers 7,377 5,697 77.2% 850 656 423940 Jewelry merchant wholesalers 7,806 7,383 94.6% 1,495 1,414 423990 Other miscellaneous durable goods merchant wholesalers 10,270 8,877 86.4% 1,723 1,489 424110 Printing and writing paper mercha nt wholesalers 1,291 698 54.1% 161 87 424120 Stationery and office supplies mercha nt wholesalers 5,865 4,217 71.9% 733 527 424130 Industrial and personal service paper merc hant wholesalers 4,939 3,644 73.8% 727 536 424210 Drugs and druggists' sundries merchant w holesalers 8,535 5,695 66.7% 1,504 1,004 424310 Piece goods, notions, and other dry goods merc hant wholesalers 3,532 2,906 82.3% 967 796 424320 Men's and boys' clothing and furnishings merchant wholesalers 4,252 3,634 85.5% 984 841 424330 Women's and children's clothing merchant wholesalers 7,674 6,823 88.9% 2,357 2,096
424340 Footwear merchant wholes alers 1,659 1,446 87.2% 525 458 424410 General line grocery merchant w holesalers 2,547 2,025 79.5% 449 357 424420 Packaged frozen food merchant wholesalers 3,502 2,702 77.2% 606 468 424450 Confectionery merchant whol esalers 2,191 1,650 75.3% 282 212
424460 Fish and seafood merchant w holesalers 2,022 1,806 89.3% 238 213 424480 Fresh fruit and vegetable merchant w holesalers 5,074 4,323 85.2% 1,102 939 424490 Other grocery and related products merchant wholesalers 13,068 8,943 68.4% 2,011 1,376 424510 Grain and field bean merchant wholesalers 4,851 1,801 37.1% 133 49

424610 Plastics materials and basic forms and shapes merchant
wholesaler 3,420 2,368 69.2% 516 357

424690 Other chemical and allied products merc hant wholesalers 10,138 5,681 56.0% 965 541 424910 Farm supplies merchant whol esalers 7,738 3,786 48.9% 649 318 424920 Book, periodical, and newspaper mercha nt wholesalers 2,813 1,816 64.6% 360 232 424930 Flower, nursery stock, & florists' supplies merchant wholesalers 4,218 3,320 78.7% 671 528 424940 Tobacco and tobacco product merchant wholesalers 1,370 1,017 74.2% 94 70 424950 Paint, varnish, and supplies merc hant wholesalers 2,060 924 44.9% 235 105
424990 Other miscellaneous nondurable goods merchant wholesalers 12, 634 11,549 91.4% 2,980 2,724
Total Wholesalers in Affected NAICS 324,621 219,835 47,175 33,831 Sources: U.S. Census Bureau 2010a, b 

### 2602

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### Table 2-75: The Number of Single-Unit Retailer Es tablishments in California, by Affected NAICS

NAICS NAICS Description All U.S.
Estab. in
Affected
NAICS U.S.SingleUnit
Estab. Percent of U.S.
Estab. that are Single Unit All CA
Estab. CASingleUnit
Estab. 441110 New car dealers 24,888 19,495 78.3% 2,516 1,970 441210 Recreational vehicle dealers 3,100 2,530 81.6% 325 265 441221 Motorcycle, ATV, and personal wate rcraft dealers 6,137 5,492 89.5% 620 555 441229 All other motor vehicle dealers 2,266 2,042 90.1% 229 206 441320 Tire dealers 20,127 10,445 51.9% 2,034 1,056 442110 Furniture stores 28,834 17,829 61.8% 3,308 2,045 442210 Floor covering stores 14,534 12,186 83.8% 1,471 1,233 442291 Window treatment stores 2,652 2,196 82.8% 358 296 442299 All other home furnishings stores 19,124 10,994 57.5% 2,274 1,307 443111 Household appliance st ores 9,336 7,216 77.3% 843 652 443112 Radio, television, and other electr onics stores 29,051 13,741 47.3% 3,478 1,645 443120 Computer and software stores 10,428 5,385 51.6% 1,307 675 443130 Camera and photographic suppl ies stores 1,988 699 35.2% 201 71 444110 Home centers 6,953 2,330 33.5% 585 196 444120 Paint and wallpaper stores 7,860 2,085 26.5% 734 195
444130 Hardware stores 16,454 11,289 68.6% 1,241 851 444190 Other building material d ealers 39,551 27,231 68.9% 3,909 2,691 444210 Outdoor power equipment stores 4,357 3,916 89.9% 236 212 444220 Nursery, garden center, and farm supply stores 15,895 11,640 73.2% 1,138 833 445110 Supermarkets and other grocery (except convenience) stores 64, 881 39,878 61.5% 7,824 4,809 445120 Convenience stores 25,510 21,529 84.4% 2,578 2,176 445210 Meat markets 6,009 5,339 88.9% 607 540
445220 Fish and seafood mark ets 2,063 1,954 94.7% 209 198 445230 Fruit and vegetable markets 2,938 2,780 94.6% 297 281 445291 Baked goods stores 4,290 3,001 70.0% 434 303 445292 Confectionery and nut stores 3,404 1,990 58.5% 344 201 445299 All other specialty food stores 5,504 4,057 73.7% 556 410 445310 Beer, wine, and liquor stor es 31,485 26,292 83.5% 3,182 2,657 446110 Pharmacies and drug stor es 42,045 17,710 42.1% 4,250 1,790 446120 Cosmetics, beauty supplies, and perfume stores 13,584 6,679 49.2% 1,373 675 446130 Optical goods stores 13,149 4,977 37.9% 1,329 503 446191 Food (health) supplement stores 8,999 4,928 54.8% 910 498 446199 All other health and personal care stores 10,675 6,835 64.0% 1,079 691
447110 Gasoline stations with convenie nce stores 97,508 49,010 50.3% 9,856 4,954 447190 Other gasoline stations 21,248 13,700 64.5% 2,148 1,385 448110 Men's clothing stores 8,321 4,533 54.5% 1,082 589 448120 Women's clothing stores 36,220 12,832 35.4% 4,419 1,566
448130 Children's and infants' clothi ng stores 7,102 2,611 36.8% 853 314 448140 Family clothing stores 28,254 7,618 27.0% 3,540 954 448150 Clothing accessories stores 7,494 3,488 46.5% 917 427 448190 Other clothing stores 12,034 7,430 61.7% 1,394 861 448210 Shoe stores 28,076 6,147 21.9% 2,838 621 448310 Jewelry stores 27,745 18,015 64.9% 3,269 2,123 448320 Luggage and leather goods stores 1,222 561 45.9% 124 57 451110 Sporting goods stores 22,254 16,485 74.1% 2,510 1,859 451120 Hobby, toy, and game stores 9,357 5,489 58.7% 1,028 603 451130 Sewing, needlework, and piece goods stores 5,663 4,001 70.7% 632 447 451140 Musical instrument and suppl ies stores 4,510 3,301 73.2% 456 334

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### Table 2-75: The Number of Single-Unit Retailer Es tablishments in California, by Affected NAICS

NAICS NAICS Description All U.S.
Estab. in
Affected
NAICS U.S.SingleUnit
Estab. Percent of U.S.
Estab. that are Single Unit All CA
Estab. CASingleUnit
Estab. 451211 Book stores 9,955 4,291 43.1% 1,006 434 451212 News dealers and newsstands 1,523 1,239 81.4% 154 125 451220 Prerecorded tape, compact disc, and record stores 4,153 2,176 52.4% 420 220 452111 Department stores (exc ept discount department stores) 3,533 7 0.2% 437 1 452112 Discount department stores 5,001 4 0.1% 568 0 452910 Warehouse clubs and supercenters 4,260 1 0.0% 185 0 452990 All other general merchandise stores 33,061 8,473 25.6% 1,897 486 453110 Florists 19,822 18,465 93.2% 1,754 1,634 453210 Office supplies and stationery stores 9,558 4,948 51.8% 1,220 632 453220 Gift, novelty, and souvenir st ores 31,391 22,652 72.2% 3,295 2,378 453910 Pet and pet supplies stores 8,782 5,643 64.3% 888 570 453920 Art dealers 6,677 6,183 92.6% 880 815 453930 Manufactured (mobile) home dealers 3,878 2,489 64.2% 210 135 453991 Tobacco stores 6,539 4,511 69.0% 661 456 453998 All other miscellaneous store retailers (e xcept tobacco stores) 17,270 13,940 80.7% 1,746 1,409 454111 Electronic shopping 14, 185 13,212 93.1% 1,434 1,335 454113 Mail-order houses 7,324 5,956 81.3% 740 602 454210 Vending machine operators 5,194 4,487 86.4% 525 454 454311 Heating oil dealers 4,055 3,078 75.9% 410 311 454312 Liquefied petroleum gas (bottled gas) dealers 5,980 1,845 30.9% 604 186 454390 Other direct selling establis hments 22,077 19,545 88.5% 2,282 2,020
Total Retailers in Affected NAICS 994,667 580,145 103,598 60,411 Sources: U.S. Census Bureau 1997, 2010d, g, h 

### 2603 The method for estimating the number of multi-unit firms with an establishment located in 2604 California is demonstrated in Figure 2-6. The av erage U.S. number of establishments per multi-unit firm 2605 and the probability of a U.S. establishment not being located in California can be combined to estimate 2606 the probability that a U.S. firm has at least one establishment located in California. Applying this 2607 probability to the total number of U.S. multi-unit firms, the number of multi-unit firms with an 2608 establishment in California is then estimated. 2609 2610 2611

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### Figure 2-6: Example Methodology for Estimating the Number of Multi-Unit Firms with an Establishment in California (NAICS 441210)



### 2612 The estimated numbers of multi-unit firms with at least one California establishment are 2613 presented for each affected industry in Table 2-76 for whol esaler firms and Table 2-77 for retailer firms. 2614 2615 Table 2-76: Number of Multi-Unit Wholesaler Firms with a California Establishment, by Affected NAICS

NAICS NAICS Description U.S.
Number of Estab. per Multi-Unit
Firm Probability
an Estab. is not in CA Probability
Firm has
an Estab.

in CA Number of CA
MultiUnit
Firms

423310 Lumber, plywood, millwork, and wood panel merchant
wholesalers 3.8 90.7% 31.2% 277

423320 Brick, stone, and related cons truction material merchant
wholesalers 4.4 89.1% 39.9% 153

423330 Roofing, siding, and insulation material merchant wholesalers 7.5 93.8% 38.3% 99
423390 Other construction material merc hant wholesalers 4.2 89.5% 37.1% 145 423410 Photographic equipment and supplies me rchant wholesalers 2.5 78.3% 45.4% 54 423420 Office equipment merchant wholesalers 10.1 89.5% 67.6% 261 423430 Computer and software mercha nt wholesalers 4.7 80.4% 64.2% 526 423440 Other commercial equi pment merchant wholes alers 2.3 88.3% 25.2% 91 U.S. Economic Census (2010e)

219 U.S. Multi-Unit Firms U.S. Multi-Unit Establishments

U.S. Economic Census (2010d, e)

3,100 – 2,530 = 570

(U.S. Multi-Unit Establishments) / (U.S. Multi-Unit Firms)

570 / 219 = 2.6Number of Establishments per MultiUnit Firm U.S. Economic Census (2010d)

3,100 All U.S. Establishments

Probability Firm has an Establishment in CA

1 – (Probability an Establishment is not in CA)^ (Number of Establishments per Multi-Unit Firm)

1 – (89.5%)^(2.6) = 25%

(US Multi-Unit Firms) * (Probability of an Establishment in CA)

219 * 25% = 55 CA Multi-Unit Firms U.S. Economic Census (2010d)

325 All CA Establishments

Probability an Establishment is NOT in CA

1 - (All CA Establishments) / (All U.S. Establishments) 1 – 325 / 3,100 = 89.5%

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

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### Table 2-76: Number of Multi-Unit Wholesaler Firms with a California Establishment, by Affected NAICS

NAICS NAICS Description U.S.
Number of Estab. per Multi-Unit
Firm Probability
an Estab. is not in CA Probability
Firm has
an Estab.

in CA Number of CA
MultiUnit
Firms 423450 Medical equipment merchant wholesalers 3.9 86.1% 44.4% 213

423490 Other professional equipmen t and supplies merchant
wholesalers 2.4 87.0% 28.7% 68

423510 Metal service centers and other metal merchant wholesalers 3.6 88.2% 36.1% 399 423610 Elec. equip. and wi ring merchant wholesalers 6.0 86.3% 58.6% 626 423620 Electric appliance merchant wholesalers 2.8 78.2% 49.8% 158 423690 Other electronic parts and equipment merchant wholesalers 4.0 78.5% 62.5% 721
423710 Hardware merchant whol esalers 4.2 84.5% 50.7% 290 423720 Plumbing equip. merchant wholesalers 7.0 88.5% 57.5% 329 423730 HVAC equip. merchant w holesalers 7.0 92.8% 40.5% 207 423740 Refrigeration equipment and supplies me rchant wholesalers 5.2 85.1% 56.8% 76 423810 Construction equipment merchant wholesalers 3.8 92.5% 26.0% 167

423820 Farm and garden machinery and equipment merchant
wholesalers 3.3 92.6% 22.2% 204

423830 Industrial machinery and equipment me rchant wholesalers 3.4 90.1% 30.2% 869 423840 Industrial supplies merchant wholesalers 4.2 88.5% 40.1% 382

423850 Service establishment equipm ent and supplies merchant wholesalers 3.6 92.1% 25.4% 104

423910 Sporting and recreational goods and supplies merchant wholesalers 2.7 80.5% 44.4% 160

423920 Toy and hobby goods and supplies merc hant wholesalers 1.8 70.4% 46.4% 63 423930 Recyclable material merchant wholesalers 3.2 88.5% 32.6% 170 423940 Jewelry merchant whol esalers 2.3 80.8% 38.2% 71 423990 Other miscellaneous durable goods me rchant wholesalers 2.4 83.2% 35.5% 207 424110 Printing and writing paper mercha nt wholesalers 5.8 87.5% 53.6% 55 424120 Stationery and office supplies me rchant wholesalers 4.1 87.5% 42.1% 170 424130 Industrial and personal service paper merchant wholesalers 3.1 85.3% 39.2% 162 424210 Drugs and druggists' sundries merc hant wholesalers 5.0 82.4% 62.2% 352

424310 Piece goods, notions, and other dry goods merchant
wholesalers 2.6 72.6% 56.0% 137

424320 Men's and boys' clothing and furnishi ngs merchant wholesalers 2.1 76.9% 42.6% 125 424330 Women's and children's clothing merc hant wholesalers 2.1 69.3% 53.0% 219
424340 Footwear merchant wholesalers 1.9 68.4% 51.8% 58 424410 General line grocery merchant wholesalers 2.9 82.4% 42.5% 78 424420 Packaged frozen food merchant wholesalers 2.7 82.7% 40.6% 118 424450 Confectionery merchant w holesalers 3.7 87.1% 39.6% 59
424460 Fish and seafood merchant wholesalers 1.8 88.2% 20.5% 24 424480 Fresh fruit and vegetable mercha nt wholesalers 2.3 78.3% 43.4% 140 424490 Other grocery and related products me rchant wholesalers 5.7 84.6% 61.4% 445
424510 Grain and field bean merchant wholesalers 4.6 97.3% 11.9% 80

424610 Plastics materials and basic forms and shapes merchant
wholesaler 2.9 84.9% 37.5% 137

424690 Other chemical and allied products merchant wholesalers 5.3 90.5% 41.0% 347 424910 Farm supplies merchant w holesalers 5.2 91.6% 36.7% 278 424920 Book, periodical, and newspaper merc hant wholesalers 4.3 87.2% 44.3% 103

424930 Flower, nursery stock, & florists' supplies merchant
wholesalers 2.9 84.1% 39.0% 123

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-124 

### Table 2-76: Number of Multi-Unit Wholesaler Firms with a California Establishment, by Affected NAICS

NAICS NAICS Description U.S.
Number of Estab. per Multi-Unit
Firm Probability
an Estab. is not in CA Probability
Firm has
an Estab.

in CA Number of CA
MultiUnit
Firms 424940 Tobacco and tobacco product merchant wholesalers 3.0 93.1% 19.2% 23 424950 Paint, varnish, and supplies merc hant wholesalers 4.7 88.6% 43.1% 105 424990 Other miscellaneous nondurable goods me rchant wholesalers 1.9 76.4% 40.1% 228
Total Wholesalers in Affected NAICS 10,656 Sources: U.S. Census Bureau 2010a, b 

### 2616 Table 2-77: Number of Multi-Unit Retailer Firm s with a California Establishment, by Affected NAICS

NAICS NAICS Description U.S.
Number of Estab. per Multi-Unit
Firm Probability
an Estab. is not in CA Probability
Firm has
an Estab.

in CA Number o fCA MultiUnit
Firms

441110 New car dealers 2.7 89.9% 25.0% 499
441210 Recreational vehicle dealers 2.6 89.5% 25.0% 55 441221 Motorcycle, ATV, and personal wate rcraft dealers 2.4 89.9% 22.4% 61
441229 All other motor vehicle dealers 2.0 89.9% 19.2% 21
441320 Tire dealers 10.7 89.9% 68.2% 614
442110 Furniture stores 5.8 88.5% 50.9% 960 442210 Floor covering stores 3.0 89.9% 27.5% 214
442291 Window treatment stores 5.6 86.5% 55.4% 45 442299 All other home furnishings stores 14.4 88.1% 83.8% 474 443111 Household appliance st ores 3.6 91.0% 28.9% 170 443112 Radio, television, and other elec tronics stores 16.3 88.0% 87.5% 821 443120 Computer and software stores 30.6 87.5% 98.3% 162 443130 Camera and photographic suppl ies stores 14.5 89.9% 78.6% 70
444110 Home centers 13.8 91.6% 70.4% 235 444120 Paint and wallpaper stores 18.4 90.7% 83.5% 262
444130 Hardware stores 6.0 92.5% 37.5% 323 444190 Other building material d ealers 3.8 90.1% 32.7% 1,059 444210 Outdoor power equipment stores 1.9 94.6% 10.1% 23 444220 Nursery, garden center, and farm supply stores 3.7 92.8% 23.8% 277 445110 Supermarkets and other grocery (except convenience) stores 12.5 87.9% 79.8% 1,602
445120 Convenience stores 6.2 89.9% 48.5% 310
445210 Meat markets 4.1 89.9% 35.5% 58
445220 Fish and seafood markets 1.6 89.9% 15.7% 11 445230 Fruit and vegetable markets 2.2 89.9% 21.1% 15 445291 Baked goods stores 10.3 89.9% 66.7% 83 445292 Confectionery and nut stores 8.9 89.9% 61.2% 97 445299 All other specialty food stores 7.2 89.9% 53.6% 108 445310 Beer, wine, and liquor stores 4.6 89.9% 38.7% 437 446110 Pharmacies and drug stores 17.9 89.9% 85.2% 1,156 446120 Cosmetics, beauty supplies, and perfume stores 37.9 89.9% 98.2% 179 446130 Optical goods stores 19.4 89.9% 87.4% 368 446191 Food (health) supplement stores 20.9 89.9% 89.2% 174 446199 All other health and personal care stores 4.9 89.9% 40.9% 318
447110 Gasoline stations with convenie nce stores 11.1 89.9% 69.4% 3,029

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 2-125 

### Table 2-77: Number of Multi-Unit Retailer Firm s with a California Establishment, by Affected NAICS

NAICS NAICS Description U.S.
Number of Estab. per Multi-Unit
Firm Probability
an Estab. is not in CA Probability
Firm has
an Estab.

in CA Number o fCA MultiUnit
Firms

447190 Other gasoline stati ons 3.8 89.9% 33.6% 660 448110 Men's clothing stores 9.0 87.0% 71.6% 300 448120 Women's clothing stores 31.2 87.8% 98.3% 737
448130 Children's and infants' clothi ng stores 39.7 88.0% 99.4% 112 448140 Family clothing stor es 30.3 87.5% 98.3% 669 448150 Clothing accessories stores 30.8 87.8% 98.2% 128 448190 Other clothing stores 8.8 88.4% 66.2% 346
448210 Shoe stores 30.5 89.9% 96.1% 692 448310 Jewelry stores 14.4 88.2% 83.5% 565 448320 Luggage and leather goods stores 8.7 89.9% 60.4% 46 451110 Sporting goods stores 5.4 88.7% 47.5% 509 451120 Hobby, toy, and game stores 14.9 89.0% 82.4% 213 451130 Sewing, needlework, and piece goods stores 13.5 88.8% 79.8% 98 451140 Musical instrument and suppl ies stores 4.3 89.9% 36.5% 104
451211 Book stores 16.1 89.9% 82.0% 289
451212 News dealers and newsstands 4.2 89.9% 36.3% 24 451220 Prerecorded tape, compact disc, and record stores 11.8 89.9% 71.7% 120 452111 Department stores (exc ept discount department stores) 251.9 87.6% 100.0% 14 452112 Discount department st ores 499.7 88.6% 100.0% 10 452910 Warehouse clubs and super centers 387.2 95.7% 100.0% 11 452990 All other general merchandise stores 63.2 94.3% 97.6% 380
453110 Florists 2.4 91.2% 19.7% 113 453210 Office supplies and stationery stores 12.5 87.2% 81.8% 302 453220 Gift, novelty, and souvenir stores 6.0 89.5% 48.7% 707 453910 Pet and pet supplies stores 11.6 89.9% 70.9% 192
453920 Art dealers 2.2 86.8% 27.2% 60 453930 Manufactured (mobile) home dealers 4.9 94.6% 23.8% 68
453991 Tobacco stores 4.7 89.9% 39.6% 170 453998 All other miscellaneous store retailers (except tobacco stores) 4.1 89.9% 35.7% 287 454111 Electronic shopping 1.4 89.9% 14.2% 96
454113 Mail-order houses 2.7 89.9% 24.7% 127 454210 Vending machine operators 4.3 89.9% 36.8% 60 454311 Heating oil dealers 2.7 89.9% 24.9% 91 454312 Liquefied petroleum gas (bottled gas) dealers 9.1 89.9% 62.3% 281 454390 Other direct selling estab lishments 3.1 89.7% 28.5% 235 Total Retailers in Affected NAICS 23,107 Sources: U.S. Census Bureau 1997, 2010d, g, h 

### 2617 Baseline CARB compliance is estimated as the sum of single-unit firms in California and multi2618 unit firms with at least one establishment in California (See Figure 2-7). 2619 2620

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January 27, 2012 2-126 

### Figure 2-7: Example Methodology for Estima ting Baseline CARB Comp liance (NAICS 441210)



### 2621 Estimated baseline compliance with the CARB ATCM is presented in Table 2-78 for wholesaler 2622 industries and Table 2-79 for retailer industries. As described above, firms that are already meeting the 2623 requirements of the CARB ATCM are not expected to incur additional costs associated with setting up 2624 chain of custody systems to comply with the TSCA Title VI proposed rule. Estimated baseline CARB 2625 compliance of these industries varies widely by NAICS, from 5 percent to 92 percent of total U.S. firms. 2626 2627 2628 2629 Table 2-78: Baseline Compliance of W holesaler Firms, by Affected NAICS

NAICS NAICS Description CASingleUnit
Firms CA MultiUnit
Firms All CA
Firms All U.S.
Firms Baseline Compliance

423210 a Furniture merchant wholesalers - 

### - - 6,172 100%

423220 a Home furnishing merchant wholesalers -

- - 6,491 100%

423310 Lumber, plywood, millwork, and wood panel merchant
wholesalers 520 277 797 6,475 12.3%

423320 Brick, stone, and related cons truction material merchant
wholesalers 263 153 416 2,796 14.9%

423330 Roofing, siding, and insu lation material merchant
wholesalers 54 99 153 1,121 13.7%

423390 Other construction material merc hant wholesalers 222 145 367 2,514 14.6% 423410 Photographic equipment and supplies merchant wholesalers 166 54 220 886 24.8% 423420 Office equipment merchant wholesalers 264 261 525 2,895 18.1%

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### Table 2-78: Baseline Compliance of W holesaler Firms, by Affected NAICS

NAICS NAICS Description CASingleUnit
Firms CA MultiUnit
Firms All CA
Firms All U.S.
Firms Baseline Compliance

423430 Computer and software merchant wholesalers 1,508 526 2,035 8,509 23.9% 423440 Other commercial equi pment merchant wholes alers 422 91 513 3,962 13.0% 423450 Medical equipment merchant wholesalers 933 213 1,145 7,197 15.9%

423490 Other professional equipmen t and supplies merchant
wholesalers 234 68 302 2,041 14.8%

423510 Metal service centers and other metal merchant wholesalers 807 399 1,207 7,973 15.1% 423610 Elec. equip. and wiri ng merchant wholesalers 1,034 626 1,660 8,622 19.3% 423620 Electric appliance merchant wholesalers 492 158 649 2,576 25.2% 423690 Other electronic parts and equipment me rchant wholesalers 2,010 721 2,731 10,483 26.1%
423710 Hardware merchant whol esalers 710 290 1,000 5,154 19.4% 423720 Plumbing equip. merchant wholesalers 346 329 674 3,584 18.8% 423730 HVAC equip. merchant wholesalers 131 207 338 2,336 14.5% 423740 Refrigeration equipment and supplies merchant wholesalers 93 76 168 758 22.2% 423810 Construction equipment merchant wholesalers 183 167 350 3,075 11.4%

423820 Farm and garden machinery and equipment merchant
wholesalers 399 204 603 6,316 9.5%

423830 Industrial machinery and equipment merc hant wholesalers 2,129 869 2,998 24,357 12.3% 423840 Industrial supplies merchant wholesalers 558 382 940 5,808 16.2%

423850 Service establishment equipm ent and supplies merchant
wholesalers 258 104 362 3,669 9.9%

423910 Sporting and recreational goods and supplies merchant
wholesalers 1,033 160 1,194 5,661 21.1%

423920 Toy and hobby goods and supplies me rchant wholesalers 669 63 733 2,398 30.5% 423930 Recyclable material mercha nt wholesalers 656 170 826 6,218 13.3% 423940 Jewelry merchant wholes alers 1,414 71 1,485 7,570 19.6% 423990 Other miscellaneous durable goods merc hant wholesalers 1,489 207 1,696 9,460 17.9% 424110 Printing and writing paper merc hant wholesalers 87 55 142 801 17.8% 424120 Stationery and office supplies me rchant wholesalers 527 170 697 4,620 15.1% 424130 Industrial and personal service paper merchant wholesalers 536 162 699 4,058 17.2% 424210 Drugs and druggists' sundries mercha nt wholesalers 1,004 352 1,356 6,261 21.7%

424310 Piece goods, notions, and other dry goods merchant
wholesalers 796 137 932 3,150 29.6%

424320 Men's and boys' clothing and furnishings merchant
wholesalers 841 125 966 3,927 24.6%

424330 Women's and children's clothing mercha nt wholesalers 2,096 219 2,315 7,237 32.0% 424340 Footwear merchant wholesalers 458 58 515 1,557 33.1% 424410 General line grocery merchant wholesalers 357 78 435 2,208 19.7% 424420 Packaged frozen food merchant wholesalers 468 118 586 2,994 19.6% 424450 Confectionery merchant wholesalers 212 59 271 1,798 15.1%
424460 Fish and seafood merchant wholesalers 213 24 237 1,924 12.3% 424480 Fresh fruit and vegetable merchant wholesalers 939 140 1,079 4,646 23.2% 424490 Other grocery and related products merc hant wholesalers 1,376 445 1,821 9,668 18.8% 424510 Grain and field bean merchant wholesalers 49 80 129 2,469 5.2%

424610 Plastics materials and basic forms and shapes merchant wholesaler 357 137 495 2,734 18.1%

424690 Other chemical and allied products merchant wholesalers 541 347 887 6,527 13.6% 424910 Farm supplies merchant wholesalers 318 278 595 4,543 13.1% 424920 Book, periodical, and newspaper me rchant wholesalers 232 103 336 2,049 16.4% 424930 Flower, nursery stock, & florists ' supplies merchant 528 123 651 3,635 17.9%

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### Table 2-78: Baseline Compliance of W holesaler Firms, by Affected NAICS

NAICS NAICS Description CASingleUnit
Firms CA MultiUnit
Firms All CA
Firms All U.S.
Firms Baseline Compliance

wholesalers 424940 Tobacco and tobacco product merchant wholesalers 70 23 92 1,135 8.1% 424950 Paint, varnish, and supplies me rchant wholesalers 105 105 211 1,168 18.0% 424990 Other miscellaneous nondurable goods merc hant wholesalers 2,724 228 2,952 12,118 24.4%
Total Wholesalers in Affected NAICS 33,831 10,656 44,488 258,304 17.2%

a Two wholesale industries, Furniture Merc hant Wholesalers (423210) and Home Furn ishing Merchant Wholesalers (423220) are assumed to be fully compliant with the CA RB ATCM chain of custody requirements in the baseline, based on conversation with industry (Personal Communication with AHFA 2010, Personal Communication with BIFMA 2010)

. Sources: U.S. Census Bureau 2010a, b 

### 2630 Table 2-79: Baseline Compliance of Retailer Firms, by Affected NAICS

NAICS NAICS Description CASingleUnit
Firms CA MultiUnit
Firms All CA
Firms All U.S.
Firms Baseline Compliance

441110 New car dealers 1,970 499 2,470 21,489 11.5% 441210 Recreational vehicle dealers 265 55 320 2,749 11.6% 441221 Motorcycle, ATV, and personal wa tercraft dealers 555 61 616 5,763 10.7% 441229 All other motor vehicle dealers 206 21 228 2,154 10.6% 441320 Tire dealers 1,056 614 1,670 11,346 14.7% 442110 Furniture stores 2,045 960 3,005 19,714 15.2% 442210 Floor covering stores 1,233 214 1,448 12,965 11.2% 442291 Window treatment stores 296 45 342 2,278 15.0% 442299 All other home furnishings stores 1,307 474 1,781 11,560 15.4% 443111 Household appliance stores 652 170 822 7,805 10.5% 443112 Radio, television, and other elec tronics stores 1,645 821 2,466 14,679 16.8% 443120 Computer and software stores 675 162 837 5,550 15.1% 443130 Camera and photographic s upplies stores 71 70 141 788 17.8% 444110 Home centers 196 235 431 2,664 16.2% 444120 Paint and wallpaper stores 195 262 457 2,399 19.0% 444130 Hardware stores 851 323 1,175 12,152 9.7% 444190 Other building material d ealers 2,691 1,059 3,750 30,467 12.3% 444210 Outdoor power equipment stores 212 23 235 4,146 5.7% 444220 Nursery, garden center, and farm supply stores 833 277 1,110 12,804 8.7% 445110 Supermarkets and other grocery (except convenience) stores 4,809 1,602 6,411 41,885 15.3% 445120 Convenience stores 2,176 310 2,486 22,168 11.2% 445210 Meat markets 540 58 597 5,502 10.9% 445220 Fish and seafood markets 198 11 208 2,022 10.3% 445230 Fruit and vegetable markets 281 15 296 2,851 10.4% 445291 Baked goods stores 303 83 387 3,126 12.4% 445292 Confectionery and nut stores 201 97 299 2,149 13.9% 445299 All other specialty food stores 410 108 518 4,258 12.2% 445310 Beer, wine, and liquor stores 2,657 437 3,095 27,421 11.3% 446110 Pharmacies and drug stor es 1,790 1,156 2,946 19,067 15.5% 446120 Cosmetics, beauty supplies, a nd perfume stores 675 179 854 6,861 12.4% 446130 Optical goods stores 503 368 871 5,398 16.1% 446191 Food (health) supplement stores 498 174 672 5,123 13.1% 446199 All other health and personal care stores 691 318 1,009 7,612 13.3%
447110 Gasoline stations with convenie nce stores 4,954 3,029 7,983 53,375 15.0%

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### Table 2-79: Baseline Compliance of Retailer Firms, by Affected NAICS

NAICS NAICS Description CASingleUnit
Firms CA MultiUnit
Firms All CA
Firms All U.S.
Firms Baseline Compliance

447190 Other gasoline stati ons 1,385 660 2,045 15,666 13.1% 448110 Men's clothing stores 589 300 890 4,952 18.0% 448120 Women's clothing stores 1,566 737 2,303 13,582 17.0%
448130 Children's and infants' clot hing stores 314 112 426 2,724 15.6% 448140 Family clothing stor es 954 669 1,624 8,299 19.6% 448150 Clothing accessories stores 427 128 554 3,618 15.3% 448190 Other clothing stores 861 346 1,206 7,952 15.2% 448210 Shoe stores 621 692 1,313 6,867 19.1% 448310 Jewelry stores 2,123 565 2,688 18,692 14.4% 448320 Luggage and leather goods stores 57 46 103 637 16.1% 451110 Sporting goods stores 1,859 509 2,368 17,556 13.5% 451120 Hobby, toy, and game stores 603 213 816 5,748 14.2% 451130 Sewing, needlework, and piec e goods stores 447 98 545 4,124 13.2%
451140 Musical instrument and s upplies stores 334 104 437 3,585 12.2% 451211 Book stores 434 289 722 4,643 15.6% 451212 News dealers and newsstands 125 24 150 1,306 11.5% 451220 Prerecorded tape, compact disc, and record stores 220 120 340 2,343 14.5% 452111 Department stores (e xcept discount department stores) 1 14 15 21 70.8% 452112 Discount department stores 0 10 10 14 74.7% 452910 Warehouse clubs and supercenters 0 11 11 12 92.0% 452990 All other general merchandi se stores 486 380 866 8,862 9.8% 453110 Florists 1,634 113 1,747 19,038 9.2% 453210 Office supplies and statione ry stores 632 302 934 5,317 17.6% 453220 Gift, novelty, and souvenir stores 2,378 707 3,085 24,106 12.8% 453910 Pet and pet supplies stores 570 192 762 5,914 12.9% 453920 Art dealers 815 60 875 6,403 13.7% 453930 Manufactured (mobile) home dealers 135 68 203 2,774 7.3% 453991 Tobacco stores 456 170 626 4,940 12.7%

453998 All other miscellaneous store retailers (except tobacco stores) 1,409 287 1,696 14,743 11.5%

454111 Electronic shopping 1,335 96 1,432 13,888 10.3% 454113 Mail-order houses 602 127 729 6,471 11.3% 454210 Vending machine operators 454 60 514 4,651 11.0% 454311 Heating oil dealers 311 91 402 3,442 11.7% 454312 Liquefied petroleum gas (bottled gas) dealers 186 281 468 2,297 20.4% 454390 Other direct selling estab lishments 2,020 235 2,255 20,370 11.1%
Total Retailers in Affected NAICS 63,985 23,107 87,092 657,847 13.2% Sources: U.S. Census Bureau 1997, 2010d, g, h 

### 2631 2632 2.5.3.3 Number of Firms Incurring Rule Familiariza tion, Supplier Notification, Recordkeeping, and 

### 2633 Labeling Costs 

### 2634 2635 All affected entities, regardless of baseline CA RB compliance, are expected to incur rule 2636 familiarization costs and costs associated with supplie r notification and response letters. The number of 2637 firms with incremental costs associated with implem enting compliant recordkeeping and labeling systems 2638 is estimated as the total number of firms in each affected industry in the U.S. that are not already 2639 compliant with the CARB regulation. Information on th e percentages of fabricator and wholesaler firms 2640 incurring additional costs such as in itial recordkeeping costs, recurring recordkeeping costs, or initial 2641

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### labeling costs, is taken from summary statistics from the questionnaire results (See Table 2-67 and Table 2642 2-68). 2643 2644 Table 2-80 presents the number of affected manufact uring firms by type. Table 2-81, Table 2-82, 2645 and Table 2-83 show the estimated levels of baselin e compliance with the CARB rule for all fabricator, 2646 wood veneer laminated product producer, wholesaler, a nd retailer firms that use or sell composite wood 2647 products by NAICS code. The estimated numbers of fi rms that will incur incremental costs, by type of 2648 cost incurred, are also presented. 2649 2650 Table 2-80: Number of Composite Wood Product Producers Incurring Costs

Sector Number of Affected Firms in Industry a Hardwood Plywood 32 Medium Density Fiberboard (MDF) 14
Particleboard 16
Total 62

a See Table 2-2 Note that because firms producing two different types of composite wood products are e xpected to incur separate costs for each product type, the estimate of 62 firms that is used to estimate costs is derived by counting firms that produce two different types of composite wood products twic e. There are 54 unique firms that produce composite wood panels. 

### 2651
2652

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### Table 2-81: Baseline Compliance and Number of Fabricator and Laminated Product Producer Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB Compliance Number of Firms with Recurring Recordkeeping Costs (the 11% of firms without baseline

compliance) c Number of Firms with More Substantial Initial Labeling Costs (the 33% of firms without baseline compliance) c Number of Firms with Minor Initial Labeling Costs

(the 67% of firms without baseline compliance and

all firms with baseline compliance) c
321211 Decorative Panel Manufacturers 71 100% 0 0 0 71 321219 337110 Cabinet Manufacturers 17,360 50% 8,680 955 2,864 14,496 337129 476 50% 238 26 79 397 321911 Window and Door Manufacturers 3,582 100% 0 0 0 3,582 337121 2,790 100% 0 0 0 2,790 337122 Household Furniture Manufacturers 6,061 100% 0 0 0 6,061 337124 579 100% 0 0 0 579 337127 Institutional and Office Furniture Manufacturing 1,367 100% 0 0 0 1,367 337211 804 100% 0 0 0 804 337214 486 100% 0 0 0 486 337215 2,415 100% 0 0 0 2,415 321918 Custom architectural woodwork & millwork manufacturing and other millwork manufacturing (including flooring) 5,214 9% 4,745 522 1,566 3,648 337212 3,991 10% 3,592 395 1,185 2,806

321999 4,822

8% 4,436 488 1,464 3,358

336213 Motor home, travel trailer, and camper manufacturing 112 100% 0 0 0 112

336214 1,203 100% 0 0 0 1,203

321991 Manufactured Home and Prefabricated Building Manufacturing 798 11% 710 78 234 564

321992 1,930

6% 1,814 200 599 1,331

339950 Sign Manufacturing 25,917 10% 23,325 2,566 7,697 18,220 Total Affected Fabricators 79,978 47,540 5,230 15,688 64,290

a See Table 2-6.
b See Table 2-73.

c See Table 2-67. None of the fabricators responding to the questionnaire reported incurring initial recordkeeping costs or recurring labeling costs. 

### 2653 2654 2655 2656

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### Table 2-82: Baseline Compliance and Number of Wholesaler Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB Compliance Number of Firms with

Initial Labeling Costs (1% of all firms) Number of Firms with Recordkeeping Costs c

Initial Costs

(57% of

firms without baseline compliance) Recurring Costs (43% of firms without baseline compliance) 423210 d Furniture merchant wholesalers 12,480 100% 0 125 0 0

423220 d Home furnishing merchant wholesalers 6,496 100% 0 65 0 0
423310 Lumber, plywood, millwork, and wood panel merchant wholesalers 10,130 12% 8,883 101 5,063 3,820

423320 Brick, stone, and related construction mate rial merchant wholesalers 401 15% 341 4 194 147

423330 Roofing, siding, and insulation material merchant wholesalers 1,779 14% 1,536 18 876 660

423390 Other construction material merchant wholesalers 3,300 15% 2,818 33 1,606 1,212
423410 Photographic equipment and supplies merchant wholesalers 46 25% 35 0 20 15
423420 Office equipment merchant wholesalers 101 18% 83 1 47 36
423430 Computer and software merchant wholesalers 200 24% 152 2 87 65
423440 Other commercial equipment merchant wholesalers 1,057 13% 920 11 524 396
423450 Medical equipment merchant wholesalers 78 16% 66 1 38 28
423490 Other professional equipment and supplies merchant wholesalers 99 15% 84 1 48 36

423510 Metal service centers and other metal merchant wholesalers 1,292 15% 1,096 13 625 471
423610 Elec. equip. a nd wiring merchant wholesalers 101 19% 82 1 47 35
423620 Electric appl iance merchant wholesalers 88 25% 66 1 38 28
423690 Other electronic parts and equipment merchant wholesalers 121 26% 89 1 51 38

423710 Hardware merchant wholesalers 938 19% 756 9 431 325 423720 Plumbing equip. merchant wholesalers 1,392 19% 1,130 14 644 486
423730 HVAC equip. merchant wholesalers 571 14% 488 6 278 210 423740 Refrigeration equipment and supplies merchant wholesalers 91 22% 71 1 40 31
423810 Construction equipment merchant wholesalers 21 11% 19 0 11 8
423820 Farm and garden machinery and equipment merchant wholesalers 461 10% 417 5 238 179
423830 Industrial machinery and equipment merchant wholesalers 525 12% 460 5 262 198
423840 Industrial supplies merchant wholesalers 293 16% 246 3 140 106
423850 Service establishment equipment and supplies merchant wholesalers 715 10% 644 7 367 277
423910 Sporting and recreational goods and supplies merchant wholesalers 9,739 21% 7,685 97 4,380 3,305

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### Table 2-82: Baseline Compliance and Number of Wholesaler Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB Compliance Number of Firms with

Initial Labeling Costs (1% of all firms) Number of Firms with Recordkeeping Costs c

Initial Costs

(57% of

firms without baseline compliance) Recurring Costs (43% of firms without baseline compliance) 423920 Toy and hobby goods and supplies merchant wholesalers 9,801 31% 6,807 98 3,880 2,927
423930 Recyclable mate rial merchant wholesalers 12 13% 10 0 6 4
423940 Jewelry merchant wholesalers 215 20% 173 2 99 74 423990 Other miscellaneous durable goods merchant wholesalers 13,794 18% 11,320 138 6,452 4,868
424110 Printing and writing paper merchant wholesalers 35 18% 29 0 17 12
424120 Stationery and office supplies merchant wholesalers 1,655 15% 1,405 17 801 604
424130 Industrial and personal service paper merchant wholesalers 184 17% 152 2 87 65
424210 Drugs and druggists' sundries merchant wholesalers 136 22% 107 1 61 46
424310 Piece goods, notions, and other dry goods merchant wholesalers 332 30% 234 3 133 101
424320 Men's and boys' clothing and furnishings mercha nt wholesalers 489 25% 369 5 210 159
424330 Women's and children's clothing merchant wholesalers 261 32% 178 3 101 77

424340 Footwear merchant wholesalers 119 33% 80 1 46 34 424410 General line grocery merchant wholesalers 580 20% 466 6 266 200
424420 Packaged frozen food merchant wholesalers 78 20% 63 1 36 27
424450 Confectionery merchant wholesalers 14 15% 12 0 7 5 424460 Fish and seafood merchant wholesalers 13 12% 11 0 6 5
424480 Fresh fruit and vegetable merchant wholesalers 16 23% 12 0 7 5
424490 Other grocery and related products merchant wholesalers 312 19% 253 3 144 109

424510 Grain and field bean merchant wholesalers 23 5% 22 0 13 9

424610 Plastics material s and basic forms and shapes merchant wholesaler 496 18% 406 5 231 175
424690 Other chemical and allied products merchant wholesalers 87 14% 75 1 43 32
424910 Farm supplies merchant wholesalers 68 13% 59 1 34 25 424920 Book, periodical, and newspaper merchant wholesalers 382 16% 319 4 182 137
424930 Flower, nursery stock, & florists' supplies merchant wholesalers 165 18% 135 2 77 58
424940 Tobacco and tobacco product merchant wholesalers 11 8% 10 0 6 4
424950 Paint, varnish, and supplies merchant wholesalers 128 18% 105 1 60 45

424990 Other miscellaneous nondurable goods merchant wholesalers 3,639 24% 2,752 36 1,569 1,183

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### Table 2-82: Baseline Compliance and Number of Wholesaler Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB Compliance Number of Firms with

Initial Labeling Costs (1% of all firms) Number of Firms with Recordkeeping Costs c

Initial Costs

(57% of

firms without baseline compliance) Recurring Costs (43% of firms without baseline compliance) Total Affected Wholesalers 85,560 53,731 855 30,629 23,102

a See Table 2-14.
b See Table 2-78.

c See Table 2-68.
d Two wholesale industries, Furniture Merc hant Wholesalers (423210) and Home Furn ishing Merchant Wholesalers (423220) are assumed to be fully compliant with the CA RB ATCM chain of custody requirements in the baseline, based on conversation with industry (Personal Communication with AHFA 2010, Personal Communication with BIFMA 2010)

. 

### 2657 Table 2-83: Baseline Compliance and Number of Retail Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB

Compliance 441110 New car dealers 3,973 11% 3,516 441210 Used car dealers 7,043 12% 6,223 441221 Recreational vehicle dealers 1,324 11% 1,183 441229 Motorcycle, ATV, and personal wa tercraft dealers 2,715 11% 2,428 441320 Boat dealers 37 15% 32 442110 All other motor vehicle dealers 36,113 15% 30,608 442210 Automotive parts and accessori es stores 21,254 11% 18,881 442291 Tire dealers 978 15% 831 442299 Furniture stores 26,385 15% 22,319 443111 Floor covering stores 3,381 11% 3,025 443112 Window treatment stores 13,501 17% 11,233 443120 All other home furnishings stores 1,052 15% 893 443130 Household appliance stores 23 18% 19 444110 Radio, television, and other electronics stores 5,076 16% 4,255 444120 Computer and software stores 682 19% 552 444130 Camera and photographic suppl ies stores 17,083 10% 15,432 444190 Home centers 38,160 12% 33,463 444210 Paint and wallpaper stores 758 6% 715 444220 Hardware stores 13,426 9% 12,262 445110 Other building material dealers 21,981 15% 18,617 445120 Outdoor power equipment stores 10,139 11% 9,002 445210 Nursery, garden center, and farm supply stores 143 11% 127 445220 Supermarkets and other gr ocery (except convenience)

stores 152 10% 136

445230 Convenience stores 413 10% 370 445291 Meat markets 109 12% 96 445292 Fish and seafood markets 774 14% 666 445299 Fruit and vegetable markets 1,959 12% 1,721 445310 Baked goods stores 1,312 11% 1,164 446110 Confectionery and nut stores 18,543 15% 15,678 446120 All other specialty food stores 674 12% 590 446130 Beer, wine, and liquor stores 6 16% 5 446191 Pharmacies and drug stores 620 13% 539 446199 Cosmetics, beauty supplies, and perfume stores 54 13% 47 447110 Optical goods stores 2,935 15% 2,496

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### Table 2-83: Baseline Compliance and Number of Retail Firms Incurring Costs

NAICS NAICS Description Number of Affected Firms a Baseline CARB Compliance b Number of Firms without Baseline CARB

Compliance 447190 Food (health) supplement stores 205 13% 178 448110 All other health and personal care stores 598 18% 491 448120 Gasoline stations with convenience stores 2,890 17% 2,400 448130 Other gasoline sta tions 3,922 16% 3,309 448140 Men's clothing stores 16,346 20% 13,148 448150 Women's clothing stores 873 15% 739 448190 Children's and infants' clot hing stores 2,794 15% 2,370 448210 Family clothing stores 1,212 19% 980 448310 Clothing accessories stores 5,389 14% 4,614 448320 Other clothing stores 424 16% 356 451110 Shoe stores 28,113 13% 24,321 451120 Jewelry stores 20,373 14% 17,479 451130 Luggage and leather goods stores 18,421 13% 15,988 451140 Sporting goods stores 30 12% 26 451211 Hobby, toy, and game stores 5,425 16% 4,581 451212 Sewing, needlework, and piec e goods stores 2,553 11% 2,261 451220 Musical instrument and suppl ies stores 3,571 14% 3,053 452111 Book stores 2,562 71% 748 452112 News dealers and newsstands 3,611 75% 915 452910 Prerecorded tape, compact disc, and record stores 3,076 92% 245 452990 Department stores (exc ept discount department stores) 32,638 10% 29,449 453110 Discount department stores 33,046 9% 30,014 453210 Warehouse clubs and supercenters 10,745 18% 8,858 453220 All other general merchandi se stores 53,166 13% 46,362 453910 Florists 106 13% 92 453920 Office supplies and statione ry stores 3,072 14% 2,652 453930 Gift, novelty, and souvenir stores 4,985 7% 4,621 453991 Used merchandise stores 2,373 13% 2,072 453998 Pet and pet supplies stores 27,491 12% 24,329 454111 Art dealers 24,102 10% 21,618 454113 Manufactured (mobile) home dealers 11,548 11% 10,247 454210 Tobacco stores 255 11% 227 454311 All other miscellaneous store retailers (except tobacco stores) 1,445 12% 1,276

454312 Electronic shopping 1,039 20% 827 454390 Mail-order houses 177,871 11% 158,180 Total Affected Retailers 759,048 658,150

a See Table 2-15.
b See Table 2-79. 

### 2658 2.5.4 Total Estimated Costs of Rule Familiarization, Notification, and Recordkeeping 2659 and Labeling Requirements 2660 2661 The total costs of the recordkeeping, supplier notification, labeling, and rule familiarization 2662 requirements are estimated by applying the per-firm co sts to the number of affected composite panel 2663 producer, fabricator, wholesaler, and retailer firms by industry. Table 2-85 summarizes these costs, 2664 except costs to panel producers, under all the opti ons where these requirements are equivalent to the 2665 CARB ATCM (all options except for the proposed op tion, Option SCR). Table 2-86 summarizes these 2666 costs, except costs to panel producers, under the pr oposed option (Option SCR). Table 2-87 presents the 2667 additional recordkeeping costs associated with pane l production. These additional costs are incurred by 2668 stock panel producers and laminated product producers under those analytical options that define these 2669 producers, or a subset of them, as producing hardwood plywood. 2670

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### 2671 Under Option SCR, firms that are not manufacturers under TSCA (i.e., wholesalers and retailers 2672 that do not import composite wood products) are only requi red to keep bills of lading and invoices. Most 2673 distributors and retailers are likely to keep these r ecords as part of their customary business practices. 36 

### 2674 Therefore this recordkeeping requirement is not assumed to impose any additional burden on non2675 manufacturers. In addition, Option SCR does not in clude a requirement for purchasers to send a separate 2676 letter to their suppliers, whereas all the ot her options include such a requirement. 2677 2678 Under Option SCR, importers are required to keep records identifying the panel producer and the 2679 date that the composite wood products were manufactu red, but their customers do not need to keep these 2680 records. For example, if an importer sells the goods to a domestic distributor who then sells them to a 2681 domestic retailer, only the importer w ould have to keep the additional records. The domestic distributor 2682 and retailer would only be required to ke ep invoices and bills of lading. 2683 2684 This analysis estimates the number of wholesalers who import composite wood products to be 2685 proportional to the ratio of the value of imports of co mposite wood products to the sum of the total import 2686 and domestic shipment values. As shown in Table 2-84, imports represent 28 percent of the value of 2687 imports and domestic shipments. Thus, it is estimat ed that 28 percent of wholesalers are importers of 2688 composite wood products This results in an estimate that 24,000 of the 86,000 wholesalers import 2689 composite wood products. The analysis assumes that wholesalers are responsible for all imports and 2690 retailers do not import products di rectly without a wholesaler. Since the number of wholesalers that 2691 import products is estimated using the total custom s value of imports (which reflects imports by all 2692 sectors), to the extent that some products are imported directly by retailers, the number of such retailers 2693 (and the cost of their recordkeeping) would be reflected in the wholesaler estimate. And to the extent that 2694 some fabricators import composite wood products direc tly, the estimated total recordkeeping cost may be 2695 overstated (since the recordkeeping costs fo r fabricators are estimated separately). 2696 2697 2698 2699

36 For example, the Internal Revenue Se rvice recommends that firms keep invoice s in order to document their assets, expenses, gross receipts, and purchases (U.S. Internal Revenue Service 2007).

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### Table 2-84: Customs Value of Imports and Domest ic Value of Shipments, by Affected NAICS (millions, 2010$)

NAICS Description Customs Value of Imports Domestic Value of Shipments Sum of Imports and

Domestic Shipments 321211 Hardwood veneer and plywood manufacturing $1,516 $3,327 $4,843 321219 Reconstituted wood product manufacturing $1,502 $6,721 $8,223 321911 Wood window and door manufacturing $491 $14,161 $14,653 321918 Other millwork (including flooring) $770 $7,483 $8,254 321991 Manufactured home (mobile ho me) manufacturing $2 $6,086 $6,089 321992 Prefabricated wood building manufacturing $50 $4,215 $4,265 321999 All other miscellaneous wood pr oduct manufacturing $1,927 $6,058 $7,984 336213 Motor home manufacturing $117 $5,779 $5,896 336214 Travel trailer and camper manufacturing $537 $10,641 $11,178
337110 Wood kitchen cabinet and count ertop manufacturing $491 $18,658 $19,149 337121 Upholstered household furnitur e manufacturing $2,898 $11,269 $14,166 337122 Nonupholstered wood household furniture manufacturing - - -
337124 Metal household furniture manufacturing $2,708 $2,393 $5,101 337127 Institutional furniture manufacturing $12,133 $5,799 $17,932 337129 Wood television, radio, and sewing m achine cabinet manufacturing $4 $407 $411 337211 Wood office furniture manufacturing $697 $2,904 $3,601 337212 Custom architectural woodwork and millwork manufacturing - - - 337214 Office furniture (except wood) manufacturing $410 $8,978 $9,388 337215 Showcase, partition, shelving, and locker manufacturing $4,283 $7,873 $12,156 339920 Sporting and athletic goods manufacturing $6,260 $12,510 $18,770 339932 Game, toy, and children's vehi cle manufacturing $21,428 $2,712 $24,140 339950 Sign manufacturing $184 $13,003 $13,187
339992 Musical instrument manuf acturing $1,190 $1,796 $2,986
Total $59,598 $152,772 $212,370 

### Ratio of Customs Value of Imports to Sum of Imports and Domestic Shipments 28% Sources: U.S. Census Bureau 2010p, U. S. International Trade Commission 2011 

### 2700 2701

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### Table 2-85: Rule Familiarization, Supplier No tification, Labeling and Recordkeeping Costs (excluding panel production recordkeeping costs) for Options SE, SI, SP, SN, SC, CE, CI, NE, and NI (2010$)

Cost Element Number of
Affected Firms a Average Per-Firm Cost
for Affected Firms b Total Costs

Stock Panel Producers (excludes laminated product producers)
Rule Familiarization 62 $294.40 $18,253 Supplier Notification: Materials 62 $165.20 $10,242 Supplier Notification: Labor 62 $171.40 $10,627 Labeling System Setup 62 $149.04 $9,240
Total Initial Costs $48,362 Total Annualized Cost (3%) $2,348 Total Annualized Cost (7%) $3,607 Fabricators and Laminated Product Producers (including wood veneer laminated product producers defined as hardwood plywood panel producers) c
Rule Familiarizatio n 79,978 $294.40 $23,545,523 Supplier Notification: Mate rials 47,540 $169.12 $8,039,965 Supplier Notification: La bor 47,540 $173.88 $8,266,255 Labeling System Setup (low) 64,290 $132.81 $8,538,355 Labeling System Setup (hi gh) 15,688 $4,552.00 $71,411,776
Total Initial Costs 15,688 $4,552.00 $119,801,874 Employer Recurring Recordkeeping 2,176 $12,916.80 $28,106,957 Nonemployer Recurring Recordkeeping 3,054 $179.19 $547,246 Total Recurring Recordkeeping $28,106,957 Total Annualized Cost (3%) $33,078,752 Total Annualized Cost (7%) $35,451,682
Wholesalers
Rule Familiarization 85,560 $373.16 $31,927,570 Supplier Notification: Materials 53,731 $166.32 $8,936,540 Supplier Notification: Labor 53,731 $178.78 $9,606,028 Labeling System Setup 855 $4,552.00 $3,891,960 Recordkeeping System Setup 30,629 $2,510.80 $76,903,293
Total Initial Costs $131,265,391 Employer Recurring Recordkeeping 9,436 4,980.30 $46,994,111 Nonemployer Recurring Recordkeeping 13,666 100.05 $1,367,283 Total Recurring Recordkeeping $48,361,394 Total Annualized Cost (3%) $52,385,774 Total Annualized Cost (7%) $54,544,088
Retailers
Rule Familiarization 759,048 $282.84 $214,689,136 Supplier Notification: Materials 658,150 $22.40 $14,742,560 Supplier Notification: Labor 658,150 $52.16 $34,329,104
Total Initial Costs $263,760,800 Total Annualized Cost (3%) $12,803,648 Total Annualized Cost (7%) $19,670,370

a For estimation of number of affected composite panel producers, fabricators, wholesalers, and retailers incurring each cost typ e, see Table 2-80 through Table 2-83. Note that b ecause firms producing two diff erent types of composite wood products are expected to incur separate costs for each product type, th e estimate of 62 stock panel producer firms that is used to estimate costs is der ived by counting firms that produce two different types of composite w ood products twice. There are 54 unique firms that produce stock panels.

b For derivation of rule familiarization and supplier notification per-firm costs, see Table 2-69 and Table 2-70; for derivation of initial and recurring per-firm recordkeeping and labe ling costs, see Table 2-67 and Table 2-68

c Laminated product producers that are define d as making hardwood plywood may incur add itional recordkeeping costs depending on the analytical option. These additiona l costs are presented in Table 2-87. 

### 2702

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### Table 2-86: Rule Familiarization, Supplier No tification, Labeling and Recordkeeping Costs (excluding panel production recordkeeping cost s) for Option SCR (the proposed option) (2010$)

Cost Element Number of
Affected Firms a Average Per-Firm Cost
for Affected Firms b Total Costs

Stock Panel Producers (excludes laminated product producers)
Rule Familiarization 62 $294.40 $18,253 Supplier Notification: Materials d

- - - Supplier Notification: Labor d

- - - Labeling System Setup 62 $149.04 $9,240
Total Initial Costs $27,493 Total Annualized Cost (3%) $1,335 Total Annualized Cost (7%) $2,050 Fabricators and Laminated Product Producers (including wood veneer laminated product producers defined as hardwood plywood panel producers) c
Rule Familiarization 79,978 $294.40 $23,545,523 Supplier Notification: Materials d

- - - Supplier Notification: Labor d

- - - Labeling System Setup (low) 64,290 $132.81 $8,538,355 Labeling System Setup (high) 15,688 $4,552.00 $71,411,776
Total Initial Costs 15,688 $4,552.00 $103,495,654 Employer Recurring Recordkeeping 2,176 $12,916.80 $28,106,957 Nonemployer Recurring Recordkeeping 3,054 $179.19 $547,246 Total Recurring Recordkeeping $28,654,203 Total Annualized Cost (3%) $32,287,205 Total Annualized Cost (7%) $34,235,620
Wholesalers
Rule Familiarization 85,560 $373.16 $31,927,570 Supplier Notification: Materials d

- - - Supplier Notification: Labor d

- - - Labeling System Setup 855 $4,552.00 $3,891,960 Recordkeeping System Setup 8,576 $2,510.80 $21,532,922
Total Initial Costs $57,352,452 Employer Recurring Recordkeeping 9,436 4,980.30 $46,994,111 Nonemployer Recurring Recordkeeping 13,666 100.05 $1,367,283 Total Recurring Recordkeeping $13,541,190 Total Annualized Cost (3%) $15,667,905 Total Annualized Cost (7%) $16,808,483
Retailers
Rule Familiarization 759,048 $282.84 $214,689,136 Supplier Notification: Materials d

- - - Supplier Notification: Labor d

- - - Total Initial Costs $214,689,136 Total Annualized Cost (3%) $10,421,579 Total Annualized Cost (7%) $16,010,775

a For estimation of number of affected composite panel producers, fabricators, wholesalers, and retailers incurring each cost typ e, see Table 2-80 through Table 2-83. Note that b ecause firms producing two diff erent types of composite wood products are expected to incur separate costs for each product type, th e estimate of 62 stock panel producer firms that is used to estimate costs is der ived by counting firms that produce two different types of composite w ood products twice. There are 54 unique firms that produce stock panels.

b For derivation of rule familiarization and supplier notification per-firm costs, see Table 2-69 and Table 2-70; for derivation of initial and recurring per-firm recordkeeping and labe ling costs, see Table 2-67 and Table 2-68

c Laminated product producers that are define d as making hardwood plywood may incur add itional recordkeeping costs depending on the analytical option. These additiona l costs are presented in Table 2-87.

d Supplier notification is not required under the proposed option (Option SCR).

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### 2703 2704 2705 Table 2-87: Panel Production Recordkeeping Costs (2010$) Regulatory Option Number of
Affected
Firms a Average PerFirm Cost for
Affected Firms b Total Costs Total
Annualized Cost (3%) Total Annualized Cost (7%) 

### Stock Panel Producers (excludes laminated product producers) All Options 62 $3,711 $230,065 $11,168 $17,157 

### Laminated Product Producers (Low Estimate) Option SE, CE, NE - - - - - Option SI, CI, NI 7,486 $3,710.72 $27,778,450 $26,430,010 $25,706,829 Option SP 50 $3,710.72 $185,536 $176,530 $171,699 Option SN 7,486 $3,710.72 $27, 778,450 $26,430,010 $25,706,829 Option SC, SCR 150 $3,710.72 $556,608 $529,589 $515,098 

### Laminated Product Producers (High Estimate) Option SE, CE, NE - - - - - Option SI, CI, NI 13,875 $3,710.72 $51,486,240 $48,986,962 $47,646,574 Option SP 50 $3,710.72 $185,536 $176,530 $171,699 Option SN 13,875 $3,710.72 $51, 486,240 $48,986,962 $47,646,574 Option SC, SCR 277 $3,710.72 $1,027,869 $977,974 $951,214 

### 2706

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## 2.6 Total Costs of the Proposed TS CA Title VI Implementation Rule 2707 2708 Table 2-88 presents the total undiscounted first and subsequent year costs and Table 2-89 presents 2709 the annualized costs of the proposed TSCA Title VI Implementation Rule. The costs are presented by 2710 analytical option and cost scenario for wood veneer laminated product producers (i.e., a low end estimate 2711 of 7,486 and a high end estimate of 13,875 for the number of affected wood veneer laminated product 2712 producers, and assuming 1 or 2 product lines requiring cer tification for the options where certification is 2713 applicable). Note that the laminator’s costs presen ted in Table 2-88 and Table 2-89 include the costs to 2714 all wood veneer laminated product pr oducers regardless of the require ments under each analytical option 2715 presented. For example, under Option SE all laminate d product producers are defined as fabricators, but 2716 their costs are still reported separately in the laminator rows of the tables. 2717 2718 For the options with emissions requirements that are consistent with TSCA Title VI (Options SE, 2719 SI, SP, SN, SC, and SCR), the first year costs range from $435 million to $1,254 million and the 2720 annualized costs range from $72 million to $293 million per year. The proposed option (Option SCR) has 2721 first year costs of $435 million to $447 million. The annualized costs under Option SCR range from $72 2722 million to $81 million per year using a 3 percent discount rate, which is $23 to $32 million less than the 2723 next least expensive option with emissions requirements that are consistent with the statute (Option SE). 2724 2725 Options CE and CI, the least stringent options in terms of emissions standards (which are 2726 presented for information purposes since they are not c onsistent with the emissions requirements of the 2727 statute), have estimated annualized costs ranging from $99 to $292 million per year using a 3 percent 2728 discount rate. The estimated costs under Options CE and CI are similar to th e estimated costs under the 2729 options with emissions requirements consistent with the statute, because recordkeeping, labeling, testing 2730 and certification are the primary cost drivers and loosening emissions standards does not affect these 2731
costs. 2732 2733 Options NE and NI, the most stringent options in terms of emissions standards (which are also 2734 presented for information purposes since they are not c onsistent with the emissions requirements of the 2735 statute), have estimated annualized costs ranging fro m $379 to $573 million us ing a 3 percent discount 2736 rate. The additional costs associated with changes to raw materials and production processes account for 2737 the difference between the costs under these options comp ared to the options with emissions requirements 2738 that are consistent with the statute (SE, SI, SP, SN, SC, and SCR). 2739

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### Table 2-88: Estimated Total First and Subsequent Year Costs (millions, 2010$) 1

Analytical Option Entity Type First Year Subsequent Years
1 Product Lines 2 Product Lines 1 Product Lines 2 Product Lines
Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Option SE: Statutory emissions standards where all wood veneer laminated products are exempt from
the definition of hardwood plywood Producers $3 $3 $3 $3 $2 $2 $2 $2
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $43 $80 $43 $80 $5 $8 $5 $8 Total $595 $595 $595 $595 $79 $79 $79 $79 Option SI: Statutory emissions standards where
all wood veneer laminated products are included in the definition of hardwood plywood Producers $3 $3 $3 $3 $2 $2 $2 $2
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $368 $670 $406 $740 $103 $178 $108 $188 Total $919 $1,184 $957 $1,254 $177 $249 $182 $258 Option SP: Statutory emissions standards where all laminated products other than Custom Plywood and
Architectural Panels are exempt from the definition of hardwood plywood Producers $3 $3 $3 $3 $2 $2 $2 $2
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $48 $85 $49 $86 $8 $12 $8 $12

Total $600 $600 $600 $600 $83 $83 $83 $83

Option SN: Statutory emissions standards where
all wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are exempt from the
definition of hardwood plywood. Producers $3 $3 $3 $3 $2 $2 $2 $2

Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20
Retailers $264 $264 $264 $264 $0 $0 $0 $0
Wholesalers $180 $180 $180 $180 $48 $48 $48 $48

Laminators 3 $102 $172 $104 $175 $61 $96 $62 $98

Total $654 $687 $655 $689 $136 $167 $137 $168

Option SC: Statutory emissions standards where laminated products made with compliant platforms and NAF resins are exempt
from the definition of hardwood plywood. Producers $3 $3 $3 $3 $2 $2 $2 $2
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20
Retailers $264 $264 $264 $264 $0 $0 $0 $0
Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $58 $105 $59 $107 $17 $28 $18 $30

Total $609 $619 $611 $621 $91 $99 $92 $101

Option SCR: Proposed Option. Statutory emissions standards where laminated products made with compliant platforms and NAF resins are exempt from the definition of hardwood plywood. Producers $3 $3 $3 $3 $2 $2 $2 $2
Fabricators 2 $91 $57 $91 $57 $24 $20 $24 $20
Retailers $215 $215 $215 $215 $0 $0 $0 $0
Wholesalers $71 $71 $71 $71 $14 $14 $14 $14
Laminators 3 $55 $100 $57 $102 $17 $28 $18 $30

Total $435 $445 $436 $447 $57 $64 $57 $66

Option CE: CARB 1 emissions standards where all wood veneer laminated products are exempt from
the definition of hardwood plywood Producers $1 $1 $1 $1 $1 $1 $1 $1
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $43 $80 $43 $80 $5 $8 $5 $8 Total $593 $593 $593 $593 $78 $78 $78 $78

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### Table 2-88: Estimated Total First and Subsequent Year Costs (millions, 2010$) 1

Analytical Option Entity Type First Year Subsequent Years
1 Product Lines 2 Product Lines 1 Product Lines 2 Product Lines
Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Option CI: CARB 1 emissions standards where all wood veneer laminated products are included in the
definition of hardwood plywood Producers $1 $1 $1 $1 $1 $1 $1 $1
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $368 $670 $406 $740 $103 $178 $108 $188 Total $918 $1,183 $956 $1,253 $176 $248 $181 $257 Option NE: NAF emissions
standards where all wood veneer laminated products are exempt from the definition of hardwood plywood Producers $297 $297 $297 $297 $295 $295 $295 $295
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $43 $80 $43 $80 $5 $8 $5 $8 Total $889 $889 $889 $889 $372 $372 $372 $372 Option NI: NAF emissions
standards where all wood veneer laminated products
are included in the
definition of hardwood plywood Producers $297 $297 $297 $297 $295 $295 $295 $295
Fabricators 2 $105 $68 $105 $68 $24 $20 $24 $20 Retailers $264 $264 $264 $264 $0 $0 $0 $0 Wholesalers $180 $180 $180 $180 $48 $48 $48 $48
Laminators 3 $368 $670 $406 $740 $103 $178 $108 $188 Total $1,214 $1,479 $1,252 $1,549 $471 $542 $476 $552 Option SCR is the proposed option.

1 Low and high end scenarios reflect the estimated number of laminators and the nu mber of product lines certified per firm, not the low and high costs for each category of entities.

2 To avoid double-counting, this ro w represents costs to fabricators that are not laminators. Costs under the “Low End Scenario” reflect the low end of the estimated number of laminators (approxima tely 7,000 firms), and costs under the “High End Scenario” reflect the high end estimate of the number of laminators (approxi mately 14,000 firms). The estimated number of fabricators that are not laminators is inversely proportional to th e estimated number of laminators. So in the Low End Scenario there are 73,000 fabricators that are not laminators, and in the High End Scenario there are 66,000 firms that are not laminators. As a result, the costs to fa bricators that are not laminators are higher under the “Low End Scenario” then under the “High End Scenario”.

3 Costs to laminators represent the costs to all firms that a ffix a wood or woody grass veneer to a purchased particleboard, MDF or veneer core platform. This includes both laminators that are considered panel producers under the proposed rule
and laminators that are considered fabricators under the proposed rule. 

### 2740 2741

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### Table 2-89: Estimated Total Annualized Costs (millions, 2010$) 1

Analytical Option Entity Type Total Annualized Costs (3 Percent) Total Annualized Costs (7 Percent)
1 Product Lines 2 Product Lines 1 Product Lines 2 Product Lines
Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Option SE: Statutory emissions standards where
all wood veneer laminated products are exempt from
the definition of hardwood plywood Producers $2 $2 $2 $2 $2 $2 $2 $2
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $6 $11 $6 $11 $7 $13 $7 $13 Total $100 $100 $100 $100 $112 $112 $112 $112 Option SI: Statutory emissions standards where
all wood veneer laminated products are included in the
definition of hardwood plywood Producers $2 $2 $2 $2 $2 $2 $2 $2
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $99 $193 $106 $205 $103 $200 $110 $212 Total $194 $282 $200 $293 $208 $298 $215 $311 Option SP: Statutory emissions standards where all laminated products other than Custom Plywood and
Architectural Panels are exempt from the definition of hardwood plywood Producers $2 $2 $2 $2 $2 $2 $2 $2
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $10 $15 $10 $15 $10 $16 $10 $16

Total $104 $104 $104 $104 $115 $115 $115 $115

Option SN: Statutory emissions standards where
all wood veneer laminated products made using NAF
resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood. Producers $2 $2 $2 $2 $2 $2 $2 $2

Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22
Retailers $13 $13 $13 $13 $20 $20 $20 $20
Wholesalers $52 $52 $52 $52 $55 $55 $55 $55

Laminators 3 $49 $95 $50 $97 $49 $94 $50 $96

Total $143 $184 $144 $185 $154 $193 $155 $195

Option SC: Statutory emissions standards where laminated products made with compliant platforms and NAF resins are exempt
from the definition of hardwood plywood. Producers $2 $2 $2 $2 $2 $2 $2 $2
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22
Retailers $13 $13 $13 $13 $20 $20 $20 $20
Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $18 $31 $19 $32 $19 $32 $19 $33

Total $112 $119 $113 $121 $123 $130 $124 $132

Option SCR: Proposed Option. Statutory emissions
standards where laminated products made with compliant platforms and NAF resins are exempt from
the definition of hardwood plywood. Reduced paperwork requirements for Producers $2 $2 $2 $2 $2 $2 $2 $2
Fabricators 2 $26 $21 $26 $21 $27 $21 $27 $21
Retailers $10 $10 $10 $10 $16 $16 $16 $16
Wholesalers $16 $16 $16 $16 $17 $17 $17 $17
Laminators 3 $18 $30 $19 $32 $18 $31 $19 $33

Total $72 $80 $73 $81 $81 $88 $81 $89

Option CE: CARB 1 emissions standards where all wood veneer laminated products are exempt from Producers $1 $1 $1 $1 $1 $1 $1 $1
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55

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### Table 2-89: Estimated Total Annualized Costs (millions, 2010$) 1

Analytical Option Entity Type Total Annualized Costs (3 Percent) Total Annualized Costs (7 Percent)
1 Product Lines 2 Product Lines 1 Product Lines 2 Product Lines
Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario Low
End Scenario High
End Scenario
the definition of hardwood plywood Laminators 3 $6 $11 $6 $11 $7 $13 $7 $13 Total $99 $99 $99 $99 $111 $111 $111 $111 Option CI: CARB 1 emissions standards where all wood veneer laminated products are included in the
definition of hardwood plywood Producers $1 $1 $1 $1 $1 $1 $1 $1
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $99 $193 $106 $205 $103 $200 $110 $212 Total $192 $281 $199 $292 $207 $297 $214 $310 Option NE: NAF emissions
standards where all wood veneer laminated products are exempt from the
definition of hardwood plywood Producers $281 $281 $281 $281 $274 $274 $274 $274
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $6 $11 $6 $11 $7 $13 $7 $13 Total $379 $379 $379 $379 $383 $383 $383 $383 Option NI: NAF emissions standards where all wood veneer laminated products
are included in the
definition of hardwood plywood Producers $281 $281 $281 $281 $274 $274 $274 $274
Fabricators 2 $27 $22 $27 $22 $28 $22 $28 $22 Retailers $13 $13 $13 $13 $20 $20 $20 $20 Wholesalers $52 $52 $52 $52 $55 $55 $55 $55
Laminators 3 $99 $193 $106 $205 $103 $200 $110 $212 Total $473 $561 $479 $573 $480 $570 $486 $582 Option SCR is the proposed option.

1 Low and high end scenarios reflect the estimated number of laminators and the nu mber of product lines certified per firm, not the low and high costs for each category of entities.

2 To avoid double-counting, this ro w represents costs to fabricators that are not laminators. Costs under the “Low End Scenario” reflect the low end of the estimated number of laminators (approxima tely 7,000 firms), and costs under the “High End Scenario” reflect the high end estimate of the number of laminators (approxi mately 14,000 firms). The estimated number of fabricators that are not laminators is inversely proportional to th e estimated number of laminators. So in the Low End Scenario there are 73,000 fabricators that are not laminators, and in the High End Scenario there are 66,000 firms that are not laminators. As a result, the costs to fa bricators that are not laminators are higher under the “Low End Scenario” then under the “High End Scenario”.

3 Costs to laminators represent the costs to all firms that a ffix a wood or woody grass veneer to a purchased particleboard, MDF or veneer core platform. This includes both laminators that are considered panel producers under the proposed rule
and laminators that are considered fabricators under the proposed rule.

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# 3 Benefits 2742 2743 Evidence for health effects associat ed with formaldehyde exposure is provided by a wide variety 2744 of human clinical, epidemiology, and animal studies (U .S. EPA 2010b). As is typical for health effects 2745 associated with a reactive gas, some of these health effects are commonly found at the portal of entry 2746 (e.g., sensory irritation). Other reported health e ffects include effects on the nervous and reproductive 2747 systems, developmental effects, and immunomodulation. 2748 2749 The health effects for which benefits are mone tized in this economic analysis include: (1) 2750 nasopharyngeal cancer for individuals of all ages, (2) eye irritation for individuals of all ages, (3) asthma 2751 in children ages 6 to 17, and (4) redu ced fertility in women ages 20 to 40. 2752 2753 The potential benefits of the proposed TSCA T itle VI Implementation Rule are estimated for 2754 several analytical options which are presented in Table 3-1. 2755 2756
2757

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### Table 3-1: Analytical Options Considered in the Benefits Analysis Analytical Option Emissions Standards NotesAnalytical options with emissions standards at the levels required by TSCA Title VI Option SE: Statutory emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.05 ppm 0.11 ppm 0.13 ppm 0.09 ppm Same emissions standards as Phase 2 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option SI: Statutory emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM. Option SP: Statutory emissions standards where wood veneer laminated products other than Custom and Architectural Panel products are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SN: Statutory emissions standards where wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SC: Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using no-added formaldehyde (NAF) resins are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SCR: Proposed Option. Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using NAF resins are exempt from the definition of hardwood plywood. Reducedrecordkeeping requirements for nonmfgrs. compared to other options. Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood

Distributors and retailers that are not manufacturers under TSCA would only be required to keep invoices and bills of lading. Other recordkeeping equivalent to CARB ATCM. No supplier notification.Analytical options withemissions standardsother than the levels required by TSCA TitleVICARB Phase 1levels Option CE: CARB 1 emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood
MDF Thin MDF Particleboard 0.08 ppm 0.21 ppm 0.21 ppm 0.18 ppm Same emissions standards as Phase 1 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option CI: CARB 1 emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 1 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.NAF emission levels Option NE: NAF emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood : 90% of samples < 0.04 ppm. All samples < 0.05 ppm. MDF and particleboard : 90% of samples < 0.04 ppm. All samples < 0.06 ppm Requires all composite wood product manufacturers to meet NAF emission standards. Recordkeeping and s upplier notification equivalent to CARB ATCM.

Option NI: NAF emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood Same as above Requires all composite wood product manufacturers to meet NAF emission standards, with a different definition of hardwood plywood. CARB recordkeeping and supplier notification. Note: This document discusses various opti ons with respect to formaldehyde and co mposite wood products, in cluding emissions sta ndards that are different from those set in TSCA Title VI. This documen t discusses alternative emissions standards simply for informat ional purposes. The breadth of the discussion here should not necessarily im ply that EPA has corresponding flexibility in implementin g the statute.

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### Figure 3-1 presents an overview of the benefits assessment approach used in this economic 2758 analysis. The estimated changes in formaldehyde expo sure under each analytical option vary by type of 2759 housing (structure type, amount of composite wood products, and elapsed time since composite wood 2760 products were installed), climate zone, and the ages and occupations of the exposed individuals (see 2761 section 3.1). Changes in risks of the adverse health outcomes associated with these changes in exposure 2762 are estimated for nasopharyngeal cancer (section 3. 3) and non-cancer health effects (section 3.5), 2763 including sensory irritation, asthma incidence, and reduced fertility. The corresponding estimated values 2764 of these risk reductions are presented in sections 3. 4 and 3.5 for cancer and non-cancer risk reductions, 2765 respectively. The estimated numbers of individua ls experiencing these exposure reductions are presented 2766 in section 3.6. Finally, section 3.7 presents the results of the benefits assessment. 2767 2768 Figure 3-1: Overview of Benefits Assessment Approach



### 2769 CHANGE IN EXPOSURE:

Estimate the changes in formaldehyde exposure attributable to the regulatory options VALUE OF RISK REDUCTION:

Estimate the value of reductions in adverse h ealth risks INDIVIDUALS AFFECTED:

Estimate number of individuals

experiencing reductions in

formaldehyde exposure attributable to the regulation

CHANGE IN RISK:

Use concentration-response

functions to estimate the resulting reductions in adverse health risks

BENEFITS:

Combine: (1) adverse health risk reductions, (2) value of reductions in adverse health

risks, and (3) number of individuals ex periencing reduction in risk to estimate total

benefits by regulatory option

Note: varies by type of housing, climate zone, age and occupation of

individual, policy scenario

Note: includes nasopharyngeal cancer, eye irritation, asthma, and reduced fertility

Note: total net present value and annualized

value for 30 years under the policy scenario

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## 3.1 Estimating the Changes in Exposure by Analytical Option 2770 2771 The potential for benefit from the reduction of formaldehyde emissions from composite wood 2772 products potentially exists anywhere where individua ls reside, work, or otherwise spend a substantial 2773 amount of time where new composite wood products w ill be introduced to an indoor space. The exposure 2774 scenarios included in this benefits analysis include two broad categories where a substantial amount of 2775 new composite wood products might be introduced to residences: (1) new home construction and (2) 2776 major renovations that include kitchen remodeling. Ta ble 3-2 includes a brief description of the factors 2777 that were used in this analysis to define the vari ous exposure scenarios. For each analytical option, there 2778 are 3,300 different exposure scenarios derived from 22 different composite wood product age/source 2779 combinations, 5 structure types, 5 climate zones, a nd 6 individual age/employment status combinations. 2780 2781 Table 3-2: Exposure Factor Categories Used to Define Population Groups Exposure

Factor Exposure Factor Categories Discussion

Composite wood product source and age

(n = 22) 1. New housing construction for 11 ages of the housing

2. Renovated housing for 11 ages of the installed composite wood products

Note: EPA calculated expos ures using a 1.5 year emissions half life of form aldehyde from composite wood products. With this half life, the emission rate 10 years after new construction would be about 1 % of the initial value, and after 11 years the emissions would be

near zero. New housing has a larger volume of newly installed composite wood products (and therefore a higher formaldehyde loading rate) relative to newly renova ted housing, so the two sources are analyzed separately. The analysis considers composite wood products that are up to 11 years old. Thus, the analysis considers 11 different ages of new homes and 11 different ages of renovated housing.

Structure type

(n = 5) 1. Single family attached housing 2. Single family detached housing 3. Apartment 4. Manufactured Housing (e.g., mobile homes) 5. Recreational Vehicles and Camper/Trailers The type of structure affects the volume of composite wood products in each structure, air exchange rates, and interactions with indoor sinks.

Climate zone

(n = 5) 1. Zone 1: <2,000 cooling degree days (CDD) and more than 7,000 heating degree days (HDD) 2. Zone 2: <2,000 CDD and 5,500 to 7,000 HDD 3. Zone 3: <2,000 CDD and 4,000 to 5,499 HDD 4. Zone 4: <2,000 CDD and <4,000 HDD. 5. Zone 5: >2,000 CDD and <4,000 HDD Note: Number of degree days is over a 30-year period. Because exposure modeling results are sensitive to indoor temperature and relative humidity, variation in these two factors are captured in the analysis by considering five climate zones separately.

Age and employment

status

(n = 6) 1. Infants: less than age 2 2. Children: aged 2 through 15 3. Ages 16+; work full-tim e outside the composite wood products industry 4. Ages 16+; work in composite wood products fabrication 5. Ages 16+; work part- time outside the composite wood products industry 6. Ages 16+; unemployed or not in the labor force Average daily concentrations of formaldehyde exposure were estimated to vary according to age and employment status because these factors affect the fo rmaldehyde exposures outside the housing unit and the amount of time spent inside and outside the housing unit.



### 2782

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## 3.2 Time Frame for the Analysis 2783 2784 This analysis estimates the benefits of each analytical option for lowering formaldehyde 2785 emissions from composite wood products over a 30-year period. This time frame was selected to be as 2786 short as possible while being long enough to capture the important effects of the policy. In general, the 2787 downside of choosing a longer analysis time frame is that uncertainties about both the baseline and policy 2788 scenarios increase with time. For ex ample, the likelihood that alternative technologies for manufacturing 2789 composite wood products might be developed increases over time (which could result in different 2790 formaldehyde emission rates for products and/or di fferent costs for reducing formaldehyde emissions). 2791 Similarly, uncertainties about changing demographics, me dical treatments for adverse health effects, and 2792 consumer preferences with respect to composite wood products all increase with time. However, 2793 selecting a time frame that is too short would not cap ture all of the important effects of the policy 2794 scenarios under consideration. 2795 2796 The benefits analysis assumes that after eleven years any continuing (and declining) emissions 2797 from a given composite wood product would contribu te negligibly to that product's effect on 2798 formaldehyde exposure. Thus, co mposite wood products are assumed to contribute to formaldehyde 2799 exposure for 11 years. 37 

### Specifically: 2800 2801

 in the first year only new composite wood products are affected by the policy; 2802

 in the second year new and one-year-old com posite wood products are affected by the 2803 policy; 2804

 in the third year new, one- and two-year-old composite wood products are affected by the 2805 policy; 2806

 in general, in the n th year, new, one-, two-, three-,..., and ( n -1)-year-old composite wood 2807 products are affected by the policy, for n = 1, 2, ..., 10; and 2808

 in the eleventh and all subsequent years new, one-, two-, three-, four-, five-, six-, seven-, 2809 eight-, nine-, and ten-year-old composite wood products are affected by the policy. 2810 2811 Since the exposure scenarios are defined in part according to the 11 different ages for composite 2812 wood products, it is not until the 11 th 

### year after the implementation of the rule that benefits are realized 2813 under every exposure scenario. That is, it is not until the 11 th 

### year after rule implementation that ten-year 2814 old composite wood products would have been require d to be produced in compliance with the emissions 2815 standards. Thus, the benefits are phased in over a period of eleven years. 2816 2817 Similarly, the benefits from a given year of composite wood production will phase-out over time. 2818 Since the analysis considers the benefits and co sts from 30 years of composite wood production, the 2819 estimated exposures have the following time profile after the 30 th 

### and last year of composite wood 2820 production considered in the analysis: 2821 2822

 in the 31 st 

### year, only one-, two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten2823 year-old composite wood products are produced before the 31 st 

### year (benefits from new 2824 composite wood products are produced after y ear 30 and therefore are not considered in 2825 the analysis); 2826

 in the 32 nd 

### year, only two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten-year-old 2827 composite wood products are produced before the 31 st 

### year (benefits from new and one- 2828

37 EPA calculated exposures us ing a 1.5 year emissions half life of form aldehyde from composite wood products With. this half life, the emission ra te 10 years after new construction would be a bout 1 % of the initial value, and after 11 years the emissions would be near zero.

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### year old composite wood products are produced after year 30 and therefore are not 2829 considered in the analysis); 2830

 in general, in the n th year after year 30, only n year-old and older composite wood 2831 products are produced before year 31, for n = 1, 2, ..., 10; and 2832

 in the 41 st 

### and all subsequent years, all 11 ages of composite wood products that 2833 potentially contribute to formaldehyde exposure are produced after the 30 th 

### year and 2834 therefore are not considered in the analysis. 2835 2836 Given this phase-in and phase-out, a time period of thirty years of composite wood production 2837 was selected so that the first ten years of the polic y (when the benefits of the policy are being phased in) 2838 and the ten years after the 30 years of composite wood production that is analyzed (when the benefits of 2839 the policy are being phased out) do not obscure the stea dy state benefits that would be experienced from 2840 the policy. It is necessary to include the phase-in and phase-out of the benefits in order to be consistent 2841 with the cost estimates, which reflect the costs of 30 years of production that complies with the emissions 2842 standards. Given that this analysis assumes that after eleven years any continuing (and declining) 2843 emissions from a given composite wood product would c ontribute negligibly to that product's effect on 2844 formaldehyde exposure, 30 years of production that complies with the emissions standards corresponds to 2845 40 years of exposure reductions. The first 10 years are a phase-in period for exposure reductions, the next 2846 20 years are a steady-state, and the next 10 years are a phase-out period. 2847

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## 3.3 Assessing the Change in Cancer Risk 2848 2849 In 1991, EPA classified formaldehyde as a probable human carcinogen, “based on limited 2850 evidence in humans, and sufficient evidence in animals,” and derived an inhalation unit risk for assessing 2851 formaldehyde cancer risk. The inhalation unit risk and supporting documentation is included in EPA’s 2852 Integrated Risk Information System (IRIS) assessment of formaldehyde (Ref. 5). Formaldehyde is also 2853 listed under section 112(b)(1) of the Clean Air Act (CAA) as a hazardous air pollutant (HAP). The CAA 2854 requires EPA to regulate emissions of HAPs from a p ublished list of industrial source categories. The 2855 EPA has developed lists of major and area source categories that must meet emission standards for HAPs 2856 and has developed (or is developing) standards for these source categories. The plywood and composite 2857 wood products (PCWP) National Emission Standards for Hazardous Air Pollutants (NESHAP), codified 2858 at 40 CFR part 63, subpart DDDD, first issued in 20 04, is one of these standards. The PCWP NESHAP 2859 controls emissions of formaldehyde and other HAPs (primarily acetaldehyde, acrolein, methanol, phenol, 2860 and proprionaldehyde) from various process units (e.g., blenders, dryers , formers, board coolers, and 2861 presses) at PCWP facilities. 2862 2863 In 2004, the EPA determined that unit risk de rived from the Chemical Industry Institute of 2864 Toxicology (CIIT; CIIT 1999) biologically-basedcancer dose-response modeling of formaldehyde2865 induced respiratory cancer (5.5 x 10-9 per micrograms per cubic meter ( μ g/m3)) better reflected the 2866 current state of the science than th e 1991 IRIS cancer unit risk. In 2004, EPA determined that the CIIT2867 derived inhalation unit risk better reflected the curre nt state of the science than the 1991 IRIS cancer 2868 inhalation unit risk. The authors of the CIIT mode ling (Conolly et al. 2004) presented their risk estimates 2869 as values more conservative than their maximum like lihood estimates, and as “conservative in the face of 2870 modeling uncertainties.” Consequently, EPA used the CIIT value in risk assessments supporting 2871 regulatory actions developed under the authority of the Clean Air Act. For example, in the 2006 2872 rulemaking that reconsidered the PCWP NESHAP, OAR stated “[i]n the case of formaldehyde, we have 2873 determined that the cancer potency derived using the approach developed by CIIT, which has been peer 2874 reviewed by an external review panel sponsored by EPA and the Canadian government, represents an 2875 appropriate alternative to EPA’s curre nt IRIS URE [unit risk estimate] for formaldehyde. Therefore, this 2876 potency represents the best available peer-reviewed sci ence at this time.” (Ref. 6, p. 8348). However, 2877 subsequent research published by the EPA suggests that the CIIT model was not appropriate and was very 2878 sensitive to unmeasured parameters such that very different estimates, including the 1991 IRIS 2879 assessment values, were consistent with the availa ble scientific data. Because the CIIT values do not 2880 reflect the uncertainty in estimates using the data th at are available, EPA has decided that those estimates 2881 do not reflect the broad range of possible risk and that the data are not supportive of interpreting 5.5 X 10- 2882 9 per μg/m 3 

### as providing a health-protective estimate of human risk. Furthermore, the 1991 IRIS 2883 assessment values are consistent with unit risks estim ated by Schlosser et al. (2003) based on Benchmark 2884 Dose modeling of the best available data at the time. In addition, the CIIT values do not address the 2885 potential risk of increased leukemias or lymphomas. Thus , in 2010, EPA returned to using the Agency’s 2886 current value on IRIS, 1.3 X 10-5 per μg/m 3 

### , which was last revised in 1991 as better reflecting the 2887 current state of the science as to the potential human can cer risk of exposure to formaldehyde (Ref. 7). 2888 2889 The inhalation unit risk is defined as the upper-b ound excess lifetime cancer risk estimated to 2890 result from continuous exposure to an agent at a concentration of 1 μg/m3 in air (see 2891 http://www.epa.gov/iris/help_gloss.htm#i). The change in excess cancer risk can be estimated by 2892 multiplying the lifetime average daily concentration (LADC) of formaldehyde exposure, in mg/m 3 

### , by the 2893 inhalation unit risk of 0.013 per mg/m 3 

### and the age-dependent adjustment factor (ADAF) of 10, 3, or 1 for 2894 individuals aged less than 2, 2-15, or 16 and older, respectively. Note that EPA policy is to apply ADAFs 2895 when there is a mutagenic mode of action. The 1991 IRIS assessment did not make a formal finding of a 2896 mutagenic mode of action. However, there is sci entific support for a mutagenic mode of action. 2897 Therefore, EPA believes that application of ADAFs is the preferred approach in this case but is also 2898

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### presenting the calculations without applying ADAFs. The lower estimate of benefits excludes the 2899 ADAFs and the higher estimate of benefits includes the ADAFs. 2900 2901 Since the inhalation unit risk was estimated to be applied to the LADC, the most straightforward 2902 approach to calculate excess lifetime risk associated with exposure to formaldehy de would be to take the 2903 average daily concentration (ADC) for various life segments of an individual and construct the overall 2904 LADC, then multiply the ADCs by the unit risk and ADAF. For example, assume that an individual has 2905 the following life profile: 2906 2907 Age 0 (infant): Lives in a new house Age 2 (child): Lives in the same house (now with 2 years of off-gassing) Age 16: Moves to a new house Age 32: Moves to a new house Age 48: Moves to a new house Age 64: Moves to a new house Age 70: Death 

### 2908
The excess lifetime risk could be calculated as: 2909 2910 Excess lifetime risk ൌ

1

ܧܮ ە ۖ ۔ ۖ ۓ ቀ ܣ ܥܦ ଴ିଵ 

### ൈ ሺ 2 ݕ݁ܽݏݎ ሻ ൈ ൫ ܣ ܨܣܦ ௡௔௙௡௜௧ 

### ൯ ቁ ൅൫ܥܦܣ ଶିଵହ 

### ൈ ሺ 14 ݕ݁ܽݏݎ ሻ ൈ ሺ ܨܣܦܣ ௟௜௛௖ௗ 

### ሻ ൯ ൅൫ܥܦܣ ଵ଺ିଷଵ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯ ൅ ൫ܥܦܣ ଷଶିସ଻ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯ ൅൫ ܣ ܥܦ ସ଼ି଺ଷ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯൅൫ ܣ ܥܦ ଺ସି଺ଽ 

### ൈ ሺ 6 ݕ݁ܽݏݎ ሻ ൯ ۙ ۖ ۘ ۖ ۗ

ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ (3)



### 2911 where: 2912 2913
ADC 0-1 = the ADC from exposure to formalde hyde in a new house for two years. ADC 2-15 = the ADC from exposures over 14 years from a house that is 2 years old in the first year. ADC a-a+16 = the ADC from exposures over 16 years from a hous e that is new in the first year (for the 16- 31, 32-47, and 48-63 age intervals) ADC 64-69 = the ADC from exposures over 6 years from a house that is new in the first year (for the 64-69 age interval) ADAF infant the infant age-dependent adjustment factor of 10 ADAF chil d the child age-dependent adjustment factor of 3 Unit Risk the inhalation unit risk for cancer of 0.013 per mg/m 3 LE= the life expectancy of the individual 

### 2914 Note that the unit risk is an estimate of excess lifetime cancer risk associated with an average 2915 lifetime exposure to one unit of the carcinogen; it gives no information about how this lifetime excess risk 2916 is distributed across the ages within a lifetime. It al so gives no information about whether the distribution 2917 of annual exposures that result in a given averag e lifetime exposure matters. Equation (3) implicitly 2918 assumes that the distribution of exposures throughout a lif etime doesn’t matter – i.e., that all that matters 2919 is the lifetime average exposure. 2920 2921 To calculate the expected number of ex cess cancer cases resulting from a given excess 2922 lifetime risk, this excess risk must be multiplied by the relevant population. If pop denotes the size of the 2923 population that incurs the excess lifetime risk, then th e expected number of can cer cases associated with 2924 exposure to formaldehyde given the scenario described above is: 2925 2926

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### Number of cancer cases = excess lifetime risk * pop. (4) 

### 2927 This calculation could then be done for both the baseline scenario and the policy scenario (in 2928 which exposures would be lower) to estimate the number of cancer cases avoided as a result of the policy: 2929 2930 Number of cancer cases baseline 

### = excess lifetime risk baseline 

### * pop Number of cancer cases policy scenario 

### = excess lifetime risk policy scenario 

### * pop Number of cases avoided due to policy scenario = Number of cancer cases b aseline 

### - Number of cancer cases p olic y scenario


### . (5)



### 2931 If V denotes the value of an avoided case, then the value of the avoided cases is: 2932 2933 Value of avoided cases = V* Number of cases avoided. (6) 

### 2934
If the lifetime costs of this action were also added up , the overall net gain or loss that this 2935 individual would receive from this ac tion could be estimated. If this c ould be done for all individuals in 2936 society, the overall net benefits of the policy co uld be estimated. To do this, it would be necessary to 2937 assume a life profile for every individual (i.e., how often each individual moves, and the structure type 2938 and age of housing they live in at each stage of their life, and how recently it has been renovated). 2939
2940 Instead, this analysis utilizes an annual approach , which evaluates the expected change in the 2941 lifetime cancer risk for an individual arising from a single year of reduced formaldehyde exposure. In 2942 contrast, a lifetime approach would require assuming a lifetime formaldehyde exposure profile for each 2943 individual and evaluating the expected change in the li fetime cancer risk for an individual arising from a 2944 lifetime of reduced formaldehyde exposure. The exposure model was designed to produce a LADC 2945 associated with the same scenario used to calculate the ADC. Thus, it can produce a LADC for any life 2946 segment for which an ADC can be calculated (e.g., e xposure over the course of 11 years to an individual 2947 who moves into a 2 year old house). Conceptually, this would be equivalent to the lifetime average daily 2948 concentration if one were exposed to the pollutant for only this life segment and no other time. Another 2949 interpretation is that it is the contribution to the overall LADC from this life segment. In other words: 2950 2951

ܥܦܣܮ ௧ 

### ൌ ൫ ܣ ܥܦ ௧ 

### ൈ ሺ ݐ ݀݋݅ݎ݁݌ ݅݊ ݁ݎݑݏ݋݌ݔ݁ ݂݋ ݏݎܻ݁ܽ ሻ ൯ ሺ ݅݉݁ݐ݈݂݅݁ ܽ ݅݊ ݏݎܻ݁ܽ ሻ ൭ ൌ ݅݉݁ݐ݂݅݁ܮ ܣ ݕ݈ܽ݅ܦ ܽ݃݁ݎ݁ݒ
݊݋݅ݐܽݎݐ݊ܿ݁݊݋ܥ ݂ ݈݂݅݁ ݎ݋ ݐ ݐ݁݃݉݁݊ݏ ൱
(7)



### 2952
Where: 2953 2954 ܥܦܣܮ ෍ ൌ ܥܦܣܮ

௧ ௧ୀ௧௜௠௘ ௣௘௥௜௢ௗ௦ (8)



### 2955 Equation (3) combined with equation (7) can be used to calculate the excess cancer risk 2956 associated with any given life segment. For example, the excess cancer risk associated with the 2-15 year 2957 old life segment for a child starting in a 2-year old house could be calculated as: 2958 2959 ሺ ݔܧܿ݁ݏݏ ܿܽ݊ܿ݁ݎ ݎ݅ݏ݇ ሻ ஺ ௚ ௘ ଶିଵହ 

### ൌ ܥܦܣܮ ଶିଵହ 

### ൈ ሺ ܣ ܨܣܦ ௟௜௛௖ௗ 

### ሻ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ (9) 

### 2960 Excess cancer risk for segment t consisting of a single year for a single individual can be 2961 calculated as: 2962

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### 2963 ሺ ݔܧܿ݁ݏݏ ܿܽ݊ܿ݁ݎ ݎ݅ݏ݇ ሻ ௧ 

### ൌ ܥܦܣܮ ௧ 

### ൈ ൫ ܣ ܨܣܦ ௔ ௚ ௔ ௘௧ ௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ (10)


### 2964 In equation (10), the LADC t 

### is determined by the concentration in a home in which the individual 2965 resides, e.g., a one-year old home for a seventeen-year old individual. 2966 2967 The advantage to this approach is that the life profile for each individual is not necessary; it is 2968 only necessary to know his or her location for that life segment. 2969 2970 It is easy to show that, mathematically, the lif etime approach to calculating excess risk and the 2971 annual approach are equivalent. The annual approach si mply estimates the amount that any given year of 2972 exposure contributes to the overall excess cancer risk from some lifetime average daily concentration. 2973 Specifically, starting with equation (3) from above: 2974 2975 ൌ ݇ݏ݅ݎ ݎܿܽ݊ܿ݁ ݏݏܿ݁ݔܧ ൬ 1

ܧܮ ൰

ە ۖ ۔ ۖ ۓ ቀ ܣ ܥܦ ଴ିଵ 

### ൈ ሺ 2 ݕ݁ܽݏݎ ሻ ൫ ܣ ܨܣܦ ௡௔௙௡௜௧ 

### ൯ቁ ൅൫ܥܦܣ ଶିଵହ 

### ൈ ሺ 14 ݕ݁ܽݏݎ ሻ ൈ ሺ ܨܣܦܣ ௟௜௛௖ௗ 

### ሻ ൯ ൅൫ܥܦܣ ଵ଺ିଷଵ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯ ൅ ൫ܥܦܣ ଷଶିସ଻ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯ ൅൫ܥܦܣ ସ଼ି଺ଷ 

### ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯ ൅ ൫ܥܦܣ ଺ସି଺ଽ 

### ൈ ሺ 6 ݕ݁ܽݏݎ ሻ ൯ ۙ ۖ ۘ ۖ ۗ

ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ

ൌ

ە

ۖ ۖ ۔ ۖ ۖ ۓ ቀܥܦܣ
଴ିଵ ൈ ሺ 2 ݕ݁ܽݏݎ ሻ ൫ܨܣܦܣ ௡௔௙௡௜௧ ൯ቁ

ܧܮ ൅ ൫ܥܦܣ ଶିଵହ ൈ ሺ 14 ݕ݁ܽݏݎ ሻ ൈ ሺ ܨܣܦܣ ௟௜௛௖ௗ ሻ ൯

ܧܮ

൅ ൫ܥܦܣ ଵ଺ିଷଵ ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯

ܧܮ ൅ ൫ܥܦܣ ଷଶିସ଻ ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯

ܧܮ ൅ ൫ܥܦܣ ସ଼ି଺ଷ ൈ ሺ 16 ݕ݁ܽݏݎ ሻ ൯

ܧܮ ൅ ൫ܥܦܣ ଺ସି଺ଽ ൈ ሺ 6 ݕ݁ܽݏݎ ሻ ൯

ܧܮ ۙ ۖ ۖ ۘ ۖ ۖ ۗ

ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ (11)



### ൌ ቊ ܥܦܣܮ ଴ିଵ 

### ൈ ൫ ܣ ܨܣܦ ௡௔௙௡௜௧ 

### ൯ ൅ ܥܦܣܮ ଶିଵହ 

### ൈ ሺ ܣ ܨܣܦ ௟௜௛௖ௗ 

### ሻ
൅ܥܦܣܮ ଵ଺ିଷଵ 

### ൅ ܥܦܣܮ ଷଶିସ଻ 

### ൅ ܥܦܣܮ ସ଼ି଺ଷ 

### ൅ ܥܦܣܮ ଺ସି଺ଽ 

### ቋ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ

ൌ ൛ ܥܦܣܮ ଴ିଵ 

### ൈ ൫ܨܣܦܣ ௡௔௙௡௜௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ ൅ ሼ ܥܦܣܮ ଶିଵହ 

### ൈ ሺ ܨܣܦܣ ௟௜௛௖ௗ 

### ሻ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ

൅ ሼ ܥܦܣܮ ଵ଺ିଷଵ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ ൅ ሼ ܥܦܣܮ ଷଶିସ଻ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ

൅ ሼ ܥܦܣܮ ସ଼ି଺ଷ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ ൅ ሼ ܥܦܣܮ ଺ସି଺ଽ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ

ൌ ൛ ܥܦܣܮ ଴ 

### ൈ ൫ܨܣܦܣ ௡௔௙௡௜௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ ൅ ൛ ܥܦܣܮ ଵ 

### ൈ ൫ܨܣܦܣ ௡௔௙௡௜௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ

൅ ሼ ܥܦܣܮ ଶ 

### ൈ ሺ ܨܣܦܣ ௟௜௛௖ௗ 

### ሻ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ ൅ ڮ
൅ ሼ ܥܦܣܮ ଵହ 

### ൈ ሺ ܣ ܨܣܦ ௟௜௛௖ௗ 

### ሻ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ ൅ ሼ ܥܦܣܮ ଵ଺ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ ൅ ڮ
൅ ሼ ܥܦܣܮ ଺ଽ 

### ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ሽ (12)



### 2976

where: 2977 2978

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-11 ADC 0-1 = the ADC from exposure to formalde hyde in a new house for two years. ADC 2-15 = the ADC from exposures over 14 years from a house that is 2 years old in the first year. ADC a-a+16 = the ADC from exposures over 16 years from a hous e that is new in the first year (for the 16- 31, 32-47, and 48-63 age intervals) ADC 64-69 = the ADC from exposures over 6 years from a house that is new in the first year (for the 64-69 age interval) ADAF infant the infant age-dependent adjustment factor of 10 ADAF chil d the child age-dependent adjustment factor of 3 Unit Risk the inhalation unit risk for cancer of 0.013 per mg/m 3 LE= The life expectancy of the individual LADC 0-1 = ADC 0-1 / LE LADC 2-15 = ADC 2-15 / LE LADC a-a+16 = ADC a-a+16 / LE LADC 64-69 = ADC 64-69 / LE 

### 2979

The change in excess cancer risk resulting from the policy (relative to baseline) is: 2980 2981

ൌ ൛ ൫ܥܦܣܮ ଴ ௕ 

### ܥܦܣܮ െ ଴ ௣ 

### ൯ൈ൫ ܣ ܨܣܦ ௡௔௙௡௜௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ ൅ ൛ ൫ܥܦܣܮ ଵ ௕ 

### െ ܥܦܣܮ ଵ ௣ 

### ൯ൈ൫ ܣ ܨܣܦ ௡௔௙௡௜௧ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ ൅ڮ൅ ൛ ൫ܥܦܣܮ ଺ଽ ௕ 

### െ ܥܦܣܮ ଺ଽ ௣ 

### ൯ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ (13)



### 2982 where LADC B 

### and LADC P 

### refer to the baseline and policy scenario LADCs, respectively. To 2983 evaluate the impact of the policy for a single year (fo r example, when the individual is 15 years old) the 2984 change in excess cancer risk for this single year would be simply: 2985 2986

ൌ ൛ ൫ܥܦܣܮ ଵହ ௕ 

### െܥܦܣܮ ଵହ ௣ 

### ൯ ൈ ሺ ܣ ܨܣܦ ௟௜௛௖ௗ 

### ሻ ൈ ሺ ܷ݊݅ݐ ܴ݅ݏ݇ ሻ ൟ (14)



### 2987 Thus, the annual excess cancer risk reduction can be calculated for an individual of any age 2988 associated with one year of the policy. At the popula tion level, the annual appro ach consists of analyzing 2989 a population profile of individuals c onsistent with current demographic data, and placing them in housing 2990 stock consistent with current real estate data and calculating the benefits accruing from one year of the 2991 policy, all else constant. 2992 2993 Since the policy is analyzed over a period of thirty years, the analysis assumes that the 2994 demographic profile of the population (e.g., population distribution by age, size, and type of housing) 2995 does not change over time. Thus, depending on ho w these demographics actually change over the next 2996 thirty years, this assumption could result in the in troduction of an upward or downward bias into the 2997 benefits estimate. For example, if the number of people moving into new housing is lower than assumed 2998 over the next thirty years then the current assumption introduces an upward bias to the benefits estimate. 2999 Similarly, if the population increases over time, then the current assumption introduces a downward bias 3000 to the benefits estimate. 3001 3002 It is also worth noting that if the analysis were to attempt to account for demographic shifts over 3003 time, it would also be necessary to estimate how the se demographic shifts would affect the demand for 3004 composite wood products and therefore impact the co sts that correspond to the estimated benefits – 3005 something that would not be possible to model wit hout introducing additional uncertainty. Therefore, 3006 attempting to relax the simplifying assumption that de mographics are constant over the 30-year analysis 3007 time frame would address one uncertainty while introduc ing another uncertainty and it is not clear that 3008 this would reduce the overall uncertainty in the estimate of net benefits. 3009 3010 There are a number of advantages to using the annual approach as opposed to the lifetime 3011 approach. With the annual approach actual demograp hic data can be used to estimate the number of 3012

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January 27, 2012 3-12 

### individuals in each exposure scenario. This way the h ousing stock used in the simulation will resemble 3013 the existing housing stock. Recent data from th e Census and housing surveys are a reasonable 3014 approximation of what the distribution will be in the n ear future. This approach avoids the need to 3015 estimate a survival function to correctly account for pr emature deaths (or be concerned with new births). 3016 Assuming demographics do not change, using a popu lation-weighted annual approach accounts for these 3017 factors. 3018 3019 It is also important to note some caveats associat ed with the annual approach. As just mentioned, 3020 some distribution of population and housing stock mu st be assumed, and it is assumed that the current 3021 distribution is a good indicator of the future distribution. In other words, the analysis is implicitly 3022 assuming a steady state, where the present distributio n closely approximates the future distribution. 3023 3024 3.3.1 Lower Estimate of the Excess Number of Cancer Cases 3025 3026 Most individuals in the analysis are more than 0 years old, so applying a unit risk – i.e., an excess 3027 lifetime risk – to them might overstate their excess risk of the cancer. For example, consider someone 3028 who is 50 years old in the year of the analysis a nd has not yet gotten the cancer. Should the entire excess 3029 lifetime risk (the unit risk) be applied to this indivi dual for the remaining expected years of his life? Or 3030 should a modified excess risk, conditional on his not having gotten the cancer in his first 49 years, be 3031 applied? Because the unit risk provides no informa tion about how excess risk is distributed over the 3032 course of a lifetime, there is no clear answer. 3033 3034 To address this uncertainty this analysis theref ore includes a lower estimate of the excess number 3035 of cancer cases that is calculated by multiplying the un it risk by a lowering factor that takes into account 3036 the age at which an individual experiences the change in exposure and the incidence of the cancer by that 3037 age. Specifically, the lowering factor is calculated as the percentage of incidence of the cancer that 3038 occurs within the age range spanni ng from the age at which the cha nge in exposure is experienced 3039 through the end of the expected lifetime. For exam ple, 56.6 percent of respiratory tract cancers occur 3040 between ages 50 and 81 (the life expectancy of a 50 year old). Therefore the lowing factor for an 3041 individual experiencing a one year change in exposure at age 50 is 0.566. This approach implicitly 3042 assumes that the excess lifetime risk of the cancer is distributed across the ages within a lifetime in the 3043 same pattern seen in the age-specific inci dences of the cancer in the population. 3044 3045 3.3.2 Summary of Approach to Estimate Change in Cancer Risk 3046 3047 Equations (15) and (16) present the equations that are used to calculate the lower and higher 3048 estimates for the change in cancer risk associated with a one year change in the average daily 3049 concentration of formaldehyde e xposure. Note that EPA policy is to apply ADAFs when there is a 3050 mutagenic mode of action. The 1991 IRIS assessment did not make a formal finding of a mutagenic mode 3051 of action. However, there is scientific support for a mutagenic mode of action. Therefore, EPA believes 3052 that application of ADAFs is the preferred approach in this case but is also presenting the calculations 3053 without applying ADAFs. The lower estimate of bene fits excludes the ADAFs and the higher estimate of 3054 benefits includes the ADAFs. 3055 3056

ሺCancer Risk Changeሻ ୪୭୵ୣ୰ ୣୱ୲୧୫ୟ୲ୣ ൌ ൫ADC ୠ ൯ െ ൫ADC ୮ ൯

LE ൈ ሺ Unit Risk ሻ ൈ ሺLowering Factorሻ (15)



### 3057

ሺCancer Risk Changeሻ ୦୧୥୦ୣ୰ ୣୱ୲୧୫ୟ୲ୣ ൌ ൫ADC ୠ ൯ െ ൫ADC ୮ ൯

LE ൈ ADAF ൈ ሺ Unit Risk ሻ (16)



### 3058

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January 27, 2012 3-13 

### where: 3059 3060
ADC b = the baseline average daily concentration of one year of formaldehyde exposure (in mg/m 3 ) ADC p = the average daily concentration of one year of formaldehyde exposure (in mg/m 3 ) in the policy scenario LE = the life expectancy of the individual given his current age (i.e., the age to which he is expected to live, given his current age) ADAF = the age dependent adjustment factor (1 0 for 0-1 year olds, 3 for 2-15 year olds, 1 otherwise) Lowering Factor = factor calculated as the percentage of incidence of the cancer that occurs within the age range spanning from the age at which the change in exposure is experienced through the end of the expected lifetime. 

### 3061

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January 27, 2012 3-14 

## 3.4 Estimating the Value of Reductions in Cancer Risk 3062 3063 In this analysis the number of excess cancer cases are estimated and then they are divided into 3064 two categories: (1) instances where individuals w ill ultimately die from the cancer, and (2) instances 3065 where individuals ultimately die from something othe r than the cancer. Note that these two categories 3066 reflect the two possible outcomes for nasopharyngeal cancer, instead of reflecting different types of 3067 cancers. Hereafter the first outcome is referred to as fatal cancer and the second outcome as nonfatal 3068 cancer. Each outcome is valued differently – the va lue of a reduction in the risk of fatal cancer is 3069 described in section 3.4.1, and the value of a reductio n in the risk of non-fatal cancer, described in section 3070 3.4.2. 3071 3072 In order to monetize the value of reduced cancer risk, it is necessary to estimate the time periods 3073 when these benefits would accrue so that the present value of these benefits can be calculated. The 3074 method for estimating the timing for when the redu ced cancer risks are realized and the method for 3075 calculating the value of reducing these risks at the ti me of the exposure is described below in section 3076 3.4.3. 3077 3078 3.4.1 The Value of a Micro Risk Reduction for Fatal Cancer 3079 3080 The value of reducing risk for nasopharyngeal cancer is estimated as a weighted average of the 3081 value of reducing both fatal and nonfatal cancer ri sks. According to data from the Surveillance, 3082 Epidemiology, and End Results (SEER) Program of the National Cancer Institute, the 15 year survival 3083 rate for cancers of the nasopharynx is 42.9 percen t (SEER 2010). Thus, the analysis assumes that 57.1 3084 percent of the reductions in cancer risk are reductions in mortality risk and therefore are valued as such. 3085 The analysis uses the value of mortality risk (VMR) of $8.01 per micro-risk. A micro risk reduction is a 3086 reduction of 1/1,000,000 in the risk of mortality. Th is benefit is assumed to be accrued at the end of the 3087 year in which a cancer case was avoided and no add itional benefits (e.g., from avoiding cancer treatment 3088 costs) are included in the instances of a mortality risk reduction. 3089 3090 3.4.2 The Value of a Micro Risk Reduction for Non-Fatal Cancer 3091 3092 As noted above, 42.9 percent of the cancer risk re ductions are assumed to be reductions in risk for 3093 non-fatal cancer. While it is the value of a micro reduc tion in risk (a risk reduction of 1/1,000,000) of 3094 non-fatal nasopharyngeal cancer that is of interest, th is was estimated by first estimating the expected 3095 value of a single avoided case of non-fatal nasopha ryngeal cancer and then dividing by 1,000,000 to 3096 obtain the implied value of a micro risk reduction. 38 

### 3097 3098 Non-fatal cases of nasopharyngeal cancer were valued using a cost-of-illness (COI) approach. 3099 The value of an avoided case of non-fatal nasopha ryngeal cancer was estimated to be the present 3100 discounted value ( pdv ) of the stream of expected medical e xpenditures and opportunity costs associated 3101 with the illness from the year of diagnosis to a preset age (set at 99 in this analysis), taking into account 3102 that the individual may die of other causes in each year in the analysis. 39 

### 3103 3104

38 If 1,000,000 people are each willing to pay y for a risk reduction of 1 in 1,000,000, then that risk reduction applied to 1,000,000 individuals would result in 1 expe cted case avoided, and the value of that expected avoided case would be the sum of the individuals’ WTPs for their risk reductions, or 1,000,000* y . If Y denotes the value of that expected avoided case, then Y = 1,000,000*y, so that y = Y/1,000,000. For example, suppose the estimated value of an avoided case of non-fatal nasopharyngeal cancer is $140,000. The implied value of a micro risk reduction would be $0.14.

39 This COI approach likely understates the true value of avoiding a case of non -fatal nasopharyngeal cancer because it

omits the individual’s willingness to pa y to avoid the pain and suffering associ ated with the illness, which may be substantial.

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January 27, 2012 3-15 

### One approach to estimating the costs associated w ith a chronic illness such as cancer, described in 3105 EPA’s Cost of Illness Handbook (U.S. EPA 2001), is to divide annual costs into three categories: (1) 3106 initial costs – costs of diagnosis and initial treatment costs – that occur in the year of diagnosis, (2) 3107 “maintenance” costs which the cancer patient incurs in each subsequent year prior to death, and (3) 3108 terminal costs – the costs incurred in the patient’s last year of life. This analysis followed this general 3109 approach. Because this section is concerned only w ith non-fatal cases of nasopharyngeal cancer, only the 3110 first two categories are included. 3111 3112 As described more fully below, the stream of annual costs of a cancer will depend on: 3113 3114

 the stage of the cancer when it is first diagnosed; 3115

 the individual’s employment status (full-time worker, part-time worker, or unemployed 3116 or retired) each year from the year of diagnosis on (since the value of an hour lost to the 3117 illness depends on this status, as is explained below); and 3118

 the individual’s age in th e year of diagnosis. 3119 3120 3.4.2.1 An outline of the approach 

### 3121 3122 The analysis estimated the pdv of a case of non-fatal nasopharyngeal cancer, conditional on age at 3123 diagnosis, using the following steps: 3124 3125

 Develop a profile of nasopharyngeal cancer – i. e., a description of the stages of the cancer 3126 and the treatments typically carried out or recommended at each stage, their frequencies, 3127 durations, and costs. 3128

 Estimate COI conditional on stage at diagnosis and age at diagnosis, a : 3129

o Estimate the medical costs and opportunity costs in the year of diagnosis, given 3130 the stage at diagnosis and age at diagnosis. 3131

o Estimate the “maintenance” medical costs and associated opportunity costs in the 3132 kth year after diagnosis, k = 1, 2, ..., given the stage at diagnosis and age at 3133 diagnosis. 3134

o Given these (conditional) kth year costs, k = 0, 1, 2, ..., and the survival 3135 probabilities for ages a , a +1, a +2, etc. (i.e., the probability of not dying of some 3136 other cause each year), estimate the expe cted total COI in each year, conditional 3137 on a given stage at diagnosis and age at diagnosis, a

. 3138

o Given a discount rate, d , estimate the present discounted value ( pdv ) of the 3139 stream of costs from the age at diagnosis, a , to a preset age (99). 3140

o Estimate COI conditional on ly on age at diagnosis: 3141

 Obtain probabilities of diagnosis of nasopharyngeal cancer at each stage of the cancer. 3142

 Using these probabilities, calculate the expected pdv , now conditional only on age at 3143 diagnosis. 3144 3145 The methods at each step are described in detail in the sections below and are shown 3146 schematically in Figure 3-2. 3147*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 3-163148Figure 3-2: Summary of Cost of Illness Method3149

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January 27, 2012 3-17 

### 3.4.2.2 Treatment profile for non-fatal nasopharyngeal cancer 

### 3150 3151 The first step in estimating the costs associated w ith a cancer is to develop a profile of the illness 3152 – i.e., a description of the medical procedures that are performed as a result of the illness, and the 3153 recommended frequency and estimated duration of each pr ocedure in the year of diagnosis of the illness 3154 and in each subsequent year. 3155 3156 This section provides an overview of the treatme nt profile for (non-fatal) nasopharyngeal cancer 3157 in the United States. According to the American Cancer Society, nasopharyngeal carcinoma includes 3158 three types of cancer: keratinizing squamous cell car cinoma, non-keratinizing di fferentiated carcinoma, 3159 and undifferentiated carcinoma. Most cases in th e United States are keratinizing squamous cell 3160 carcinoma, while other types are more common in other parts of the world (American Cancer Society 3161 2011c). The risk of nasopharyngeal cancer increases w ith age; this cancer is rarely found in children 3162 under the age of 18 years (American Cancer Society 2011c; Lou, et al. 2010). 3163 3164 Diagnosis and initial treatments: procedures 

### 3165 3166 The year in which the cancer is diagnosed incl udes diagnosis and initial treatment. Diagnostic 3167 procedures include: medical history and physical exam , biopsy, imaging tests, and blood tests (American 3168 Cancer Society 2011c ). Specifically, the type of bi opsy is usually an endoscopic biopsy and imaging tests 3169 include both a CT scan and an MRI (Lo and Lu 2010; L ou, et al. 2010). Since a majority of patients with 3170 nasopharyngeal cancer have been shown to have an elevated level of an Epstein-Barr virus (EBV) 3171 antibody, the blood tests to diagnose this cancer involve EBV-specific serology (Lo and Lu 2010). 3172 3173 Treatment generally does not vary by type of nas opharyngeal cancer, but differs by stage at which 3174 the cancer is diagnosed (American Cancer Society 20 11c). The analysis assumed that the distribution of 3175 all nasopharyngeal cancer diagnoses by stage of illness applies to formaldehyde-related nasopharyngeal 3176 cancer patients as well. Table 3-3 presents a descripti on of each stage, the percent of nasopharyngeal 3177 cancer cases diagnosed at each stage, and long-term (ten-year) relative su rvival rates. Relative survival 3178 rates indicate the proportion of cases diagnosed at each stage who survive for a given number of years 3179 after diagnosis, adjusting for other causes of death. Most cases of nasopharyngeal cancer are diagnosed at 3180 Stages III or IV (Piccirillo, et al. 2007). 3181 3182 3183 Table 3-3: Stages of Nasopharyngeal Cancer at Diagnosis Stage of Cancer at Diagnosis Description Cases Diagnosed (%) Long-Term Relative Survival Rate (%) Stage I Tumor is confined to the nasopharynx. 15.0 62.6 Stage II Tumor has spread to tissues of the left or right sides of the upper part of the throat, and/or has spread to nearby lymph nodes. 6.7 51.6

Stage III Tumor has spread to the sinuses or bones near the nasopharynx, or has spread to nearby lymph nodes. 21.8 46.2

Stage IV Tumor has grown into the skull and/or cranial nerves, the hypopharynx, the eye, or its nearby tissues; has spread to lymph nodes that are larger than 6 cm across or are located in the shoulder area above the collarbone; and/or has spread to distant sites. 45.3 37.1

Unknown Information is insufficien t to indicate a stage. 11.2 44.6
Sources: American Cancer Society 2011c; Picc irillo, et al. 2007. 

### 3184 Due to difficulties in operating on the nasopharynx and the effectiveness of other types of 3185 treatment, surgery is not a main treatment option for nasopharyngeal cancer (American Cancer Society 3186 2011c). Prior to the landmark Intergroup 0099 trial, as published by Al-Sarraf et al. (1998), the primary 3187

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### treatment option for all patients with nasopharyng eal cancer was radiation therapy. However, the 3188 Intergroup 0099 trial on Stage III and IV cancers cha nged the way in which locally advanced stages of 3189 nasopharyngeal cancer are treated (Cooper 2010). In th is trial, radiation therapy was administered 3190 concurrently with chemotherapy for a total of sev en weeks, followed by adjuvant chemotherapy over 3191 approximately eight weeks, with the doses and treatme nt schedules presented in Table 3-4 (Al-Sarraf, et 3192 al. 1998; Cooper 2010). Patients receiving this prescribed course of treatment experienced a statistically 3193 significant (p=0.005) improvement in overall surviv al, compared with patients who received radiation 3194 therapy alone (Al-Sarraf, et al. 1998). 3195 3196 3197 Table 3-4: Dosages of Radiation Therapy and Chemotherapy in the Intergroup 0099 Trial Therapy Site/Method Drug Dosage Schedule Radiation Primary tumor N /A 70 Gy 1.8-2 Gy per day, Monday through Friday Affected lymph nodes 66-70 Gy Uninvolved lymph nodes 50 Gy Chemotherapy Rapid (15-20 minutes) intravenous infusion Cisplatin 100 mg/m2 Days 1, 22, and 43 of radiotherapy Cisplatin 80 mg/m2 Days 71, 99, and 127 96-hour infusion 5-fluorouracil 1,000 mg /m2/day Days 71-74, 99-102, and 127-130 Sources:Al-Sarraf, et al. 1998; Cooper 2010. One gray (Gy) is the absorption of one joule of energy, in the form of ionizing ra diation, divided by one kilogram of matter. Radiation sessions take 15 to 30 mi nutes and are typically given five days a week for one to ten weeks (American Cancer Society 2011a). 

### 3198 Hence, while radiation therapy is still the primar y treatment option for ear ly stage nasopharyngeal 3199 cancer, chemotherapy combined with radiation th erapy (known as “chemoradiation”) is currently the 3200 recommended treatment for later stages of this cancer (American Cancer Society 2011c). Stage I cancers 3201 are treated with radiation therapy aimed at the nasopharyngeal tumor and nearby lymph nodes, as a 3202 preventive measure (American Cancer Society 2011c). Patients diagnosed with Stage II, III, IVA, or IVB 3203 cancer are included in the group of locally advanced cancers that are treated with chemoradiation and 3204 adjuvant chemotherapy (American Cancer Society 20 11c). In addition, the American Cancer Society 3205 provides a separate treatment profile for Stage IVC can cer, which is characterized by distant metastasis. 3206 However, since cancer with distant metastasis usually is not curable (Lin 2010), it was assumed that all 3207 patients with Stage IV cancers who survive (and are th erefore included in the analysis of non-fatal cases) 3208 receive the treatment profile for Stages IVA and IVB. 3209 3210 Given this information on the dosages and schedule from the Intergroup 0099 trial from the 3211 American Cancer Society, the analysis developed the following profile for initial treatment of non-fatal 3212 nasopharyngeal cancer: 3213 3214

 Diagnosis at Stage I: Radiation therapy to the primary tumor and uninvolved lymph 3215 nodes. 3216

 Diagnosis at Stage II, III or IV: Radiation therapy to the primary tumor and affected 3217 lymph nodes; concurrent and adjuvant ch emotherapy with cisplatin; and adjuvant 3218 chemotherapy with 5-fluorouracil (5-FU). 3219 3220 After treatment, the maintenance phase begins. This phase consists of follow-up treatment, which 3221 is presented by Tham and Lu 

## ( 2010 

## ) as an evidence-based follow-up sch edule and regimen that draws 3222 from the recommendations of professional organizations (including the National Comprehensive Cancer 3223 Network and the American Head and Neck Society) . The following profile of follow-up treatment for 3224 nasopharyngeal cancer is recommended for all patients treated with radiation therapy: 3225 3226

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###  Physical exams to check for signs of cancer r ecurrence: every one to three months for the 3227 first year after treatment, every two to four months in the second year, every four to six 3228 months in years three to five post-treatment, then every six to twelve months thereafter. 40 

### 3229

 Thyroid function screening tests 41 

### (i.e. thyroid-stimulating hormone and free thyroxine 3230 tests): every six to twelve months. 3231

 MRI of the head and neck: three months after radiation therapy, then annually. 3232 3233 A dental evaluation, smoking cessation counseli ng, and patient support groups may also be 3234 recommended (Tham and Lu 2010 

## ). However, since these treatments are recommended on an individual 3235 basis and information on the proporti on of patients who receive these treatments is not available, they 3236 were not included in this analysis. 3237 3238 Frequencies and durations of treatments 

### 3239 3240 To estimate the amount of time lost by an indi vidual diagnosed with nasopharyngeal cancer in 3241 each year, the analysis first estimated time values fo r each procedure carried out during each year outlined 3242 in the treatment profile. The treatment profile outlines the frequency of procedures in the year of 3243 diagnosis and all subsequent years. Treatment freque ncy also varies by stage of the illness (i.e., Stages I – 3244 IV), though some treatments are common to all stages. 3245 3246 Three components of lost time were estimated for each treatment procedure: the time taken for 3247 the procedure, the time spent waiting before and after the procedure, and the travel time to and from the 3248 facility where the procedure is carried out. Wait and travel times were assumed to be twenty and forty3249 five minutes, respectively. The opportunity costs associ ated with the time it takes for patients to recover 3250 from the treatments were excluded from the analys is because data on the duration of recovery times 3251 associated with these treatments were not readily av ailable. Thus, this omission introduces a downward 3252 bias to the extent to which recovery time results in lost work time, lost time available for performing 3253 domestic chores, and lost leisure time. 3254 3255 The entire treatment profile, including the diagnostic and recommended treatment procedures, 3256 and the estimated durations of each, are detailed in Table 3-5 and Table 3-6. Table 3-5 gives the 3257 breakdown of estimated wait times, travel times (to a nd from the locations of the treatments), and times 3258 per visit. Table 3-6 gives the frequency and total tim e associated with each medical procedure, separately 3259 for the year of diagnosis and subsequent years. Th e medical and opportunity costs associated with these 3260 procedures are described in the subsections below. 3261 3262

40 The estimation of medical costs, uses th e midpoint of all ranges for the frequency of each medical procedure or service in the treatment profile.

41 Thyroid function tests are recommended be cause research indicates a high incidence of hypothyroidism in patients who

have received radiation therapy to the entire neck (National Cancer Institute 2011b), which is typical in the treatment of nasopharyngeal cancer (Lo and Lu 2010).

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### Table 3-5: Estimated Lost Time (in Mi nutes) Per Visit Per Treatment Procedure

Procedure Procedure Time Wait Time i Travel Time (Round Trip) j Total Time Per Visit Diagnosis: All Stages at Diagnosis Medical history and physical exam a 20 20 45 85 Biopsy (endoscopic or fine needle aspiration) 20 20 45 85 Imaging tests: CT scan b 10 20 45 75 Imaging tests: MRI c 60 20 45 125 Epstein-Barr virus (EBV) specific serology (blood test) 5 0 d 0 d 5 Treatment: Stage I at Diagnosis Radiation therapy sessions e 30 20 45 95 Treatment: Stage II, III, or IV at Diagnosis Radiation therapy sessions e 30 20 45 95 Chemotherapy with cisplatin f 20 20 45 85 Chemotherapy with 5-fluorouracil g 3,840 0 h 45 3,885 Follow-Up Care: All Stages at Diagnosis Physical exam a 20 20 45 85 Laboratory tests for thyroid levels 5 0 d 0 d 5 MRI of the head and neck c 60 0 d 0 d 60
N ote that the initial phase of treatment for all stages-at-diagnos is of nasopharyngeal cancer includes diagnosis and treatment, while the maintenance phase consists of follow-up care.
N otes:

a. Average time spent with physician was 20.9 minutes in 2005 (Abbo, et al. 2008).
b. Procedure takes a few minutes (Mayo Clinic 2010a).

c. Procedure takes less than an hour (Mayo Clinic 2010b).
d. Assumed to be included in time lost for other procedures.

e. Session takes 15 to 30 minutes (American Cancer Society 2011a).
f. Rapid infusion of cisplatin ta kes 15 to 20 minutes (Cooper 2010).

g. Chemotherapy with 5-fluorouracil is given as a 96-hour infusion (Al-Sarraf, et al. 1998; Cooper 2010 ), which implies a 4-day hospital stay.
h. No wait time assumed for overnight stay.
i. Press Ganey Associates, Inc. (2010) reported an average wait time of 21 minutes for internal me dicine and 22 minutes for famil y practice in 2009. j. Based on Federal Highway Administration (2011) data, the aver age one-way travel time for medical/dental reasons was approximately 23.15 minutes in 2009. 

### 3263

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### Table 3-6: Estimated Total Lost Time (in Minutes), by Treatment Procedure

Procedure Frequency in First Year Frequency Subsequent Years Total Time (First Year) Total Time (Subsequent Years) Diagnosis: All Stages at Diagnosis Medical history and physical exam 1 0 85 0 Biopsy (endoscopic or fine needle aspiration) 1 0 85 0 Imaging tests: CT scan 1 0 75 0 Imaging tests: MRI 1 0 125 0 Epstein-Barr virus (EBV) specific serology (blood test) 1 0 5 0 Subtotal 375 0 Treatment: Stage I at Diagnosis Radiation therapy sessions 35 0 3,325 0 Subtotal 3,325 0 Treatment: Stage II, III, and IV at Diagnosis Radiation therapy sessions 35 0 3,325 0 Chemotherapy with cisplatin 6 0 510 0 Chemotherapy with 5-fluorouracil 3 0 11,655 0 Subtotal 15,490 0 Follow-Up Care: All Stages at Diagnosis Physical exam 3 1.7 255 434 Laboratory tests for thyr oid levels 1 1.5 5 8 MRI of the head and neck 1 1 60 60 Subtotal 320 501
N ote that the initial phase of treatment for all stages-at-diagnos is of nasopharyngeal cancer includes diagnosis and treatment, while the maintenance phase consists of follow-up care. 

### 3264 3.4.2.3 Estimated medical costs in the year of diagnosis and in subsequent years 

### 3265 3266 This section describes the calculation of mean medical expenditures for each procedure and 3267 service in the treatment profile, as well as the estim ation of expected medical costs of illness for (non3268 fatal) nasopharyngeal cancer in the year of diagnosis and in subsequent years. For the average cost of 3269 each procedure, the analysis relied on two data sour ces provided by the Agency for Healthcare Research 3270 and Quality (AHRQ): the Medical Expenditure Panel Su rvey (MEPS) (Agency for Health Care Research 3271 and Quality 2009) and Healthcare Cost and Utilizatio n Project (HCUP) (Agency for Healthcare Research 3272 and Quality 2011). Note that mean expenditures fro m MEPS and HCUP are converted to 2010 dollars 3273 using the Bureau of Labor Statistics’ Consumer Price Index for medical care. 3274 3275 The Household Component of MEPS includes separat e data files for types of medical events 3276 (e.g., office-based medical provider visits, outpatient visits, and hospital inpatie nt stays), which provide 3277 information on the expenditures for specific events for a nationally representative sample of families and 3278 individuals. The data files include variables that i ndicate the conditions with which a patient has been 3279 diagnosed and the procedures undergone during a par ticular medical event. ICD-9-CM (International 3280 Classification of Diseases, Ninth Revision, Clinical Modification) codes are used to identify specific 3281 diseases and procedures. In addition, some data file s include variables that indicate any services that 3282 patients received during their visit (e.g., laboratory tests, chemotherapy, and CT scan or MRI). 3283 3284 The analysis used the MEPS outpatient visit and office-based provider visit event files for 1996- 3285 2007 for all procedures and services in the treatment profile, except chemotherapy with 5-fluorouracil. 3286 Since chemotherapy with 5-fluorouracil involves a 96-hour infusion, the analysis assumed that this 3287 service is provided during an inpatient hospital stay; 2009 data on this specific procedure from HCUPnet, 3288 the online query system of HCUP, were used to estimate the mean cost of the procedure. 3289 3290

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### For each procedure and service for which there ar e sufficient observations in both the outpatient 3291 visits and office-based medical provider visits event files, the mean estimates across the two files were 3292 pooled, following the approach of DerSimonian and La ird (1986). The method for pooling is described in 3293 detail in Appendix L of the BenMAP user manual (Abt Associates Inc. 2010). It is described briefly here. 3294 3295 The first step in pooling is to calculate a pool ed estimate under the assumption of a fixed effects 3296 model – i.e., that the different samples are both fro m the same population, and the only reason the sample 3297 means differ is because of sampling error. This pooled estimate is a weighted average of the individual 3298 sample means, where the weights are the corres ponding inverse variances divided by the sum of the 3299 inverse variances. The next step is to test for hom ogeneity of the mean expenditures across the two event 3300 types (outpatient visits and office-based medical provider visits). The test statistic is the weighted sum of 3301 squares of the differences between each mean estimate and the pooled estimate calculated in the first step, 3302 where the weights are the inverse variances of the me an estimates. If the test indicates that the mean 3303 expenditures are homogeneous (i.e., the fixed eff ects model is correct), then the pooled estimate 3304 calculated on the first step is used. If the test indi cates that the mean expenditures are not homogeneous, a 3305 random effects model is used. To do this, a between -event type variance is first calculated. The pooled 3306 estimate based on the random effects model is calcu lated in almost the same way as under the fixed 3307 effects model; however, the weights now incorpor ate both the within-event type variance and the 3308 between-event type variance. 3309 3310 Diagnosis 

### 3311
3312 Diagnosis includes medical history and a physi cal exam, an endoscopic biopsy, a CT scan, an 3313 MRI, and EBV-specific serology. The analysis assume d that doctor visits for physical examinations 3314 include medical history. The cost of a physical ex am was estimated as the mean expenditure by all 3315 individuals who had a physical examinati on only (ICD-9-CM procedure code 89). 3316 3317 For the endoscopic biopsy, the analysis first investigated MEPS data on the ICD-9-CM procedure 3318 code for operations on the pharynx (ICD-9-CM proce dure code 29), which includes pharyngeal biopsies. 3319 However, since there are very few observations fo r operations on the pharynx, the analysis used the 3320 procedure codes for operations on the nose and n asal sinuses (ICD-9-CM procedure codes 21 and 22). 3321 These codes include both surgical and diagnostic pro cedures, with the diagnostic procedures primarily 3322 consisting of biopsies. The type of biopsy used to diagnose nasopharyngeal cancer does not involve 3323 surgery (Lo and Lu 2010), so observations with surg eries were excluded, and the mean expenditures for 3324 the remaining observations with pro cedure codes 21 and 22 was calculated. 3325 3326 The MEPS event files for outpatient and office-base d provider visits include a variable that 3327 indicates whether a particular medical event incl uded a CT scan or MRI. Since these two services are 3328 bundled together in the MEPS variable, it was assumed that the cost for a CT scan is equal to the cost for 3329 an MRI. Due to a lack of data on a CT scan or MRI for patients with head and neck cancers, mean 3330 expenditures were calculated for MRI or CT scans fo r patients with a diagnosis of “symptoms involving 3331 the head and neck” (ICD-9-CM diagnosis code 784). 3332 3333 EBV-specific serologic testing is the preferred method to diagnose EBV infections (National 3334 Center for Infectious Diseases 2006). Therefore, fo r this service, the analysis calculated the mean 3335 expenditures for outpatient and office-based visits for which the only service provided was a laboratory 3336 test and the individual’s only diagnosis is EBV (ICD-9-CM diagnosis code 075). 3337 3338 3339 3340 3341

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### Treatment 

### 3342
3343 Treatment for all patients includes radiation ther apy. Because nasopharyngeal cancer is relatively 3344 rare in the United States, there are no records for th is specific illness in MEPS. Because pairwise t-tests 3345 found significant differences in mean expenditures for radiation therapy across different cancer types, the 3346 analysis estimated the mean per-session expenditure for radiation therapy for cancer types that are 3347 primarily treated with the radiation treatment used for treating nasopharyngeal cancer – external beam 3348 radiation therapy (EBRT) (American Cancer Society 2011b, c). 42 

### This approach seems reasonable 3349 because radiation therapy costs depend on the type of radiation therapy and the number of sessions 3350 (American Cancer Society 2011a). The analysis c onsidered using MEPS data on expenditures for head 3351 and neck cancers, but there are too few observati ons in the MEPS database on these diseases. Of the 3352 observations for radiation therapy for a malignant ne oplasm of unspecified parts of the mouth (one of 3353 only two types of head and neck cancer included in th e MEPS office-based visits file), there are only 36 3354 observations, 35 of which are for one individual’s doctor visits. 3355 3356 Treatment for Stages II, III, and IV includes ch emotherapy with the drugs cisplatin and 5- 3357 fluorouracil. The cost of chemotherapy depends on a number of factors, including the drugs used and the 3358 frequency and method of treatment (American Cancer Society 2010). The analysis accounted for variation 3359 in costs due to frequency by using per-visit expenditu res for outpatient or office-based visit costs. For 3360 cisplatin, the method of treatment is not a factor beca use this drug is always given intravenously (Medline 3361 Plus 2009). Due to a lack of data on nasopharyngeal cancer, the analysis estimated chemotherapy costs by 3362 using expenditures for chemotherapy during outpatie nt and office-based visits for other cancer types 3363 treated with the same drug, cisplatin, as liste d by the National Cancer Institute (2011a). 43 

### There are no 3364 significant differences (based on pairwise t-tests) within each MEPS event file in the average 3365 expenditures for chemotherapy across the cancer types th at are treated with cisplatin and have sufficient 3366 observations (>30). Thus, the analysis assumed that the cost of chemotherapy with cisplatin for 3367 nasopharyngeal cancer equals the average cost for chemotherapy using this drug for these other cancer 3368 types. 3369 3370 The first approach considered for estimating the cost of adjuvant chemotherapy with 5- 3371 fluorouracil (5-FU) was to compare expenditures in MEPS for chemotherapy during inpatient hospital 3372 stays across cancer types treated with this drug, as listed by the National Cancer Institute (2011c). 3373 However, since there are significant differences in average expenditures across cancer types, it cannot be 3374 assumed that the cost of chemotherapy with 5-fluorou racil for nasopharyngeal cancer is equal to the mean 3375 expenditures for chemotherapy for these cancers. Inst ead, the analysis used 2009 data from HCUPnet to 3376 obtain the mean hospital charge and cost for infusi ons of cancer chemotherapeutic substances (ICD-9-CM 3377 procedure code 99.25). The mean cost provided by HCUPnet is intended to reflect the actual costs for 3378 hospital stays and is estimated using a cost-to-charge ratio (Agency for Healthcare Research and Quality 3379 2011). 44 

### However, application of these ratios often results in an underestimation of costs for stays where 3380 a large percentage of charges are for room and boa rd (Agency for Healthcare Research and Quality 2011), 3381 which seems likely for chemotherapy treatments. In contrast, for a variety of reasons hospital charges 3382 typically overstate actual medical expenditures, ofte n substantially (Agency for Healthcare Research and 3383

42 The cancer types that are treated with EBRT and included in the MEPS data are: malignant neoplasm of unspecified parts of the mouth; malignant neoplasm of other and ill-defined parts of lip, oral cavity, and pharynx; esophagus cancer; colorectal cancer; laryngeal cancer; lung cancer; basal and squamous cell skin cancer; breast cancer; cervical cancer; testicular cancer; bladder cancer; brain cancer; thyroid cancer; and multiple myeloma.

43 The cancer types that are treated with cisplatin and included in the MEPS data are: malignant neoplasm of other and illdefined parts of lip, oral cavity, and pharynx; lung can cer; cervical cancer; testicular cancer; and bladder cancer.

44 AHRQ calculates cost-to-charge ratios using hospital-speci fic accounting information from the Centers for Medicare

and Medicaid Services (Agency for Healthcare Research and Quality 2011). Ho spital-specific information is necessary because detailed charges are not available in all states.

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### Quality 2010). Therefore, the analysis adjusted this charge estimate downward using MEPS, which 3384 provides both charges and expenditures, to calculate the ratio of expenditures to charges for inpatient 3385 hospital stays for treatment or therapy for all types of cancer. On average, the cost of these procedures is 3386 63.97 percent of the charge for them. This percenta ge was applied to the hospital charges from HCUPnet 3387 to estimate the mean expenditures for a ho spital stay for a chemotherapy infusion. 3388 3389 Follow-up care 

### 3390 3391 Follow-up care consists of a physical exam, laborat ory tests for thyroid levels, and an MRI of the 3392 head and neck. The estimation of average costs of a ph ysical exam and an MRI of the head and neck is 3393 described above. The thyroid tests that are used to monitor the thyroid levels of individuals with 3394 hypothyroidism are thyroid stimulation hormone a nd thyroxine tests (PubMed Health 2010). These are 3395 also the thyroid function tests recommended for fo llow-up care of nasopharyngeal cancer. Hence, the 3396 analysis calculated the average expenditure of out patient and office-based vi sits for which the only 3397 service was a laboratory test and the individual’s onl y diagnosis is hypothyroid ism (ICD-9-CM diagnosis 3398 code 244). 3399 3400 Expected medical costs of nasopharyngeal cancer 

### 3401
3402 Using the treatment profile and mean medi cal expenditures from MEPS and HCUPnet, the 3403 analysis estimated expected medical costs of hospital inpatient stays and outpatient and office-based visits 3404 for individuals diagnosed with Stage I nasopharyngeal cancer (Table 3-7) and those diagnosed with Stage 3405 II, III, or IV I nasopharyngeal cancer (Table 3-8). These expected costs include those incurred during the 3406 year of diagnosis and in each subsequent year. 3407 3408 Table 3-7: Expected Medical Costs for Stage I (Non-Fatal) Nasopharyngeal Cancer (2010$) Treatment Phase Event Unit Cost in First Year Unit Cost in Subsequent Years Outpatient and Office-Based Provider Care Initial Diagnosis $2,086 $0
Treatment: Ra diation therapy $14,424 $0 Maintenance Follow-up care $1,446 $1,337 Total $17,955 $1,337 

### 3409 Table 3-8: Expected Medical Cost s for Stages II, III, and IV of (Non -Fatal) Nasopharyngeal Cancer (2010$) Treatment Phase Treatment Type Unit Cost in First Year Unit Cost in Subsequent Years Inpatient Care Initial Treatment: Chemotherapy with 5-fluorouracil $88,184 $0 Outpatient and Office-Based Provider Care Initial Diagnosis $2,086 $0
Treatment: Ra diation therapy $14,424 $0 Treatment: Chemotherapy with cisplatin $4,095 $0 Maintenance Follow-up care $1,446 $1,337 Total $110,234 $1,337 

### 3410 3.4.2.4 Estimated opportunity costs in the year of diagnosis and in subsequent years 

### 3411 3412 In addition to medical costs, can cer patients also incur opportunity costs – i.e., the value of time 3413 lost to treating the illness. The analysis identified three categories of activity – work, leisure, and 3414 housekeeping – that an individual could spend time on. 3415 3416

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### The expected value of an hour spent at work was calculated as the average total compensation 3417 (wages plus employment benefits). This analysis values non-work time (both leisure time and time spent 3418 on non-market activities, such as housekeeping) by assuming that “an individual will engage in such 3419 unpaid activities only if, at the margin, the value of th ese activities is greater than the wages that could be 3420 earned in paid employment. Hence after-tax wages provide a lower bound estimate of the value of non3421 work time. There are two different values for time co nsidered in this analysis – one for time spent at 3422 work and another for time spent at leisure or housek eeping activities – that were used to estimate the 3423 opportunity cost associated with nasopharyngeal cancer. 3424 3425 Valuing any lost time of children can be diffi cult. However, based on the National Cancer 3426 Institute’s Surveillance Epidemiology and End Resu lts (SEER) database (SEER 2010), there are virtually 3427 no cases of nasopharyngeal cancer among children, so this problem did not arise for this analysis. 3428 3429 The analysis assumed that full-tim e workers work 40 hours a week, fo r an average of 5.714 hours 3430 per day (including weekends). It was assumed that ever yone spends 8 hours sleeping, so the time spent in 3431 leisure or housekeeping activities by the average full-ti me worker is estimated as 24 – 8 – 5.714 = 10.286. 3432 If v work 

### denotes the value of an hour of work, and v leisure 

### denotes the value of an hour of leisure or 3433 housekeeping, then the expected value of a full day lo st to nasopharyngeal cancer for a full-time worker is 3434

. 3435

leisure work wor time full 

### v v day full a of value E * 286

. 10 * 714

. 5 ) ( ker 

###  

 (17)


### 3436 The analysis assumed that part-time workers work 20 hours a week, for an average of 2.857 hours 3437 per day. Under this assumption, the time spent in le isure or housekeeping activities by the average part3438 time worker is 24 – 8 – 2.857 = 13.143. Thus the expected value of a full day lost to nasopharyngeal 3439 cancer for a part-time worker is 3440

. 3441

leisure work wor time part 

### v v day full a of value E * 143

. 13 * 857

. 2 ) ( ker 

###  

 (18)


### 3442 Finally, someone who is unemployed or retired would spend all 16 non-sleeping hours in 3443 leisure or housekeeping activities. The expected value of a full day lost to nasopharyngeal cancer for an 3444 unemployed or retired person, therefore, is 3445

. 3446

leisure retired unemployed 

### v day full a of value E * 16 ) ( / 

###  (19)


### 3447 The BLS Labor Force Statistics Current Population Survey provides age group-specific 3448 proportions of the U.S. non-institutionalized populati on that are (1) employed full time, (2) employed 3449 part-time, (3) unemployed, and (4) retired. Using th ese proportions, the analysis constructed age-specific 3450 expected values of a full day lost to nasopharyngeal cancer. If 

## ) ( a p i 

### denotes the probability of being in 3451

the i th employment status at age a , the expected value of a full day lost to nasopharyngeal cancer for 3452
someone age a is: 3453 3454


## ) ( * ) ( ) ( 4

1 

## day full a of value E a p day full a of value E i
i i a 

# 

 

##  (20)



### 3455 where employment status is 3456 3457 full-time worker if i =1, 3458 part-time worker if i =2, 3459 unemployed if i =3, and 3460

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### retired if i =4, 3461 3462 and the values for i =1, 2, 3, and 4 are given in equations (17) through (19) above. Table 3-9 3463 presents the age ranges provided by BLS for each employment status. 3464 3465 Table 3-9: Age Ranges by Employment Status Employment Status Age Group

Full-time / Part-time 16 – 17 18 – 19 20 – 24 25 - 54

55 +

Unemployed / Retired 16 – 17 18 – 19 20 – 24 25 – 29 30 – 34 35 – 39 40 – 44 45 – 49 50 – 64 a
65 – 69 70 – 74
75 + a. Data for ages 55 – 64 were not available. This age range was assumed to have the same probabilities as for 50 – 54. 

### 3466 To estimate the value of work time, average hour ly wages were obtained for full-time and part3467 time workers in all occupations from the National Comp ensation Survey (U.S. Bureau of Labor Statistics 3468 2011a). Hourly wages were $22.77 for full-time workers and $12.10 for part-time workers in 2010. 3469 These wages were loaded with benefits obtained from BLS Employer Costs for Employee Compensation 3470 data. Total benefits were estima ted to be $10.05 for full-time workers and $3.35 for part-time workers 3471 (U.S. Bureau of Labor Statistics 2011b). Therefore, total compensation used to estimate the value of 3472 work time was $32.82 for a full-time worker and $15.45 for a part-time worker. 3473 3474 As noted above, the value of leisure time w as estimated as after-tax wages. The analysis 3475 estimated an average income tax rate by dividing national income from wages and salaries by the total 3476 value of income taxes at the federal and state leve ls. According to the Bureau of Economic Analysis 3477 (BEA) National Economic Accounts, wage and salary disbursements in 2010 were approximately $6.4 3478 trillion (U.S. Bureau of Economic Analysis 2011a), and the value of federal income taxes withheld 3479 (minus refunds) and state income taxes was appr oximately $1.5 trillion (U.S. Bureau of Economic 3480 Analysis 2011b). The computed average tax rate – about twenty-three percent – was applied to the wages 3481 for full-time and part-time workers, resulting in estimated after-tax wages of $17.46 and $9.28, 3482 respectively. 3483 3484 Using equations (17), (18), and (19) given above, the expected full-day values for individuals 3485 having each of the four employment statuses were calculated. These are shown in Table 3-10. 3486 3487

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### Table 3-10: Expected Full-Day Values by Employment Status (2010$)

Value of Work Value of Leisure

Employment Status Work Hours /

Day [A] Compensation / Hour

[B] Work Value / Day

[C] = [A] * [B] Leisure Hours /

Day [D] After-Tax Wages /

Hour

[E] Leisure Value / Day

[F] = [D] * [E] Total Full Day Value

[G] = [C] + [F] Full-Time 5.714 $32.82 $187.55 10.286 $17.46 $179.55 $367.10 Part-Time 2.857 $15.45 $44.14 13.143 $9.28 $121.92 $166.06 Unemployed 0.000 $0.00 $0.00 16.000 $9.28 $148.42 $148.42
N ot in Labor Force 0.000 $0.00 $0.00 16.000 $9.28 $148.42 $148.42

Source:U.S. Bureau of Economic A nalysis 2011a, b; U.S. Bureau of Labor Statis tics 2011a, b 

### 3488 The probabilities of employment status at each age were then multiplied by the corresponding 3489 expected full-day values in Table 3-10 (see equation (20)) to estimate the expected full-day value of an 3490 individual at each age. These values are presented in Table 3-11. 3491 3492 Table 3-11: Expected Full-Day Values by Age Probability of Employment Status

Age Full Time Part Time Unemployed Not In Labor Force Expected Value of Full Day Expected Value Per Hour 16-17 1.13% 12.23% 5.10% 81.54% $153.04 $9.57 18-19 8.99% 26.25% 10.74% 54.02% $172.71 $10.79 20-24 36.41% 23.02% 11.15% 29.43% $232.10 $14.51 25-29 62.38% 9.90% 8.71% 19.01% $286.58 $17.91 30-34 64.27% 10.20% 7.55% 17.98% $290.77 $18.17 35-39 65.43% 10.38% 6.75% 17.44% $293.33 $18.33 40-44 66.40% 10.53% 6.42% 16.65% $295.47 $18.47 45-49 65.41% 10.38% 6.66% 17.55% $293.30 $18.33 50-54 63.26% 10.04% 5.86% 20.85% $288.53 $18.03 55-64 56.24% 17.06% 5.86% 20.85% $274.41 $17.15 65-69 23.44% 7.11% 2.20% 67.25% $200.93 $12.56 70-74 12.99% 3.94% 1.10% 81.96% $177.53 $11.10

75+ 5.09% 1.54% 0.44% 92.93% $159.82 $9.99 Source: U.S. Bureau of Economic Analysis 2011a, b; U.S. Bureau of Labor Statistics 2011a, b, c 

### 3493 As shown in Table 3-5 above, much of lost tim e associated with nasopharyngeal cancer consists 3494 of partial rather than full days lost. Assuming that these lost hours are distributed across the two types of 3495 activity (work and leisure) in the same proportions that these activities occur in a typical day for 3496 individuals in each of the three employment status ca tegories, an expected opportunity cost associated 3497 with a given treatment is estimated as the number of hours lost as a result of the treatment times the 3498 expected value per hour, shown in the right-most column of Table 3-11. The expected value per hour was 3499 calculated by dividing the expected value of a full da y by 16, since the assumption of 16 waking hours per 3500 day underlies the expected value of a full day (see equati ons (17), (18), and (19)). Note that it is possible 3501 that the assumption that lost hours are distributed across the two types of activity (work and leisure) in the 3502 same proportions that these activities occur in a typical day may tend to lead toward an underestimate of 3503 the benefits if full time workers are more likely to schedule treatments during working hours rather than 3504 leisure hours. It is also worth noting that the opportunity cost estimates do not include work or leisure 3505 time lost due to the side effects of chemotherapy, b ecause there is wide variation in how individuals react 3506 to treatments, and information could not be locat ed on the typical or average recovery time from 3507 chemotherapy. 3508 3509 3510 3511

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### 3.4.2.5 Annual expected opportunity cost by age 

### 3512 3513 Expected opportunity costs associated with nasopha ryngeal cancer were estimated for the year in 3514 which diagnosis occurs and for all subsequent years by multiplying the estimated number of hours lost in 3515 the year (lost time is given in minutes in Table 3-6) times the expected value per hour lost, given in Table 3516 3-11. Since the expected value of a lost hour varies by age, expected opportunity co sts also vary by age. 3517 In addition, since treatments differ by cancer stage at diagnosis, expected opportunity costs also differ by 3518 stage at diagnosis. Table 3-12 gives age- and stage at diagnosis-specific opportunity costs, separately for 3519 the year of diagnosis and subsequent years. 3520 3521 Table 3-12: Total Expected Value of Time Lost Treating (Non-Fatal) Nasopharyngeal Cancer (2010$)

First Year Subsequent Years Age Stage I Stage II, III, and IV Stage I Stage II, III, and IV
16-17 $640.87 $2,580.20 $33.80 $33.80

18-19 $723.20 $2,911.70 $38.14 $38.14

20-24 $971.92 $3,913.07 $51.26 $51.26

25-29 $1,200.06 $4,831.58 $63.29 $63.29

30-34 $1,217.61 $4,902.23 $64.21 $64.21

35-39 $1,228.32 $4,945.37 $64.78 $64.78

40-44 $1,237.30 $4,981.50 $65.25 $65.25

45-49 $1,228.19 $4,944.83 $64.77 $64.77

50-54 $1,208.23 $4,864.46 $63.72 $63.72

55-64 $1,149.07 $4,626.30 $60.60 $60.60

65-69 $841.38 $3,387.48 $44.37 $44.37

70-74 $743.42 $2,993.10 $39.21 $39.21

75+ $669.24 $2,694.44 $35.29 $35.29
Sources: Wages and Benefits from U.S. Bureau of L abor Statistics 2011a, b, c; Income and Tax information from U.S. Bureau of
E conomic Analysis 2011a, b; Average time with a physician from Abbo, et al. 2008; Time for chemother apy with 5-fluorouracil f

rom Al-Sarraf, et al. 1998; Cooper 2010; Time for rapid infusion of cisplatin from Cooper 2010; Radiation therapy time from
A merican Cancer Society 2011a; CT scan time fromMayo Clinic 2010a; MRI time from Mayo Clinic 2010b; Average wait time based on Press Ganey Associates Inc. 2010; Average tr avel time based on Federal Highway Administration 2011. 

### 3522 Consider the following example: the opportunity cost in the year of diagnosis for someone 3523 diagnosed at age 60 with Stage III nasopharyng eal cancer would be calculated as follows: 3524 3525 Calculate total hours lost in year of diagnosis: 3526 3527 • Diagnosis (all stages at diagnosis) = 375 minutes = (375/60) hours = 6.25 hours 3528 • First-year follow-up care (all stages at diagnosis) = 320 minutes = 320/60 hours = 5.33 hours 3529 • First-year treatments (for Stages II, II, and IV at diagnosis) = 15,490 mins. = 258.17 hours 3530 3531 Therefore, total first-year hours lost = 6.25 + 5.33 + 258.17 = 269.75. 3532 3533 The expected value of a lost hour for someone age 60 is $17.15 (see Table 3-11). The estimated 3534 opportunity cost in the year of diagnosis for some one diagnosed at age 60 with Stage III nasopharyngeal 3535 cancer would be 3536 269.75 hours x $17.15 per hour = $4,626. 3537 3538 3539

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### 3.4.2.6 Total expected cost of non-fatal nasopharyngeal cancer 

### 3540 3541 Expected cost in the kth year after diagnosis, conditional on age and stage of cancer at diagnosis 

### 3542
3543 If a person is diagnosed with nasopharyngeal cancer at age a and lives throughout the year of 3544 diagnosis, the total costs associated with the illness that year will be ) ( 1

, 1 a 

### OC MC  

### , where MC 1 

### denotes 3545 the medical costs in the first year and OC a,1 

### denotes the opportunity costs in the first year for someone 3546 diagnosed at age a . While these costs also depend on the stag e of the cancer at diagnosis, for ease of 3547 exposition, that is (t emporarily) omitted here. 3548 3549 Although the analysis is considering only non -fatal cases of the cancer, people can still die of 3550 other causes. If the cancer patient dies of other causes partway through the year, he will not incur all of 3551 ) ( 1

, 1 a 

### OC MC  

### . The analysis assumes that deaths from other causes occur uniformly throughout the 3552 year and thus, on average, the expected cost associ ated with nasopharyngeal cancer for the first year 3553 among those who die of some other cause that year is ) ( 1

, 1 2 1

a 

### OC MC 



### . 3554

3555 Survival probabilities were obtained fro m the Centers for Disease Control and 3556 Prevention/National Center for Health Statistics (2010a). 45 

### Since survival probab ilities are age-specific, 3557 age is inserted into the calculations here. 3558 3559 Suppose an individual is diagnosed with nasopharyngeal cancer at age a . Let sp a 

### denote the 3560 probability of surviving from age a to age ( a +1). Then the expected cost during the year of diagnosis of 3561 nasopharyngeal cancer for an individual diagnosed at age a is: 3562 3563 3564 ) ( * ) 1 ( ) ( * ) (cos 1

, 1 2 1 1

, 1 1

, a a a a a 

### OC MC sp OC MC sp t E 

    (21)


### 3565 3566 Similarly, the expected cost associated with n asopharyngeal cancer for that individual during the 3567 second year (at age a +1) is: 3568 3569

. 3570 ) ( * ) 1 ( ) ( * ) (cos 2

, 1 2 2 1 1 2

, 1 2 1 2

, 1      

### 

    a a a a a 

### OC MC sp OC MC sp t E (22)


### 3571 In general, the expected cost associat ed with nasopharyngeal cancer during the k th year after 3572 diagnosis (i.e., in year ( k +1) of the cancer) for an i ndividual diagnosed at age a is: 3573 3574 ) ( * ) 1 ( ) ( * ) (cos 1

, 1 2 1 1

, 1 1

,           

### 

    k k a k k a k k a k k a k k a 

### OC MC sp OC MC sp t E (23)


### 3575 For example, suppose an individual is diagno sed with Stage III nasopharyngeal cancer at age 3576 60. The survival probability at age 60 (the probabilit y of surviving from age 60 to age 61) is 0.990718. 3577 Using the first-year medical cost from Table 3-8 ($110,234) and the first-year opportunity cost for 3578 someone diagnosed with Stage III nasopharyngeal can cer at age 60 from Table 3-12 ($4,626), the total 3579 expected cost in the first year is: 3580 3581

45 Having nasopharyngeal cancer may increase the probabilities of dying of other causes. However, because no such information was identified, this analysis us es general population su rvival probabilities.

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January 27, 2012 3-30 

### ) 626

, 4 $ 234

, 110 ($ * ) 990718

. 0 1 ( ) 626

, 4 $ 234

, 110 ($ * 990718

. 0 ) (cos 2 1 1

, 60 

### 

    t E



### = $114,327 (24)



### 3582 The age-specific expected costs in the first year (the year of diagnosis) and in subsequent years 3583 for individuals diagnosed with Stage I nasopharyngeal cancer and at Stages II, III, or IV are shown in 3584 Table 3-13. 3585

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### Table 3-13: Annual Cost of (Non-Fatal) Nasopharyngeal Cancer (2010$) Diagnosed in Stage I Diagnosed in Stage II, III, IV Age at Diagnosis First Year Subsequent Years First Year Subsequent Years 16 $18,591 $1,370 $112,783 $1,370 17 $18,590 $1,370 $112,777 $1,370 18 $18,672 $1,374 $113,103 $1,374 19 $18,671 $1,374 $113,099 $1,374 20 $18,919 $1,387 $114,095 $1,387 21 $18,918 $1,387 $114,091 $1,387 22 $18,917 $1,387 $114,088 $1,387 23 $18,917 $1,387 $114,087 $1,387 24 $18,917 $1,387 $114,087 $1,387 25 $19,146 $1,399 $115,007 $1,399 26 $19,146 $1,399 $115,007 $1,399 27 $19,146 $1,399 $115,008 $1,399 28 $19,146 $1,399 $115,008 $1,399 29 $19,146 $1,399 $115,007 $1,399 30 $19,163 $1,400 $115,076 $1,400 31 $19,163 $1,400 $115,074 $1,400 32 $19,162 $1,400 $115,072 $1,400 33 $19,162 $1,400 $115,069 $1,400 34 $19,161 $1,400 $115,066 $1,400 35 $19,171 $1,400 $115,106 $1,400 36 $19,171 $1,400 $115,101 $1,400 37 $19,170 $1,400 $115,095 $1,400 38 $19,168 $1,400 $115,088 $1,400 39 $19,167 $1,400 $115,079 $1,400 40 $19,174 $1,400 $115,105 $1,400 41 $19,173 $1,400 $115,096 $1,400 42 $19,171 $1,400 $115,084 $1,400 43 $19,169 $1,400 $115,072 $1,400 44 $19,167 $1,400 $115,059 $1,400 45 $19,155 $1,399 $115,009 $1,399 46 $19,153 $1,399 $114,995 $1,399 47 $19,150 $1,399 $114,980 $1,399 48 $19,148 $1,399 $114,963 $1,399 49 $19,145 $1,398 $114,945 $1,398 50 $19,121 $1,397 $114,845 $1,397 51 $19,118 $1,397 $114,823 $1,397 52 $19,114 $1,397 $114,801 $1,397 53 $19,110 $1,396 $114,778 $1,396 54 $19,107 $1,396 $114,756 $1,396 55 $19,044 $1,393 $114,496 $1,393 56 $19,040 $1,392 $114,472 $1,392 57 $19,035 $1,392 $114,444 $1,392 58 $19,030 $1,392 $114,412 $1,392 59 $19,024 $1,391 $114,374 $1,391 60 $19,016 $1,391 $114,327 $1,391 61 $19,007 $1,390 $114,274 $1,390 62 $18,998 $1,389 $114,218 $1,389 63 $18,989 $1,389 $114,164 $1,389 64 $18,980 $1,388 $114,112 $1,388 65 $18,665 $1,371 $112,826 $1,371 66 $18,656 $1,371 $112,769 $1,371 67 $18,645 $1,370 $112,703 $1,370 68 $18,632 $1,369 $112,625 $1,369 69 $18,617 $1,368 $112,536 $1,368 70 $18,503 $1,361 $112,044 $1,361

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### Table 3-13: Annual Cost of (Non-Fatal) Nasopharyngeal Cancer (2010$) Diagnosed in Stage I Diagnosed in Stage II, III, IV Age at Diagnosis First Year Subsequent Years First Year Subsequent Years 71 $18,484 $1,360 $111,929 $1,360 72 $18,462 $1,358 $111,796 $1,358 73 $18,437 $1,356 $111,643 $1,356 74 $18,409 $1,354 $111,472 $1,354 75 $18,304 $1,348 $110,987 $1,348 76 $18,270 $1,346 $110,781 $1,346 77 $18,233 $1,343 $110,555 $1,343 78 $18,192 $1,340 $110,305 $1,340 79 $18,147 $1,337 $110,032 $1,337 80 $18,097 $1,333 $109,731 $1,333 81 $18,043 $1,329 $109,401 $1,329 82 $17,983 $1,325 $109,040 $1,325 83 $17,918 $1,320 $108,644 $1,320 84 $17,847 $1,315 $108,212 $1,315 85 $17,769 $1,309 $107,741 $1,309 86 $17,684 $1,303 $107,227 $1,303 87 $17,592 $1,296 $106,669 $1,296 88 $17,493 $1,288 $106,064 $1,288 89 $17,385 $1,280 $105,410 $1,280 90 $17,268 $1,272 $104,703 $1,272 91 $17,142 $1,263 $103,941 $1,263 92 $17,008 $1,253 $103,124 $1,253 93 $16,863 $1,242 $102,249 $1,242 94 $16,709 $1,231 $101,316 $1,231 95 $16,546 $1,219 $100,323 $1,219 

### 3586 Present discounted value of costs conditional on age at diagnosis 

### 3587
3588 Because cancer is a chronic illness, costs are incurred for a number of years. The COI-based 3589 value of a cancer case is the pdv of the stream of expected costs asso ciated with the illness, from the year 3590 of diagnosis to the year of death of the patient (or a preset year). Since the analysis is considering only 3591 non-fatal cases of nasopharyngeal cancer, death would be from some other cause. As shown in Table 3592 3-13, expected first-year and subsequent-year costs (i ncluding medical costs and opportunity costs) were 3593 calculated for each age at diagnosis, starting at age 16, separately for those diagnosed at Stage I and those 3594 diagnosed at Stages II, III, or IV. Expected costs take into account the probability of dying of some other 3595 cause at each age, as explained above. Denoting the discount rate as d , the pdv of a case of 3596 nasopharyngeal cancer for an individual diagnosed at age a , conditional on a given stage-at-diagnosis, is 3597 3598 

# 

  


##   M

k k k k a

a 

## d t E pdv

0 1

, 

## ) 1 ( ) (cos (25)



### 3599 where
1

, 

### ) (cos

  k

k a 

### t E 

### is given by equation (23) above. The su ms of the expected costs were taken 3600 through age 99. 3601 3602 While the dependence of cost on stage of th e cancer at diagnosis has been omitted from 3603 equations (23) and (25), cost does in fact depend on this, as shown in Table 3-13. The final step is to 3604 calculate an expected pdv , where the expectation is taken over the stage at diagnosis. Using the 3605 percentages of cases diagnosed at each stage given in Table 3-13 above, and assuming that the cases with 3606 unknown stage at diagnosis have the same distributi on of stages at diagnosis as the cases whose stages are 3607

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January 27, 2012 3-33 

### known, 16.89 percent of cases are diagnosed at Stage I and 83.11 percent are diagnosed at Stages II, III, 3608 or IV. Table 3-14 shows the stage at diagnosis-specific pdv s, and the expected pdv , calculated as a 3609 weighted average of the two stage at diagnosis-specific pdv s, where the weights are these percentages, 3610 separately for each age at diagnosis. These pdv s are estimated for a 3 and a 7 percent discount rate. The 3611 final column of Table 3-14 shows the implied valu es of a micro risk reduction (a risk reduction of 3612 1/1,000,000), which is just the expected pdv divided by 1,000,000. 3613 3614 3615

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-34 

### Table 3-14: Present Discounted Valu es of Nonfatal Nasopharyngeal Cancer by Age at Diagnosis

Age at Diagnosis 3 Percent Discount Rate 7 Percent Discount Rate

PDV for Diagnosis at Stage I PDV for Diagnosis at Stage II, III, or IV Expected PDV Implied Value of a Micro Risk Reduction PDV for Diagnosis at Stage I PDV for Diagnosis at Stage II, III, or IV Expected PDV Implied Value o f a Micro Risk

Reduction
16 $60,328 $154,520 $138,609 $0.139 $38,090 $132,282 $116,371 $0.116 17 $60,207 $154,394 $138,484 $0.138 $60,207 $154,394 $138,484 $0.138 18 $60,297 $154,728 $138,777 $0.139 $60,297 $154,728 $138,777 $0.139 19 $60,169 $154,597 $138,646 $0.139 $60,169 $154,597 $138,646 $0.139 20 $60,681 $155,857 $139,780 $0.140 $60,681 $155,857 $139,780 $0.140 21 $60,544 $155,717 $139,640 $0.140 $60,544 $155,717 $139,640 $0.140 22 $60,404 $155,575 $139,499 $0.139 $60,404 $155,575 $139,499 $0.139 23 $60,262 $155,431 $139,355 $0.139 $60,262 $155,431 $139,355 $0.139 24 $60,115 $155,285 $139,209 $0.139 $60,115 $155,285 $139,209 $0.139 25 $60,638 $156,605 $140,394 $0.140 $60,638 $156,605 $140,394 $0.140 26 $60,481 $156,448 $140,238 $0.140 $60,481 $156,448 $140,238 $0.140 27 $60,320 $156,287 $140,076 $0.140 $60,320 $156,287 $140,076 $0.140 28 $60,153 $156,120 $139,909 $0.140 $60,153 $156,120 $139,909 $0.140 29 $59,980 $155,947 $139,736 $0.140 $59,980 $155,947 $139,736 $0.140 30 $59,768 $155,693 $139,489 $0.139 $59,768 $155,693 $139,489 $0.139 31 $59,585 $155,508 $139,305 $0.139 $59,585 $155,508 $139,305 $0.139 32 $59,396 $155,317 $139,114 $0.139 $59,396 $155,317 $139,114 $0.139 33 $59,202 $155,121 $138,918 $0.139 $59,202 $155,121 $138,918 $0.139 34 $59,001 $154,917 $138,715 $0.139 $59,001 $154,917 $138,715 $0.139 35 $58,774 $154,662 $138,464 $0.138 $58,774 $154,662 $138,464 $0.138 36 $58,560 $154,444 $138,248 $0.138 $58,560 $154,444 $138,248 $0.138 37 $58,340 $154,219 $138,023 $0.138 $58,340 $154,219 $138,023 $0.138 38 $58,112 $153,985 $137,791 $0.138 $58,112 $153,985 $137,791 $0.138 39 $57,877 $153,743 $137,549 $0.138 $57,877 $153,743 $137,549 $0.138 40 $57,618 $153,455 $137,266 $0.137 $57,618 $153,455 $137,266 $0.137 41 $57,368 $153,197 $137,010 $0.137 $57,368 $153,197 $137,010 $0.137 42 $57,111 $152,930 $136,745 $0.137 $57,111 $152,930 $136,745 $0.137 43 $56,846 $152,655 $136,471 $0.136 $56,846 $152,655 $136,471 $0.136 44 $56,572 $152,370 $136,188 $0.136 $56,572 $152,370 $136,188 $0.136 45 $56,307 $152,115 $135,932 $0.136 $56,307 $152,115 $135,932 $0.136 46 $56,017 $151,813 $135,631 $0.136 $56,017 $151,813 $135,631 $0.136 47 $55,718 $151,501 $135,322 $0.135 $55,718 $151,501 $135,322 $0.135 48 $55,409 $151,179 $135,002 $0.135 $55,409 $151,179 $135,002 $0.135 49 $55,091 $150,846 $134,671 $0.135 $55,091 $150,846 $134,671 $0.135 50 $54,799 $150,584 $134,404 $0.134 $54,799 $150,584 $134,404 $0.134 51 $54,460 $150,227 $134,050 $0.134 $54,460 $150,227 $134,050 $0.134 52 $54,111 $149,860 $133,686 $0.134 $54,111 $149,860 $133,686 $0.134 53 $53,752 $149,482 $133,312 $0.133 $53,752 $149,482 $133,312 $0.133 54 $53,383 $149,094 $132,927 $0.133 $53,383 $149,094 $132,927 $0.133 55 $51,727 $145,725 $129,847 $0.130 $51,727 $145,725 $129,847 $0.130 56 $51,344 $145,321 $129,447 $0.129 $51,344 $145,321 $129,447 $0.129 57 $50,948 $144,903 $129,032 $0.129 $50,948 $144,903 $129,032 $0.129 58 $50,539 $144,467 $128,601 $0.129 $50,539 $144,467 $128,601 $0.129 59 $50,115 $144,012 $128,151 $0.128 $50,115 $144,012 $128,151 $0.128 60 $49,676 $143,535 $127,680 $0.128 $49,676 $143,535 $127,680 $0.128 61 $49,222 $143,037 $127,190 $0.127 $49,222 $143,037 $127,190 $0.127 62 $48,755 $142,524 $126,684 $0.127 $48,755 $142,524 $126,684 $0.127 63 $48,275 $142,000 $126,168 $0.126 $48,275 $142,000 $126,168 $0.126 64 $47,783 $141,465 $125,640 $0.126 $47,783 $141,465 $125,640 $0.126 65 $47,833 $142,268 $126,316 $0.126 $47,833 $142,268 $126,316 $0.126 66 $47,306 $141,693 $125,749 $0.126 $47,306 $141,693 $125,749 $0.126 67 $46,760 $141,091 $125,157 $0.125 $46,760 $141,091 $125,157 $0.125 68 $46,194 $140,461 $124,537 $0.125 $46,194 $140,461 $124,537 $0.125

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### Table 3-14: Present Discounted Valu es of Nonfatal Nasopharyngeal Cancer by Age at Diagnosis

Age at Diagnosis 3 Percent Discount Rate 7 Percent Discount Rate

PDV for Diagnosis at Stage I PDV for Diagnosis at Stage II, III, or IV Expected PDV Implied Value of a Micro Risk Reduction PDV for Diagnosis at Stage I PDV for Diagnosis at Stage II, III, or IV Expected PDV Implied Value o f a Micro Risk

Reduction
69 $45,608 $139,800 $123,889 $0.124 $45,608 $139,800 $123,889 $0.124 70 $45,171 $139,531 $123,592 $0.124 $45,171 $139,531 $123,592 $0.124 71 $44,541 $138,804 $122,881 $0.123 $44,541 $138,804 $122,881 $0.123 72 $43,888 $138,039 $122,135 $0.122 $43,888 $138,039 $122,135 $0.122 73 $43,211 $137,234 $121,352 $0.121 $43,211 $137,234 $121,352 $0.121 74 $42,510 $136,389 $120,531 $0.121 $42,510 $136,389 $120,531 $0.121 75 $41,904 $135,811 $119,948 $0.120 $41,904 $135,811 $119,948 $0.120 76 $41,154 $134,887 $119,054 $0.119 $41,154 $134,887 $119,054 $0.119 77 $40,378 $133,920 $118,119 $0.118 $40,378 $133,920 $118,119 $0.118 78 $39,577 $132,908 $117,143 $0.117 $39,577 $132,908 $117,143 $0.117 79 $38,749 $131,848 $116,122 $0.116 $38,749 $131,848 $116,122 $0.116 80 $37,893 $130,738 $115,055 $0.115 $37,893 $130,738 $115,055 $0.115 81 $37,009 $129,575 $113,939 $0.114 $37,009 $129,575 $113,939 $0.114 82 $36,097 $128,357 $112,772 $0.113 $36,097 $128,357 $112,772 $0.113 83 $35,155 $127,080 $111,552 $0.112 $35,155 $127,080 $111,552 $0.112 84 $34,183 $125,742 $110,276 $0.110 $34,183 $125,742 $110,276 $0.110 85 $33,180 $124,341 $108,943 $0.109 $33,180 $124,341 $108,943 $0.109 86 $32,148 $122,874 $107,549 $0.108 $32,148 $122,874 $107,549 $0.108 87 $31,084 $121,339 $106,093 $0.106 $31,084 $121,339 $106,093 $0.106 88 $29,990 $119,732 $104,573 $0.105 $29,990 $119,732 $104,573 $0.105 89 $28,865 $118,053 $102,988 $0.103 $28,865 $118,053 $102,988 $0.103 90 $27,710 $116,300 $101,336 $0.101 $27,710 $116,300 $101,336 $0.101 91 $26,525 $114,472 $99,616 $0.100 $26,525 $114,472 $99,616 $0.100 92 $25,312 $112,567 $97,828 $0.098 $25,312 $112,567 $97,828 $0.098 93 $24,072 $110,586 $95,972 $0.096 $24,072 $110,586 $95,972 $0.096 94 $22,805 $108,529 $94,049 $0.094 $22,805 $108,529 $94,049 $0.094 95 $21,513 $106,398 $92,059 $0.092 $21,513 $106,398 $92,059 $0.092 

### 3616 3617 3.4.3 Timing of Reduced Cancer Risk and Present Value of Reduced Cancer Risk at the 3618 Time of the Exposure Reduction 3619 3620 The available studies that link formaldehyde exposure to cancer risk do not provide any 3621 information about the latency periods between exposure and cancer incidence. Therefore, this analysis 3622 relies on the assumption that the incidence of nas opharyngeal cancer caused by formaldehyde exposure 3623 has the same distribution as the incidence of nasopharyngeal cancer from any cause. 3624 3625 The National Cancer Institutes’ Surveill ance Epidemiology and End Results (SEER) 3626 nasopharyngeal cancer incidence data included the nu mber of cancer diagnoses for ten year age brackets 3627 that ranged from ages 20 to 79 and also included an ag e bracket for age 80 and older (Ries, et al. 2007). 3628 To estimate the timing of avoided cancer for a hypothetical person, it was assumed that the timing of 3629 cancer diagnosis would follow the distribution betw een the age of exposure and the individual’s life 3630 expectancy age. Table 3-15 presents an example of how this calculation is perfo rmed for individuals who 3631 are age 50 at the time they experience a change in fo rmaldehyde exposure that reduces their cancer risk. 3632 Thus, conditional on avoiding a case of nasopharyngeal cancer because of an exposure reduction that 3633 occurred at age 50, there is a 40.7 percent chance th at the avoided cancer would have occurred between 3634 ages 50 and 59, a 37.8 percent chance that it would ha ve occurred between ages 60 and 69, a 21.0 percent 3635 chance that it would have occurred between ages 70 a nd 79, and a 0.4 percent chance that it would have 3636 occurred at age 80. Note that although the table pr esents these percentages for the age brackets for which 3637

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January 27, 2012 3-36 

### the incidence data were available, the analysis u ses annual incidence rates estimated by assuming the 3638 incidence rates are uniformly distributed within the age brackets for which they were reported. 3639 3640 Table 3-15: Distribution of Timing of Avoided Cancer Risk: Example for a Reduction in Exposure Experienced at Age 50 Age

(1) Cancer Incidence Distribution (2) Timing of Avoided Cancer Risk a

(3) 0-29 4.5% n.a. 30-39 12.1% n.a. 40-49 23.4% n.a. 50-59 23.0% 40.7% 60-69 21.4% 37.8%
70-79 11.9% 21.0%

80 3.7% 0.4% 81+ n.a. Total 100% 100%

a Calculated as column (2) divided by 56.6%, where 56.6% is the percentage of cancer death incidence between the ages of 50 and 81 (the ages that span from when the change in exposure was experienced through th e end of the expected lifetime). Source: Ries, et al. 2007 

### 3641 3.4.3.1 Present Value of Reduced Cancer Risk at the Time of the Exposure Reduction 

### 3642 3643 Once the distribution of the timing of the avoided can cer risk is estimated (see section 3.4.3), this 3644 distribution can be applied to the estimated values of re duced cancer risk at the time the cancer is avoided. 3645 Using the example presented above in section 3.4.3 an individual with an exposure reduction at age 50 3646 has a 40.7% chance of realizing the benefit from that reduction between the ages of 50 and 59. This is 3647 assumed to be uniformly distributed across the 10 year s in that age range; therefore, there is a 4.7% 3648 chance this individual realizes this benefit in each y ear between the ages 50 and 59. Thus, by multiplying 3649 the probability that cancer is avoided in a given year by the value of the risk reduction discounted to the 3650 year when the exposure reduction was experienced, the analysis can estimate the present value of reduced 3651 cancer risk at the time of the exposure reduction. Fo r an individual with a given age at exposure, this 3652 calculation can be described with the following formula: 3653 3654

݊݋݅ݐܿݑܴ݇݁݀ݏܴ݅ݎܽ݊ܿ݁ܥܸܲ ௔௘ ௧ୀ ෍ ൌ ݅݀݁݀݋ݒܣݎܲ ௧ ܥܨܸܰ ൈ ݈ܽݐܽܨ݊݋ܰݎܲ ൅ ܴܯܸ ൈ ݈ܽݐܽܨݎܲሺ ൈ ௧ ሻ ሺ1 ൅ ݀ሻ ሺ௧ାଵି௔௘ሻ ௅ா

௧ୀ௔௘ (26)



### 3655 where: 3656 3657
PVCancerRiskReduction t=ae is the present value of the reduced cancer risk at the time of the exposure reduction for individual age ae at the time of the exposure reduction. PRAvoided t is the probability that reduction in cancer risk is realized in period t. This probability is conditional on the age at exposure. PrFatal is the probability that a case of na sopharyngeal cancer is fa tal, 57.1 percent. VMR is the value of a micro mortality risk reduction, $8.01. PrNonFatal is the probability that a case of nasopharyngeal cancer is not fatal, 42.9 percent. VNFC t is the value of a micro risk reduction for nonfatal cancer diagnosed in period t, or 1/1,000,000 of the value of an avoided cas e of nonfatal nasopharyngeal cancer. This value is conditional on the age at diagnosis. d is the 3 percent or 7 percent discount rate. 

### 3658 Table 3-16 presents the present values for micro ri sk reductions for fatal and nonfatal cancer, both 3659 separately and combined, by the age at exposure. No te that the combined value for fatal and nonfatal 3660

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-37 

### cancer is simply the average of the two separate valu es weighted according to the probability that cancer 3661 is fatal, which is 57.1 percent of nasopharyngeal cases (SEER 2010). 3662 3663

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-38 

### Table 3-16: Present Discounted Values for Nasopharyngeal Cancer by Age at Exposure

Age at Exposure 3 Percent Discount Rate 7 Percent Discount Rate

PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal) PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for

Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal)
0 $1.809 $0.030 $1.01 $0.333 $0.005 $0.19

1 $1.850 $0.031 $1.04 $0.352 $0.005 $0.20

2 $1.919 $0.032 $1.08 $0.381 $0.006 $0.21

3 $1.963 $0.032 $1.10 $0.403 $0.006 $0.23

4 $2.019 $0.033 $1.13 $0.430 $0.006 $0.24

5 $2.082 $0.034 $1.17 $0.461 $0.007 $0.26

6 $2.145 $0.035 $1.20 $0.494 $0.007 $0.28

7 $2.209 $0.037 $1.24 $0.528 $0.008 $0.30

8 $2.275 $0.038 $1.27 $0.565 $0.008 $0.32

9 $2.343 $0.039 $1.31 $0.605 $0.009 $0.34

10 $2.414 $0.040 $1.35 $0.647 $0.009 $0.36

11 $2.486 $0.041 $1.39 $0.693 $0.010 $0.39

12 $2.561 $0.042 $1.43 $0.741 $0.011 $0.41

13 $2.637 $0.044 $1.48 $0.793 $0.012 $0.44

14 $2.717 $0.045 $1.52 $0.848 $0.012 $0.47

15 $2.798 $0.046 $1.57 $0.908 $0.013 $0.51

16 $2.882 $0.048 $1.62 $0.971 $0.014 $0.54

17 $2.969 $0.049 $1.66 $1.039 $0.015 $0.58

18 $3.058 $0.051 $1.71 $1.112 $0.016 $0.62

19 $3.149 $0.052 $1.76 $1.190 $0.017 $0.67

20 $3.222 $0.053 $1.81 $1.244 $0.018 $0.70

21 $3.297 $0.054 $1.85 $1.301 $0.019 $0.73

22 $3.375 $0.056 $1.89 $1.363 $0.020 $0.76

23 $3.455 $0.057 $1.94 $1.429 $0.021 $0.80

24 $3.538 $0.058 $1.98 $1.501 $0.022 $0.84

25 $3.624 $0.060 $2.03 $1.577 $0.023 $0.88

26 $3.713 $0.061 $2.08 $1.659 $0.024 $0.93

27 $3.805 $0.063 $2.13 $1.747 $0.025 $0.98

28 $3.900 $0.064 $2.19 $1.841 $0.027 $1.03

29 $3.998 $0.066 $2.24 $1.943 $0.028 $1.09

30 $4.062 $0.067 $2.28 $2.001 $0.029 $1.12

31 $4.134 $0.068 $2.32 $2.068 $0.030 $1.16

32 $4.209 $0.069 $2.36 $2.139 $0.031 $1.20

33 $4.286 $0.070 $2.40 $2.216 $0.032 $1.24

34 $4.366 $0.071 $2.45 $2.298 $0.033 $1.29

35 $4.449 $0.073 $2.49 $2.386 $0.035 $1.33

36 $4.535 $0.074 $2.54 $2.480 $0.036 $1.39

37 $4.624 $0.075 $2.59 $2.581 $0.037 $1.44

38 $4.717 $0.077 $2.64 $2.690 $0.039 $1.51

39 $4.813 $0.078 $2.70 $2.807 $0.041 $1.57

40 $4.869 $0.079 $2.73 $2.866 $0.042 $1.60

41 $4.927 $0.080 $2.76 $2.927 $0.042 $1.64

42 $4.985 $0.081 $2.79 $2.989 $0.043 $1.67

43 $5.044 $0.081 $2.83 $3.054 $0.044 $1.71

44 $5.104 $0.082 $2.86 $3.120 $0.045 $1.75

45 $5.156 $0.083 $2.89 $3.179 $0.046 $1.78

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-39 

### Table 3-16: Present Discounted Values for Nasopharyngeal Cancer by Age at Exposure

Age at Exposure 3 Percent Discount Rate 7 Percent Discount Rate

PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal) PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for

Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal)
46 $5.217 $0.083 $2.92 $3.249 $0.047 $1.82

47 $5.279 $0.084 $2.96 $3.320 $0.048 $1.86

48 $5.341 $0.085 $2.99 $3.394 $0.049 $1.90

49 $5.404 $0.086 $3.03 $3.469 $0.050 $1.94

50 $5.469 $0.087 $3.06 $3.549 $0.051 $1.99

51 $5.535 $0.087 $3.10 $3.631 $0.052 $2.03

52 $5.601 $0.088 $3.14 $3.715 $0.053 $2.08

53 $5.668 $0.089 $3.17 $3.801 $0.054 $2.13

54 $5.735 $0.090 $3.21 $3.889 $0.055 $2.18

55 $5.790 $0.090 $3.24 $3.964 $0.056 $2.22

56 $5.857 $0.091 $3.28 $4.054 $0.058 $2.27

57 $5.923 $0.092 $3.32 $4.146 $0.059 $2.32

58 $5.989 $0.092 $3.35 $4.237 $0.060 $2.37

59 $6.054 $0.093 $3.39 $4.328 $0.061 $2.42

60 $6.111 $0.093 $3.42 $4.413 $0.062 $2.47

61 $6.182 $0.094 $3.46 $4.519 $0.064 $2.53

62 $6.252 $0.095 $3.50 $4.625 $0.065 $2.59

63 $6.321 $0.095 $3.54 $4.730 $0.066 $2.65

64 $6.388 $0.096 $3.58 $4.832 $0.067 $2.70

65 $6.430 $0.096 $3.60 $4.900 $0.068 $2.74

66 $6.486 $0.096 $3.63 $4.988 $0.069 $2.79

67 $6.535 $0.097 $3.66 $5.061 $0.070 $2.83

68 $6.571 $0.097 $3.68 $5.112 $0.070 $2.86

69 $6.589 $0.096 $3.69 $5.126 $0.070 $2.87

70 $6.647 $0.097 $3.72 $5.227 $0.071 $2.92

71 $6.736 $0.097 $3.77 $5.377 $0.073 $3.01

72 $6.824 $0.098 $3.82 $5.531 $0.075 $3.09

73 $6.912 $0.099 $3.87 $5.687 $0.077 $3.18

74 $6.999 $0.100 $3.92 $5.845 $0.079 $3.27

75 $6.978 $0.098 $3.90 $5.823 $0.078 $3.25

76 $7.039 $0.099 $3.94 $5.936 $0.079 $3.32

77 $7.078 $0.098 $3.96 $6.009 $0.080 $3.36

78 $7.066 $0.097 $3.95 $5.983 $0.079 $3.34

79 $6.900 $0.093 $3.86 $5.650 $0.074 $3.16

80 $6.803 $0.090 $3.80 $5.480 $0.070 $3.06

81 $6.900 $0.091 $3.86 $5.650 $0.072 $3.16

82 $6.999 $0.092 $3.91 $5.828 $0.074 $3.26

83 $7.100 $0.092 $3.97 $6.014 $0.076 $3.36

84 $7.203 $0.093 $4.02 $6.208 $0.078 $3.47

85 $7.100 $0.090 $3.97 $6.014 $0.074 $3.36

86 $7.100 $0.088 $3.97 $6.014 $0.074 $3.36

87 $7.100 $0.087 $3.97 $6.014 $0.073 $3.36

88 $7.100 $0.085 $3.96 $6.014 $0.071 $3.36

89 $7.100 $0.084 $3.96 $6.014 $0.070 $3.36

90 $7.203 $0.084 $4.02 $6.208 $0.072 $3.47

91 $7.308 $0.084 $4.08 $6.410 $0.074 $3.58

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-40 

### Table 3-16: Present Discounted Values for Nasopharyngeal Cancer by Age at Exposure

Age at Exposure 3 Percent Discount Rate 7 Percent Discount Rate

PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal) PV of Micro Risk Reduction for Fatal Cancer PV of Micro Risk Reduction for

Nonfatal Cancer PV of Micro Risk Reduction for Cancer (fatal and nonfatal)
92 $7.415 $0.085 $4.14 $6.622 $0.075 $3.70

93 $7.524 $0.085 $4.20 $6.843 $0.077 $3.82

94 $7.635 $0.085 $4.26 $7.075 $0.079 $3.95 

### 3664 3665

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-41 

## 3.5 Estimating the Value of Non-cancer Risk Reductions 3666 3667 This section describes the approach to estimating th e benefits associated with avoiding a selected 3668 suite of non-cancer effects as a result of the proposed TSCA Title VI Implementation Rule. This approach 3669 is summarized from the EPA draft report titled “Appro ach to Assessing Non-cancer Health Effects from 3670 Formaldehyde and Benefits from Reducing Non-cancer Health Effects as a Result of Implementing 3671 Formaldehyde Emission Limits for Composite Wood Products” (November 2011). EPA’s non-cancer 3672 approach document (U.S. EPA 2011) evaluated the non-can cer health evidence used in the derivation of 3673 candidate reference concentrations from the J une 2010 draft IRIS Toxicological Review of 3674 Formaldehyde. While the draft IRIS Toxicological Re view of Formaldehyde identified seven categories 3675 of non-cancer health effects, EPA determined there was sufficient evidence for quantitative 3676 concentration-response modeling for only three cate gories of effects. The specific non-cancer endpoints 3677 selected for the TSCA Title VI benefits assessment we re: eye irritation, asthma, and reduced fertility. In 3678 the non-cancer approach document, EPA derived c oncentration-response functions for these three 3679 endpoints and recommended accompanying unit values fo r use in the benefits assessment based on a 3680 literature review of the endpoints. The National Academ y of Sciences (NAS) peer reviewed the draft IRIS 3681 Toxicological Review in 2011, and where possible, EPA’s non-cancer approach document followed NAS 3682 recommendations, such as excluding two studies that NAS recommended should not be advanced in the 3683 derivation of reference concentrations. 3684 3685 All of the non-market benefits are estimated to result from reduced exposure to formaldehyde 3686 from composite wood products as a result of the propo sed rule. The benefits for each avoided endpoint 3687 are a function of the: (1) concentration-response functi on (e.g., increase in risk of health endpoint per unit 3688 increase in formaldehyde concentration), (2) unit va lues of the avoided illness, (3) impacted population, 3689 (4) background rate of the health endpoint (if applicab le), and (5) estimated cha nge in exposure associated 3690 with the rule. All of these inputs are described briefl y below, and some (e.g., impacted population, change 3691 in exposure as a result of the rule) are described in more detail in other sections of this document. The 3692 benefits equations for avoiding cases of eye irritation, asthma, and reduced fertility as a result of the 3693 proposed rule are provided below. 3694 3695 The exposures before (“baseline”) and after the rule (“policy”) have been modeled as described in 3696 Section 3.1. As necessary, average daily concentrati ons (ADC) of formaldehyde in air will be converted 3697 from units of mg/m 3 

### to ppb or vice versa using this convers ion factor: 814 ppb formaldehyde = 1 mg/m 3



### , 3698 which corresponds to a temperature of 25°C, a pr essure of 1 atm, and a molecular weight for 3699 formaldehyde of 30.03 g/mol. 3700 3701 3.5.1 Eye Irritation 3702 3703 Information from two studies reporting sensory i rritation in humans from chronic formaldehyde 3704 inhalation exposures in a residential environment wa s combined to create th e concentration-response 3705 function for eye irritation. Liu et al. (1991) employed in-home measurements over a seven-day period to 3706 calculate cumulative exposure based on time spent in the home for over 1,000 mobile home residents, 3707 including both young children (< 4 years) and the elderly (> 65 years). Liu et al. (1991) reported that 3708 formaldehyde exposure was a significant predictor of burning eyes in a multivariate logistic regression. 3709 The prevalence of eye irritation increased with increasing cumulative exposure in a categorical analysis of 3710 participants in the 20-64 age group for both summer and winter exposure estimat es. While not appropriate 3711 to derive a concentration-response function, this study provided the most specific information on the 3712 relative timing of inhalation exposures to formaldehy de and the report of sensory irritation: exposures 3713 were recorded in a two-week period preceding the collection of endpoint data on sensory irritation. 3714 3715

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-42 

### Hanrahan et al. (1984) assessed average exposure in the home (from 30-60 minute air samples) 3716 and occurrence of adverse health outcomes (by questionnaires), including burning eyes, in a study of 61 3717 teenage and adult (mean age 48) residents of m obile homes in Wisconsin. Measured formaldehyde 3718 concentrations ranged from l ess than 100 ppb to 800 ppb. Hanrahan et al. (1984) provided a graphical 3719 representation (Figure 1 in the paper) of the best-fitti ng logistic regression model results to the predicted 3720 prevalence of burning eyes for formaldehyde exposures from 100 to 800 ppb. 3721 3722 This analysis fit a power model to the prevalence odds ratio (p/(1-p)) of burning eyes (estimated 3723 from Figure 1 of Hanrahan et al. (1984) as a function of average formaldehyde concentration. The 3724 resulting functional form of the prevalence odds ratio was estimated to be p/(1-p) = Z = 7x10 -7 

### Conc 2.3743



### . 3725 This can be solved for prevalence (e .g., p/(1-p) = Z; p = Z/(1 + Z)) for use in the benefits equation. Since 3726 Liu et al. (1991) produced similar results for a two-w eek period, the analysis adju sted the prevalence to an 3727 annual basis consisting of 26 two-week periods (e.g., p = 26 * Z/(1 + Z)). While Hanrahan et al. (1984) 3728 did not administer questionnaires to children explicitl y, this analysis assumes that the concentration3729 response function applies to that age group as well. 3730 3731 There are additional sources of uncertainty associ ated with using this concentration-response 3732 function. It does not account for the possibility that irritant effects may diminish with the time exposed. 3733 Furthermore, the Hanrahan et al. (1984) data fro m which this concentration-response function was 3734 derived included formaldehyde exposures only above 100 ppb. Thus, it may be problematic to apply this 3735 concentration-response function to estimate the rela tionship between lower formaldehyde exposures and 3736 burning eye prevalence. To address this potential prob lem this analysis includes an estimate of irritation 3737 benefits where it is assumed that reductions below 40 ppb do not result in any additional reductions in 3738 burning eye prevalence. 3739 3740 The value for willingness to pay (WTP) to avoid eye irritation is based on an estimate from 3741 Industrial Economics (IEc) (1993). IEc (1993) estimated WTP to avoid a minor respiratory restricted 3742 activity day using the WTP estimates from Tolley et al. (1986) and Weitzel (1990). This analysis uses the 3743 IEc (1993) mid-range estimate for eye irritation, which is $26 in 2010$. Note that this willingness to pay 3744 value is for the symptom of “eye irritation” while the Hanrahan et al. (1984) data used to estimate the 3745 concentration-response function was for “burning eyes,” a type of “eye irritation.” It is also worth noting 3746 that the willingness to pay to avoid eye irritation declin es with the number of symptom days an individual 3747 experiences. Thus, applying the WTP to avoid a single day of eye irritation as the WTP per day for 3748 avoiding multiple days of eye irritation would tend to overstate the WTP for avoiding multiple days of 3749 eye irritation. However, this pot ential problem is not a concern in the case of this analysis because the 3750 expected annual number of eye irritatio n cases per individual is less than one. 3751 3752 By combining the concentration-response informa tion with the unit value and other relevant 3753 terms, the analysis calculates the higher estimate for the monetized benefits of avoided eye irritation cases 3754

as: 3755 3756 ቆ כ ܻܨ כ ܹܶܲ כ ܱܲܲ ൌ ܣ כ ܣ ܥܦܫ ௕ ஻



### ൅ 1 ܣ כ ܣ ܥܦܫ ௕ ஻ 

### െ ܣ כ ܣ ܥܦܫ ௣ ஻



### ൅ 1 ܣ כ ܣ ܥܦܫ ௣ ஻ 

### ቇ (27)



### 3757 where: 3758 POP is the exposed population (includes all ages and housing types); 3759 WTP is $26 in 2010$ based on the mid-range estimate for eye irritation from IEc (1993); 3760 FY is a factor of 26 converting two-week incidence of eye irritation, as stated in Liu et al. (1990), to 3761 an annual basis; 3762

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-43 

### AIDC b 

### and AIDC p 

### are the average indoor daily concentrations (AIDC) in units of ppb for the 3763 baseline and policy scenarios, respectively. These AIDCs include exposures during time spent 3764 at home, school, work, and in vehicles; 46 

### and 3765 A and B are the coefficients that define the power function that EPA fit to the prevalence odds ratio 3766 data for burning eyes in response to average air fo rmaldehyde concentrations in mobile homes 3767 from Hanrahan et al. (1984). The prevalence odds ratio, p/(1-p), is A*X B 

### and prevalence is 3768 therefore (A* X B 

### )/(1 + A* X B 

### ), where A is 7x10 -7 

### , B is 2.3743, and X represents the 3769 concentration (AIDC b 

### or AIDC p 

### ). 3770 3771 In addition, the analysis calculates a lower estim ate for the monetized benefits of avoided eye 3772 irritation to address the potential problem of applying a concentration-response function to formaldehyde 3773 exposure levels that are lower than observed in th e study from which the concentration-response function 3774 was derived. In this lower estimate it is assumed that reducing formaldehyde exposure levels below 40 3775 ppb do not result in any additional reductions in burning eye prevalence cases. The lower irritation 3776 benefit is estimated as follows: 3777 3778 ቆ כ ܻܨ כ ܹܶܲ כ ܱܲܲ ൌ ܣ ሻሽ40 ,ሺAIDC ሼmax כ ௕ ஻



### 1 ൅ ܣ כ ሼmax ሺAIDC, 40ሻሽ ௕ ஻ 

### െ ܣ כ ሼmax ሺAIDC, 40ሻሽ ௣ ஻



### 1 ൅ ܣ כ ሼmax ሺAIDC, 40ሻሽ ௣ ஻ 

### ቇ (28)



### 3779 In this lower estimate, 40 is the minimum formal dehyde exposure level that the health effect 3780 function is applied to. That is, it is assumed that reducing formaldehyde exposure below 40 ppb does not 3781 achieve any additional reduction in eye irritation prevalence. 3782 3783 3.5.2 Asthma in Children 3784 3785 The meta-analysis of formaldehyde-associated childhood asthma conducted by McGwin et al. 3786 (2010) was identified as the most relevant study to developing a concentration-response function for use 3787 in the benefits assessment. The meta-analysis w as based on seven peer-reviewed studies providing 3788 quantitative information on the association between form aldehyde exposure and asthma in children (mean 3789 age in the studies ranged from 2 – 14). Most of the studies were cross-sectional or case-control in design, 3790 collected information on asthma prevalence (either self-reported or doctor diagnosed), and assigned 3791 formaldehyde exposures (range: 1 to > 87.5 μg/m 3 

### ) from the home or school setting. Of the seven studies 3792 included in the meta-analysis, six reported incr eased risks of asthma associated with exposure to 3793 formaldehyde. The pooled random effects odds ratio (OR) for the seven studies was 1.17 per 10 μg/m 3 

### 3794 formaldehyde (95% CI: 1.01-1.36). (Random effects models are preferred with heterogeneous data as 3795 they allow for different effects or slopes in the source studies.) 3796 3797 McGwin et al. (2010) noted that one of the seven studies (Rumchev, et al. 2002) may have had 3798 ‘undue influence on the study data’ and recomputed the pooled OR without that study. That study was 3799 focused on very young children (mean age: 1.9 years; range: 6 months to 3 years), and NAS (2011) noted 3800 that study participants of such young ages are now thought to be more likely to have lower respiratory 3801 illnesses with wheezing of an infectious origin rather than asthma. Therefore, this analysis uses the 3802 McGwin et al. (2010) random effects model excludi ng Rumchev et al. (2002) as the basis of the 3803 concentration-response function for use in the benefits assessment. Note that while the mean age for the 3804 six remaining studies ranges from 8 to 14 years old, the minimum age across the six studies was 6 and the 3805 maximum was 17 and this is the age range for which be nefits are estimated in this analysis. The pooled 3806

46 AIDCs are calculated from average daily concentrations. Infants (0-2), children (3-15), full time working adults, unemployed/retired adults, and part-time working adults ar e assumed to spend 11.7%, 14.3%, 4.1%, 13.8%, and 15.8% of their time outdoors, where background expos ure levels are assumed to be .0037 mg/m 3

.

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-44 

### random effects OR reported by McGwin et al. (2010) after excluding Rumchev et al. (2002) was 1.24 per 3807 10 μg/m 3 

### increase in formaldehyde concentration (95% CI 1.09 – 1.42). Thus, converting to an OR based 3808 on parts per billion (assuming conditions of 25°C and 1 atm) results in an OR of 1.027 per ppb increase in 3809 formaldehyde exposure, with a 95% CI of 1.008-1.047 per ppb. 3810 3811 All of the studies included in the McGwin et al . (2010) meta-analysis measured individuals’ 3812 exposure to formaldehyde at a single point in time; almost all of them related that single formaldehyde 3813 measurement to asthma prevalence rather than inci dence. The most reasonable interpretation of the 3814 McGwin (2010) meta-analysis concentration-response functi on for use in the benefits analysis is that (1) 3815 the formaldehyde exposure measurements reflect typical or average exposure levels of the individuals in 3816 the study and (2) under reasonable assumptions, prev alence can be considered cumulative incidence. 47 

### 3817 Given this, the McGwin et al. (2010) concentrati on-response function is interpreted as a long-term 3818 exposure function relating exposure to a constant level of formaldehyde over the course of childhood to a 3819 given probability of getting asthma sometime during that childhood. The corresponding health impact 3820 function relates changes in long-term constant or av erage exposure to changes in the incidence of asthma 3821 during childhood. Because the con centration-response function from McGw in et al. (2010) is log-linear 3822 in form, the health impact function is 3823 3824

ൌ ܱܲܲܥ כ ܫ݊ܿܣ ௖ 

### כ ቀ 1 െ ൫݁ ሺ୪୬ ሺ ைோ ሻ ൈሺAIDC ೛ ିAIDC ್ ሻ 

### ൯ ቁ (29)



### where 3825
3826

 POPC is the exposed population of children 3827

 IncA
c 

### is the cumulative baseline incidence rate of asthma among children (for an n -year period). 3828

 OR is the odds ratio derived from the McGwin et al. (2010) meta-analysis of studies associating 3829 asthma with formaldehyde exposure. 48 

### EPA converted the OR for six of the seven studies from units 3830 of effect per 10 μg/m 3 

### to effect per ppb formaldehyde (MW = 30.03, T=25°C, P = 1 atm), and 3831 estimated an OR of 1.027 per ppb increase in formal dehyde exposure, with a 95% CI of 1.008-1.047 3832 per ppb. 3833

 AIDC p 

### and AIDC b 

### are the average indoor daily concentrations (AIDC) in units of ppb for the policy 3834 and baseline scenarios, respectively (the differe nce between these terms will be negative). These 3835 AIDCs include exposures experienced at home, school, work, and in vehicles. 49 

### 3836 3837 However, this economic analysis considers one -year changes in formaldehyde exposure – not 3838 changes that last over the course of childhood. Theref ore, it is necessary to transform the health impact 3839 function so that it can be applied to one-year changes in formaldehyde exposure. If exposure is constant 3840

over an n -year period, then it is reasonable to assume th at the probability of ge tting formaldehyde-related 3841 asthma is uniformly distributed throughout that period – i.e., that the probability of getting asthma as a 3842 result of exposure to formaldehyde in any one of the n years is (1/ n ) times the probability for the whole n

3843 year period. Given this, when the economic analysis applies the health impact function to any given 3844 annual change in exposure, the change in inciden ce of asthma is first calculated as if the one-year 3845

47 Prevalence can be considered cumulative incidence within a given age bracket if it is assumed that once an individual gets asthma the individual continues to ha ve asthma within that given age bracket.

48 Excluding one of the studies (Rumchev, et al. 2002; McGwi n et al. (2010) reported an OR from a random effects metaanalysis model of 1.24 per 10 μg/m 3 formaldehyde (95% CI: 1.07-1.45) with a p-value of 0.0026.

49 AIDCs are calculated from average daily concentrations. Infants (0-2), children (3-15), full time working adults,

unemployed/retired adults, and part-time working adults ar e assumed to spend 11.7%, 14.3%, 4.1%, 13.8%, and 15.8% of their time outdoors, where background expos ure levels are assumed to be .0037 mg/m 3

.

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January 27, 2012 3-45 

### exposure changes were occurring over the entire n -year period. This result is then divided by n so it 3846 reflects the change in asthma incidence from a one year change in formaldehyde exposure. 3847 3848 Estimating the baseline incidence rate of asthma is not trivial. First, estimating asthma in very 3849 young children (under 5 years old) is problematic becau se doctors may rely on signs and symptoms rather 3850 than lung function testing (spirometry) in making diagnostic decisions (U.S. HHS 2007). Second, while 3851 asthma prevalence rates are widely available, asthm a incidence rates are not. Estimating incidence from 3852 prevalence is not straightforward because of the assumptions that must be made. In light of these 3853 difficulties, the analysis estimates the incidence rate s using data on asthma prevalence by age bracket. 3854 The available data indicate that the asthma prevalen ce among 0-4 years olds is 7.9 percent and asthma 3855 prevalence among 5-14 year olds is 16.2 percent (C DC 2009). Although this analysis accounts for the 3856 probability that individuals with asthma become asympt omatic at some point in their lives, it assumes that 3857 once a child gets asthma, he or she does not outgrow it before age 17. For example, for ages 0-4, the 3858 prevalence rate is 7.9 percent. This means that 7. 9 percent of individuals ages 0-4 have asthma. Since 3859 this age range starts at birth, all of these asthma cases must have started within the age range – i.e., in this 3860 case, prevalence equals cumulative incidence (assuming no migration in or out). For any age range that 3861 starts at an age greater than 0, however, prevalence does not equal incidence, since some of the prevalent 3862 cases may have started at an age less than the lowe r bound of the age range. For example, the 16.2 3863 percent of individuals with asthma between the ages of 5 and 14 include those individuals whose asthma 3864 started during ages 0-4. The incidence rate for th e age range 5-14 was estimated by subtracting 7.9 3865 percent from 16.2 percent to estimate that 8.3 percent of individuals in the age range of 5-14 are newly 3866 diagnosed with asthma. This implies, if these new ca ses are uniformly distributed over the 10 ages within 3867 that age range, the per-age (annual) incidence rate fo r 5 to 14-year olds would be 0.083/10 = 0.0083, or 3868 0.83%. 3869 3870 This analysis calculates a lower estimate and a hi gher estimate. Both estimates use the same 3871 basic method; however, the lower estimate includes benefits for ages 6 through 17, whereas the higher 3872 estimate includes benefits for ages 2 through 17

. To calculate the number of avoided asthma cases (and 3873 thus benefits) for any given age, the analysis first calculates the per capita cumulative risk reduction over 3874

an n -year period and then divides the results by n to get the age-specific per capita risk reductions. Each 3875 age-specific per capita risk reduction is then multiplie d by the age-specific exposed population to get the 3876 age-specific number of asthma cases avoided. 3877 3878 To facilitate the application of this approach to different ages, the analysis makes the simplifying 3879 assumption that the annual incidence rate of 0.83%, calculated for children aged 5 – 14, is similarly 3880 applicable to all ages through age 17. 50 

### Given this assumption, the value of n doesn’t matter because n 3881 cancels out in the calculation. First, the cumulative baseline incidence rate for n -year olds is calculated 3882 by multiplying the annual baseline incidence rate (0. 83%, assumed to be the same for all ages through age 3883 17) by n , and then the resulting cumulative risk reduction over the n -year period is divided by n to get 3884 age-specific (annual) per capita risk reducti ons, for all ages in the range through age n . The calculation of 3885 the reduction in risk for an individual at a given age (i.e., in a given year) is thus 3886 3887 3888

ൌ ሺܫ݊ܿܣ ௔ 

### כ ݊ሻ ቀ 1 െ ൫݁ ሺ୪୬ ሺ ைோ ሻ ൈሺAIDC ೛ ିAIDC ್ ሻ 

### ൯ ቁ

݊ (30)



### 3889

50 Given the prevalence rate of 7.9% for ages 0 – 4 from CDC (see Table 3-17 below), th is may be a conservative assumption (i.e., an assumption that would tend to understate benefits).

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-46 

### where

a 

## IncA is the annual baseline asthma incidence rate (0.83%). The corresponding age-specific 3890 number of avoided asthma cases is, then, 3891 3892 3893

ൌ ܱܲܲܥ כ ሺܫ݊ܿܣ ௔ 

### כ ݊ሻ ቀ 1 െ ൫݁ ሺ୪୬ ሺ ைோ ሻ ൈሺAIDC ೛ ିAIDC ್ ሻ 

### ൯ ቁ

݊ (31)



### 3894 where POPC is the exposed population of children of th e given age. The lower estimate does this 3895 calculation for ages 6 through 17; the higher estimate does the calculation for ages 2 through 17. In both 3896 estimates, the resulting monetized benefit is th e sum of the age-specific monetized benefits. 3897 3898 EPA has included asthma exacerbation as a health effect in many of its economic analyses, but 3899 not the incidence of asthma (i.e., the creation of new cases). EPA did value a decrease in asthma 3900 incidence as a result of reduced ozone exposure in its fi rst prospective study of the benefits and costs of 3901 the Clean Air Act (EPA 1999). This analysis estimates WTP to avoi d asthma by utilizing the methods that 3902 were developed to estimate the un it value in EPA’s BenMAP (Abt Associates Inc. 2010), which relies 3903 primarily on two studies that estimated WTP to avoid a case of adult-onset asthma. 51 

### One study, 3904 Blumenschein and Johannesson (1998), estimated an annual WTP; the other study, O'Conor and 3905 Blomquist (1997), estimated a monthly WTP, from which an annual estimate was derived. 3906 3907 The analysis first estimated the pdv of the stream of annual WTPs to avoid a case of child-onset 3908 asthma, assuming that once a child gets asthma he has it for the rest of his life (i.e., there are no 3909 asymptomatic asthmatics). The inputs to the analysis are: 3910 3911

 A study-specific annual WTP to avoid asthma – $189/month, or $2,268 per year (1996$) in 3912 Blumenschein and Johannesson (1998); $1,200/year (1990$) in O'Conor and Blomquist (1997). 3913

 A discount rate (the analysis used 3% and 7%). 3914

 Age-specific populations for each age in the age ra nge considered in the analysis: 6 – 17 for the 3915 lower estimate; 2 – 17 for the higher estimate. Age group-specific population data were obtained 3916 from the U.S. Census Bureau, 52 

### and it was assumed that the popul ation within an age group is 3917 uniformly distributed among the ages in that age group. 3918

 Age-specific life expectancies. The analysis obtaine d life expectancies for selected ages (0, 1, 5, 3919 10, 15, ...) from the National Vital Statistics Re ports, Vol. 59, No. 4, March 16, 2011, Table 6. 53 

### 3920 The analysis linearly interpolated life expect ancies for the ages that were not included among 3921 those obtained. 3922 3923 Using these inputs, the analysis calculated the age-specific pdv of the stream of annual WTPs, for each 3924 age of onset in the age range (6-17 for the lowe r estimate; 2–17 for the higher estimate) to the age3925 specific life expectancy. If 3926 3927

annual 

## WTP denotes the annual WTP, 3928

51 For a description of the two studies on which the WTP to avoid adult-onset as thma is based, see the BenMAP User Manual, Appendix J, Section J.2.3.

52 http://www.census.gov/compendi a/statab/cats/population.html

53 http://www.cdc.gov/nchs/dat a/nvsr/nvsr59/nvsr59_04.pdf

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January 27, 2012 3-47 

## a denotes the age at onset of asthma (where 

## a = 6, 7, ..., or 17 for the lower estimate and 

## a = 2, 3929 3, ..., or 17 for the higher estimate), 3930

a 

## LE denotes the life expectancy for an individual age a, and 3931

dr denotes the discount rate, 3932 3933 then the present discounted value of the stream of annual WTPs for someone who gets asthma at age a is 3934 3935
3936 

# 

  

##        

  a

LE

j j annual

a 

## dr WTP pdv

1 1 

## ) 1 ( (32)



### 3937 The analysis then calcula ted a weighted average pdv , using the percentages of the population in 3938 the age categories as the weights. This assumes that an y child in the age range is equally likely to have 3939 asthma. Using the lower estimate to illustrate, if 3940 3941

j 

## p denotes the percent of children in the age range [6-17] who are age j

, j = 6, ..., 17, and 3942

] 17 6 [

 

## pdv denotes the expected present discounted value of annual WTP s to avoid asthma for a 3943 randomly selected individual in the age range [6-17], 3944 3945 Then 3946
3947 

# 

  

##  17

6 ] 17 6 [ j j j 

## pdv p pdv (33)



### 3948

The calculation of ] 17 2 [

 

## pdv for the higher estimate is carried out the same way, with the youngest age of 3949 6 replaced with a youngest age of 2. 3950 3951 It is worth noting that the annual (or monthly) WTP estimates from the two studies were for 3952 adult-onset asthma. There is evidence that parents ar e willing to pay more to avoid adverse health effects 3953 in their children than they are to avoid the same a dverse health effects in themselves (Dickie and Gerking 3954 2003, Dickie and Messman 2004, Liu, et al. 2000). Using the WTP estimates from these two studies as 3955 inputs to the calculation of a unit value for child-onset asthma could thus tend to understate the true value. 3956 3957 There is substantial evidence, however, that non-trivial percentages of asthmatics become 3958 asymptomatic at some point in their lives. The Cent ers for Disease Control, National Health Interview 3959 Survey (NHIS) has collected data on asthma in the U.S. for at least a decade, and data are available online 3960 for the years 2001 through 2009. For each year, th e NHIS asked several asthma-related questions. The 3961 results are presented, separately for each year, in two set s of tables: one set of tables refers to “lifetime 3962 asthma”; the other set refers to “current asthma.” The CDC website describes the meanings of “lifetime 3963 asthma” and “current asthma” as follows: 54 

### 3964 3965

54 See Centers for Disease Control and Prevention, National Health Interview Survey (NHIS) Data: Asthma – Background Information. Available online at: http://www.cdc.gov/asthma /nhis/default.htm#09

.

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### A positive response to the question: "Has a docto r or other health professional ever told 3966 you that you had asthma?" determined lifetim e asthma. To determine the prevalence of 3967 asthma episodes or attacks, persons answering "yes" to the lifetime asthma question were 3968 then asked, "During the past 12 months, have you had an episode of asthma or an asthma 3969 attack?" Since 2001, current asthma status has also been collected. To determine current 3970 asthma, persons answering "yes" to the life time asthma question were then asked, "Do 3971 you still have asthma?" 3972 3973 The 2009 population and prevalence rate results for the total U.S. population in the current 3974 asthma and lifetime asthma tables are availabl e online and are shown in Table 3-17 below. 3975 3976 The analysis calculated the percent of individuals who said they were diagnosed with asthma and 3977 also said they still have asthma by dividing the “cu rrent asthma population” by the “lifetime asthma 3978 population,” separately for each age group. The analys is then calculated the percent of asthmatics who 3979 are asymptomatic by subtracting this from 100%. For example, in the 5-14 age group, 6,534,000 3980 individuals said they had been diagnosed with ast hma; of these, 4,515,000 – or 69.1% -- said they still 3981 have asthma. That implies that 100% - 69.1% = 30.9% of asthmatics in this age group are asymptomatic. 3982 3983 The percentages of individuals who were diagnosed with asthma at some point in their lives but 3984 considered themselves asymptomatic when they answer ed the NHIS questions we re substantial, ranging 3985 from about 20% (in the 0-4 age group) to almost 53% (in the 20-24 age group). This suggests that the 3986 above calculation of the pdv (equation 27) may overstate the value of avoiding a case of asthma, because 3987 it includes (discounted) annual WTPs out to the life expectancy for the age-o f-onset of the asthma. 3988 3989 Unfortunately, the NHIS asthma tables do not include the kind of longitudinal information that 3990 are needed to properly estimate the value of avoiding child-onset asthma, taking into account that some 3991 proportion of child asthmatics will become asymptomatic later in life. Ideally, it is necessary to know, for 3992 each age at onset, y , in the age range [6-17], the percenta ge of asthmatic children who become 3993 asymptomatic at age x , for all y 

## LE x y 

 . This would require following a cohort of asthmatic children 3994
over time. Instead, the NHIS data is cross-sectional – i.e., it looks at individuals of different ages at a 3995 single point in time. Still, because the percentages of respondents in the NHIS who said they are 3996 asymptomatic are non-trivial, and consistent with what other sources report, it is worthwhile to attempt to 3997 take these percentages into account in devising an estim ate of the value of an avoided case of child-onset 3998 asthma. 3999 4000 The analysis first calculated the weighted averag e percent asymptomatic for those age groups that 4001 are (largely) after childhood – age groups (15-19) and older. The weight for the i th group was the 4002 proportion of all individuals in age groups (15-19) and older who are in the i th group. The weighted 4003 average percent asymptomatic across these age groups w as 41%. The analysis assumed that an asthmatic 4004 child who becomes asymptomatic is equally likely to do so at any age after childhood. This was 4005 represented by a set of equally spaced ages, starting w ith age 17, the midpoint of the first age category 4006 (15-19) – ages 17, 27, 37, 47, 57, and 67. Since the total proportion of child asthmatics who will become 4007 asymptomatic at some point after childhood is assumed to be 41%, and each age is assumed to have an 4008 equal probability of being the age at which the individual becomes asymptomatic, 41%/6 = 6.8% is the 4009 proportion of child asthmatics who become asympt omatic at each of the 6 representative ages. 4010 4011*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 3-49Table 3-17: Results of the 2009 National Health Interview SurveyQuestions on Asthma and Implied Percentage of AsymptomaticIndividualsCharacteristic TotalPopulationChildren(<18)Adults(18+)Ages 0-14 Ages 15-340 - 4 5 - 14 15 - 34 15 - 19 20 - 24 25 - 34 35 - 64 65+Lifetime asthma population (in1000s) (Table 1-1 )39,930 10,196 29,734 1,668 6,534 12,4713,124 3,732 5,615 14,972 4,284Current asthma population (in1000s) (Table 3-1 )24,567 7,111 17,456 1,332 4,515 6,3631,839 1,758 2,765 9,450 2,906Percent of asthmatics who stillhave asthma: 61.5% 69.7% 58.7% 79.9% 69.1% 51.0% 58.9%47.1% 49.2% 63.1% 67.8%Percent of asthmatics who arenow asymptomatic: 38.5% 30.3% 41.3% 20.1%30.9% 49.0% 41.1% 52.9% 50.8% 36.9% 32.2%Prevalence (%) Told They HadAsthma Sometime in theirLifetime (Table 2-1)13.3 13.8 13.1 7.9 16.2 15.2 15.2 17.8 13.9 12.5 11.3Prevalence (%) who CurrentlyHave Asthma (Table 4-1)8.2 9.6 7.7 6.3 11.2 7.8 9 8.4 6.8 7.9 7.7Population (in 1000s) implied byTables 1-1 and 2-1 : 300,226 73,884 226,977 21,11440,333 82,046 20,553 20,966 40,396 119,776 37,912Population (in 1000s) implied byTables 3-1 and 4-1 : 299,598 74,073 226,701 21,14340,313 81,577 20,433 20,929 40,662 119,620 37,740Average implied population: 299,912 73,978 226,839 21,128 40,323 81,811 20,493 20,947 40,529 119,698 37,826Source: Centers for DiseaseControl and Prevention 200940124013

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January 27, 2012 3-50 

### For each of the representative ages (17, 27 , 37, 47, 57, and 67), the analysis calculated 4014

] 17 6 [

 

## pdv and ] 17 2 [

 

## pdv given that age-when-asthma-stops, usi ng equations (32) and (33) above and 4015

replacing
a 

## LE in equation (32) with the representative age, for all values of a . It was assumed that 4016 asthma starts at the beginning of an age and stops in the middle of an age, so that if a child gets asthma at 4017
age x and becomes asymptomatic at age y , the number of years the child has asthma is y – x + 0.5. For 4018 example, to calculate ] 17 6 [

 

## pdv assuming that all asthmatic children become asymptomatic at age 27, 4019 equation (32) becomes: 4020 4021 

#  



  

##        

  5

. 0 27

1 1 

## ) 1 ( a

j j annual

a 

## dr WTP pdv for each a in [6-17]. (34)



### 4022 The analysis then used equation (34) to calculate the resulting value for ] 17 6 [

 

## pdv . The results are 4023

shown for the lower estimate in Table 3-18 and Tabl e 3-19, using a 3 percent and a 7 percent discount 4024 rate, respectively. Results for the higher estimate are shown in Table 3-20 and Table 3-21, using a 3 4025 percent and a 7 percent discount rate, respectively. 4026 4027
Table 3-18: Calculation of Lower Estimate WTP to Avoid Child-Onset Asthma, Assuming Some Proportion of Asthmatics Become Asymptomatic, Using a 3 Percent Discount Rate

Age at Which Asthmatic Becomes Asymptomatic, x =** Percent Who Become Asymptomatic at Age

x Weighted Average PDV (in 2010$), Assuming Individuals Become Asymptomatic at Age x, Based on:*

Blumenschein and Johannesson (1998) O'Conor and Blomquist (1997) 17 6.8% $16,987 $10,789 27 6.8% $40,334 $25,618 37 6.8% $57,706 $36,653 47 6.8% $70,633 $44,863 57 6.8% $80,251 $50,973 67 6.8% $87,408 $55,519

Never becomes asymptomatic 59.0% $93,341 $59,287

Overall Weighted PDV (in 2010$): $79,214 $50,314 Average of Two Study-Specific PDV s: $64,764 

### *Inflated to 2010$ usin g the CPI-U "all items".

** The analysis assumes the child gets asthma at the begi nning of an age (e.g., at the beginning of age 6) and becomes asymptomatic in the middle of an age (e .g., halfway through age 17). Ages included for the lower estimate are 6 – 17.



### 4028

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-51



### Table 3-19: Calculation of Lower Estimate WTP to Avoid Child-Onset Asthma, Assuming Some Proportion of Asthmatics Become Asymptomatic, Using a 7 Percent Discount Rate

Age at Which Asthmatic Becomes Asymptomatic, x =** Percent Who Become Asymptomatic at Age

x Weighted Average PDV (in 2010$), Assuming Individuals Become Asymptomatic at Age x, Based on:*

Blumenschein and Johannesson (1998) O'Conor and Blomquist (1997) 17 6.8% $15,078 $9,577 27 6.8% $31,353 $19,914 37 6.8% $39,626 $25,169 47 6.8% $43,832 $27,841 57 6.8% $45,970 $29,199 67 6.8% $47,057 $29,889

Never becomes asymptomatic 59.0% $47,660 $30,272

Overall Weighted PDV (in 2010$): $43,352 $27,535 Average of Two Study-Specific PDV s: $35,443 

### *Inflated to 2010$ usin g the CPI-U "all items".

** The analysis assumes the child gets asthma at the begi nning of an age (e.g., at the beginning of age 6) and becomes asymptomatic in the middle of an age (e .g., halfway through age 17). Ages included for the lower estimate are 6 – 17.



### 4029 4030
4031 Table 3-20: Calculation of Higher Estimate WTP to Avoid Child-Onset Asthma, Assuming Some Proportion of Asthmatics Become Asymptomatic, Using a 3 Percent Discount Rate

Age at Which Asthmatic Becomes Asymptomatic, x =** Percent Who Become Asymptomatic at Age

x Weighted Average PDV (in 2010$), Assuming Individuals Become Asymptomatic at Age x, Based on:*

Blumenschein and Johannesson (1998) O'Conor and Blomquist (1997) 17 6.8% $22,003 $13,976 27 6.8% $44,066 $27,989 37 6.8% $60,483 $38,417 47 6.8% $72,699 $46,176 57 6.8% $81,789 $51,949 67 6.8% $88,553 $56,245

Never becomes asymptomatic 59.0% $94,151 $59,801

Overall Weighted PDV (in 2010$): $80,804 $51,324 Average of Two Study-Specific PDV s: $66,064 

### *Inflated to 2010$ usin g the CPI-U "all items".

** The analysis assumes the child gets asthma at the begi nning of an age (e.g., at the beginning of age 6) and becomes asymptomatic in the middle of an age (e .g., halfway through age 17). Ages included for the higher estimate are 2 – 17.



### 4032 4033

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 3-52 

### 4034 4035 Table 3-21: Calculation of Higher Estimate WTP to Avoid Child-Onset Asthma, Assuming Some Proportion of Asthmatics Become Asymptomatic, Using a 7 Percent Discount Rate

Age at Which Asthmatic Becomes Asymptomatic, x =** Percent Who Become Asymptomatic at Age

x Weighted Average PDV (in 2010$), Assuming Individuals Become Asymptomatic at Age x, Based on:*

Blumenschein and Johannesson (1998) O'Conor and Blomquist (1997) 17 6.8% $18,745 $11,906 27 6.8% $33,217 $21,098 37 6.8% $40,574 $25,771 47 6.8% $44,314 $28,147 57 6.8% $46,215 $29,354 67 6.8% $47,182 $29,968

Never becomes asymptomatic 59.0% $47,717 $30,308

Overall Weighted PDV (in 2010$): $43,886 $27,875 Average of Two Study-Specific PDV s: $35,881 

### *Inflated to 2010$ usin g the CPI-U "all items".

** The analysis assumes the child gets asthma at the begi nning of an age (e.g., at the beginning of age 6) and becomes asymptomatic in the middle of an age (e .g., halfway through age 17). Ages included for the higher estimate are 2 – 17.



### 4036 The actual distribution of ages at which asthmatic children become asymptomatic is not known, 4037 and the resulting pdv depends on this distribution. In the absence of any further information, the analysis 4038 assumed this distribution is uniform – i.e., an asthmatic is equally likely to b ecome asymptomatic at any 4039 age. Selecting evenly spaced ages starting at ag e 17 was just a convenient way to model this. 4040 4041 Combining the WTP to avoid a case with the estimate of the number of avoided cases, the 4042 analysis estimates the monetized benefits of avoidi ng the development of asthma for 6-17 year olds, for 4043 the lower estimate, as: 4044 4045
4046

כ ܹܶܲ ൌ ܱܲܲܥ כ ܫ݊ܿܣܽ כ ݊ ቀ 1 െ ൫݁ ሺ୪୬ ሺ ைோ ሻ ൈሺAIDC ೛ ିAIDC ್ ሻ 

### ൯ ቁ

݊ (35)



### 4047 where WTP is $64,764 (if a 3 percent discount rate is used) or $35,443 (if a 7 percent discount 4048 rate is used) and now POPC is the population of exposed children ages 6 – 17. An analogous calculation 4049 is done for the higher estimate, where WTP is $66,064 (if a 3 percent discount rate is used) or $35,881 (if 4050 a 7 percent discount rate is used) and POPC is now specific to the age range [2, 17]. 4051 4052 3.5.3 Female Fertility 4053 4054 Based on a review of the developmental and repr oductive toxicity studies in humans and animals 4055 in the draft IRIS assessment (U.S. EPA 2010b), the Taskinen et al. (1999) retrospective cohort study 4056 appears to have the best availabl e evidence of female reproductive toxicity for the purpose of deriving a 4057

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### concentration-response relationship for use in the bene fits assessment. In Taskinen et al. (1999) subjects 4058 recruited from a woodworkers’ union and other bus inesses involving wood processing in Finland were 4059 linked to a national register of births. Women were included if they were born between 1946 and 1975, 4060 had a live birth at age 20

− 40 years during 1985

− 1995, had worked in the wood processing industry for at 4061 least 1 month, and had first employment in the w ood processing industry beginning at least 6 months 4062 before the index pregnancy (the fi rst pregnancy that fulfilled the above criteria). While 1,094 women met 4063 these criteria, the final sample included 602 women due to the response rate from mailed questionnaires 4064 (64%) and exclusions due primarily to infertility history, unknown time to pregnancy, and contraceptive 4065 failure. 4066 4067 Estimates of mean daily exposure to formalde hyde were based on measurements taken at the 4068 women’s factories of employment during the early 1990s. Where measurements were unavailable, 4069 measurements from equivalent i ndustries were used. An exposure index representing a time-weighted 4070 average exposure (TWA) was established for every pers on in the study based on the concentration of their 4071 workplace formaldehyde multiplied by the proportion of the workday exposed to formaldehyde. The 4072 investigators categorized time-weighted average form aldehyde exposure into categories of low (mean of 4073 18 ppb), medium (mean of 76 ppb), and high (mean of 219 ppb) exposure. Time-t o-pregnancy data were 4074 analyzed by a discrete proportional hazards regression procedure with a fecundability density ratio (FDR) 4075 as the outcome. This ratio compared the average incidence densities of pregnancies for exposed women 4076 with that of the employed, unexposed women. As explained by Taskinen et al. (1999), an FDR 4077 significantly below unity suggests that conception was delayed. The age-, employment-, smoking-, 4078 alcohol consumption-, parity-, and menstrual irregularity-adjus ted FDR was 0.64 (95% CI: 0.43

− 0.92) for 4079 women exposed to high formaldehyde levels compared with the unexposed controls, indicating that there 4080 was a substantial, and statistically significant, de lay in time to conception in this group of women. 4081 4082 This analysis relied on Table 5 of Taskinen et al. (1999) to derive its concentration-response 4083 relationship. That table provided information on time -to-pregnancy (in menstrual cycles) for women in 4084 low, medium, and high levels of formaldehyde e xposure, as well as non-exposed to formaldehyde. The 4085 fraction of women who took longer than 13 menstrua l cycles to conceive was 9.1% for non-exposed, 4086 10.1% for low, 11.7% for medium, and 20.5% for high levels of formaldehyde exposure. In most women, 4087 13 menstrual cycles would correspond to approximately 12 months, and infertility is often defined as the 4088 inability to conceive within 12 months. Thus, these data were used to generate a concentration-response 4089 function for formaldehyde exposur e and infertility in women. 4090 4091 First, the average formaldehyde exposure concen trations were adjusted for background exposures 4092 to formaldehyde estimated from a personal exposure st udy. Jurvelin et al. (2001) estimated personal 48- 4093 hour exposures to formaldehyde in the summer/fall of 1997 for 15 persons in Helsinki, Finland. Personal 4094 exposure levels were significantly correlated with in door residential concentrations. The mean personal 4095 exposure level was 21.4 ppb. According to EPA’s non-cancer approach document (U.S. EPA 2011), the 4096 24-hr time-weighted average exposure levels were de termined to be 21 ppb for “non-exposed”, 26 ppb for 4097 low, 43 ppb for medium, and 89 ppb for hi gh levels of formaldehyde exposure. 4098 4099 This analysis uses the concentr ation-response function estimated in EPA’s non-cancer approach 4100 document (U.S. EPA 2011). This concentration-res ponse function was estimated by fitting a linear 4101 regression to these formaldehyde concentrations a nd the corresponding fraction of women who took 4102 longer than 12 months to conceive, where Risk = alpha + beta*Concentration. Thus, the estimated 4103 regression equation did not include an y confounder variables. Alpha was estimated to be 0.056 (5.6%) 4104 and beta was estimated to be 0.0016 per ppb. 4105 4106 The number of women in the U.S. wishing to become pregnant can be estimated from CDC 4107 information on pregnancy and contraception use (CDC 2010). In particular, the percentage of women 4108

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### seeking pregnancy over the course of a year can be estimated as the sum of the percentage who reported 4109 not using contraception because they were seeking pr egnancy and the percentage who are intentionally 4110 pregnant or postpartum after an intentional pre gnancy. The percentages of women who reported not 4111 using contraception because they were seeking pregna ncy were 4.3%, 6.3%, 5.9%, and 5.1% for age 4112 ranges 20-24, 25-29, 30-34, and 35-39, respectively. The percentages of women who were pregnant or 4113 postpartum were 10.0%, 7.7%, 8.1%, and 1.9% for age ranges 20-24, 25-29, 30-34, and 35-39, 4114 respectively. Since half of pregnancies are intende d, according to CDC (2010), the percentage of women 4115 seeking pregnancy over the course of a year was estim ated as the percentage of those currently seeking 4116 pregnancy plus half the percenta ge who are pregnant or postpartu m. These estimates are 9.3%, 10.2%, 4117 10.0%, and 6.1% for age ranges 20-24, 25-29, 30-34, and 35-39, respectively. 4118 4119 Fertility problems are not uncommon during a woman’ s reproductive cycle. Garceau et al. (2002) 4120 claims that one in six couples experience fertility di fficulty at some point in time in their reproductive 4121 lives. The CDC (2005) reports that nearly 12% of wo men of childbearing age in the United States have 4122 sought some type of cycle-based fertility service at some point in their reproductive cycles. While 4123 obtaining some fertility service is common, only 3. 8% obtain ovulation drugs, 1.1% undergo artificial 4124 insemination and 0.3% engage in assisted reproductiv e technology, primarily in-vitro fertilization (IVF). 4125 The remainder seek advice, undergo tests, or obtain me dical help to prevent miscarriages or surgery for 4126 blocked tubes. These rates vary by age group as shown in the table from CDC (2005) below. 4127 4128 Table 3-22 presents the probabilities of seeking preg nancy and of obtaining cycle-based treatment 4129 that are used in the analysis. No te that the last three columns, wh ich present the percentages of women 4130 using a particular fertility treatment given that they have sought some fertility treatment, do not sum to 4131 one hundred percent. This is because the costs asso ciated with fertility treatments other than the three 4132 presented in the table were not estimated. Thus, these costs are implicitly assumed to be zero for the 4133 purpose of this analysis. 4134 4135 4136 Table 3-22: Probability of Seeking Pregnancy and of Obtaining Cycle-Based Fertility Treatment in U.S. Women

Percent Obtaining Treatment Percent Obtaining Treatment Conditional on Some Fertility

Treatment Being Sought
Age Group Percent Seeking Pregnancy Any Fertility Service Ovulation drugs IUI IVF Ovulation drugs IUI IVF

20-24 9.3% 4.9% 1.0% 0.2% 0.0% 20.41% 4.08% 0.00% 25-29 10.2% 30-34 10.0% 17.7% 5.3% 1.8% 0.4% 29.94% 10.17% 2.26% 35-39 6.1% 17.3% 4.6% 1.4% 0.3% 23.96% 7.29% 3.65% Source: Percent seeking pregnancy is from CDC 2010b and percent obtai ning treatment is from CDC 2005 

### 4137 Infertility is generally defined as the inability to b ecome pregnant after trying to become pregnant 4138 for a year (CDC 2011). Thus, delayed fertility , the health outcome to which this economic analysis 4139 relates formaldehyde exposure, is effectively the same as infertility given this definition. That said, it is 4140 important to use WTP values that are appropriate for the specific type of infertility being evaluating – 4141 infertility cases where a successful pregnancy can be achieved. This economic analysis estimates the 4142 willingness to pay to avoid delayed fertility using a co st of illness approach, where the cost of illness is 4143 estimated as the cost of fertility treatments for t hose patients who ultimately become pregnant. 4144 4145

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### Katz (2011) reports estimates of the median fe rtility treatment costs for women who successfully 4146 became pregnant, which are likely to closely reflect the actual treatment costs for women with delayed 4147 fertility who seek treatment for their condition. 4148 4149 One fertility treatment option is to take medicati on to stimulate ovulation in order to improve the 4150 chances of conceiving. Another option is intrauterine insemination, a process in which the sperm is placed 4151 in the uterus (intrauterine insemination, or IUI) by artificial means. In vitro fertilization (IVF) is yet 4152 another option in which human egg cells are fertilized by sperm outside the body and then transferred 4153 back to the patient's uterus. Katz (2011) estimat es the median treatment costs for women who had 4154 successful outcomes as $925 for medication; $4,124-$8,542 for IUI; 55 

### and $24,010-$38,545 for IVF. 56 

### 4155 This analysis converts the estimates from Katz (2011) to 2010$ and uses the midpoints of the ranges 4156 estimated by Katz (2011). The resulting estimates are $1,001, $6,848, and $33,831 for medication, IUI, 4157 and IVF, respectively. 4158 4159 There are two sources of potential bias associated w ith using this cost of illness approach. First, 4160 since most fertility treatments are paid for out-of- pocket rather than through insurance, patients’ 4161 willingness to pay for these treatments will be at leas t as high as the cost of the treatments, for those 4162 patients that seek the treatments – that is, these patient s are willing to pay the going rate for the treatment 4163 and may be willing to pay more than the going rate. To the extent that they would be willing to pay more 4164 than the going rate, the cost-of- illness estimates understate their true willingness to pay. On the other 4165 hand, since some women with fertility problems ma y not seek treatment, this implies that their 4166 willingness-to-pay to avoid infertility is lower than the cost of treatment. Thus the cost-of-illness 4167 estimates will overstate the willingness to pay for these women. Since these two biases go in opposite 4168 directions, it is not clear whether the end result will be an upward or a downward bias. 4169 4170 Combining the concentration-response informati on with the population estimates, unit value, 4171 probability of seeking pregna ncy, and probability of us ing a particular cycle-based treatment given that 4172 one is seeking a fertility service, and assuming that all women seeking pregna ncy but having difficulty 4173 getting pregnant opt for some kind of fertility service, the analysis estimates the monetized benefits of 4174 increased fecundity in women of childbearing age as: 4175 4176 ܹܣܤܥܱܲܲ ෍ ൌ

௔ 

### ൫ ൈ ܣܶܧܤ ൈ ܣ ܥܦܫ ௕ 

### െ ܣ ܥܦܫ ௣ 

### ܵܲݎܲ ൈ ൯
௔ 

### ݏ݁݀ܯݎܲሺ ൈ ௔ 

### ܫܷܫݎܲ ൅ ݐݏ݋ܥݏ݁݀ܯ ൈ ௔

௔ 

### ܨܸܫݎܲ ൅ ݐݏ݋ܥܫܷܫ ൈ ௔ 

### ሻݐݏ݋ܥܨܸܫ ൈ (36)

55 $4,124 was the median for IUI with clomiphene citrate and $8,524 was the median for IUI with gonadotropins.

56 $24,010 was the median for IVF without a donor e gg and $33,831 was the median with a donor egg.

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### 4177
4178 Where: 4179

 POPCBAW a 

### is the exposed population of childbearing-aged women 4180

 Subscript a denotes an age group (20-24, 25-29, 30-34, or 30-39) 4181

 BETA is the slope derived by EPA by fitting a lin ear regression to the data in Taskinen et al. 4182 (1999) relating the risk of not conceiving in a year to average formaldehyde occupational 4183 exposures (EPA also adjusted these time-weightedconcentrations for background exposures of 4184 formaldehyde). The slope was determined to be 0.0016 increase in risk of not conceiving in one 4185 year per unit increase in ppb formaldehyde concentration 4186

 AIDC p 

### and AIDC b 

### are the average indoor daily concentrations (AIDC) in units of ppb for the 4187 policy and baseline scenarios, respectively (the difference between these terms will be negative). 4188 These AIDCs include exposures experienced at home, school, work, and in vehicles. 57 

### 4189

 PrSP a 

### is the probability a woman in age group a is seeking to become pregnant, estimated as the 4190 percentage of women in age group a who are not using contraception because they want to 4191 become pregnant plus half the women in age group a who are pregnant or are postpartum from 4192 Table 5 CDC (2010b). Note that only half of the pregnant or postpartum women are included 4193 because half of pregnancies are unintende d according to CDC (2010b). The estimated 4194 percentages are 9.3%, 10.2%, 10.0%, and 6.1% for age ranges 20-24, 25-29, 30-34, and 35-39, 4195 respectively. 4196

 PrMeds
a 

### is the probability of using fertility drugs (ovulation medication) among women in age 4197

group a given that they have sought some fertility service, from CDC (2005). It is 20.41%, 4198 29.94%, and 23.96% for women aged 20-29, 30-34, and 35-39, respectively. 4199

 PrIUI a 

### is the probability of using artificial intr auterine insemination (IUI) among women in age 4200

group a given that they have sought some fertility service from CDC (2005). It is 4.08%, 10.17%, 4201 and 7.29% for women aged 20-29, 30-34, and 35-39, respectively. 4202

 PrIVF a 

### is the probability of using in vitro fer tilization (IVF) assisted reproductive technology 4203 among women in age group a given that they have sought some fertility service from CDC 4204 (2005). It is 0.00%, 2.26%, and 3.65% for women aged 20-29, 30-34, 35-39, respectively 4205

 MedsCost is $1,001in 2010$, the average treatme nt cost for women with successful outcomes 4206 after using ovulation drugs reported by Katz (2011) 4207

 IUICost is $6,848 in 2010$, the midpoint of th e average IUI treatment cost for women with 4208 successful outcomes reported by Katz (2011) 4209

 IVFCost is $33,831 in 2010$, the midpoint of th e average IVF treatment cost for women with 4210 successful outcomes reported by Katz (2011) 4211
4212

57 AIDCs are calculated from average daily concentrations. Infants (0-2), children (3-15), full time working adults, unemployed/retired adults, and part-time working adults ar e assumed to spend 11.7%, 14.3%, 4.1%, 13.8%, and 15.8% of their time outdoors, where background expos ure levels are assumed to be .0037 mg/m 3

.

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## 3.6 Estimated Numbers of Affected Individuals 4213 4214 The number of individuals benefitting from th e reduction of formaldehyde emissions from 4215 composite wood products potentially includes anyone who resides, works, or otherwise spends a 4216 substantial amount of time where new composite wood pr oducts are introduced to an indoor space. This 4217 benefits analysis includes monetized benefits for only two broad categor ies where a substantial amount of 4218 new composite wood products might be introduced to residences: (1) new home construction and (2) 4219 major renovations that include kitchen remodeling. As described in section 3.1, exposures were estimated 4220 separately for the various categories listed in Table 3- 23. Table 3-23 also includes a brief description of 4221 the data sources and methods that were used to est imate these populations. Additional description of how 4222 the populations were estimated fo r renovated housing is provided in section 3.6.1. A summary of the 4223 estimated number of affected indivi duals is presented in section 3.6.2. 4224 4225

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### Table 3-23: Exposure Factor Categories Used to Define Population Groups Exposure

Factor Exposure Factor Categories Description

Composite wood product source and age 1. New housing construction for 11 ages of the housing 2. Renovated housing for 11 ages

of the installed composite wood products The American Community Survey (ACS) reports house age in segments, the most recent being 2005 to 2009. One fifth of population living in homes cons tructed between 2005 and 2009 was used to estimate the number of people inhabiting new construction on an annual basis. The 2009 Am erican Housing Survey (AHS) asked respondents about renovation activities in a two year period. Half of the kitchen renovation rate in owner-occupied housing, stratified by housing type and home vintage, was applied to ACS populations to estimate people exposed due to renovation activities in owner and renter occupi ed homes annually. Structure type 1. Single family attached 2. Single family detached 3. Apartment 4. Manufactured Housing 5. Recreational Vehicles and

Camper/Trailers The 2007-2009 ACS reports housing type in a variable that takes the following values: Mobile home or trailer; One-family house detached; One-family house attached ; 2 Apartments; 3-4 Apartments; 5-9 Apartments; 10-19 Apartments; 20-49 Apartments; 50 or more apartments; Boat, RV, van, etc. This variable was recoded to provide the five categories in the benefits analysis. Climate zone 1. Zone 1: <2,000 cooling degree days (CDD) and more than 7,000 heating degree days (HDD) 2. Zone 2: <2,000 CDD and

5,500 to 7,000 HDD 3. Zone 3: <2,000 CDD and

4,000 to 5,499 HDD 4. Zone 4: <2,000 CDD and

<4,000 HDD. 5. Zone 5: >2,000 CDD and

<4,000 HDD Note: Number of degree days is over a 30-year period. Each public use micro area (PUM A) in the ACS was assigned a climate rating by mapping from NOAA division data to PUMAs using NOAA data matching climate divisions to counties. The NOAA data used to develop the climate ratings is from NOAA’s publication “Climatography Of The United States No. 85: Divisional Normals of Temperature, Precipitation, and Heating and Cooling Degree Days”. The data is available for between one and ten divisions in each state. A climate division is a region within a state that is as climatically homogeneous as possible.

Not all counties were available in the NOAA datase t. Hawaii and Alaska were not included, though as Alaska has the same climate rating for the entire state, this was not a problem. Hawaii’s counties are individual islands, as are the climate regions, which made creating that mapping straightforw ard. Other missing cases include independent cities, the District of Columbia, and a few counties in New Mexico and Arizona. In these cases, each missing area was assigned the same region as adjace nt counties in the database.

For the PUMAs with multiple county matches that had different climates, a population-we ighted average climate rating was assigned

. Age and employment

status 1 Infants: less than age 2 2 Children: aged 2 through 15 3 Ages 16+; work full-time

outside the composite wood products industry 4 Ages 16+; work in composite

wood products fabrication 5 Ages 16+; work part-time

outside the composite wood products industry 6 Ages 16+; unemployed or not

in the labor force An individual observation’s age is available in the ACS from ages 0 to 95, with ages above 95 bei ng counted as 95. For the exposure categories 1 and 2, infants and child ren were defined as ages 0-1 and 2-15, respectively. Individuals ag ed 16-95 working 20+ hrs, not at home, in any industry categories other than those listed below were included in category 3. Individual s that reported employment in the industries that manufacture furnit ure and related products or that manufacture prefabricated wood build ings and mobile homes were defined as working in composite wood product fabrication (category 4). Individuals aged 16-95 working 0-20 hrs, not at home, in any other industry categories were incl uded in category 5. Individuals aged 16-95 who were not working, retired, or not in the labor force were counted in category 6. Also counted in category 6 were individuals who work from home.



### 4226 4227

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### 4228 3.6.1 Composite Wood Products Installed During Renovation 4229 4230 The ACS does not provide any information with respect to renovation for home-owners or 4231 renters. Thus, it was necessary to use another data source to estimate renovation rates among the 4232 population, and apply those rates to the ACS population estimates. 4233 4234 The National 2009 American Housing Survey (AHS ) Dataset was used to determine the average 4235 frequency of kitchen renovation among homeowners. K itchen renovation was determined to be the most 4236 likely source of new composite wood products being in troduced in a home. In order to obtain a mean 4237 value that would be consistent with the ACS data, the variable in the AHS indicating the year the home 4238 was built was recoded into nine categories so that there were no overlaps between the AHS and ACS 4239 categories. 4240 4241 As noted in a recent Joint Center for Housing Studies’ report (Will 2010), data specific to the 4242 frequency or expenditures of remodeli ng and renovation in rental housi ng are not available. However, 4243 home renovation data were availabl e for owner-occupied housing in the following categories: single4244 family detached homes, single-family attached hom es, manufactured housing, and apartments. Because 4245 renovation frequency data for rente r-occupied housing were not ava ilable, the renovation frequency for 4246 owner-occupied housing was used for both owner- and renter-occupied housing. 4247 4248 Table 3-24 presents the average renovation frequency by housing type and year of construction. 4249 The overall average is 2.7 percent. Homes built in recent years renovate less, on average, than homes 4250 from previous decades. Since homes built in the last 11 years are accounted for in the new home exposure 4251 category in this analysis, these homes were assumed not to conduct a renovation. Note that a non-trivial 4252 percentage of homeowners renovate kitchens in even the newest homes (i.e., homes built in 2009 also 4253 surveyed in 2009). However, to simplify the analys is separate exposure scenarios were not estimated for 4254 housing that is both new and recently renovated. Instead, these scenarios were simply treated as new 4255 homes. This simplifying assumption may result in an underestimate for the formaldehyde exposures 4256 experienced by individuals living in ne wer homes that were recently renovated. 4257 4258 4259 Table 3-24: Frequency of Kitchen Renovation by Housing Type and Year Built, 2009 AHS

Year Built Single-Family
Detached

Homes Single-Family
Attached

Homes Apartments Manufactured Housing

2005 or later - - - - 2000 to 2004 - - - - 1990 to 1999 2.8% 2.7% 1.4% 1.1%

1980 to 1989 3.4% 2.1% 4.0% 2.1%

1970 to 1979 2.9% 2.6% 3.2% 2.4%

1960 to 1969 2.3% 2.2% 0.8%

2.2% 1950 to 1959 2.8% 3.8% 2.1%

1940 to 1949 3.0% 2.1% 2.3%

1939 or earlier 2.8% 3.0% 2.7% 

### 4260 4261 There were two year built categories of manufact ured housing where no k itchen renovations were 4262 reported. Each of these cells has fewer than 20 obser vations associated with it. Since there was not a 4263

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### statistically significant difference between ma nufactured housing renovation in 1960-1969 and 1940- 4264 1949, the analysis used the same mean renovation ra te for all manufactured housing built prior to 1969. 4265 The renovation frequencies presented in Table 3-24 were applied to all homes by housing age and 4266 structure type. Applying the renovation percenta ges presented in Table 3-24 to the 2007-2009 ACS 4267 National Dataset results in the population totals and household counts presented in Table 3-25. It should 4268 be noted that the renovation percentage was applied to the aggregated totals by housing age and structure 4269 type. 4270 4271 Table 3-25: Total Population in Renovated Houses

Housing Type Population in Renovated Homes Percent of Total Population Renovated Households Percent of Total Households Single-Family Detached 4,922,274 2.8% 1,768,967 2.8% Single-Family Attached 367,710 2.6% 142,962 2.6% Apartment 1,344,143 2.5% 634,781 2.5% Manufactured Housing 268,559 1.8% 109,549 1.8%

Total 6,902,686 2.7% 2,656,259 2.7%


### 4272 4273 3.6.2 Summary of Population Estimates 4274 4275 The analysis estimates that there will be about 10 million individuals living in housing units 4276 where composite wood products have been installed within the past year (i.e., individuals who have 4277 moved into new home or live in a home where there was a renovation). Since these individuals are 4278 estimated to be affected by the emissions from th ese products over a period of 11 years, by the 11 th 

### year it 4279 is estimated that about 106 million individuals live in housing units where composite wood products have 4280 been installed within the past 11 years. Table 3-26 and Table 3-27 present a summary of the population 4281 estimates by the categories that are used to define the different exposure groups. See Table 3-23 and 4282 section 3.6.1 for a description of how these populations we re estimated. The reductions in micro risks of 4283 adverse health outcomes (see sections 3.3 and 3. 5) are applied to these population estimates and 4284 combined with the values of reducing micro risks fo r the various adverse health outcomes (see sections 4285 3.4 and 3.5) to estimate the total value of the reduced risks of adverse health outcomes. 4286 4287 4288

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### Table 3-26: Population Estimates by Age of New Construction, Years since Renovation and Structure Type Age of new construction in Years Years since renovation Structure Type

Category Population Category Po pulation Category Population 0-1 2,738,898 0-1 6,902,685 New Apt 4,755,876 1-2 2,738,898 1-2 6,902, 685 New Man 1,405,598 2-3 2,738,898 2-3 6,902,685 New RV 52,063 3-4 2,738,898 3-4 6,902,685 New SF Att 2,235,686 4-5 2,738,898 4-5 6,902,685 New SF Det 21,678,650 5-6 2,738,898 5-6 6,902,685 Total New 30,127,874 6-7 2,738,898 6-7 6,902, 685 Ren Apt 14,785,584 7-8 2,738,898 7-8 6,902, 685 Ren Man 2,954,145 8-9 2,738,898 8-9 6,902,685 Ren SF Att 4,044,810 9-10 2,738,898 9-10 6,902,685 Ren SF Det 54,144,991 10-11 2,738,898 10-11 6,902,685 Total Renovated 75,929,530
Total New 30,127,874 Total Renovated 75,929,530 All Structures 106,057,404 Source: U.S. Census Bureau 2009e, f Note: See Table 3-23 and section 3.6.1 for a descripti on of how these populations were estimated. Age of new construction and years since renovation indicates the number of years since composite wood products were introduced to the house. For example, “0-1” for years si nce renovation indicat es that the structure was renovated within the past year. Totals may not add due to rounding. Abbreviations: “New SF Att” is new construction of single -family attached housing (up to 11 years old) “New SF Det” is new construction of single -family detached housing (up to 11 years old). “New SF Apt” is new construction of multi-family housing (up to 11 years old). “New SF Man” is new construction of manufactured housing (up to 11 years old). “New SF CT” is new campers and trailers (up to 11 years old). “New SF Att” is renovated single-family attached housing (up to 11 years old) “New SF Det” is renovated single-family detached housing (up to 11 years old). “New SF Apt” is renovated multi-family housing (up to 11 years old). “New SF Man” is renovated manufactured housing (up to 11 years old). Note: Campers and Trailers are assumed to never be renovated. 

### 4289 Table 3-27: Population Estimates by C limate Zone, Age of Individual, and Occupation Climate Zone Occupation of Individual Category Population Category Population Zone 1 13,177,114 Infants 0-1 3,309,269 Zone 2 23,906,632 Children 2-15 21,312,289 Zone 3 20,637,107 Not CWP Industry 55,523,507 Zone 4 21,214,309 Fabrication 238,487 Zone 5 27,122,241 Unemployed 19,508,314 - Part Time 6,165,538 Total 106,057,404 Total 106,057,404

Source: U.S. Census Bureau 2009e, f Note: See Table 3-23 and section 3.6.1 for a descripti on of how these populations were estimated. Totals may not add due to rounding. Abbreviations: Zone 1: Fewer than 2,000 cooling degree days and more than 7,000 heating degree days over 30 years. Zone 2: Fewer than 2,000 cooling degree days an d 5,500 to 7,000 heating degree days over 30 years. Zone 3: Fewer than 2,000 cooling degree days an d 4,000 to 5,499 heating degree days over 30 years. Zone 4: Fewer than 2,000 cooling degree days and fe wer than 4,000 heating degree days over 30 years. Zone 5: 2,000 or more cooling degree days and fewer than 4,000 heating degree days over 30 years. 

### 4290 4291

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## 3.7 Results of Benefits Assessment 4292 4293 This section presents the results of the benefits as sessment. Detailed results are presented for the 4294 analytical options with emissions standards that are consistent with the TSCA Title VI statute. Summary 4295 results are presented for the additional options that consider alternative formaldehyde emissions 4296 standards. Section 3.7.1 presents the total benefits attributable to reductions in cancer risk by combining 4297 the changes in cancer risk (see section 3.3), the value of the reductions in risk (see section 3.4) and the 4298 number of individuals experiencing reductions in risk (see section 3.6). Section 3.7.2 presents the total 4299 benefits attributable to reductions in non-cancer adverse health risk s by combining the changes in non4300 cancer adverse health risks (see section 3.5), the value of the reductions in risk (see section 3.5) and the 4301 number of individuals experiencing reductions in risk (see section 3.6). 4302 4303 As described in section 3.2, this analysis assum es that after eleven years any continuing (and 4304 declining) emissions from a given composite wood pr oduct would contribute negligibly to that product's 4305 effect on formaldehyde exposure. Thus, compos ite wood products are assumed to contribute to 4306 formaldehyde exposure for 11 years. 58 

### Specifically: 4307 4308

 in the first year only new composite wood products are affected by the policy; 4309

 in the second year new and one-year-old com posite wood products are affected by the 4310 policy; 4311

 in the third year new, one- and two-year-old composite wood products are affected by the 4312 policy; 4313

 in general, in the n th year, new, one-, two-, three-,..., and ( n -1)-year-old composite wood 4314 products are affected by the policy, for n = 1, 2, ..., 10; and 4315

 in the eleventh and all subsequent years new, one-, two-, three-, four-, five-, six-, seven-, 4316 eight-, nine-, and ten-year-old composite wood products are affected by the policy. 4317 4318 Since the exposure scenarios are defined in part according to the 11 different ages for composite 4319 wood products, it is not until the 11 th 

### year after the implementation of the rule that benefits are realized 4320 under every exposure scenario. That is, it is not until the 11 th 

### year after rule implementation that ten-year 4321 old composite wood products would have been require d to be produced in compliance with the emissions 4322 standards. Thus, the benefits are phased in over a period of eleven years. 4323 4324 Similarly, the benefits from a given year of composite wood production will phase-out over time. 4325 Since the analysis considers the benefits and co sts from 30 years of composite wood production, the 4326 estimated exposures have the following time profile after the 30 th 

### and last year of composite wood 4327 production considered in the analysis: 4328 4329

 in the 31 st 

### year, only one-, two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten4330 year-old composite wood products are produced before the 31 st 

### year (benefits from new 4331 composite wood products are produced after y ear 30 and therefore are not considered in 4332 the analysis); 4333

 in the 32 nd 

### year, only two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten-year-old 4334 composite wood products are produced before the 31 st 

### year (benefits from new and one4335 year old composite wood products are produced after year 30 and therefore are not 4336 considered in the analysis); 4337

58 EPA calculated exposures us ing a 1.5 year emissions half life of form aldehyde from composite wood products With. this half life, the emission ra te 10 years after new construction would be a bout 1 % of the initial value, and after 11 years the emissions would be near zero.

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###  in general, in the n th year after year 30, only n year-old and older composite wood 4338 products are produced before year 31, for n = 1, 2, ..., 10; and 4339

 in the 41 st 

### and all subsequent years, all 11 ages of composite wood products that 4340 potentially contribute to formaldehyde exposure are produced after the 30 th 

### year and 4341 therefore are not considered in the analysis. 4342 4343 Given this phase-in and phase-out, a time period of thirty years of composite wood production 4344 was selected so that the first ten years of the polic y (when the benefits of the policy are being phased in) 4345 and the ten years after the 30 years of composite wood production that is analyzed (when the benefits of 4346 the policy are being phased out) do not obscure the stea dy state benefits that would be experienced from 4347 the policy. It is necessary to include the phase-in and phase-out of the benefits in order to be consistent 4348 with the cost estimates, which reflect the costs of 30 years of production that complies with the emissions 4349 standards. Given that this analysis assumes that after eleven years any continuing (and declining) 4350 emissions from a given composite wood product would c ontribute negligibly to that product's effect on 4351 formaldehyde exposure, 30 years of production that complies with the emissions standards corresponds to 4352 40 years of exposure reductions. The first 10 years are a phase-in period for exposure reductions, the next 4353 20 years are a steady-state, and the next 10 years are a phase-out period. 4354 4355 Since the eleventh year is the first steady-state or typical year, undiscounted benefits estimates are 4356 presented in this section in order to convey the annua l benefits from a typical year. In addition, the 4357 present discounted value for the thirty year stream of benefits and the annualized value for the stream of 4358 benefits are estimated using discount rates of 3 and 7 percent. Benefits are discounted back to the 4359 beginning of the 40-year period, as follows: 4360 4361 ෍ൌ ݁ݑܸ݈ܽ ݁݀ݐ݊ݑ݋ܿݏ݅ܦ ݐ݁݊ݏ݁ݎܲ ሻ݁ݑܸ݈ܽ ݁݀ݐ݊ݑ݋ܿݏܷ݊݀݅ሺ ௧ 

### ሻ݁ݐܽݎ ݐ݊ݑ݋ܿݏ݀݅ ൅ 1ሺ ௧ ସ଴

௧ୀଵ (37)



### 4362 The benefits for discount rate, d , are annualized over a 30 year period to be consistent with the 4363 annualized costs using the following formula: 4364 4365

ሺ ܣ ݊݊ݑ݈ܽ݅ݖ݁݀ ܤ݁݊. ሻ ൌ ሺܲܦܸ ସ଴ ௬௘௔௥ ௕௘௡௘௙௜௧௦ ௦௧௥௘௔௠ 

### ሻ כ ݀ כ ሺ1 ൅ ݀ሻ ଷ଴ 

### ሺ1 ൅ ݀ሻ ଷଵ 

### െ 1 (38)



### 4366 Table 3-28 and Table 3-29 present descriptions of the analytical options and the exposure groups 4367 with the abbreviations that are used in the results tables below. Table 3-30 summarizes the assumptions 4368 that differentiate between the lower benef it estimates and the higher benefit estimates. 4369 4370

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### Table 3-28: Analytical Options Summary Analytical

Option Description

Option SE Statutory emissions standards where all wood ve neer laminated products are exempt from the definition of hardwood plywood

Option SI Statutory emissions standards where all wood ve neer laminated products are included in the definition of hardwood plywood

Option SC Statutory emissions standards where all wood ven eer laminated products made with wood veneers attached to compliant platform s using NAF resins are exempt from the definition of hardwood plywood

Option SCR Proposed Option. Statutory emissions standards where wood veneer laminated products ma de with wood veneers attached to compliant platform s using NAF resins are exempt from the definition of hardwood plywood. Reduced recordkeeping requirements for non-mfgrs. compared to other options.
Option SN Statutory emissions standards where all wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are ex empt from the definition of hardwood plywood
Option CE CARB 1 emissions standards where all wood ven eer laminated products are exempt from the definition of hardwood plywood
Option CI CARB 1 emissions standards where all wood ven eer laminated products are included in the definition of hardwood plywood
Option NE NAF emissions standards where all wood veneer laminated products are exempt from the definition of hardwood plywood
Option NI NAF emissions standards where all wood veneer la minated products are included in the definition of hardwood plywood 

### 4371 Table 3-29: Exposure Group Descriptions and Abbreviations Used in Results Tables Exposure Group Descriptions (and abbreviations) Composite Wood Product Source and Age: 1. New housing construction for 11 ages of the housing (Structure age 0-1 through Structure age 10-11) 2. Renovated housing for 11 ages of the installed composite wood products (0-1 years post ren. through 10-11 years post ren.) Structure Type: 1. New apartment (New Apt) 2. New manufactured housing (New Man) 3. New recreational vehicles and camper/trailers (New RV) 4. New single family attached (New SF Att) 5. New single family detached (New SF Det) 6. Renovated apartment (Ren Apt) 7. Renovated manufactured housing (Ren Man) 8. Renovated single family attached (Ren SFAtt) 9. Renovated single family detached (Ren SF Det)

Climate Zone: 1. (Zone 1) <2,000 cooling degree days (CDD) and more than 7,000 heating degree days (HDD) 2. (Zone 2) <2,000 CDD and 5,500 to 7,000 HDD 3. (Zone 3) <2,000 CDD and 4,000 to 5,499 HDD 4. (Zone 4) <2,000 CDD and <4,000 HDD. 5. (Zone 5) >2,000 CDD and <4,000 HDD Note: Number of degree days is over a 30 year period.
Age and Employment Status: 1. Infants: less than age 2 (Infants 0-1) 2. Children: aged 2 through 15 (Children 2-15) 3. Ages 16+; work full-time outside the composite wood products industry (Not CWP Industry) 4. Ages 16+; work in composite wood products fabrication (Fabricator) 5. Ages 16+; unemployed or not in the labor force (Retired/Unemployed) 6. Ages 16+; work part-time outside the com posite wood products industry (Part Time) 

### 4372

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### Table 3-30: Summary of Lower and Higher Benefit Estimate Assumptions

Health Outcome Lower Estimate Higher Estimate

Cancer Does not apply age-dependent adjustment factor (ADAF) to the inhalation unit risk. a Multiplies the inhalation unit risk by a lowering factor. Applies age-dependent ad justment factor (ADAF) to the inhalation unit risk. a

Irritation Does not include benefits for reductions in the indoor average daily concentration below 40ppb. Includes benefits for any reduction in the indoor average daily concentration, including reductions below 40ppb.

Asthma Includes benefits for 6-17 year olds only. The willingness-to-pay (WTP) to avoid asthma, which is age-specific, is lower for this age group compared to the higher estimate. Includes benefits for 2-17 year olds only. The willingness-to-pay (WTP) to avoid asthma, which is age-specific, is higher for this age group compared to the lower estimate.

Fertility There is only one fertility estimate presented.

a EPA policy is to apply ADAFs when there is a mutagenic mode of action. The 1991 IRIS assessment did not make a formal finding of a mutagenic mode of action. However, there is scientific support for a mutagenic mode of action. Therefore, EPA believes appl ication of ADAFs is the prefe rred approach in this case but is also presenting the calculations without applying ADAFs.
b The lowering factor is calculated as the percentage of incidence of the cancer that occurs within the age range spanning from the age at which the change in exposure is experienced through the end of the expected lifetime. 

### 4373 4374

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### 4375 3.7.1 Total Benefits Attributable to Cancer Risk Reductions 4376 4377 The benefits of reducing the risk of nasopharyng eal cancer is estimated as a weighted average of 4378 the value of reducing fatal and nonfatal cancer risks. As noted above (see section 3.4.1), the fifteen year 4379 survival rate for cancers of the nasopharynx is 42.9 percent (SEER 2010). Thus, the analysis assumes 4380 that 57.1 percent of the reductions in cancer risk are reductions in mortality risk and therefore are valued 4381 as the value of mortality risk (VMR) presented in secti on 3.4.1. Likewise, the analysis assumes that 42.9 4382 percent of the cancer risk reductions are reductions in the risk of nonfatal cancer and are valued using a 4383 cost of illness approach presented in section 3.4.2. The results presented in this section generally include 4384 the number of individuals experien cing exposure reductions annually as a result of the analytical option 4385 (see section 3.6), the average individual’s micro risk reduction for cancer (see section 3.3), and the total 4386 benefits for the reduction in cancer risk. The anal ysis includes both lower and higher estimates for the 4387 reduction in cancer risk, where the lower estimate ad justs the cancer risk downward based according to 4388 the distribution of cancer incidence by age (see secti on 3.3.1). Note that the value for each micro risk 4389 reduction for cancer is conditional on the age at the time of the exposure (see Table 3-16). 4390 4391 Table 3-31 through Table 3-36 present the annual benefits using a 3 percent discount rate 4392 associated with reduced cancer risk for a typical year under the analytical options with the statutory 4393 emissions standards (see Table 3-28 for a description of the analytical options and Table 3-29 for a 4394 description of the exposure groups). Because the expos ure model assumes that the benefits of reduced 4395 emissions from newly installed composite wood produ cts are accrued over 11 years and the numbers of 4396 individuals in different exposure groups are assumed to be the same in each year, the annual benefits are 4397 the same starting in the eleventh year. Thus, the eleventh and subsequent years are defined as typical 4398 years for the purpose of this analysis. Table 3-37 presents the typical annual benefits, the present 4399 discounted value of the 40-year stream of benefits, and the annualized benefits associated with reduced 4400 cancer risk for all analytical options. 4401 4402 The results in Table 3-31 through Table 3-36 indicate that the cancer-related benefits are 4403 generally higher for composite wood products that have been more recently installed, new housing 4404 compared to renovated housing, warmer and more humid climate zones, younger individuals, and 4405 individuals who work in the co mposite wood products industry. 4406 4407 The results in Table 3-37 indicate that the most protective option with emissions standards that 4408 are consistent with the TSCA Title VI statute (Op tion SN, which would require laminated products to be 4409 made with both NAF resins and NAF platforms in or der to be exempted from the definition of hardwood 4410 plywood) has cancer-related benefits that are less than 20 percent larger than the benefits of the least 4411 protective option with emissions standards that are c onsistent with the TSCA Title VI statute (Option SE, 4412 which exempts all laminated products from the de finition of hardwood plywood). The cancer-related 4413 benefits under Option SC and the proposed option (Op tion SCR) are only slightly less than those under 4414 Option SN, the difference being less than 5 percent. Options SC and SCR w ould both require laminated 4415 products to be made with NAF resins in order to be exempted from the definition of hardwood plywood. 4416 Analytical options that would require NAF resin t echnologies for all composite wood products (Options 4417 NE and NI) would result in benefits about four times larger than under the proposed analytical option 4418 with emissions standards consistent with the TSCA T itle VI statute, and analytical options that would 4419 require less stringent emissions standards than the st atute (Options CE and CI) would result in benefits 4420 about 25 percent lower. 4421 4422

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### Table 3-31: Cancer Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Option SE (3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 0.43 1.08 $2.5 $5.3 Structure age 1-2 2,739 0.28 0.69 $1.6 $3.4 Structure age 2-3 2,739 0.18 0.45 $1.0 $2.2 Structure age 3-4 2,739 0.12 0.29 $0.7 $1.5 Structure age 4-5 2,739 0.08 0.20 $0.5 $1.0 Structure age 5-6 2,739 0.06 0.13 $0.3 $0.7 Structure age 6-7 2,739 0.04 0.10 $0.2 $0.5 Structure age 7-8 2,739 0.03 0.07 $0.2 $0.4 Structure age 8-9 2,739 0.03 0.06 $0.2 $0.3 Structure age 9-10 2,739 0.02 0.05 $0.1 $0.3 Structure age 10-11 2,739 0.02 0.04 $0.1 $0.2 0-1 years post-ren. 6,903 0.25 0.60 $3.8 $8.5 1-2 years post-ren. 6,903 0.16 0.39 $2.5 $5.5 2-3 years post-ren. 6,903 0.11 0.26 $1.6 $3.6 3-4 years post-ren. 6,903 0.07 0.17 $1.1 $2.4 4-5 years post-ren. 6,903 0.05 0.12 $0.8 $1.7 5-6 years post-ren. 6,903 0.04 0.08 $0.6 $1.2 6-7 years post-ren. 6,903 0.03 0.06 $0.4 $0.9 7-8 years post-ren. 6,903 0.02 0.05 $0.4 $0.7 8-9 years post-ren. 6,903 0.02 0.04 $0.3 $0.6 9-10 years post-ren. 6,903 0.02 0.04 $0.3 $0.5 10-11 years post-ren. 6,903 0.02 0.03 $0.3 $0.5 Total 106,057 0.08 0.20 $19.4 $42.1

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4423 4424 4425

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### Table 3-32: Cancer Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Options SI, SC, and SCR (Proposed Option, 3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 0.48 1.19 $2.7 $5.9 Structure age 1-2 2,739 0.31 0.76 $1.7 $3.8 Structure age 2-3 2,739 0.20 0.49 $1.1 $2.4 Structure age 3-4 2,739 0.13 0.32 $0.7 $1.6 Structure age 4-5 2,739 0.09 0.21 $0.5 $1.1 Structure age 5-6 2,739 0.06 0.15 $0.4 $0.7 Structure age 6-7 2,739 0.04 0.10 $0.3 $0.5 Structure age 7-8 2,739 0.03 0.08 $0.2 $0.4 Structure age 8-9 2,739 0.03 0.06 $0.2 $0.3 Structure age 9-10 2,739 0.02 0.05 $0.1 $0.3 Structure age 10-11 2,739 0.02 0.04 $0.1 $0.2 0-1 years post-ren. 6,903 0.30 0.72 $4.5 $10.2 1-2 years post-ren. 6,903 0.19 0.46 $2.9 $6.6 2-3 years post-ren. 6,903 0.13 0.30 $1.9 $4.3 3-4 years post-ren. 6,903 0.08 0.20 $1.3 $2.9 4-5 years post-ren. 6,903 0.06 0.14 $0.9 $2.0 5-6 years post-ren. 6,903 0.04 0.10 $0.6 $1.4 6-7 years post-ren. 6,903 0.03 0.07 $0.5 $1.0 7-8 years post-ren. 6,903 0.03 0.05 $0.4 $0.8 8-9 years post-ren. 6,903 0.02 0.04 $0.3 $0.7 9-10 years post-ren. 6,903 0.02 0.04 $0.3 $0.6 10-11 years post-ren. 6,903 0.02 0.03 $0.3 $0.5
Total 106,057 0.10 0.23 $22.0 $48.0

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4426 4427

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### Table 3-33: Cancer Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Option SN, 3% discount rate Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 0.49 1.23 $2.8 $6.1 Structure age 1-2 2,739 0.32 0.78 $1.8 $3.9 Structure age 2-3 2,739 0.20 0.51 $1.2 $2.5 Structure age 3-4 2,739 0.13 0.33 $0.8 $1.6 Structure age 4-5 2,739 0.09 0.22 $0.5 $1.1 Structure age 5-6 2,739 0.06 0.15 $0.4 $0.8 Structure age 6-7 2,739 0.05 0.11 $0.3 $0.5 Structure age 7-8 2,739 0.03 0.08 $0.2 $0.4 Structure age 8-9 2,739 0.03 0.06 $0.2 $0.3 Structure age 9-10 2,739 0.02 0.05 $0.1 $0.3 Structure age 10-11 2,739 0.02 0.04 $0.1 $0.2 0-1 years post-ren. 6,903 0.31 0.76 $4.7 $10.8 1-2 years post-ren. 6,903 0.20 0.49 $3.1 $6.9 2-3 years post-ren. 6,903 0.13 0.32 $2.0 $4.5 3-4 years post-ren. 6,903 0.09 0.21 $1.4 $3.0 4-5 years post-ren. 6,903 0.06 0.14 $0.9 $2.0 5-6 years post-ren. 6,903 0.04 0.10 $0.7 $1.4 6-7 years post-ren. 6,903 0.03 0.07 $0.5 $1.1 7-8 years post-ren. 6,903 0.03 0.06 $0.4 $0.8 8-9 years post-ren. 6,903 0.02 0.05 $0.3 $0.7 9-10 years post-ren. 6,903 0.02 0.04 $0.3 $0.6 10-11 years post-ren. 6,903 0.02 0.04 $0.3 $0.5 Total 106,057 0.10 0.24 $22.9 $50.1

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4428 4429

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### Table 3-34: Cancer Benefits for Statutory Options by Structure Type, Annual Benefits for Typical Year, 3% discount rate

Structure Type Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE New Apt 4,756 0.17 0.38 $1.7 $3.3 New Man 1,406 0.14 0.35 $0.4 $0.9 New RV 52 0.26 0.73 $0.0 $0.1 New SF Att 2,236 0.11 0.26 $0.5 $1.1 New SF Det 21,679 0.10 0.26 $4.7 $10.2 Ren Apt 14,786 0.11 0.26 $3.6 $7.4 Ren Man 2,954 0.11 0.27 $0.7 $1.6 Ren SF Att 4,045 0. 07 0.17 $0.6 $1.4 Ren SF Det 54,145 0. 06 0.14 $7.1 $16.0 Total 106,057 0.08 0.20 $19.4 $42.1 Options SI, SC and SCR (Proposed Option) New Apt 4,756 0.19 0.42 $1.9 $3.7
New Man 1,406 0.16 0.40 $0.5 $1.1
New RV 52 0.34 0.96 $0.0 $0.1
New SF Att 2,236 0.12 0.29 $0.6 $1.2
New SF Det 21,679 0.11 0.28 $5.1 $11.0 Ren Apt 14,786 0.13 0.30 $4.1 $8.5
Ren Man 2,954 0.13 0.34 $0.9 $2.0
Ren SF Att 4,045 0.08 0.19 $0.7 $1.6
Ren SF Det 54,145 0.07 0.16 $8.2 $18.7
Total 106,057 0.10 0.23 $22.0 $48.0 Option SN New Apt 4,756 0.20 0.44 $1.9 $3.8 New Man 1,406 0.17 0.42 $0.5 $1.1 New RV 52 0.37 1.04 $0.0 $0.1 New SF Att 2,236 0.12 0.29 $0.6 $1.2 New SF Det 21,679 0.12 0.29 $5.2 $11.3 Ren Apt 14,786 0.14 0.31 $4.3 $8.9 Ren Man 2,954 0.14 0.36 $0.9 $2.2 Ren SF Att 4,045 0. 09 0.20 $0.8 $1.7 Ren SF Det 54,145 0. 07 0.17 $8.6 $19.6 Total 106,057 0.10 0.24 $22.9 $50.1

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4430

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### Table 3-35: Cancer Benefits for Statutory Options by Climate Zone, Annual Benefits for Typical Year, 3% discount rate

Climate Zone Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Zone 1 13,177 0.07 0.17 $2.1 $4.5 Zone 2 23,907 0.07 0.18 $3.9 $8.4 Zone 3 20,637 0.08 0.18 $3.4 $7.4 Zone 4 21,214 0.09 0.21 $4.0 $8.6 Zone 5 27,122 0.10 0.25 $6.0 $13.1 Total 106,057 0.08 0.20 $19.4 $42.1 Options SI, SC and SCR (Proposed Option) Zone 1 13,177 0.1 0.2 $2.3 $5.1
Zone 2 23,907 0.08 0.20 $4.4 $9.6
Zone 3 20,637 0.09 0.20 $3.9 $8.5
Zone 4 21,214 0.10 0.24 $4.5 $9.8
Zone 5 27,122 0.12 0.29 $6.8 $15.0
Total 106,057 0.10 0.23 $22.0 $48.0 Option SN Zone 1 13,177 0.08 0.20 $2.4 $5.3 Zone 2 23,907 0.09 0.21 $4.6 $10.0 Zone 3 20,637 0.09 0.21 $4.0 $8.8 Zone 4 21,214 0.10 0.25 $4.7 $10.2 Zone 5 27,122 0.12 0.30 $7.1 $15.6 Total 106,057 0.10 0.24 $22.9 $50.1

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4431

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### Table 3-36: Cancer Benefits for Statutory Options by Age/Employment Status, Annual Benefits for Typical Year, 3% discount rate Age/Employment Status Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Infants 0-1 3,309 0.12 1.27 $0.4 $4.4 Children 2-15 21,312 0.11 0.34 $3.1 $9.6 Not CWP Industry 55,524 0.08 0.12 $12.0 $18.2 Fabricator 238 0.32 0.48 $0.2 $0.3 Retired/Unemployed 19,508 0.05 0.13 $2.6 $7.8 Part Time 6,166 0. 08 0.12 $1.1 $1.7 Total 106,057 0.08 0.20 $19.4 $42.1 Options SI, SC and SCR (Proposed Option) Infants 0-1 3,309 0.14 1.45 $0.5 $5.1
Children 2-15 21,312 0.12 0.38 $3.5 $10.8 Not CWP Industry 55,524 0.09 0.13 $13.5 $20.5
Fabricator 238 0.33 0.50 $0.2 $0.3 Retired/Unemployed 19,508 0.06 0.15 $3.1 $9.2
Part Time 6,166 0.09 0.13 $1.3 $2.0
Total 106,057 0.10 0.23 $22.0 $48.0 Option SN Infants 0-1 3,309 0.14 1.51 $0.5 $5.3 Children 2-15 21,312 0.13 0.40 $3.6 $11.3 Not CWP Industry 55,524 0.10 0.14 $14.0 $21.3 Fabricator 238 0.34 0.50 $0.2 $0.3 Retired/Unemployed 19,508 0.07 0.16 $3.2 $9.7 Part Time 6,166 0. 10 0.14 $1.3 $2.1 Total 106,057 0.10 0.24 $22.9 $50.1

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4432 4433 Table 3-37: Cancer Benefits for All Options, Pr esent Discounted Value of 40-Year Stream of Benefits and Annualized Benefits (millions 2010$, 3% discount rate) Analytical Option Annual Benefits in Typical Year PDV of 40-Year Stream of Benefits Annualized Benefits

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $19 $42 $356 $776 $17 $38 Option SI/SC/SCR (Proposed) $22 $48 $405 $887 $20 $43 Option SN $23 $50 $422 $926 $20 $45 Option CE $15 $32 $272 $592 $13 $29 Option CI $17 $37 $311 $680 $15 $33 Option NE $84 $182 $1,545 $3,359 $75 $163 Option NI $88 $190 $1,618 $3,523 $79 $171 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4434 4435 3.7.2 Total Benefits Attributable to Non-cancer Health Effect Risk Reductions 4436 4437 The benefits of reducing risk for non-cancer h ealth effects are estimated using the methods 4438 described in section 3.5. The presented results gene rally include the number of individuals experiencing 4439 exposure reductions annually as a result of the analytical option (see section 3.6) and the average 4440

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### individual’s micro risk reduction for the non-cancer h ealth effect. A micro risk reduction represents a 4441 1/1,000,000 reduction in risk. As described in sectio n 3.5, the benefits under a 3 percent discount rate 4442 from avoiding a case of eye irritation, asthma, a nd reduced fertility were $26, $35,443-$66,064, and 4443 $1,969-$5,336 (depending on age), respectively. Thus these values multiplied by 1/1,000,000 correspond 4444 to the values for a single micro risk reduction. 4445 4446 3.7.2.1 Eye Irritation 

### 4447 4448 Table 3-38 through Table 3-43 present the annual benefits using a 3 percent discount rate 4449 associated with reduced eye irritation risk for a typical year under the analytical options with the statutory 4450 emissions standards (see Table 3-28 for a description of the analytical options and Table 3-29 for a 4451 description of the exposure groups). Because the expos ure model assumes that the benefits of reduced 4452 emissions from newly installed composite wood produ cts are accrued over 11 years and the numbers of 4453 individuals in different exposure groups are assumed to be the same in each year, the annual benefits are 4454 the same starting in the eleventh year. Thus, the eleventh and subsequent years are defined as typical 4455 years for the purpose of this analysis. Table 3-44 presents the typical annual benefits, the present 4456 discounted value of the 40-year stream of benefits, and the annualized benefits associated with reduced 4457 eye irritation risk for all analytical options. 4458 4459 The results in Table 3-38 through Table 3-43 indicat e that the eye irritation-related benefits are 4460 generally higher for composite wood products that have been more recently installed, new housing 4461 compared to renovated housing, warmer and more humid climate zones, and individuals who work in the 4462 composite wood products industry. 4463 4464 The results in Table 3-44 indicate that the most protective option with emissions standards that 4465 are consistent with the TSCA Title VI statute (Op tion SN, which would require laminated products to be 4466 made with both NAF resins and NAF platforms in or der to be exempted from the definition of hardwood 4467 plywood) has eye irritation-related benefits that are about 9 to 17 percent larger than the benefits of the 4468 least protective option with emissions standards that are consistent with the TSCA Title VI statute 4469 (Option SE, which exempts all laminated products fr om the definition of hardwood plywood). The eye 4470 irritation-related benefits under the proposed optio n (Option SCR, which would require laminated 4471 products to be made with NAF resins in order to be exempted from the definition of hardwood plywood) 4472 are only slightly less than those under Option SN, the difference being less than 4 percent. Analytical 4473 options that would require NAF resin technologies for all composite wood products (Options NE and NI) 4474 would result in benefits that are about three times la rger than under the proposed analytical option with 4475 emissions standards consistent with the TSCA Title VI statute, and analytical options that would require 4476 less stringent emissions standards than the statute (Op tions CE and CI) would result in benefits about 20 4477 to 25 percent lower. 4478 4479 4480

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### Table 3-38: Irritation Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Option SE (3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 5, 739.76 17,934.82 $0.409 $1.277 Structure age 1-2 2,739 203.22 7,230.14 $0.014 $0.515 Structure age 2-3 2,739 60.81 3,136.33 $0.004 $0.223 Structure age 3-4 2,739 49.65 1,491.51 $0.004 $0.106 Structure age 4-5 2,739 43.18 787.82 $0.003 $0.056 Structure age 5-6 2,739 39.33 464.81 $0.003 $0.033 Structure age 6-7 2,739 37.00 305.69 $0.003 $0.022 Structure age 7-8 2,739 35.56 222.10 $0.003 $0.016 Structure age 8-9 2,739 34.67 175.79 $0.002 $0.013 Structure age 9-10 2,739 34.11 149.07 $0.002 $0.011 Structure age 10-11 2,739 33.77 133.20 $0.002 $0.009 0-1 years post-ren. 6,903 112.26 5,728.63 $0.020 $1.028 1-2 years post-ren. 6,903 86.43 2,596.25 $0.016 $0.466 2-3 years post-ren. 6,903 71.76 1,297.15 $0.013 $0.233 3-4 years post-ren. 6,903 63.15 720.53 $0.011 $0.129 4-5 years post-ren. 6,903 57.98 445.52 $0.010 $0.080 5-6 years post-ren. 6,903 54.82 305.07 $0.010 $0.055 6-7 years post-ren. 6,903 52.86 228.99 $0.009 $0.041 7-8 years post-ren. 6,903 51.65 185.82 $0.009 $0.033 8-9 years post-ren. 6,903 50.89 160.47 $0.009 $0.029 9-10 years post-ren. 6,903 50.41 145.21 $0.009 $0.026 10-11 years post-ren. 6,903 50.11 135.89 $0.009 $0.024 Total 106,057 208.69 1,604.93 $0.575 $4.426

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4481 4482 4483

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### Table 3-39: Irritation Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Options SI, SC, and SCR (Proposed Option, 3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 6,217.72 19,737.86 $0.443 $1.406 Structure age 1-2 2,739 210.18 7,944.66 $0.015 $0.566 Structure age 2-3 2,739 62.95 3,437.11 $0.004 $0.245 Structure age 3-4 2,739 50.90 1,627.35 $0.004 $0.116 Structure age 4-5 2,739 43.93 853.79 $0.003 $0.061 Structure age 5-6 2,739 39.79 499.08 $0.003 $0.036 Structure age 6-7 2,739 37.28 324.51 $0.003 $0.023 Structure age 7-8 2,739 35.74 232.90 $0.003 $0.017 Structure age 8-9 2,739 34.78 182.18 $0.002 $0.013 Structure age 9-10 2,739 34.18 152.94 $0.002 $0.011 Structure age 10-11 2,739 33.81 135.57 $0.002 $0.010 0-1 years post-ren. 6,903 122.41 6,705.17 $0.022 $1.203 1-2 years post-ren. 6,903 92.35 3,032.09 $0.017 $0.544 2-3 years post-ren. 6,903 75.31 1,506.47 $0.014 $0.270 3-4 years post-ren. 6,903 65.32 828.24 $0.012 $0.149 4-5 years post-ren. 6,903 59.31 504.27 $0.011 $0.091 5-6 years post-ren. 6,903 55.65 338.60 $0.010 $0.061 6-7 years post-ren. 6,903 53.38 248.76 $0.010 $0.045 7-8 years post-ren. 6,903 51.97 197.75 $0.009 $0.035 8-9 years post-ren. 6,903 51.09 167.78 $0.009 $0.030 9-10 years post-ren. 6,903 50.54 149.74 $0.009 $0.027 10-11 years post-ren. 6,903 50.19 138.71 $0.009 $0.025
Total 106,057 222.99 1,806.48 $0.615 $4.981

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4484 4485

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### Table 3-40: Irritation Benefits by Composit e Wood Source and Age, Annual Benefits for Typical Year, Option SN, 3% discount rate Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 2,739 6, 376.53 20,360.47 $0.454 $1.450 Structure age 1-2 2,739 211.50 8,191.74 $0.015 $0.583 Structure age 2-3 2,739 63.70 3,541.31 $0.005 $0.252 Structure age 3-4 2,739 51.33 1,674.50 $0.004 $0.119 Structure age 4-5 2,739 44.20 876.73 $0.003 $0.062 Structure age 5-6 2,739 39.95 511.01 $0.003 $0.036 Structure age 6-7 2,739 37.38 331.08 $0.003 $0.024 Structure age 7-8 2,739 35.80 236.67 $0.003 $0.017 Structure age 8-9 2,739 34.82 184.41 $0.002 $0.013 Structure age 9-10 2,739 34.21 154.29 $0.002 $0.011 Structure age 10-11 2,739 33.83 136.40 $0.002 $0.010 0-1 years post-ren. 6,903 125.94 7,039.10 $0.023 $1.263 1-2 years post-ren. 6,903 94.42 3,181.77 $0.017 $0.571 2-3 years post-ren. 6,903 76.55 1,578.67 $0.014 $0.283 3-4 years post-ren. 6,903 66.07 865.53 $0.012 $0.155 4-5 years post-ren. 6,903 59.78 524.67 $0.011 $0.094 5-6 years post-ren. 6,903 55.94 350.27 $0.010 $0.063 6-7 years post-ren. 6,903 53.56 255.66 $0.010 $0.046 7-8 years post-ren. 6,903 52.09 201.92 $0.009 $0.036 8-9 years post-ren. 6,903 51.16 170.33 $0.009 $0.031 9-10 years post-ren. 6,903 50.59 151.32 $0.009 $0.027 10-11 years post-ren. 6,903 50.22 139.69 $0.009 $0.025 Total 106,057 227.75 1,875.87 $0.628 $5.173

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4486 4487

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### Table 3-41: Irritation Benefits for Statutory Options by Structure Type, Annual Benefits for Typical Year, 3% discount rate

Structure Type Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE New Apt 4,756 2,051.74 5,159.38 $0.254 $0.638 New Man 1,406 1,014.86 4,151.36 $0.037 $0.152 New RV 52 11,928.14 17, 386.79 $0.016 $0.024 New SF Att 2,236 254.44 2,622.20 $0.015 $0.152 New SF Det 21,679 226.55 2,333.65 $0.128 $1.315 Ren Apt 14,786 57.48 2,164.15 $0.022 $0.832 Ren Man 2,954 140.99 1,937.64 $0.011 $0.149 Ren SF Att 4,045 43.27 1,054.63 $0.005 $0.111 Ren SF Det 54,145 62.91 747.91 $0.089 $1.053 Total 106,057 208.69 1,604.93 $0.575 $4.426 Options SI, SC, and SCR (Proposed Option) New Apt 4,756 2,199.43 5,731.54 $0.272 $0.709
New Man 1,406 1,130.49 4,790.85 $0.041 $0.175
New RV 52 14,647.20 22,139.03 $0.020 $0.030
New SF Att 2,236 269.06 2,856.59 $0.016 $0.166
New SF Det 21,679 240.54 2,522.31 $0.136 $1.422 Ren Apt 14,786 59.90 2,466.91 $0.023 $0.948
Ren Man 2,954 151.22 2,386.52 $0.012 $0.183
Ren SF Att 4,045 44.62 1,203.59 $0.005 $0.127
Ren SF Det 54,145 64.81 867.77 $0.091 $1.222
Total 106,057 222.99 1,806.48 $0.615 $4.981 Option SN New Apt 4,756 2,250.38 5,929.20 $0.278 $0.733 New Man 1,406 1,166.51 5,010.67 $0.043 $0.183 New RV 52 15,302.17 23, 687.63 $0.021 $0.032 New SF Att 2,236 274.12 2,937.91 $0.016 $0.171 New SF Det 21,679 245.40 2,587.86 $0.138 $1.459 Ren Apt 14,786 60.75 2,571.04 $0.023 $0.988 Ren Man 2,954 154.76 2,537.77 $0.012 $0.195 Ren SF Att 4,045 45.09 1,254.96 $0.005 $0.132 Ren SF Det 54,145 65.47 909.00 $0.092 $1.280 Total 106,057 227.75 1,875.87 $0.628 $5.173

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4488

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### Table 3-42: Irritation Benefits for Statutory Options by Climate Zone, Annual Benefits for Typical Year, 3% discount rate

Climate Zone Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Zone 1 13,177 93.78 1,169.86 $0.032 $0.401 Zone 2 23,907 90.38 1,226.80 $0.056 $0.763 Zone 3 20,637 99.30 1,281.44 $0.053 $0.688 Zone 4 21,214 175.84 1,658.12 $0.097 $0.915 Zone 5 27,122 477.73 2,354.12 $0.337 $1.660 Total 106,057 208.69 1,604.93 $0.575 $4.426 Options SI, SC, and SCR (Proposed Option) Zone 1 13,177 98.5 1,316.1 $0.034 $0.451
Zone 2 23,907 94.93 1,382.86 $0.059 $0.860
Zone 3 20,637 104.54 1,445.01 $0.056 $0.775
Zone 4 21,214 186.56 1,862.55 $0.103 $1.027
Zone 5 27,122 514.96 2,649.27 $0.363 $1.868
Total 106,057 222.99 1,806.48 $0.615 $4.981 Option SN Zone 1 13,177 100.16 1,366.58 $0.034 $0.468 Zone 2 23,907 96.50 1,436.66 $0.060 $0.893 Zone 3 20,637 106.34 1,501.38 $0.057 $0.806 Zone 4 21,214 190.00 1,932.95 $0.105 $1.066 Zone 5 27,122 527.32 2,750.74 $0.372 $1.940 Total 106,057 227.75 1,875.87 $0.628 $5.173

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4489

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### Table 3-43: Irritation Benefits for Statutor y Options by Age/Employment Status, Annual Benefits for Typical Year, 3% discount rate Age/Employment Status Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Infants 0-1 3,309 403.55 2,185.76 $0.035 $0.188 Children 2-15 21,312 88.42 1,532.89 $0.049 $0.849 Not CWP Industry 55,524 46.85 1,287.54 $0.068 $1.859 Fabricator 238 26,845.10 26,845.10 $0.166 $0.166 Retired/Unemployed 19,508 453. 31 2,177.11 $0.230 $1.104 Part Time 6,166 172.96 1,613.61 $0.028 $0.259 Total 106,057 208.69 1,604.93 $0.575 $4.426 Options SI, SC, and SCR (Proposed Option) Infants 0-1 3,309 429.17 2,456.66 $0.037 $0.211
Children 2-15 21,312 95.31 1,714.52 $0.053 $0.950 Not CWP Industry 55,524 47.49 1,444.11 $0.069 $2.085
Fabricator 238 27,758.76 27,758.76 $0.172 $0.172 Retired/Unemployed 19,508 501.70 2,501.58 $0.254 $1.269
Part Time 6,166 187.18 1,835.40 $0.030 $0.294
Total 106,057 222.99 1,806.48 $0.615 $4.981 Option SN Infants 0-1 3,309 437.92 2,549.98 $0.038 $0.219 Children 2-15 21,312 97.65 1,777.13 $0.054 $0.985 Not CWP Industry 55,524 47.55 1,498.10 $0.069 $2.163 Fabricator 238 28,077.14 28,077.14 $0.174 $0.174 Retired/Unemployed 19,508 517. 93 2,612.92 $0.263 $1.325 Part Time 6,166 191.93 1,911.72 $0.031 $0.306 Total 106,057 227.75 1,875.87 $0.628 $5.173

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4490 4491 Table 3-44: Irritation Benefits for All Options, Present Discounted Value of 40-Year Stream of Benefits and Annualized Benefits (millions 2010$, 3% discount rate) Analytical Option Annual Benefits in Typical Year PDV of 40-Year Stream of Benefits Annualized Benefits

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $0.6 $4.4 $10.9 $83.9 $0.5 $4.1 Option SI/SC/SCR (Proposed) $0.6 $5.0 $11.7 $94.5 $0.6 $4.6 Option SN $0.6 $5.2 $11.9 $98.1 $0.6 $4.8 Option CE $0.5 $3.4 $8.9 $64.3 $0.4 $3.1 Option CI $0.5 $3.9 $9.7 $73.1 $0.5 $3.5 Option NE $1.5 $16.3 $27.9 $307.3 $1.4 $14.9 Option NI $1.5 $16.8 $27.9 $316.6 $1.4 $15.4 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4492 4493 3.7.2.2 Asthma 

### 4494 4495 Table 3-45 through Table 3-50 present the annual benefits using a 3 percent discount rate 4496 associated with reduced asthma risk for a typical year under the analytical options with the statutory 4497 emissions standards (see Table 3-28 for a description of the analytical options and Table 3-29 for a 4498

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### description of the exposure groups). Because the expos ure model assumes that the benefits of reduced 4499 emissions from newly installed composite wood produ cts are accrued over 11 years and the numbers of 4500 individuals in different exposure groups are assumed to be the same in each year, the annual benefits are 4501 the same starting in the eleventh year. Thus, the eleventh and subsequent years are defined as typical 4502 years for the purpose of this analysis. Table 3-51 presents the typical annual benefits, the present 4503 discounted value of the 40-year stream of benefits, and the annualized benefits associated with reduced 4504 asthma risk for all analytical options. 4505 4506 The results in Table 3-45 through Table 3-50 i ndicate that the asthma -related benefits are 4507 generally higher for composite wood products that have been more recently installed, new housing 4508 compared to renovated housing, warmer and more humid climate zones, and individuals who work in the 4509 composite wood products industry. 4510 4511 The results in Table 3-51 indicate that the most protective option with emissions standards that 4512 are consistent with the TSCA Title VI statute (Op tion SN, which would require laminated products to be 4513 made with both NAF resins and NAF platforms in or der to be exempted from the definition of hardwood 4514 plywood) has asthma-related benefits that are less than 20 percent larger than the benefits of the least 4515 protective option with emissions standards that are c onsistent with the TSCA Title VI statute (Option SE, 4516 which exempts all laminated products from the defi nition of hardwood plywood). The asthma-related 4517 benefits under the proposed option (Option SCR, whic h would require laminated products to be made 4518 with NAF resins in order to be exempted from the definition of hardwood plywood) are only slightly less 4519 than those under Option SN, the difference being about 4 percent. Analytical options that would require 4520 NAF resin technologies for all composite wood products (Options NE and NI) would result in benefits 4521 that are nearly four times larger than under the pr oposed analytical option with emissions standards 4522 consistent with the TSCA Title VI statute, and an alytical options that would require less stringent 4523 emissions standards than the statute (Options CE and CI) would result in benefits about 25 percent lower. 4524 4525 4526

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### Table 3-45: Asthma Benefits by Composite Wood Source and Age, Annual Benefits for Typical Year, Option SE (3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 492 718 658.11 654.52 $21.0 $31.1 Structure age 1-2 492 718 429.13 427.00 $13.7 $20.3 Structure age 2-3 492 718 281.08 279.94 $9.0 $13.3 Structure age 3-4 492 718 186.28 185.77 $5.9 $8.8 Structure age 4-5 492 718 125.93 125.84 $4.0 $6.0 Structure age 5-6 492 718 87.67 87.84 $2.8 $4.2 Structure age 6-7 492 718 63.46 63.80 $2.0 $3.0 Structure age 7-8 492 718 48.17 48.62 $1.5 $2.3 Structure age 8-9 492 718 38.53 39.04 $1.2 $1.9 Structure age 9-10 492 718 32.44 33.00 $1.0 $1.6 Structure age 10-11 492 718 28.61 29.19 $0.9 $1.4 0-1 years post-ren. 1,126 1,488 423.28 426.95 $30.9 $42.0 1-2 years post-ren. 1,126 1,488 277.27 279.86 $20.2 $27.5 2-3 years post-ren. 1,126 1,488 183.69 185.58 $13.4 $18.2 3-4 years post-ren. 1,126 1,488 124.10 125.53 $9.1 $12.3 4-5 years post-ren. 1,126 1,488 86.30 87.43 $6.3 $8.6 5-6 years post-ren. 1,126 1,488 62.38 63.33 $4.6 $6.2 6-7 years post-ren. 1,126 1,488 47.27 48.10 $3.4 $4.7 7-8 years post-ren. 1,126 1,488 37.74 38.50 $2.8 $3.8 8-9 years post-ren. 1,126 1,488 31.73 32.44 $2.3 $3.2 9-10 years post-ren. 1,126 1,488 27.94 28.62 $2.0 $2.8 10-11 years post-ren. 1,126 1,488 25.55 26.21 $1.9 $2.6 Total 17,802 24,270 138.69 139.52 $159.9 $225.7

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4527 4528

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### Table 3-46: Asthma Benefits by Composite Wood Source and Age, Annual Benefits for Typical Year, Options SI, SC, and SCR (Proposed Option, 3% discount rate) Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 492 718 720.23 716.05 $23.0 $34.0 Structure age 1-2 492 718 469.70 467.17 $15.0 $22.2 Structure age 2-3 492 718 307.23 305.82 $9.8 $14.5 Structure age 3-4 492 718 202.99 202.31 $6.5 $9.6 Structure age 4-5 492 718 136.55 136.35 $4.4 $6.5 Structure age 5-6 492 718 94.40 94.50 $3.0 $4.5 Structure age 6-7 492 718 67.72 68.01 $2.2 $3.2 Structure age 7-8 492 718 50.86 51.28 $1.6 $2.4 Structure age 8-9 492 718 40.22 40.72 $1.3 $1.9 Structure age 9-10 492 718 33.51 34.06 $1.1 $1.6 Structure age 10-11 492 718 29.28 29.86 $0.9 $1.4 0-1 years post-ren. 1,126 1,488 502.45 506.15 $36.6 $49.8 1-2 years post-ren. 1,126 1,488 328.30 330.92 $23.9 $32.5 2-3 years post-ren. 1,126 1,488 216.31 218.22 $15.8 $21.5 3-4 years post-ren. 1,126 1,488 144.84 146.28 $10.6 $14.4 4-5 years post-ren. 1,126 1,488 99.44 100.58 $7.3 $9.9 5-6 years post-ren. 1,126 1,488 70.69 71.64 $5.2 $7.0 6-7 years post-ren. 1,126 1,488 52.52 53.35 $3.8 $5.2 7-8 years post-ren. 1,126 1,488 41.05 41.81 $3.0 $4.1 8-9 years post-ren. 1,126 1,488 33.81 34.53 $2.5 $3.4 9-10 years post-ren. 1,126 1,488 29.25 29.93 $2.1 $2.9 10-11 years post-ren. 1,126 1,488 26.38 27.04 $1.9 $2.7
Total 17,802 24,270 157.25 158.05 $181.3 $255.2

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4529 4530

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### Table 3-47: Asthma Benefits by Composite Wood Source and Age, Annual Benefits for Typical Year, Option SN, 3% discount rate Composite Wood Source and Age Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Structure age 0-1 492 718 741.80 737.42 $23.6 $35.0 Structure age 1-2 492 718 483.82 481.15 $15.4 $22.8 Structure age 2-3 492 718 316.35 314.84 $10.1 $14.9 Structure age 3-4 492 718 208.82 208.08 $6.7 $9.9 Structure age 4-5 492 718 140.27 140.02 $4.5 $6.6 Structure age 5-6 492 718 96.75 96.82 $3.1 $4.6 Structure age 6-7 492 718 69.20 69.48 $2.2 $3.3 Structure age 7-8 492 718 51.80 52.21 $1.7 $2.5 Structure age 8-9 492 718 40.81 41.30 $1.3 $2.0 Structure age 9-10 492 718 33.89 34.43 $1.1 $1.6 Structure age 10-11 492 718 29.52 30.09 $0.9 $1.4 0-1 years post-ren. 1,126 1,488 529.92 533.63 $38.7 $52.5 1-2 years post-ren. 1,126 1,488 346.07 348.70 $25.2 $34.3 2-3 years post-ren. 1,126 1,488 227.69 229.60 $16.6 $22.6 3-4 years post-ren. 1,126 1,488 152.08 153.52 $11.1 $15.1 4-5 years post-ren. 1,126 1,488 104.03 105.18 $7.6 $10.3 5-6 years post-ren. 1,126 1,488 73.59 74.55 $5.4 $7.3 6-7 years post-ren. 1,126 1,488 54.35 55.19 $4.0 $5.4 7-8 years post-ren. 1,126 1,488 42.21 42.97 $3.1 $4.2 8-9 years post-ren. 1,126 1,488 34.54 35.26 $2.5 $3.5 9-10 years post-ren. 1,126 1,488 29.71 30.39 $2.2 $3.0 10-11 years post-ren. 1,126 1,488 26.67 27.33 $1.9 $2.7 Total 17,802 24,270 163.72 164.50 $188.8 $265.5

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4531 4532

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### Table 3-48: Asthma Benefits for Statutory Options by Structure Type, Annual Benefits for Typical Year, 3% discount rate

Structure Type Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE New Apt 556 862 266.14 264.79 $9.6 $15.1 New Man 249 350 237.10 235.72 $3.8 $5.5 New RV 6 7 574.29 569.84 $0.2 $0.3 New SF Att 277 417 183.96 183.23 $3.3 $5.0 New SF Det 4,325 6,266 164.75 163.92 $46.1 $67.9 Ren Apt 1,867 2,765 188.57 188.12 $22.8 $34.4 Ren Man 473 646 192.74 192.42 $5.9 $8.2 Ren SF Att 627 861 122.55 122.06 $5.0 $6.9 Ren SF Det 9,422 12,096 103.46 103.19 $63.1 $82.5 Total 17,802 24,270 138.69 138.19 $159.9 $225.7 Options SI, SC and SCR (Proposed Option) New Apt 556 862 295.59 294.01 $10.6 $16.7
New Man 249 350 273.92 272.21 $4.4 $6.3
New RV 6 7 738.78 733.05 $0.3 $0.4
New SF Att 277 417 199.77 198.84 $3.6 $5.5
New SF Det 4,325 6,266 177.31 176.30 $49.7 $73.0 Ren Apt 1,867 2,765 215.51 214.88 $26.1 $39.2
Ren Man 473 646 241.27 240.68 $7.4 $10.3
Ren SF Att 627 861 139.77 139.05 $5.7 $7.9
Ren SF Det 9,422 12,096 120.57 120.09 $73.6 $96.0
Total 17,802 24,270 157.25 156.56 $181.3 $255.2 Option SN New Apt 556 862 305.83 304.17 $11.0 $17.3 New Man 249 350 286.70 284.88 $4.6 $6.6 New RV 6 7 794.08 787.93 $0.3 $0.4 New SF Att 277 417 205.28 204.28 $3.7 $5.6 New SF Det 4,325 6,266 181.70 180.62 $50.9 $74.8 Ren Apt 1,867 2,765 224.88 224.18 $27.2 $40.9 Ren Man 473 646 258.07 257.39 $7.9 $11.0 Ren SF Att 627 861 145.77 144.98 $5.9 $8.2 Ren SF Det 9,422 12,096 126.53 125.99 $77.2 $100.7 Total 17,802 24,270 163.72 162.95 $188.8 $265.5

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4533

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### Table 3-49: Asthma Benefits for Statutory Op tions by Climate Zone, Annual Benefits for Typical Year, 3% discount rate

Climate Zone Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Zone 1 2,157 2,935 117.81 120.09 $16.5 $23.3 Zone 2 3,956 5,341 121.47 123.44 $31.1 $43.6 Zone 3 3,294 4,466 125.35 127.16 $26.7 $37.5 Zone 4 3,656 4,999 142.67 144.41 $33.8 $47.7 Zone 5 4,739 6,528 168.76 170.72 $51.8 $73.6 Total 17,802 24,270 138.69 140.62 $159.9 $225.7 Options SI, SC and SCR (Proposed Option) Zone 1 2,157 2,935 133.7 135.84 $18.7 $26.3
Zone 2 3,956 5,341 138.07 139.91 $35.4 $49.4
Zone 3 3,294 4,466 142.44 144.12 $30.4 $42.5
Zone 4 3,656 4,999 161.55 163.14 $38.3 $53.9
Zone 5 4,739 6,528 190.97 192.76 $58.6 $83.1
Total 17,802 24,270 157.25 159.04 $181.3 $255.2 Option SN Zone 1 2,157 2,935 139.22 141.33 $19.4 $27.4 Zone 2 3,956 5,341 143.86 145.64 $36.9 $51.4 Zone 3 3,294 4,466 148.40 150.03 $31.7 $44.3 Zone 4 3,656 4,999 168.12 169.66 $39.8 $56.0 Zone 5 4,739 6,528 198.69 200.43 $61.0 $86.4 Total 17,802 24,270 163.72 165.45 $188.8 $265.5

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4534

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### Table 3-50: Asthma Benefits for Statutory Options by Age/Employment Status, Annual Benefits for Typical Year, 3% discount rate Age/Employment Status Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)
Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE Infants 0-1 - - - - - - Children 2-15 14,844 21,312 137.84 140.45 $132.5 $197.8 Not CWP Industry 499 499 129.14 129.14 $4.2 $4.3 Fabricator 1 1 519.55 519.55 $0.0 $0.0 Retired/Unemployed 1,712 1,712 154. 12 154.12 $17.1 $17.4 Part Time 745 745 125.95 125.95 $6.1 $6.2 Total 17,802 24,270 138.69 140.87 $159.9 $225.7 Options SI, SC and SCR (Proposed Option) Infants 0-1 - - - - - - Children 2-15 14,844 21,312 155.56 158.28 $149.6 $222.9 Not CWP Industry 499 499 145.82 145.82 $4.7 $4.8
Fabricator 1 1 535.19 535.19 $0.0 $0.0 Retired/Unemployed 1,712 1,712 180.12 180.12 $20.0 $20.4
Part Time 745 745 145.63 145.63 $7.0 $7.2
Total 17,802 24,270 157.25 159.53 $181.3 $255.2 Option SN Infants 0-1 - - - - - - Children 2-15 14,844 21,312 161.73 164.49 $155.5 $231.6 Not CWP Industry 499 499 151.64 151.64 $4.9 $5.0 Fabricator 1 1 540.63 540.63 $0.0 $0.0 Retired/Unemployed 1,712 1,712 189. 16 189.16 $21.0 $21.4 Part Time 745 745 152.48 152.48 $7.4 $7.5 Total 17,802 24,270 163.72 166.02 $188.8 $265.5

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4535 4536 Table 3-51: Asthma Benefits for All Options, Present Discounted Value of 40-Year Stream of Benefits and Annualized Benefits (millions 2010$, 3% discount rate) Analytical Option Annual Benefits in Typical Year PDV of 40-Year Stream of Benefits Annualized Benefits

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $160 $226 $2,947 $4,158 $143 $202 Option SI/SC/SCR (Proposed) $181 $255 $3,347 $4,710 $162 $229 Option SN $189 $266 $3,486 $4,903 $169 $238 Option CE $123 $174 $2,263 $3,192 $110 $155 Option CI $140 $197 $2,586 $3,638 $126 $177 Option NE $619 $874 $11,455 $16,188 $556 $786 Option NI $646 $912 $11,955 $16,882 $580 $819 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4537 3.7.2.3 Infertility 

### 4538 4539 Table 3-52 presents the annual benefits using a 3 percent discount rate associated with reduced 4540 infertility risk for a typical year under the analytical options with the statutory emissions standards (see 4541 Table 3-28 for a description of the analytical options and Table 3-29 for a description of the exposure 4542 groups). Because the exposure model assumes that the benefits of reduced emissions from newly 4543

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### installed composite wood products ar e accrued over 11 years and the numbers of individuals in different 4544 exposure groups are assumed to be the same in each year , the annual benefits are the same starting in the 4545 eleventh year. Thus, the eleventh and subsequent y ears are defined as typical years for the purpose of this 4546 analysis. Table 3-53 presents the typical annual bene fits, the present discounted value of the 40-year 4547 stream of benefits, and the annualized benefits associated with reduced infertility risk for all analytical 4548 options. 4549 4550 The results in Table 3-52 indicate that the infer tility-related benefits are generally higher for 4551 composite wood products that have been more r ecently installed, new housing compared to renovated 4552 housing, warmer and more humid climate zones, and individuals who work in the composite wood 4553 products industry. 4554 4555 The results in Table 3-52 indicate that the most protective option with emissions standards that 4556 are consistent with the TSCA Title VI statute (Op tion SN, which would require laminated products to be 4557 made with both NAF resins and NAF platforms in or der to be exempted from the definition of hardwood 4558 plywood) has infertility-related benefits that are less th an 20 percent larger than the benefits of the least 4559 protective option with emissions standards that are c onsistent with the TSCA Title VI statute (Option SE, 4560 which exempts all laminated products from the defini tion of hardwood plywood). The infertility-related 4561 benefits under the proposed option (Option SCR, whic h would require laminated products to be made 4562 with NAF resins in order to be exempted from the definition of hardwood plywood) are only slightly less 4563 than those under Option SN, the difference being less than 4 percent. Analytical options that would 4564 require NAF resin technologies for all composite wood products (Options NE and NI) would result in 4565 benefits that are about four times larger than un der the proposed analytical option with emissions 4566 standards consistent with the TSCA Title VI statut e, and analytical options that would require less 4567 stringent emissions standards than the statute (Optio ns CE and CI) would result in benefits about 25 4568 percent lower. 4569 4570

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### Table 3-52: Infertility Benefits for Statutor y Options by Exposure Group, Annual Benefits for Typical Year, 3% discount rate Exposure Group Individuals Affected (thousands) Average Micro Risk Reduction Per Individual Annual Benefit (millions, 2010$)

Option

SE Options SI/SC/SCR Option SN Option SE Options SI/SC/SCR Option SN Composite Wood Product Source and Age Structure age 0-1 44 4,970 5,500 5,685 $0.24 $0.27 $0.27 Structure age 1-2 44 3,203 3,537 3,653 $0.15 $0.17 $0.18 Structure age 2-3 44 2,089 2,300 2,373 $0.10 $0.11 $0.11 Structure age 3-4 44 1,388 1,521 1,567 $0.07 $0.07 $0.08 Structure age 4-5 44 946 1,030 1,059 $0.05 $0.05 $0.05 Structure age 5-6 44 668 721 739 $0.03 $0.03 $0.04 Structure age 6-7 44 493 526 537 $0.02 $0.03 $0.03 Structure age 7-8 44 382 403 410 $0.02 $0.02 $0.02 Structure age 8-9 44 313 326 330 $0.02 $0.02 $0.02 Structure age 9-10 44 269 277 280 $0.01 $0.01 $0.01 Structure age 10-11 44 241 246 248 $0.01 $0.01 $0.01 0-1 years post-ren. 79 3,387 4,016 4,236 $0.28 $0.34 $0.35 1-2 years post-ren. 79 2,205 2,601 2,739 $0.18 $0.22 $0.23 2-3 years post-ren. 79 1,460 1,709 1,796 $0.12 $0.14 $0.15 3-4 years post-ren. 79 990 1,147 1,202 $0.08 $0.10 $0.10 4-5 years post-ren. 79 695 793 828 $0.06 $0.07 $0.07 5-6 years post-ren. 79 508 571 592 $0.04 $0.05 $0.05 6-7 years post-ren. 79 391 430 444 $0.03 $0.04 $0.04 7-8 years post-ren. 79 317 342 350 $0.03 $0.03 $0.03 8-9 years post-ren. 79 270 286 291 $0.02 $0.02 $0.02 9-10 years post-ren. 79 241 251 254 $0.02 $0.02 $0.02 10-11 years post-ren. 79 223 229 231 $0.02 $0.02 $0.02 Structure Type New Apt 110 1,838 2,046 2,118 $0.18 $0.20 $0.21 New Man 19 1,664 1,923 2,014 $0.03 $0.04 $0.04 New RV 0 4,401 5,827 6,326 $0.00 $0.00 $0.00 New SF Att 44 1,278 1,391 1,430 $0.06 $0.06 $0.06 New SF Det 310 1,180 1,275 1,308 $0.45 $0.49 $0.50 Ren Apt 264 1,318 1,505 1,571 $0.34 $0.38 $0.40 Ren Man 32 1,375 1,722 1,844 $0.05 $0.06 $0.06
Ren SF Att 56 906 1,032 1,076 $0.05 $0.06 $0.07
Ren SF Det 518 778 905 949 $0.46 $0.53 $0.56
Climate Zone Zone 1 161 969 1,094 1,137 $0.16 $0.18 $0.19
Zone 2 292 993 1,123 1,168 $0.32 $0.36 $0.37 Zone 3 259 1,007 1,139 1,185 $0.28 $0.32 $0.33 Zone 4 281 1,134 1,281 1,332 $0.34 $0.39 $0.40 Zone 5 359 1,325 1,499 1,559 $0.51 $0.58 $0.60 Age/Employment Status Infants 0-1 - - - - - - - Children 2-15 - - - - - - - NotCWP Industry 1,046 1,075 1,207 1,253 $1.21 $1.36 $1.41 Fabricator 2 4,087 4,222 4,269 $0.01 $0.01 $0.01 Retired/Unemployed 169 1,284 1,492 1,564 $0.26 $0.30 $0.32 Part Time 134 1,115 1,281 1,339 $0.14 $0.16 $0.16 All Exposure Groups Total 1,352 1,110 1,255 1,306 $1.62 $1.83 $1.90

See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations.

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### 4571 Table 3-53: Infertility Benefits for All Options, Present Discounted Value of 40-Year Stream of Benefits and Annualized Benefits (millions 2010$, 3% discount rate) Analytical Option An nual Benefits in Typical Year PDV of 40-Year Stream of Benefits Annualized Benefits

Option SE $1.6 $29.8 $1.4 Option SI/SC/SCR (Proposed) $1.8 $33.8 $1.6 Option SN $1.9 $35.1 $1.7 Option CE $1.2 $22.7 $1.1 Option CI $1.4 $25.8 $1.3 Option NE $7.1 $131.2 $6.4 Option NI $7.4 $137.2 $6.7 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4572 4573

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### 3.7.3 Summary of Benefits Assessment Results 4574 4575 Table 3-54 and Table 3-55 present the total benefits by health effect and analytical option for 3 4576 and 7 percent discount rates, respectively. The r esults indicate that the most protective option with 4577 emissions standards that are consistent with the TSC A Title VI statute (Option SN, which would require 4578 laminated products to be made with both NAF resins and NAF platforms in order to be exempted from 4579 the definition of hardwood plywood) has benefits that ar e less than 20 percent larger than the benefits of 4580 the least protective option with emissions standards th at are consistent with the TSCA Title VI statute 4581 (Option SE, which exempts all laminated products from the definition of hardwood plywood). The 4582 benefits under the proposed option (Option SCR, whic h would require laminated products to be made 4583 with NAF resins in order to be exempted from th e definition of hardwood plywood) are only slightly 4584 lower those of Option SN, the difference being less than 5 percent. Analytical options that would require 4585 all composite wood products to be made with NAF re sin technologies (Options NE and NI) would result 4586 in benefits nearly four times larger than under the an alytical options with emissions standards consistent 4587 with the TSCA Title VI statute and analytical options that would require less stringent emissions 4588 standards (Options CE and CI) compared to the statut e would result in benefits about 25 percent lower. 4589 4590 About 84 percent of the total benefits are attri butable to reductions in asthma risk and about 12 4591 percent are attributable to reductions in cancer risk . About 2 and 1 percent of the total benefits are 4592 attributable to avoiding eye irritation and reduced fertility, respectively. 4593 4594
4595

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### Table 3-54: Total Benefits for All Op tions (millions 2010$, 3% discount rate)

Analytical Option Cancer Eye Irritation Asthma Infertility Total Benefits

lower higher lower higher lower higher lower higher Annual Benefit for Typical Year Option SE $19.4 $42.1 $0.6 $4. 4 $159.9 $225.7 $1.6 $181.4 $273.8 Option SI/SC/SCR (Proposed) $22.0 $48.0 $0.6 $5.0 $181.3 $255.2 $1.8 $205.7 $310.1
Option SN $22.9 $50.1 $0.6 $5. 2 $188.8 $265.5 $1.9 $214.2 $322.7 Option CE $14.8 $32.1 $0.5 $3. 4 $123.0 $173.5 $1.2 $139.5 $210.3 Option CI $16.9 $36.9 $0.5 $3. 9 $140.3 $197.4 $1.4 $159.1 $239.5 Option NE $83.8 $181.6 $1.5 $16. 3 $618.7 $874.4 $7.1 $711.1 $1,079.4 Option NI $87.6 $190.3 $1.5 $16. 8 $645.6 $911.7 $7.4 $742.2 $1,126.2
PDV of 40-Year Stream of Benefits Option SE $356 $776 $11 $84 $2,947 $4,158 $30 $3,343 $5,048 Option SI/SC/SCR (Proposed) $405 $887 $12 $94 $3,347 $4,710 $34 $3,797 $5,725
Option SN $422 $926 $12 $98 $3,486 $4,903 $35 $3,955 $5,961 Option CE $272 $592 $9 $64 $2,263 $3,192 $23 $2,567 $3,871 Option CI $311 $680 $10 $73 $2,586 $3,638 $26 $2,933 $4,417 Option NE $1,545 $3,359 $28 $307 $11,455 $16,188 $131 $13,160 $19,985 Option NI $1,618 $3,523 $28 $317 $11,955 $16,882 $137 $13,738 $20,859
Annualized Benefits Option SE $17.3 $37.7 $0.5 $4. 1 $143.0 $201.8 $1.4 $162.3 $245.0 Option SI/SC/SCR (Proposed) $19.7 $43.0 $0.6 $4.6 $162.4 $228.7 $1.6 $184.3 $277.9
Option SN $20.5 $44.9 $0.6 $4. 8 $169.2 $238.0 $1.7 $192.0 $289.4 Option CE $13.2 $28.7 $0.4 $3. 1 $109.9 $155.0 $1.1 $124.6 $187.9 Option CI $15.1 $33.0 $0.5 $3. 5 $125.5 $176.6 $1.3 $142.4 $214.4 Option NE $75.0 $163.1 $1.4 $14. 9 $556.1 $785.8 $6.4 $638.8 $970.1 Option NI $78.5 $171.0 $1.4 $15. 4 $580.3 $819.5 $6.7 $666.9 $1,012.5 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4596
4597

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### Table 3-55: Total Benefits for All Op tions (millions 2010$, 7% discount rate)

Analytical Option Cancer Eye Irritation Asthma Infertility Total Benefits

lower higher lower higher lower higher lower higher Annual Benefit for Typical Year Option SE $9.6 $20.6 $0.6 $4. 4 $87.5 $122.6 $1.6 $99.3 $149.2 Option SI/SC/SCR (Proposed) $10.9 $23.5 $0.6 $5.0 $99.2 $138.6 $1.8 $112.5 $169.0
Option SN $11.3 $24.6 $0.6 $5. 2 $103.3 $144.2 $1.9 $117.2 $175.8 Option CE $7.3 $15.7 $0.5 $3. 4 $67.3 $94.3 $1.2 $76.4 $114.6 Option CI $8.4 $18.1 $0.5 $3. 9 $76.8 $107.2 $1.4 $87.1 $130.6 Option NE $41.5 $88.6 $1.5 $16. 3 $338.6 $474.9 $7.1 $388.8 $586.9 Option NI $43.5 $93.0 $1.5 $16. 8 $353.3 $495.1 $7.4 $405.7 $612.3
PDV of 40-Year Stream of Benefits Option SE $103 $223 $7 $51 $950 $1,330 $18 $1,077 $1,622 Option SI/SC/SCR (Proposed) $118 $256 $7 $58 $1,081 $1,509 $20 $1,226 $1,843
Option SN $123 $268 $7 $60 $1,126 $1,572 $21 $1,277 $1,920 Option CE $79 $170 $5 $39 $728 $1,019 $13 $826 $1,242 Option CI $91 $197 $6 $45 $834 $1,164 $15 $946 $1,420 Option NE $451 $968 $16 $186 $3,711 $5,204 $77 $4,255 $6,435 Option NI $473 $1,016 $16 $192 $3,873 $5,428 $81 $4,443 $6,717
Annualized Benefits Option SE $7.7 $16.6 $0.5 $3. 8 $70.8 $99.2 $1.3 $80.4 $120.9 Option SI/SC/SCR (Proposed) $8.8 $19.1 $0.5 $4.3 $80.6 $112.5 $1.5 $91.4 $137.4
Option SN $9.2 $20.0 $0.5 $4. 5 $84.0 $117.2 $1.5 $95.3 $143.2 Option CE $5.9 $12.7 $0.4 $2. 9 $54.3 $76.0 $1.0 $61.6 $92.6 Option CI $6.8 $14.7 $0.4 $3. 3 $62.2 $86.8 $1.1 $70.5 $105.9 Option NE $33.6 $72.2 $1.2 $13. 9 $276.7 $388.1 $5.8 $317.4 $479.9 Option NI $35.2 $75.8 $1.2 $14. 3 $288.9 $404.8 $6.0 $331.4 $500.9 See Table 3-28 for a description of options and Table 3- 29 for a description of the exposure group abbreviations. 

### 4598 Table 3-56 presents the average annual number of ca ses avoided by health outcome and option from an 4599 annual formaldehyde exposure reduction under the policy. 4600 4601 Table 3-56: Average Annual Number of Cases Avoided by Health Outcome and Option

Analytical Option Cancer Eye Irritation Asthma Infertility

lower higher lower higher lower higher Option SE 9 21 22,133 170,214 2,469 3,416 1,501 Option SI/SC/SCR (Proposed) 10 24 23,650 191,590 2,799 3,864 1,696 Option SN 11 25 24,154 198,950 2,915 4,019 1,765 Option CE 7 16 18,015 130,720 1,899 2,627 1,144 Option CI 8 19 19,563 148,389 2,166 2,988 1,301 Option NE 39 92 58,492 626,726 9,554 13,235 6,566 Option NI 40 97 58,494 645,678 9,968 13,800 6,874 See Table 3-28 for a description of options

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# 4 Net Benefits 4602 4603 This chapter evaluates the various analytical op tions under consideration in terms of their net 4604 benefits (i.e. benefits minus costs) . In reviewing the net benefits, it is important to remember that these 4605 estimates only partially account for the benefits of the rule; some potentially important groups of benefits 4606 are excluded from monetization. Evidence for health effects associated with formaldehyde exposure is 4607 provided by a wide variety of human clinical, epidemio logy, and animal studies. In 2010, EPA released 4608 a draft IRIS assessment of adverse cancer and non-cancer health effects from inhalation of formaldehyde. 4609 The draft IRIS assessment identified seven categor ies of non-cancer health outcomes: (1) sensory 4610 irritation; (2) upper respiratory tract pathology; (3) pulmonary function effects; (4) asthma and allergic 4611 sensitization (atopy); (5) immune function effects; (6) neurological and behavioral toxicity; and (7) 4612 developmental and reproductive toxicity. At this time, only three of the non-cancer health effect 4613 categories were judged to have sufficient data for quantitative concentration-r esponse modeling in support 4614 of the benefits assessment: sensory irritation, asthm a, and female reproductive toxicity. Therefore, the 4615 net benefits estimates includes monetiz ed benefits for four health effects: (1) nasopharyngeal cancer for 4616 individuals of all ages, (2) eye irritation for individuals of all ages, (3) asthma in children ages 2 to 17 and 4617 6 to 17, and (4) female reproductive toxicity (i .e. reduced fertility) in women ages 20 to 40. 4618 4619 Table 4-1 presents the analytical options that are considered in this economic analysis. The 4620 analytical options can be grouped into two basic categories. The first category contains analytical options 4621 with emissions standards at the levels required by TS CA Title VI. Within this category there are several 4622 different options for how to regulate wood veneer laminated products. The second category contains 4623 emissions standards other than the levels required by TSCA Title VI. There is one set of options with the 4624 same emissions standards as Phase 1 of the CARB ATCM, and another set of options requiring all 4625 products to meet the NAF emissions standards. This document discusses options with alternative 4626 emissions standards simply for informational purposes. The breadth of the discussion here should not 4627 necessarily imply that EPA has corresponding flexibility in implementing the statute. 4628 4629 4630

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### 4631 Table 4-1: Analytical Options Considered in the Economic Analysis Analytical Option Emissions Standards NotesAnalytical options with emissions standards at the levels required by TSCA Title VI Option SE: Statutory emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood MDF Thin MDF Particleboard 0.05 ppm 0.11 ppm 0.13 ppm 0.09 ppm Same emissions standards as Phase 2 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option SI: Statutory emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM. Option SP: Statutory emissions standards where wood veneer laminated products other than Custom and Architectural Panel products are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SN: Statutory emissions standards where wood veneer laminated products made using NAF resins to attach wood veneers to NAF platforms are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SC: Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using no-added formaldehyde (NAF) resins are exempt from the definition of hardwood plywood Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.

Option SCR: Proposed Option. Statutory emissions standards where wood veneer laminated products made with wood veneers attached to compliant platforms using NAF resins are exempt from the definition of hardwood plywood. Reducedrecordkeeping requirements for nonmfgrs. compared to other options. Same as above Same emissions standards as Phase 2 of the CARB ATCM, with a different definition of hardwood plywood

Distributors and retailers that are not manufacturers under TSCA would only be required to keep invoices and bills of lading. Other recordkeeping equivalent to CARB ATCM. No supplier notification required.Analytical options withemissions standardsother than the levels required by TSCA TitleVICARB Phase 1levels Option CE: CARB 1 emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood MDF Thin MDF Particleboard 0.08 ppm 0.21 ppm 0.21 ppm 0.18 ppm Same emissions standards as Phase 1 of the CARB ATCM. Recordkeeping and supplier notification equivalent to CARB ATCM.
Option CI: CARB 1 emissions standards where wood veneer laminated products are included in the definition of hardwood plywood Same as above Same emissions standards as Phase 1 of the CARB ATCM, with a different definition of hardwood plywood. Reco rdkeeping and supplier notification equivalent to CARB ATCM.NAF emission levels Option NE: NAF emissions standards where wood veneer laminated products are exempt from the definition of hardwood plywood Hardwood plywood : 90% of samples < 0.04 ppm. All samples < 0.05 ppm. MDF and particleboard : 90% of samples < 0.04 ppm. All samples < 0.06 ppm Requires all composite wood product manufacturers to meet NAF emission standards. Recordkeeping and s upplier notification equivalent to CARB ATCM.

Option NI: NAF emissions standards where all wood veneer laminated products are included in the definition of hardwood plywood Same as above Requires all composite wood product manufacturers to meet NAF emission standards, with a different definition of hardwood plywood. CARB recordkeeping and supplier notification. Note: This document discusses various opti ons with respect to formaldehyde and co mposite wood products, in cluding emissions sta ndards that are different from those set in TSCA Title VI. This documen t discusses alternative emissions standards simply for informat ional purposes. The breadth of the discussion here should not necessarily im ply that EPA has corresponding flexibility in implementin g the statute.

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## 4.1 Discounting and Time Frame for the Analysis 4632 4633 This analysis estimates the costs and benefits of each analytical option for a 30-year period of 4634 composite wood product production. Thus, the estimates of the costs reflect the annualized costs of 30 4635 years of composite wood production being subject to th e rule’s requirements. Likewise, the benefits 4636 estimates reflect the annualized benefits associated with the formaldehyde exposure reductions resulting 4637 from 30 years of composite wood production being subject to the rule’s requirements. Both the costs and 4638 the benefits are discounted using 3 a nd 7 percent discount rates, so that costs and benefits incurred in the 4639 future are expressed in present terms that are co mparable. Because the timing of the costs and the 4640 benefits vary, they are annualized to make their comparison easier. An annualized value is the amount 4641 one would have to pay at the beginning of each time period so that the sum of all payments in present 4642 value terms equals the original stream of values. 4643 4644 The 30-year time frame was selected to be as short as possible while being long enough to 4645 capture the important effects of the policy. In ge neral, the downside of choosing a longer analysis time 4646 frame is that uncertainties about both the baseline an d policy scenarios increase with time. For example, 4647 the likelihood that alternative technologies for manufacturing composite wood products might be 4648 developed increases over time (which could result in different formaldehyde emission rates for products 4649 and/or different costs for reducing formaldehyde em issions). Similarly, uncertainties about changing 4650 demographics, medical treatments for adverse health effects, and consumer preferences with respect to 4651 composite wood products all increase with time. Howe ver, selecting a time frame that is too short would 4652 not capture all of the important effects of the policy scenarios under consideration. 4653 4654 The benefits analysis assumes that after eleven years any continuing (and declining) emissions 4655 from a given composite wood product would contribu te negligibly to that product's effect on 4656 formaldehyde exposure. Thus, co mposite wood products are assumed to contribute to formaldehyde 4657 exposure for 11 years. 59 

### Specifically: 4658 4659

 in the first year only new composite wood products are affected by the policy; 4660

 in the second year new and one-year-old com posite wood products are affected by the 4661 policy; 4662

 in the third year new, one- and two-year-old composite wood products are affected by the 4663 policy; 4664

 in general, in the n th year, new, one-, two-, three-,..., and ( n -1)-year-old composite wood 4665 products are affected by the policy, for n = 1, 2, ..., 10; and 4666

 in the eleventh and all subsequent years new, one-, two-, three-, four-, five-, six-, seven-, 4667 eight-, nine-, and ten-year-old composite wood products are affected by the policy. 4668 4669 Since the exposure scenarios are defined in part according to the 11 different ages for composite 4670 wood products, it is not until the 11 th 

### year after the implementation of the rule that benefits are realized 4671 under every exposure scenario. That is, it is not until the 11 th 

### year after rule implementation that ten-year 4672 old composite wood products would have been require d to be produced in compliance with the emissions 4673 standards. Thus, the benefits are phased in over a period of eleven years. 4674 4675 Similarly, the benefits from a given year of composite wood production will phase-out over time. 4676 Since the analysis considers the benefits and co sts from 30 years of composite wood production, the 4677

59 EPA calculated exposures us ing a 1.5 year emissions half life of form aldehyde from composite wood products With. this half life, the emission ra te 10 years after new construction would be a bout 1 % of the initial value, and after 11 years the emissions would be near zero.

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### estimated exposures have the following time profile after the 30 th 

### and last year of composite wood 4678 production considered in the analysis: 4679 4680

 in the 31 st 

### year, only one-, two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten4681 year-old composite wood products are produced before the 31 st 

### year (benefits from new 4682 composite wood products are produced after y ear 30 and therefore are not considered in 4683 the analysis); 4684

 in the 32 nd 

### year, only two-, three-, four-, five-, six-, seven-, eight-, nine-, and ten-year-old 4685 composite wood products are produced before the 31 st 

### year (benefits from new and one4686 year old composite wood products are produced after year 30 and therefore are not 4687 considered in the analysis); 4688

 in general, in the n th year after year 30, only n year-old and older composite wood 4689 products are produced before year 31, for n = 1, 2, ..., 10; and 4690

 in the 41 st 

### and all subsequent years, all 11 ages of composite wood products that 4691 potentially contribute to formaldehyde exposure are produced after the 30 th 

### year and 4692 therefore are not considered in the analysis. 4693 4694 Given this phase-in and phase-out, a time period of thirty years of composite wood production 4695 was selected so that the first ten years of the polic y (when the benefits of the policy are being phased in) 4696 and the ten years after the 30 years of composite wood production that is analyzed (when the benefits of 4697 the policy are being phased out) do not obscure the stea dy state benefits that would be experienced from 4698 the policy. It is necessary to include the phase-in and phase-out of the benefits in order to be consistent 4699 with the cost estimates, which reflect the costs of 30 years of production that complies with the emissions 4700 standards. Given that this analysis assumes that after eleven years any continuing (and declining) 4701 emissions from a given composite wood product would c ontribute negligibly to that product's effect on 4702 formaldehyde exposure, 30 years of production that complies with the emissions standards corresponds to 4703 40 years of exposure reductions. The first 10 years are a phase-in period for exposure reductions, the next 4704 20 years are a steady-state, and the next 10 years are a phase-out period. 4705

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## 4.2 Summary of Net Benefits 4706 4707 Table 4-2 and Table 4-3 present the total annua lized net benefits by analytical option and 4708 discount rate. The estimated net benefits under the anal ytical options that have emissions standards that 4709 are consistent with TSCA Title VI range from negative $109 million to positive $206 million using a 4710 three percent discount rate. Of these analytical opti ons, Option SI is the only option where net benefits 4711 are negative under the lower estimate of net benefits using the three percent discount rate. Option SCR 4712 (the proposed option) is the only option that has emi ssions standards that are c onsistent with TSCA Title 4713 VI where both the lower and the higher estimate for ne t benefits is positive usin g the 7 percent discount 4714
rate. 4715 4716 There are smaller net benefits (smaller positive and larger negative net benefits) under Options 4717 CE and CI (the analytical options with emissions st andards lower than those that are consistent with 4718 TSCA Title VI). Net benefits are lower under these options because the estimated benefits are 4719 substantially lower while the estimated costs are only modestly lower (because the costs are largely 4720 driven by the certification, testing, and chain of custody requirements, which are not affected by the 4721 emissions standards). 4722 4723 Options NE and NI (which have emissions limits that are more stringent than those required by 4724 the statute) have substantially higher costs and benefits than the options with emissions standards that are 4725 consistent with TSCA Title VI. Net benefits are positive under these options using a 3 percent discount 4726 rate, and are positive for the higher estimate of net benefits using a 7 percent discount rate but are 4727 negative for the lower estimate using a 7 percent discount rate. 4728 4729 Table 4-2: Total Annualized Costs, Benefits, a nd Net Benefits for All Options (millions 2010$, 3 percent discount rate)

Analytical Option 

### Costs Benefits Net Benefits


### Low End Estimate High End
Estimate Lower Estimate Higher
Estimate Lower Estimate Higher
Estimate Option SE $100 $100 $162 $245 $62 $145 Option SI $194 $293 $184 $278 ($109) $84 Option SP $104 $104 Not estimated Not es timated Not es timated Not estimated Option SN $143 $185 $192 $289 $7 $146 Option SC $112 $121 $184 $278 $63 $166 Option SCR (proposed) $72 $81 $184 $278 $103 $206 Option CE $99 $99 $125 $188 $25 $89 Option CI $192 $292 $142 $214 ($150) $22 Option NE $379 $379 $639 $970 $259 $591 Option NI $473 $573 $667 $1,013 $94 $540 Option SCR is the proposed option. Pare ntheses indicate negative net benefits. Lower estimate of net benefits is ca lculated by subtracting high end cost estimate from lower benefits estimate. Higher estimate of net benefits is ca lculated by subtracting low end cost estimate from higher benefits estimate. 

### 4730
4731

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### Table 4-3: Total Annualized Costs, Benefits, a nd Net Benefits for All Options (millions 2010$, 7 percent discount rate)

Analytical Option Costs Benefits Net Benefits

Lower Estimate Higher Estimate Lower Estimate Higher Estimate Lower Estimate Higher Estimate Option SE $112 $112 $80 $121 ($31) $9 Option SI $208 $311 $91 $137 ($220) ($71) Option SP $115 $115 Not estimated Not estim ated Not estimated Not estimated Option SN $154 $195 $95 $143 ($99) ($11) Option SC $123 $132 $91 $137 ($41) $14 Option SCR (proposed) $81 $89 $91 $137 $2 $57 Option CE $111 $111 $62 $93 ($49) ($18) Option CI $207 $310 $71 $106 ($239) ($101) Option NE $383 $383 $317 $480 ($66) $97 Option NI $480 $582 $331 $501 ($251) $21 Option SCR is the proposed option. Parent heses indicate nega tive net benefits. Lower estimate of net benefits is ca lculated by subtracting high end cost estimate from lower benefits estimate. Higher estimate of net benefits is ca lculated by subtracting low end cost estimate from higher benefits estimate.

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# 5 Small Business Impacts 4732 4733 This chapter presents the impact of the costs of the proposed TSCA Title VI Implementation Rule 4734 on the financial condition of small entities. The Regul atory Flexibility Act (RFA) of 1980, amended by 4735 the Small Business Regulatory Enfo rcement Fairness Act (SBREFA) of 1996, requires regulators to 4736 assess the effects of regulations on small entities including businesses, nonprofit organizations, and 4737 governments. In some instances, agencies are also re quired to examine regulatory alternatives that may 4738 reduce adverse economic effects on significantly impact ed small entities. The RFA requires agencies to 4739 prepare an initial and final regulator y flexibility analysis for each rule unless the Agency certifies that the 4740 rule will not have a significant economic impact on a substantial number of small entities. The RFA, 4741 however, does not specifically define “a significant ec onomic impact on a substa ntial number” of small 4742 entities. Sections 603 and 604 of the RFA require that regulatory flexibility analyses identify the types, 4743 and estimate the numbers, of small entities to whic h the rule will apply; and describe the rule 4744 requirements to which small entities will be subject a nd any regulatory alternatives, including exemptions 4745 and deferral, which would lessen the rule’s burden on small entities. 4746 4747 The proposed rule will affect small businesses, but small non-profit organizations or small 4748 governments are not expected to be affected by the proposed rule because they are not expected to be 4749 panel producers, fabricators, wholesalers, or importe rs. Under the Regulatory Flexibility Act (RFA), a 4750 “small business” is determined by the U.S. Small Business Administration’s regulations at 13 CFR 4751 121.201 (which create small business size standards us ing either a sales or employment threshold, 4752 depending on the nature of the industry), unless an agency establishes an alternate definition. 4753 4754 To fulfill the requirements of the RFA, this an alysis addresses two basic questions regarding the 4755 proposed rule: (1) the number and type of small en tities potentially affected, and (2) the extent of the 4756 rule’s potential economic impact on th ose entities as measured by the cost-t o-revenue ratio. This ratio is a 4757 good measure of entities’ ability to afford the cost s attributable to a regulatory requirement, because 4758 comparing compliance costs to revenues or expenses pr ovides a reasonable indication of the magnitude of 4759 the regulatory burden relative to a commonly availabl e measure of economic activity. Where regulatory 4760 costs represent a small fraction of a typical entity’s revenues or expenses, the financial impacts of the 4761 regulation on such entities may be considered as not si gnificant. The impact ratios are calculated using 4762 annualized costs, because these costs are more repr esentative of the continuing costs entities face to 4763 comply with the rule. 4764 4765 The small business impacts are presented separatel y according to the types of requirements they 4766 are subject to. The number of small firms in the a ffected NAICS codes (described in Chapter 2) were 4767 estimated using Census data and SBA’s small business si ze standards. Table 5-1 presents a summary of 4768 the number of small firms affected by the rule. S ection 5.1 presents the small business impacts for stock 4769 panel producers. Section 5.2 presents the small business impacts for wood veneer laminated product 4770 producers. Section 5.3 presents the small business im pacts fabricators, wholesalers, and retailers. 4771 Finally, section 5.4 presents a summa ry of the small business impacts. 4772 4773
4774

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### Table 5-1: Summary of Affected Number of Firms

Employer Status Firm Type Number of Affected Firms Number of Affected Small Firms

Employers Stock Panel Producer 54 31
Wood Veneer Laminated Product 5,260 5,260
Fabricator 28,014 27,879
Wholesale 34,948 34,324
Retail 247,689 202,630
All Firms 315,965 270,123

Nonemployers Stock Panel Producer



### - - Wood Veneer Laminated Product 2,226 2,226
Fabricator 44,478 44,478
Wholesale 50,612 50,612
Retail 511,359 511,359
All Firms 608,675 608,675

All Firms Stock Panel Producer 54 31
Wood Veneer Laminated Product 7,486 7,486
Fabricator 72,492 72,356
Wholesale 85,560 84,936
Retail 759,048 713,988
All Firms 924,640 878,798
Note that for the cost es timates presented in Chapter 2, stock panel producer firms were assumed to incur separate costs per type of compos ite panel product. As a result, the number of stock panel producer firms reported is higher in Chapter 2 compared to the number reported here. For example, a firm that owns a both particleboard mill and an MDF mill is counted twice in Chapter 2, but counted only once here. This is why the number of panel producer firms is 62 in Chapter 2 and 54 here.


### 4775

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## 5.1 Small Business Impacts for Stock Panel Producers 4776 4777 Table 5-2 presents the number of small stock ha rdwood plywood, MDF, and particleboard mills 4778 and firms subject to the TSCA Title VI rule’s requi rements for testing and third-party certification. 4779 (Stock panel producers exclude hardwood plywo od producers that are defined as laminated product 4780 manufacturers under the CARB ATCM. Those firms are discussed in Section 5.2.) The small business 4781 status of the majority of affected composite panel producing firms was determined using Dun & 4782 Bradstreet (D&B), an online database containing information on the sales volume, number of employees, 4783 and primary NAICS of establishments (Dun & Bradst reet 2010). For the remaining firms, the small 4784 business status was determined using other business information directories, company websites, and 4785 annual reports. 4786 4787 Table 5-2: Stock Panel Producers, by Sector and Small Business Status

Sector Total Number in Industry Number of Small Entities Firms Mills Firms Mills Stock Hardwood Plywood 32 41 22 22 Medium Density Fiberboard 14 22 

### 5 5
Particleboard 16 30 

### 5 7
Total 1 54 90 

### 31 33 Note: Total does not equal sum of rows because some firms and mills produce more than one product. Note that for the cost estimates presented in Chapter 2, firms were assumed to incur se parate costs per type of compos ite panel product. As a result, the number of firms reported is higher in Chapter 2 compared to the number reported here. For example, a firm that owns both a particleboard mill and an MDF mill is counted twice in Chapter 2, but counted only once here. This is why the number of panel producer firms is 62 in Chapter 2 and 54 here. Sources: Composite Panel Associa tion 2007, Dun & Bradstreet 2010 

### 4788 As indicated in Table 5-2, 31 of the 54 firms (appr oximately 57 percent of the total) and 33 of the 4789 90 mills (37 percent) are small. Of these, 22 of th e affected small firms (approximately 71 percent) are 4790 hardwood plywood producers; five are MDF produc ers, and five are particleboard producers 4791 (approximately 16 percent each). 4792 4793 Table 5-3 summarizes the economic impact to aff ected small panel producers as a result of the 4794 TSCA Title VI rule. Firm-specific revenue data fro m Dun & Bradstreet were available for most small 4795 firms; where data were not available, revenues were imputed as the average revenue for small firms in the 4796 corresponding product category. 4797 4798 While all affected small firms incur rule familia rization and supplier notification costs due to the 4799 TSCA Title VI rule, only a fraction will incur cost s associated with changing production processes and 4800 raw materials, or with testing and certification (sin ce most firms already incurred those costs due to the 4801 CARB ATCM). Per-firm costs for firms with produc tion process, raw materials, and testing and 4802 certification costs were calculated by dividing the total annualized costs by the number of affected firms. 4803 4804 All stock panel mills were assumed to have two pr oduct lines, and the baseline certification status 4805 of their product lines was determined according to CARB’s (2011b) list of certified mills and CARB’s 4806 (2011a) list of no-added formaldehy de (NAF) and ultra low emitting formaldehyde (ULEF) exemptions. 4807 For example, if CARB only listed a mill as having Phase 2 (i.e., standard) certification, it was assumed 4808 that the mill had two product lines with standard certifica tion. As another example, a mill that is listed by 4809 CARB as Phase 2 certified and also listed as having NA F exempt status would be assumed to have one 4810 NAF product line and one product line with standard certif ication. The exception to this is particleboard, 4811 where it is assumed that 5 of the 25 particleboard mills with standard certification status under the CARB 4812 ATCM also produce a product line that is not certified under the CARB ATCM. There are only 3 4813 particleboard mills that are sma ll and have standard certification status under the CARB ATCM. To 4814

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### ensure that cost impacts are not understated, the analysis assumed all 3 small particleboard mills with 4815 standard certification under the CARB ATCM also have a product line that is uncertified in the baseline. 4816 4817 The analysis assumes that most mills making products that are not certified or that have ULEF 4818 certification under the CARB ATCM will seek standard certification under the TSCA Title VI rule. The 4819 exception is mills that have a product line that is ULEF certified and a product line that is NAF certified 4820 under the CARB ATCM. These mills are assumed to convert the ULEF product line to NAF, so that both 4821 product lines will be NAF certified under TSCA Title VI. 4822 4823 As indicated in Table 5-3, 25 small stock panel firms (approximately 81 percent of the total) are 4824 expected to experience cost impacts that are l ess than one percent of their revenues, 5 firms 4825 (approximately 16 percent) are expected to experience impacts at levels between one and three percent of 4826 their revenue, and 1 firm (approximately 3 percent) is expected to be incur co sts exceeding three percent 4827 of their revenue. Total cost impacts ranged from zero to approximately 5.5 percent of firm revenues. 4828*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-5Table 5-3: Number of Small Composite Panel Producers, by Product Type, Baseline and Post-Rule Product Lines, and Impact LevelProduct TypeBaseline Product Lines(CARB ATCM certification)Post-Rule Product Lines(TSCA Title VIcertification)Number ofAffectedSmall FirmsPer-Firm Costs(thousands,2010$)Per-FirmRevenues(thousands,2010$)Range of ImpactsNumber of Firms withImpacts<1% 1-3% >3%HardwoodPlywood2 product lines withoutcertification2 product lines with NAFcertification7 $35$2,500;$4,955;$6,200;$7,000;$7,500;$12,000; and$12,4100.3% - 1.4%61-2 product lines with ULEFcertification2 product lines withstandard certification4 $70$2,600;$4,600;$12,410; and$20,0000.4% - 2.7%22-1 prod. with NAF cert.; 1prod. with ULEF cert.2 product lines with NAFcertification1 3 $12,410 - 1 - -2 product lines with standardcertification.2 product lines withstandard certification7 $16$2,300;$3,700;$12,410;$12,410;$12,410;$24,000; and$30,0000.047% - 0. 61%7--2 product lines with NAFcertification2 product lines with NAFcertification2 $3.6$5,200 and$60,0000.006% - 0.07% 2 - -HardwoodPlywood &Particleboard2 HWPW prod. withoutcertification; 1 PB prod.without cert., 1 PB prod. withstandard certification2 HWPW prod. with NAFcert.; 2 PB prod. withstandard certification1$332$6,0005.5%--1Particleboard1 prod without cert.; 1 prod.with standard cert.2 prod. with standardcertification2 $29610,411 and$15,0002.0% - 2.8%-2-2 prod. with NAF cert.2 prod. with NAF cert.1$3.6$11,0530.03%1--1 prod. with NAF cert.; 1prod. with standard cert.1 prod. with NAF cert.; 1prod. with standard cert.1$3.6$12,8030.03%1--MDF2 product lines with standardcertification2 product lines withstandard certification5$3.6$14,100;$14,867;$14,867;$15,000; and$15,5000.023% - 0.025%5--Total31--0.0% - 5.5%2551Notes: Numbers in parentheses represent cost savings.HWPW = hardwood plywood. PB = particleboard.

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## 5.2 Small Business Impacts for Wood Veneer Laminated Product Producers 4829 

## (including firms making products defined as hardwood plywood ) 4830 4831 The small business impact analysis for wood ven eer laminated product producers (including firms 4832 making products defined as hardwood plywood under th e proposed option) follows four basic steps: (1) 4833 estimate the number of small firms, (2) estimate the cost per firm, (3) estimate the revenue distribution of 4834 affected firms, and (4) based on the number of aff ected firms, the per-firm costs, and the revenue 4835 distribution, estimate the number of firms by cost-re venue ratio. These steps are described in more detail 4836 below. 4837 4838 5.2.1 Number of Small Laminator Firms 4839 4840 Due to the uncertainty in the estimated numbe r and characteristics of wood veneer laminated 4841 product producers, this analysis assumes that all w ood veneer laminated product producers are small. To 4842 ensure that per-firm costs are not understated, the number of small wood veneer laminated product 4843 producers is estimated as the lower bound of affected firms from presented in Chapter 2 (i.e., 7,486 4844 firms). As discussed in Chapter 2, the costs to la minators were estimated in part by estimating the 4845 consumption of veneer by firms in laminator NAICS codes; using that information to estimate the surface 4846 area of wood veneer laminated products that are pr oduced; and estimating the production process and raw 4847 materials costs based on that surface area If the smal l entity analysis were to use the upper bound for the 4848 estimated number of laminators (i.e., 13,875 firms) , the total costs for changes to production processes 4849 and raw materials would be spread out over nearly tw ice as many firms. This would reduce the estimated 4850 impact per firm. Therefore, using the lower bound estim ate of affected firms yields a higher estimate of 4851 the impact per firm. 4852 4853 5.2.2 Per-Firm Costs for Laminators 4854 4855 Table 5-4 summarizes the per-firm cost co mponents for wood veneer laminated product 4856 producers. The per-firm costs associated with rule fa miliarization, supplier notification, labeling system 4857 setup, and recordkeeping are estimated by annualizing the per-firm costs presented in Table 2-85, Table 4858 2-86, and Table 2-87 in Chapter 2. All costs excep t for recurring recordkeeping costs were estimated as 4859 an average cost applied to all firms. Recurring record keeping costs were estimated to include a fixed cost 4860 component of 2 hours of labor per firm plus a va riable cost estimated as a function of revenue. 4861 4862 As described in Chapter 2, th e recordkeeping and labeling costs were estimated based on the 4863 responses to a questionnaire administered to nine fa bricator firms. The firms that reported recurring 4864 recordkeeping costs described these co sts as data entry costs, which ar e costs that are likely to increase 4865 with the volume of a firm’s sales. Based on revenue data from the Dun and Bradstreet database and other 4866 publically available sources, the two respondents repo rting recurring recordkeeping costs appeared to be 4867 larger firms that likely have revenues that are signifi cantly larger than the av erage revenue for affected 4868 firms. Nevertheless, the costs they reported were still assumed to be the average costs incurred by 4869 affected firms. For fabricators and wood veneer laminated product manufacturers, the per firm recurring 4870 recordkeeping cost was estimated to be $12,917, which is $12,290 per year when annualized over 30 4871 years using a three percent discount rate. For the pu rpose of the small business analysis, the cost impact 4872 associated with recurring recordkeepin g activities is estimated as a fixed cost per firm associated with 2 4873 hours of labor plus a variable cost in terms of a pe rcentage of firm revenue. This variable cost is 4874 calculated such that the average annualized recurri ng recordkeeping costs are $12,290 per firm incurring 4875 this cost. The variable portion of the recordkeeping cost is estimated to range from 0.1 percent to 0.8 4876 percent of average revenues, depending on the NAICS code. 4877 4878

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### The per-firm costs of production process and raw ma terial changes were estimated at the industry 4879 level as the total annualized cost of the changes di vided by the number of wood veneer laminated product 4880 producers using added-formaldehyde resins in the ba seline. In addition, wood veneer laminated product 4881 manufacturers that are assumed not to switch to NAF resins after rule implementation are estimated to 4882 incur additional annualized recurring recordkeeping costs of $3,531 per firm (the same as stock panel 4883 producers). 4884 4885 Table 5-4: Annualized Per-Firm Cost Components for Wood Veneer Laminated Product Producers, by NAICS

NAICS Rule Familiarization Labeling Setup Production Process and Raw

Material Costs Recordkeeping (Products defined as fabricated products) Testing and Certification (products defined

as hardwood)

plywood) Recordkeeping (products defined as hardwood plywood) Fixed Costs Variable Costs (Percent of

Average Revenues)
321211

$14.29 $220.97 $56,470.59

$47.27 0.1%

$60,622 $3,530.59 337110 $2,025.36 0.6% 337129 $2,025.36 0.8% 337121 $545.17 0.2% 337122 $545.17 0.5% 337211 $954.43 0.2% 337127 $954.43 0.2% 337215 $954.43 0.2% 321911 $758.19 0.1% 337212 $2,857.50 0.4% 321999 $2,857.50 0.4% 339920 $2,857.50 0.2% 339932 $2,857.50 0.3% 339992 $2,857.50 0.4%

Notes: $14.29 is estimated as the initial cost of $294 a nnualized over 30 years using a 3% discount rate. $16.65 is estimated as the initial cost of $169 (material cost) plus $174 (labor cost) annualized over 30 years using a 3% disc ount rate. $220.87 is estimated as the initial cost of $4,552 annualized over 30 years using a 3% discount rate. Production process and raw material costs are estimated as the to tal cost of production for each NAICS divided by the number of laminated product producers using added-formalde hyde resins in the baseline. Recordkeeping costs for fabricated products are described above in section 5.2.2. See Chapter 2 for a description of testing and certification costs. $3,530.59 is estimated as the recurring cost of $3,7 10.72 annualized over 30 years using a 3% discount rate. NAICS 321211: Hardwood Veneer and Plywood Manufacturers; 337110: W ood kitchen cabinet and counter top manufacturing; 337129: Woo d television, radio, and sewing machine cab inet manufacturing; 337121: Upholstered hous ehold furniture manufacturing; 337122: Non upholstered wood household furniture manufacturing; 337 211: Wood office furniture manufacturing; 337127: Institutional furniture manufactur ing; 337215: Showcase, partition, shelving, and locker manufacturing; 321911: Wood window and door manufacturing; 337212: Custom architectur al
woodwork and millwork manufacturi ng; 321999: All other miscellane ous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musical instrument manufacturing. 

### 4886 Costs are calculated separately for four categor ies of wood veneer laminated product producers, 4887 depending on the types of costs th ey are estimated to incur: 4888
4889

 Laminators that use NAF resins in the baseline. They are estimated to incur costs for rule 4890 familiarization, supplier notification, and labeling setup. 4891 4892

 Laminators that use added-formaldehyde resins in the baseline, switch to NAF resins, and are among 4893 the fabricators that are not estimated to incur recu rring recordkeeping costs (i.e., all fabricators that 4894 make products sold in California and 89 percent of the fabricators making products that are not sold 4895

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### in California). They are estimated to incur cost s for rule familiarization, supplier notification, 4896 labeling setup, and pr oduction process and raw material (to switch to NAF resins). 4897 4898

 Laminators that use added-formaldehyde resins in the baseline, switch to NAF resins, and are among 4899 the fabricators that are estimated to incur recu rring recordkeeping costs (i.e., 11 percent of the 4900 fabricators making products that are not sold in Califor nia). They are estimated to incur costs for rule 4901 familiarization, supplier notification, labeling setup, production process and raw material (to switch to 4902 NAF resins), and fabricator recordkeeping. 4903 4904

 Laminators that continue to u se added-formaldehyde resins under the TSCA Title VI rule, so that 4905 their products are included in the definition of ha rdwood plywood. (These represent 2 percent of all 4906 laminators.) They are estimated to incur costs fo r rule familiarization, supplier notification, labeling 4907 setup, production process and raw material (to switc h to enhanced UF resin systems and low emitting 4908 platforms), fabricator recordkeeping, testing and certification, and panel producer recordkeeping. 4909 4910 In general, the analysis uses a simplifying assump tion that firms with the less frequent costs also 4911 incur the more frequent costs. That is, if 10% of firms incur recordkeeping costs and 5% incur labeling 4912 costs, the small entity analysis assumes that 5% incur both recordkeeping and labeling costs, and 5% 4913 incur just recordkeeping costs. Th e analysis also assumes that all firms with testing and certification costs 4914 also incur recordkeeping costs due to the TSCA Title VI rule. 4915
4916 5.2.3 Revenue Distribution for Affected Laminator Firms 4917 4918 Revenue distributions for employer and nonemp loyer wood veneer laminated product producers 4919 were estimated at the industry level using data fro m the 2007 Economic Census and the Census Bureau’s 4920 2008 Nonemployer Statistics. While employer data were available at the six-digit NAICs level, 4921 nonemployer data were only available at the three-di git level. As with fabricators, revenues were 4922 assumed to be uniformly distributed within each re venue bracket, and revenue floors of $20,000 and 4923 $1,000 were set for employers and nonemployers, re spectively. Table 5-5 and Table 5-6 present the 4924 estimated revenue distributions for employer and no nemployer wood veneer laminated product producers. 4925*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-9Table 5-5: Estimated Revenue Distribution for Employer Wood Veneer Laminated Product Producers, by NAICS (thousands, 2010$)PercentileNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS3399921$50 $27 $23 $23 $25 $22 $27 $22 $27 $27 $50 $23 $22 $222$81 $35 $27 $28 $30 $25 $34 $25 $35 $35 $81 $27 $25 $253$112 $43 $30 $32 $36 $30 $43 $29 $43 $43 $112 $31 $29 $294$136 $51 $34 $37 $42 $33 $51 $31 $51 $51 $136 $36 $31 $315$164 $60 $38 $41 $47 $36 $59 $34 $60 $60 $164 $40 $34 $346$192 $68 $43 $46 $53 $39 $66 $38 $68 $68 $192 $44 $38 $387$216 $76 $47 $50 $60 $43 $74 $41 $76 $76 $216 $48 $41 $418$244 $85 $50 $54 $65 $46 $82 $44 $84 $85 $244 $52 $44 $449$272 $93 $54 $59 $71 $50 $90 $47 $92 $93 $272 $56 $47 $4710$300 $100 $58 $63 $77 $53 $98 $51 $100 $100 $300 $60 $51 $5111$324 $124 $62 $68 $82 $56 $116 $53 $116 $124 $324 $64 $54 $5412$352 $144 $65 $72 $88 $60 $136 $56 $132 $144 $352 $69 $56 $5613$380 $168 $69 $77 $94 $63 $156 $60 $148 $168 $380 $73 $60 $6014$404 $188 $73 $81 $99 $66 $176 $63 $168 $188 $404 $77 $63 $6315$432 $208 $77 $85 $112 $70 $200 $66 $184 $208 $432 $81 $66 $6616$460 $232 $81 $89 $124 $73 $220 $69 $200 $232 $460 $85 $69 $6917$484 $252 $85 $94 $136 $77 $240 $72 $216 $252 $484 $89 $72 $7218$520 $276 $89 $98 $152 $80 $260 $75 $232 $276 $520 $94 $76 $7619$560 $296 $93 $104 $164 $83 $284 $78 $248 $296 $560 $98 $79 $7920$600 $320 $97 $116 $176 $87 $304 $81 $264 $320 $600 $108 $81 $8121$640 $340 $100 $124 $192 $90 $324 $85 $280 $340 $640 $120 $85 $8522$680 $360 $116 $132 $204 $94 $344 $88 $296 $360 $680 $136 $88 $8823$720 $384 $128 $144 $216 $97 $364 $91 $316 $384 $720 $148 $91 $9124$760 $404 $144 $152 $228 $100 $388 $94 $332 $404 $760 $164 $94 $9425$805 $428 $156 $160 $244 $112 $408 $97 $348 $428 $805 $176 $98 $9826$845 $448 $172 $168 $256 $124 $428 $100 $364 $448 $845 $192 $104 $10427$885 $472 $184 $180 $268 $132 $448 $108 $380 $472 $885 $204 $124 $11228$925 $492 $200 $188 $284 $144 $468 $120 $396 $492 $925 $220 $140 $12429$965 $520 $212 $196 $296 $156 $492 $128 $412 $520 $965 $232 $160 $13630$1,015 $550 $224 $208 $308 $168 $520 $136 $428 $550 $1,015 $248 $180 $14831$1,105 $585 $240 $216 $320 $176 $550 $144 $444 $585 $1,105 $260 $200 $15632$1,195 $615 $252 $224 $336 $188 $585 $156 $460 $615 $1,195 $276 $220 $16833$1,285 $650 $268 $232 $348 $200 $620 $164 $480 $650 $1,285 $288 $240 $18034$1,375 $680 $280 $244 $360 $212 $655 $172 $496 $680 $1,375 $300 $256 $19235$1,465 $715 $296 $252 $376 $220 $685 $180 $520 $715 $1,465 $316 $276 $20436$1,555 $745 $308 $260 $388 $232 $720 $192 $550 $745 $1,555 $328 $296 $21237$1,660 $780 $320 $272 $400 $244 $755 $200 $575 $780 $1,660 $344 $316 $22438$1,750 $810 $336 $280 $412 $252 $785 $208 $605 $810 $1,750 $356 $336 $23639$1,840 $845 $348 $288 $428 $264 $820 $216 $635 $845 $1,840 $372 $356 $248*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-10Table 5-5: Estimated Revenue Distribution for Employer Wood Veneer Laminated Product Producers, by NAICS (thousands, 2010$)PercentileNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS33999240$1,930 $875 $364 $300 $440 $276 $855 $228 $660 $875 $1,930 $384 $372 $26041$2,020 $905 $376 $308 $452 $288 $890 $236 $690 $905 $2,020 $400 $392 $26842$2,110 $940 $392 $316 $468 $296 $920 $244 $720 $940 $2,110 $412 $412 $28043$2,200 $970 $404 $324 $480 $308 $955 $252 $745 $970 $2,200 $428 $432 $29244$2,290 $1,000 $420 $336 $492 $320 $990 $264 $775 $1,000 $2,290 $440 $452 $30445$2,380 $1,075 $432 $344 $515 $332 $1,060 $272 $805 $1,075 $2,380 $456 $472 $31646$2,470 $1,135 $444 $352 $540 $340 $1,135 $280 $830 $1,135 $2,470 $468 $488 $32447$2,625 $1,195 $460 $364 $570 $352 $1,225 $288 $860 $1,195 $2,625 $484 $515 $33648$2,775 $1,255 $472 $372 $600 $364 $1,300 $300 $890 $1,255 $2,775 $496 $540 $34849$2,950 $1,315 $488 $380 $630 $376 $1,390 $308 $915 $1,315 $2,950 $525 $570 $36050$3,100 $1,375 $500 $388 $660 $384 $1,480 $316 $945 $1,375 $3,100 $560 $595 $37251$3,275 $1,435 $540 $400 $690 $396 $1,555 $324 $975 $1,435 $3,275 $595 $625 $38052$3,425 $1,495 $580 $408 $715 $408 $1,645 $336 $1,015 $1,495 $3,425 $630 $655 $39253$3,600 $1,555 $620 $416 $745 $420 $1,720 $344 $1,105 $1,555 $3,600 $665 $680 $40454$3,775 $1,630 $660 $428 $775 $428 $1,810 $352 $1,195 $1,630 $3,775 $700 $710 $41655$3,925 $1,690 $700 $436 $805 $440 $1,885 $360 $1,285 $1,690 $3,925 $735 $735 $42856$4,100 $1,750 $740 $444 $835 $452 $1,975 $372 $1,390 $1,750 $4,100 $770 $765 $43657$4,250 $1,810 $780 $456 $860 $460 $2,065 $380 $1,480 $1,810 $4,250 $805 $795 $44858$4,425 $1,870 $820 $464 $890 $472 $2,140 $388 $1,570 $1,870 $4,425 $840 $820 $46059$4,575 $1,930 $860 $472 $920 $484 $2,230 $396 $1,675 $1,930 $4,575 $870 $850 $47260$4,750 $1,990 $900 $480 $950 $496 $2,305 $408 $1,765 $1,990 $4,750 $905 $875 $48461$4,900 $2,050 $940 $492 $980 $515 $2,395 $416 $1,855 $2,050 $4,900 $940 $905 $49262$5,125 $2,110 $975 $500 $1,015 $550 $2,470$424 $1,960 $2,110 $5,125 $975 $935 $52063$5,425 $2,185 $1,045 $535 $1,105 $585 $2,675$432 $2,050 $2,185 $5,425 $1,030 $960 $56564$5,700 $2,245 $1,135 $565 $1,195 $615 $2,900$444 $2,140 $2,245 $5,700 $1,135 $990 $61065$6,000 $2,305 $1,240 $600 $1,285 $650 $3,125$452 $2,230 $2,305 $6,000 $1,240 $1,060 $65566$6,300 $2,365 $1,345 $630 $1,375 $680 $3,375$460 $2,335 $2,365 $6,300 $1,345 $1,165 $70067$6,575 $2,425 $1,435 $665 $1,465 $715 $3,600$468 $2,425 $2,425 $6,575 $1,435 $1,270 $74568$6,875 $2,485 $1,540 $700 $1,555 $750 $3,825$480 $2,550 $2,485 $6,875 $1,540 $1,375 $79069$7,175 $2,725 $1,630 $730 $1,645 $780 $4,075$488 $2,775 $2,725 $7,175 $1,645 $1,480 $84070$7,450 $2,975 $1,735 $765 $1,735 $815 $4,300$496 $3,000 $2,975 $7,450 $1,750 $1,585 $88571$8,200 $3,250 $1,825 $795 $1,825 $845 $4,525$525 $3,225 $3,250 $8,200 $1,855 $1,690 $93072$9,050 $3,525 $1,930 $830 $1,915 $880 $4,775$565 $3,450 $3,525 $9,050 $1,960 $1,795 $97573$9,875 $3,800 $2,035 $865 $2,005 $915 $5,000 $605$3,675 $3,800 $9,875 $2,065 $1,900 $1,06074$10,700 $4,050 $2,125 $895 $2,095 $945 $5,500 $650$3,900 $4,050 $10,700 $2,155 $2,005 $1,18075$11,550 $4,325 $2,230 $930 $2,185 $980 $6,025 $690$4,125 $4,325 $11,550 $2,260 $2,110 $1,30076$12,400 $4,600 $2,320 $960 $2,275 $1,045 $6,525$730 $4,350 $4,600 $12,400 $2,365 $2,215 $1,42077$13,250 $4,875 $2,425 $995 $2,365 $1,165 $7,025$770 $4,600 $4,875 $13,250 $2,470 $2,320 $1,54078$14,050 $5,250 $2,575 $1,090 $2,455 $1,285 $7,575$815 $4,825 $5,250 $14,050 $2,725 $2,425 $1,660*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-11Table 5-5: Estimated Revenue Distribution for Employer Wood Veneer Laminated Product Producers, by NAICS (thousands, 2010$)PercentileNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS33999279$14,900 $5,750 $2,900 $1,195 $2,675 $1,390 $8,375$855 $5,100 $5,750 $14,900 $3,075 $2,575 $1,78080$16,350 $6,250 $3,200 $1,300 $3,025 $1,510 $9,200$895 $5,675 $6,250 $16,350 $3,400 $2,875 $1,90081$17,800 $6,750 $3,525 $1,405 $3,375 $1,630 $10,000$940 $6,225 $6,750 $17,800 $3,725 $3,150 $2,02082$19,300 $7,250 $3,825 $1,510 $3,725 $1,750 $11,250$980 $6,800 $7,250 $19,300 $4,075 $3,450 $2,14083$21,200 $7,875 $4,150 $1,615 $4,075 $1,870 $12,450$1,075 $7,350 $7,875 $21,200 $4,400 $3,750 $2,26084$23,450 $8,675 $4,450 $1,720 $4,450 $1,990 $13,650$1,195 $7,900 $8,675 $23,450 $4,725 $4,050 $2,38085$26,350 $9,450 $4,775 $1,825 $4,800 $2,110 $14,850$1,330 $8,425 $9,450 $26,350 $5,150 $4,325 $2,52586$30,800 $10,650 $5,200 $1,930 $5,400 $2,215 $16,600$1,465 $8,975 $10,650 $30,800 $5,850 $4,625 $2,92587$35,200 $12,750 $5,875 $2,035 $6,275 $2,335 $18,400$1,600 $9,500 $12,750 $35,200 $6,550 $4,925 $3,35088$38,550 $14,850 $6,575 $2,140 $7,175 $2,455 $20,950$1,735 $10,150 $14,850 $38,550 $7,250 $5,750 $3,75089$43,800 $17,900 $7,250 $2,245 $8,550 $2,825 $27,050$1,870 $11,950 $17,900 $43,800 $8,600 $6,800 $4,17590$51,200 $21,500 $8,150 $2,350 $10,200 $3,350 $31,150$1,990 $13,750 $21,500 $51,200 $10,450 $7,800 $4,57591$67,400 $26,550 $9,175 $2,455 $12,100 $3,850 $35,800$2,125 $16,500 $26,550 $67,400 $12,500 $8,700 $5,00092$85,600 $33,550 $10,500 $2,800 $14,000 $4,375 $51,500$2,260 $21,250 $33,550 $85,600 $14,550 $9,575 $6,25093$100,000 $41,400 $13,150 $3,325 $17,500 $4,900 $63,800$2,395 $26,200 $41,400 $100,000 $17,350 $11,200 $7,55094$100,000 $63,800 $16,300 $3,850 $22,950 $6,000 $76,100$2,650 $32,100 $63,800 $100,000 $20,600 $13,450 $9,25095$100,000 $100,000 $21,150 $4,400 $28,650 $7,275 $94,600$3,325 $48,500 $100,000 $100,000 $27,850 $17,150 $14,25096$100,000 $100,000 $31,500 $4,925 $37,350 $9,550 $100,000$4,000 $70,700 $100,000 $100,000 $39,000 $23,900 $18,45097$100,000 $100,000 $46,550 $6,500 $61,400 $14,950 $100,000$4,700 $99,000 $100,000 $100,000 $95,000 $43,450 $34,10098$100,000 $100,000 $97,000 $9,425 $100,000$24,000 $100,000 $6,900 $100,000 $100,000 $100,000 $100,000 $70,700 $48,80099$100,000 $100,000 $100,000 $20,150 $100,000$79,700 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $98,800100$100,000 $100,000 $100,000 $100,000 $100,000$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000Note: NAICS 321211: Hardwood Veneer and Plywood Manufacturers;337110: Wood kitchen cabinet andcountertop manufacturing; 337129: Wood television, radio, and sewing machine cabinetmanufacturing; 337121: Upholstered household furniture manufacturing; 337122: Nonupholstered wood household furniture manufacturing; 337211: Wood office furniture manufacturing; 337127:Institutional furniture manufacturing; 337215:Showcase, partition, shelving, and lockermanufacturing; 321911: Wood window anddoor manufacturing; 337212: Custom architectural woodwork and millworkmanufacturing; 321999: All other miscellaneous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musicalinstrument manufacturing.

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### Table 5-6: Estimated Revenue Distribution for Nonemployer Wood Veneer Laminated Product Producers, by NAICS

Percentile NAICS 321 NAICS 337 NAICS 339 1 $1,138 $1,179 $1,098
2 $1,259 $1,339 $1,219
3 $1,420 $1,540 $1,380
4 $1,581 $1,701 $1,500
5 $1,742 $1,902 $1,621
6 $1,862 $2,103 $1,742
7 $2,023 $2,264 $1,902
8 $2,184 $2,465 $2,023
9 $2,345 $2,626 $2,144
10 $2,465 $2,827 $2,264
11 $2,626 $2,988 $2,425
12 $2,787 $3,189 $2,546
13 $2,908 $3,390 $2,667
14 $3,069 $3,551 $2,787
15 $3,230 $3,752 $2,948
16 $3,390 $3,913 $3,069
17 $3,511 $4,114 $3,189 18 $3,672 $4,315 $3,310
19 $3,833 $4,476 $3,471
20 $3,994 $4,677 $3,591
21 $4,114 $4,838 $3,712
22 $4,275 $5,050 $3,833 23 $4,436 $5,400 $3,953
24 $4,557 $5,750 $4,114
25 $4,717 $6,050 $4,235
26 $4,878 $6,400 $4,356
27 $5,050 $6,700 $4,476
28 $5,350 $7,050 $4,637 29 $5,650 $7,350 $4,758
30 $5,950 $7,699 $4,878
31 $6,250 $7,999 $5,050
32 $6,600 $8,349 $5,300
33 $6,900 $8,699 $5,600 34 $7,200 $8,999 $5,900
35 $7,500 $9,349 $6,200
36 $7,799 $9,649 $6,450
37 $8,099 $10,000 $6,750
38 $8,399 $10,600 $7,050
39 $8,699 $11,200 $7,350 40 $8,999 $11,950 $7,599
41 $9,299 $12,550 $7,899
42 $9,649 $13,150 $8,199
43 $9,949 $13,750 $8,499
44 $10,450 $14,500 $8,799
45 $11,200 $15,100 $9,049 46 $11,800 $15,700 $9,349
47 $12,550 $16,300 $9,649
48 $13,150 $17,050 $9,949
49 $13,900 $17,649 $10,450
50 $14,500 $18,249 $11,200
51 $15,250 $18,849 $11,950
52 $15,850 $19,599 $12,550
53 $16,600 $20,199 $13,300
54 $17,200 $20,799 $13,900
55 $17,949 $21,399 $14,650
56 $18,549 $22,149 $15,250

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### Table 5-6: Estimated Revenue Distribution for Nonemployer Wood Veneer Laminated Product Producers, by NAICS

Percentile NAICS 321 NAICS 337 NAICS 339 57 $19,299 $22,749 $16,000
58 $19,899 $23,349 $16,750
59 $20,499 $23,949 $17,350
60 $21,249 $24,699 $18,099
61 $21,849 $25,750 $18,699
62 $22,599 $27,000 $19,449 63 $23,199 $28,500 $20,049
64 $23,949 $30,000 $20,799
65 $24,549 $31,500 $21,549
66 $25,750 $33,000 $22,149
67 $27,500 $34,500 $22,899 68 $29,250 $35,750 $23,499
69 $31,000 $37,250 $24,249
70 $32,750 $38,749 $24,849
71 $34,500 $40,249 $26,750
72 $36,250 $41,749 $28,750
73 $37,999 $43,249 $30,750
74 $39,749 $44,499 $32,750
75 $41,499 $45,999 $34,750
76 $43,249 $47,499 $36,750
77 $44,999 $48,999 $38,749
78 $46,749 $51,000 $40,749 79 $48,499 $55,000 $42,749
80 $51,000 $59,000 $44,749
81 $55,500 $63,500 $46,749
82 $60,500 $67,500 $48,749
83 $65,000 $71,500 $52,500
84 $70,000 $75,499 $58,000 85 $75,000 $79,499 $64,000
86 $79,499 $83,499 $69,500
87 $84,499 $87,499 $75,000
88 $89,499 $91,499 $80,999
89 $93,999 $95,499 $86,499 90 $98,999 $99,499 $91,999
91 $116,500 $118,000 $97,499
92 $139,000 $139,000 $115,000
93 $161,500 $158,500 $140,500
94 $182,499 $179,499 $164,500
95 $204,999 $198,999 $189,999 96 $227,499 $219,999 $215,499
97 $250,000 $239,499 $240,999
98 $367,500 $320,000 $337,500
99 $489,999 $459,999 $477,499
100 $10,000,000 $10,000,000 $10,000,000 Note: NAICS 321: Wood product manufacturing; 337: Furniture and related product manufacturing; 339: Miscellaneous manufacturing. 

### 4926 5.2.4 Small Business Impact Summary for Wood Veneer Laminated Product Producers 4927 4928 Table 5-7 presents a summary of the number of a ffected small laminated product producers by NAICS 4929 code, category of costs incurred, and employment status. Table 5-8 and Table 5-9 present the small 4930 business impacts on employer and nonemployer wood ve neer laminated product producers, respectively. 4931 Table 5-10 summarizes the impacts to al l small laminated product producers. 4932 4933

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### The number of firms by cost-revenue ratio bracket is estimated from the estimated number of 4934 firms, the per-firm costs, and the revenue distri butions presented above in Table 5-5 and Table 5-6. 60 

### For 4935 example, there are an estimated 165 employer w ood veneer laminated product producers in the Wood 4936 Kitchen Cabinet and Countertop indu stry (NAICS 337110) that will incur rule familiarization, labeling, 4937 and raw materials costs ($2,260.62). Thus, empl oyer firms with revenues below $75,354 ($2,260.62 4938 divided by 3%) have cost-impact ratios above thr ee percent and firms with revenue above $226,062 4939 ($2,260.62 divided by 1%) have cost-impact ratios below one percent. Finally, firms with revenues 4940 between $75,354 and $226,062 would have cost-impact ratios between 1 and 3 percent. Since the 12 th 

### 4941 percentile of revenues for NAICS 337110 is below $75, 354, 12 percent of these firms (20 firms) have 4942 cost-impact ratios above three percent. Since the 32 nd 

### percentile of revenues for NAICS 337110 is below 4943 $226,062, 20 percent (32 minus 12 percent) or 33 of these firms have cost-impact ratios between one and 4944 three percent. The remaining 68 percent of these fi rms (112 firms) have a cost-impact ratio below one 4945 percent. 4946 4947 Overall, 5,532 small wood veneer laminated produc t producers (about 74 percent of the total) are 4948 expected to have costs impacts that are less than one percent of their revenues, 759 firms (about 11 4949 percent) are expected to experience impacts at levels between one and three percent of their revenue, and 4950 1,159 firms (about 15 percent) are expected to incur costs exceeding three percent of their revenues. 4951 4952

60 Nonemployers were assumed to account for 30 percent of all affected wood veneer laminated product manufacturers.*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-15Table 5-7: Number of Wood Veneer Laminated Product Producers with Cost Impacts, by NAICSCategories of CostsIncurredNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS339992All Small Employer Firms With Cost ImpactsRule fam., label.51 821 88 267 338 704 259 55 152 100 459 17 5 5Rule fam., label., raw mat.10 508 - 165 209 435 - 33 - - - - - -Rule fam., label., raw mat., fab.record.6 134 9 44 55 115 26 9 15 10 46 1 1 1Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.1 30 2 10 13 26 6 2 4 2 11 1 - -Total68 1,493 99 485 615 1,280 291 99 171 112 516 19 6 6All Nonemployer Firms With Cost ImpactsRule fam., label.- 352 37 114 145 302 111 23 65 43 197 7 3 3Rule fam., label., raw mat.- 218 - 71 90 187 - 14 - - - - - -Rule fam., label., raw mat., fab.record.- 58 4 19 24 49 11 4 7 4 20 1 - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 13 1 4 5 11 2 1 1 1 4 - - -Total- 640 42 208 264 549 125 42 73 48 221 8 3 3All Small Firms With Cost ImpactsRule fam., label.51 1,173 125 381 483 1,006 370 78 217 142 656 24 8 8Rule fam., label., raw mat.10 725 - 236 299 622 - 47 - - - - - -Rule fam., label., raw mat., fab.record.6 192 13 62 79 164 38 13 22 15 66 2 1 1Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.1 43 3 14 18 37 8 3 5 3 15 1 - -Total68 2,133 141 693 879 1,829 416 141 244 160 737 27 9 9Note: NAICS 321211: Hardwood Veneer and Plywood Manufacturers;337110: Wood kitchen cabinet andcountertop manufacturing; 337129: Wood television, radio, and sewing machine cabinetmanufacturing; 337121: Upholstered household furniture manufacturing; 337122: Nonupholstered wood household furniture manufacturing; 337211: Wood office furniture manufacturing; 337127:Institutional furniture manufacturing; 337215:Showcase, partition, shelving, and lockermanufacturing; 321911: Wood window anddoor manufacturing; 337212: Custom architectural woodwork and millworkmanufacturing; 321999: All other miscellaneous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musicalinstrument manufacturing.4953*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-16Table 5-8: Small Business Impacts on Employer Wood Veneer Laminated Product Producers by NAICSCategories of CostsIncurredNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS339992All Small Employer FirmsWith Cost Impacts <1%Rule fam., label.51 821 87 264 338 697 259 54 152 100 459 17 5 5Rule fam., label., raw mat.4 462 - 112 188 361 - 20 - - - - - -Rule fam., label., raw mat., fab.record.2 121 6 30 49 94 24 5 14 8 45 1 - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 6 - - 2 2 1 - 1 - 4 - - -Total57 1,410 93 406 577 1,154 284 80 166 108 508 18 6 6All Small Employer Firms WithCost Impacts >1% and <3%Rule fam., label.- - 1 3 - 7 - 1 - - - - - -Rule fam., label., raw mat.2 41 - 33 19 65 - 7 - - - - - -Rule fam., label., raw mat., fab.record.2 12 1 8 6 18 2 2 1 1 1 - - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 5 - 1 2 2 1 - 1 - 3 - - -Total4 58 2 45 26 93 3 10 2 1 4 - - -All Small Employer FirmsWith Cost Impacts >3%Rule fam., label.- - - - - - - - - - - - - -Rule fam., label., raw mat.4 5 - 20 2 9 - 6 - - - - - -Rule fam., label., raw mat., fab.record.3 1 2 6 1 2 1 2 - 1 - - - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.1 19 2 9 9 22 3 2 2 1 4 1 - -Total7 25 3 34 12 33 4 9 3 2 4 1 - -Note: NAICS 321211: Hardwood Veneer and Plywood Manufacturers;337110: Wood kitchen cabinet andcountertop manufacturing; 337129: Wood television, radio, and sewing machine cabinetmanufacturing; 337121: Upholstered household furniture manufacturing; 337122: Nonupholstered wood household furniture manufacturing; 337211: Wood office furniture manufacturing; 337127:Institutional furniture manufacturing; 337215:Showcase, partition, shelving, and lockermanufacturing; 321911: Wood window anddoor manufacturing; 337212: Custom architectural woodwork and millworkmanufacturing; 321999: All other miscellaneous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musicalinstrument manufacturing.4954*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-17Table 5-9: Small Business Impacts on NonemployerWood Veneer Laminated Product Producers by NAICSCategories of CostsIncurredNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS339992All Small Nonemployer Firms With Cost Impacts <1%Rule fam., label.- 130 14 48 61 127 47 10 27 18 83 2 1 1Rule fam., label., raw mat.- 22 - 3 14 30 - 1 - - - - - -Rule fam., label., raw mat., fab.record.- 6 - 1 4 7 1 - 1 - 2 - - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- - - - - - - - - - - - - -Total- 158 14 52 79 164 48 10 28 18 84 2 1 1All Small Nonemployer Firms With Cost Impacts >1% and <3%Rule fam., label.- 95 10 32 41 85 31 7 18 12 55 2 1 1Rule fam., label., raw mat.- 44 - 9 21 43 - 2 - - - - - -Rule fam., label., raw mat., fab.record.- 11 - 2 5 11 2 - 1 - 4 - - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- - - - - - - - - - - - - -Total- 149 10 43 67 139 33 9 19 12 59 2 1 1All Small Nonemployer Firms With Cost Impacts >3%Rule fam., label.- 127 13 34 44 91 33 7 19 13 59 3 1 1Rule fam., label., raw mat.- 152 - 59 55 114 - 12 - - - - - -Rule fam., label., raw mat., fab.record.- 41 3 16 15 31 8 3 5 4 14 1 - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 13 1 4 5 11 2 1 1 1 4 - - -Total- 333 18 113 118 246 44 23 26 18 78 4 1 1Note: NAICS 321211: Hardwood Veneer and Plywood Manufacturers;337110: Wood kitchen cabinet andcountertop manufacturing; 337129: Wood television, radio, and sewing machine cabinetmanufacturing; 337121: Upholstered household furniture manufacturing; 337122: Nonupholstered wood household furniture manufacturing; 337211: Wood office furniture manufacturing; 337127:Institutional furniture manufacturing; 337215:Showcase, partition, shelving, and lockermanufacturing; 321911: Wood window anddoor manufacturing; 337212: Custom architectural woodwork and millworkmanufacturing; 321999: All other miscellaneous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musicalinstrument manufacturing.4955*** EO 12866 Review Draft – Deliberative – DoNot Quote, Cite, or Release During Review***January 27, 2012 5-18Table 5-10: Small Business Impacts on All Small Wood Veneer Laminated Product Producers by NAICSCategories of CostsIncurredNAICS321211NAICS321911NAICS321999NAICS337110NAICS337121NAICS337122NAICS337127NAICS337129NAICS337211NAICS337212NAICS337215NAICS339920NAICS339932NAICS339992All Small Firms With Cost Impacts <1%Rule fam., label.51 951 101 312 399 824 306 64 179 118 542 19 6 6Rule fam., label., raw mat.4 484 - 115 203 391 - 21 - - - - - -Rule fam., label., raw mat., fab.record.2 127 6 30 53 102 25 5 14 8 47 1 - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 6 - - 2 2 1 - 1 - 4 - - -Total57 1,568 107 458 656 1,318 332 90 194 126 592 20 7 7All Small Firms With Cost Impacts >1% and <3%Rule fam., label.- 95 11 35 41 92 31 7 18 12 55 2 1 1Rule fam., label., raw mat.2 84 - 42 40 108 - 9 - - - - - -Rule fam., label., raw mat., fab.record.2 23 2 11 11 30 5 2 3 1 5 - - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.- 5 - 1 2 2 1 - 1 - 3 - - -Total4 208 13 88 93 232 37 18 21 14 63 2 1 1All Small Firms With Cost Impacts >3%Rule fam., label.- 127 13 34 44 91 33 7 19 13 59 3 1 1Rule fam., label., raw mat.4 157 - 79 57 123 - 18 - - - - - -Rule fam., label., raw mat., fab.record.3 42 5 21 15 33 9 5 5 5 14 1 - -Rule fam., label., raw mat., fab.record., test., cert., HWPWrecord.1 31 2 13 15 33 6 3 4 2 9 1 - -Total7 358 21 147 130 279 48 32 28 20 82 4 2 2Note: NAICS 321211: Hardwood Veneer and Plywood Manufacturers;337110: Wood kitchen cabinet and countertop manufacturing; 337129: Wood television, radio, and sewing machine cabinetmanufacturing; 337121: Upholstered household furniture manufacturing; 337122: Nonupholstered wood household furniture manufacturing; 337211: Wood office furniture manufacturing; 337127:Institutional furniture manufacturing; 337215:Showcase, partition, shelving, and lockermanufacturing; 321911: Wood window anddoor manufacturing; 337212: Custom architectural woodwork and millworkmanufacturing; 321999: All other miscellaneous wood product manufacturing; 339920: Sporting and athletic goods manufacturing; 339932: Game, toy, and children's vehicle manufacturing; 339992: Musicalinstrument manufacturing.49564957

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 5-19 

## 5.3 Small Business Impacts for Fabri cators, Wholesalers, and Retailers 4958 4959 The basic steps in the small busin ess impact analysis for fabricators (excluding those fabricators 4960 that are laminators, which are discussed in Section 5.2), wholesalers, and retailers are as follows: (1) 4961 estimate the number of small firms, (2) estimate the re venue distribution of affected firms, (3) estimate 4962 the cost per firm, and (4) based on the number of af fected firms, the per-firm costs, and the revenue 4963 distribution, estimate the number of firms by cost-re venue ratio. These steps are described in more detail 4964 below. 4965 4966 5.3.1 Number of Small Fabricator, Wholesale, and Retail Firms 4967 4968 The number of small employer firms in the affected fabricator, wholesaler, and retailer NAICS 4969 (described in Chapter 2) were estimated using data from the 2007 Economic Census , the Census Bureau’s 4970 2008 Nonemployer Statistics, and SBA’s small business size standards. For those retail NAICS where 4971 the Census revenue brackets overlapped the small busin ess revenue threshold, the firms in the overlapped 4972 bracket were counted as small. All nonemploy er firms were assumed to be small. 4973 4974 5.3.2 Revenue Distribution for Affected Fabricator, Wholesale, and Retail Firms 4975 4976 The 2007 Economic Census has information on the nu mber of employer firms by NAICS code in 4977 18 revenue brackets. The 2008 Nonemployer Statistics has information on the number of nonemployer 4978 firms by NAICS code in 12 revenue brackets. Impacts were separately estimated for six industry 4979 categories: (1) employer fabricators, (2) employer wholesalers, (3) employer retailers, (4) nonemployer 4980 fabricators, (5) nonemployer wholesalers, and (6) none mployer retailers. For each industry category, the 4981 number of affected firms by revenue bracket was estimated by combining the number of affected firms by 4982 NAICS/employer status and the percentage of firms by revenue bracket within each affected 4983 NAICS/employer status category. After compiling th ese data, the overall revenue distributions for each 4984 percentile from 1 to 100 were calculated by assuming th at revenues are uniformly distributed within each 4985 revenue bracket. The bottom revenue bracket was assi gned a revenue floor of $20,000 for employers and 4986 $1,000 for nonemployers. Note that this analysis lik ely overestimates the number of affected firms in this 4987 bottom revenue bracket because Census data includes firms with no revenue, an d firms with no revenue 4988 do not sell composite wood products and therefore ar e unlikely to incur costs due to the rule. The 4989 resulting distributions are presented in Table 5-11. 4990 4991 4992 Table 5-11: Estimated Revenue Distribution for Fabricators, Wholesalers, and Retailers

Percentile Type of Firm Employers Nonemployers Fabricators Wholesalers Retailers Fabricators Wholesalers Retailers 1 $25,110 $31,072 $25,110 $1,165 $1,206 $1,123


### 2 $30,220 $41,292 $31,072 $1,329 $1,370 $1,247


### 3 $34,478 $52,363 $36,182 $1,453 $1,576 $1,370


### 4 $39,588 $63,435 $42,143 $1,617 $1,782 $1,494


### 5 $44,698 $73,655 $47,253 $1,782 $1,946 $1,617


### 6 $49,808 $84,726 $53,215 $1,946 $2,152 $1,741


### 7 $54,918 $95,798 $58,325 $2,070 $2,358 $1,864


### 8 $59,176 $105,167 $64,286 $2,234 $2,522 $1,987


### 9 $64,286 $126,201 $69,396 $2,399 $2,728 $2,111


### 10 $69,396 $143,027 $75,358 $2,563 $2,934 $2,234

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 5-20 

### Table 5-11: Estimated Revenue Distribution for Fabricators, Wholesalers, and Retailers

Percentile Type of Firm Employers Nonemployers Fabricators Wholesalers Retailers Fabricators Wholesalers Retailers 11 $74,506 $159,854 $80,468 $2,687 $3,098 $2,358


### 12 $79,616 $180,888 $86,430 $2,851 $3,304 $2,481


### 13 $84,726 $197,714 $91,540 $3,016 $3,510 $2,605


### 14 $88,985 $214,541 $96,650 $3,181 $3,715 $2,728


### 15 $94,095 $231,368 $102,611 $3,304 $3,880 $2,851


### 16 $99,205 $252,401 $109,374 $3,469 $4,086 $2,975


### 17 $104,315 $269,228 $121,994 $3,633 $4,291 $3,098


### 18 $113,581 $286,055 $134,614 $3,798 $4,456 $3,222


### 19 $126,201 $302,881 $143,027 $3,921 $4,662 $3,345


### 20 $138,821 $323,915 $155,647 $4,086 $4,867 $3,469


### 21 $151,441 $340,741 $164,061 $4,250 $5,032 $3,592


### 22 $164,061 $357,568 $176,681 $4,415 $5,371 $3,715


### 23 $176,681 $378,602 $189,301 $4,538 $5,729 $3,798


### 24 $189,301 $395,428 $197,714 $4,703 $6,138 $3,921


### 25 $201,921 $412,255 $210,334 $4,867 $6,496 $4,045


### 26 $210,334 $429,082 $218,748 $5,032 $6,854 $4,168


### 27 $222,954 $450,115 $231,368 $5,218 $7,263 $4,291


### 28 $235,574 $466,942 $243,988 $5,524 $7,621 $4,415


### 29 $248,194 $483,769 $252,401 $5,831 $8,031 $4,538


### 30 $260,815 $504,802 $265,021 $6,138 $8,389 $4,662


### 31 $273,435 $521,629 $277,641 $6,496 $8,747 $4,785


### 32 $286,055 $552,128 $286,055 $6,803 $9,156 $4,909


### 33 $298,675 $588,937 $298,675 $7,110 $9,514 $5,032


### 34 $307,088 $625,745 $307,088 $7,417 $9,923 $5,218


### 35 $319,708 $662,554 $319,708 $7,724 $10,384 $5,524


### 36 $332,328 $694,104 $332,328 $8,031 $11,151 $5,831


### 37 $344,948 $730,912 $340,741 $8,337 $11,919 $6,138


### 38 $357,568 $767,721 $353,362 $8,644 $12,686 $6,445


### 39 $370,188 $804,529 $361,775 $8,951 $13,453 $6,752


### 40 $382,808 $841,338 $374,395 $9,309 $14,220 $7,059


### 41 $395,428 $878,146 $387,015 $9,616 $15,141 $7,366


### 42 $408,048 $914,955 $395,428 $9,923 $15,908 $7,673


### 43 $416,462 $951,763 $408,048 $10,231 $16,676 $7,928


### 44 $429,082 $983,313 $416,462 $10,844 $17,443 $8,235


### 45 $441,702 $1,020,122 $429,082 $11,612 $18,210 $8,542


### 46 $454,322 $1,067,448 $441,702 $12,226 $18,977 $8,849


### 47 $466,942 $1,146,324 $450,115 $12,993 $19,745 $9,156


### 48 $479,562 $1,225,199 $462,735 $13,607 $20,512 $9,463


### 49 $492,182 $1,304,074 $471,149 $14,220 $21,433 $9,769


### 50 $504,802 $1,382,950 $483,769 $14,988 $22,200 $10,076


### 51 $517,422 $1,461,825 $496,389 $15,601 $22,967 $10,538


### 52 $531,095 $1,540,701 $504,802 $16,369 $23,734 $11,305


### 53 $567,903 $1,619,576 $517,422 $16,983 $24,502 $12,072


### 54 $604,712 $1,698,452 $531,095 $17,750 $25,269 $12,839

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 5-21 

### Table 5-11: Estimated Revenue Distribution for Fabricators, Wholesalers, and Retailers

Percentile Type of Firm Employers Nonemployers Fabricators Wholesalers Retailers Fabricators Wholesalers Retailers 55 $636,262 $1,793,102 $562,645 $18,364 $26,856 $13,607


### 56 $673,070 $1,871,978 $594,195 $18,977 $28,646 $14,374


### 57 $709,879 $1,950,853 $620,487 $19,745 $30,436 $15,141


### 58 $746,687 $2,029,728 $652,037 $20,358 $32,226 $15,908


### 59 $783,496 $2,108,604 $683,587 $21,126 $34,017 $16,522


### 60 $815,046 $2,187,479 $709,879 $21,739 $35,807 $17,289


### 61 $851,855 $2,266,355 $741,429 $22,507 $37,853 $18,057


### 62 $888,663 $2,345,230 $772,979 $23,121 $39,643 $18,824


### 63 $925,472 $2,424,106 $799,271 $23,888 $41,434 $19,591


### 64 $962,280 $2,502,981 $830,821 $24,502 $43,224 $20,358


### 65 $993,830 $2,581,856 $862,371 $25,115 $45,014 $21,126


### 66 $1,030,639 $2,734,350 $888, 663 $26,344 $46,805 $21,893


### 67 $1,098,998 $2,944,685 $920, 213 $28,134 $48,851 $22,660


### 68 $1,193,649 $3,128,727 $951, 763 $29,925 $50,641 $23,427


### 69 $1,288,299 $3,339,062 $983, 313 $31,459 $53,711 $24,195


### 70 $1,382,950 $3,549,396 $1,009, 605 $33,249 $57,803 $24,962


### 71 $1,493,375 $3,759,731 $1,041, 155 $35,040 $61,895 $25,832


### 72 $1,588,026 $3,970,065 $1,114, 773 $36,830 $65,988 $28,134


### 73 $1,682,677 $4,180,400 $1,193, 649 $38,620 $70,080 $30,436


### 74 $1,793,102 $4,390,734 $1,288, 299 $40,411 $74,172 $32,738


### 75 $1,887,753 $4,601,069 $1,382, 950 $42,201 $77,753 $35,040


### 76 $1,982,403 $4,811,403 $1,461, 825 $43,991 $81,845 $37,597


### 77 $2,077,054 $5,021,738 $1,556, 476 $45,526 $85,937 $39,899


### 78 $2,187,479 $5,232,073 $1,651, 126 $47,316 $90,029 $42,201


### 79 $2,282,130 $5,652,743 $1,730, 002 $49,106 $94,122 $44,503


### 80 $2,376,780 $6,073,412 $1,824, 652 $50,897 $98,214 $46,805


### 81 $2,487,206 $6,520,373 $1,919, 303 $55,246 $102,307 $49,106


### 82 $2,581,856 $6,941,042 $1,998, 178 $60,361 $114,584 $52,177


### 83 $2,813,225 $7,388,003 $2,092, 829 $64,965 $128,395 $58,315


### 84 $3,155,019 $7,808,672 $2,187, 479 $70,080 $140,672 $63,942


### 85 $3,523,104 $8,544,844 $2,266, 355 $75,195 $154,483 $70,080


### 86 $3,864,898 $9,333,598 $2,361, 005 $79,799 $168,294 $76,218


### 87 $4,232,984 $10,122,353 $2,455, 656 $84,914 $180,571 $82,356


### 88 $4,574,777 $11,200,318 $2,534, 531 $89,518 $194,383 $88,495


### 89 $4,916,571 $12,514,909 $2,629, 183 $94,633 $208,194 $94,633


### 90 $5,310,949 $13,829,500 $2,944, 685 $99,237 $220,471 $100,771


### 91 $6,178,579 $15,144,091 $3,260, 186 $111,515 $234,282 $117,653


### 92 $7,046,209 $17,089,687 $3,601, 980 $134,533 $246,559 $140,672


### 93 $7,913,840 $19,561,119 $3,917, 482 $157,552 $276,229 $163,691


### 94 $9,570,224 $22,505,804 $4,232, 984 $180,571 $332,497 $186,710


### 95 $11,778,738 $26,134,075 $4,548, 485 $202,056 $386,208 $209,729


### 96 $14,723,422 $31,392,440 $4,863, 987 $225,074 $442,477 $232,747


### 97 $19,087,866 $38,543,818 $5,179, 489 $248,093 $498,745 $255,767


### 98 $26,659,913 $49,638,969 $5,847, 302 $350,401 $670,110 $365,747

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 5-22 

### Table 5-11: Estimated Revenue Distribution for Fabricators, Wholesalers, and Retailers

Percentile Type of Firm Employers Nonemployers Fabricators Wholesalers Retailers Fabricators Wholesalers Retailers 99 $43,591,849 $74,037,784 $6,604, 507 $485,957 $879,839 $478,284


### 100 $105,167,308 $105,167,307 $7,361,712 $2,557,673 $5,115,346 $10,230,695 

### 4993 5.3.3 Costs per Small Fabricator, Wholesale, and Retail Firm 4994 4995 The costs per small firm are estimated by annualizin g the costs per firm presented in Chapter 2. 4996 Except for recurring recordkeeping costs, the impact analysis uses a single average annualized cost per 4997 firm for each cost element (rule familiariza tion, labeling and initial recordkeeping). 4998 4999 Table 5-12: Per Firm Costs

Description of Costs Incurred Initial or Annual Cost Annualized Cost (3 Percent)
Fabricators

Rule Familiarization $294.40 $14.29 Initial Labeling (firms with minor costs) $132.81 $6.45 Initial Labeling (firms with more substantial costs) $4,552.00 $220.97 Recurring Recordkeeping 49.68 $47.27 

### Wholesalers

Rule Familiarization $373.16 $18.11 Initial Recordkeeping $2,510.80 $121.88 Initial Labeling (firms with more substantial costs) $4,552.00 $220.97 Recurring Recordkeeping 51.08 $48.60 

### Retailers

Rule Familiarization $282.84 $13.73 

### 5000 5001 Recurring recordkeeping costs are assumed to be a function of revenue rather than a fixed cost 5002 per firm. As described in Chapter 2, the recordk eeping and labeling costs were estimated based on the 5003 responses to a questionnaire administered to seven wholesale firms and another questionnaire 5004 administered to nine fabricator firms. Based on revenue data from the Dun and Bradstreet database and 5005 other publically available sources, the two responde nts reporting recurring recordkeeping costs appeared 5006 to be larger firms that likely have revenues that are significantly larger than the average revenue for 5007 affected firms. Nevertheless, the costs they re ported were still assumed to represent the average costs 5008 for the fraction of affected firms that will incur additional recordkeeping cost s due to the rule. These 5009 average costs were compared to average industry revenues to calculate the cost impact of recurring 5010 recordkeeping. (This is equivalent to scaling the recurring recordkeeping costs to the revenues of the 5011 firm.) The cost impacts of recurring recordkeeping were then added to the cost impacts from the other 5012 cost elements to calculate the total cost impact. 5013 5014 As described in Chapter 2, 11 percent of the fabr icators that are not curre ntly complying with the 5015 CARB ATCM (because their products are not sold in California) are assumed to incur recurring 5016 recordkeeping costs that were estim ated to average $12,917 and $179 per year for employer firms and 5017 nonemployer firms, respectively. This is $12,290 a nd $170 per year when annualized over 30 years using 5018 a three percent discount rate. The analysis assumes that these recordkeeping costs include a fixed cost 5019 component associated with 2 hours of labor ($47.27 an nualized, based on labor rates at fabricator firms) 5020 and a variable cost component that is estimated as a function of revenue. The variable cost component is 5021

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### estimated to be 0.3 percent of revenue, which is calcu lated by taking the employer firm variable cost of 5022 $12,243and dividing by the average employer fi rm revenue of $4.2 million (Given the revenue 5023 distribution for fabricators shown in Table 5-11, this is equivalent to a range of recurring recordkeeping 5024 costs of $120 to $304,002 per year for employer firm fabricators, and a range of $51 to $7,439 per year 5025 for non-employer firm fabricators.) As shown in Table 5-12, the average annualized cost per firm to 5026 fabricators for the other rule’s other requirements ranges from $14 to $220. The cost impacts from these 5027 costs are combined with the cost impacts from recurring recordkeeping to calculate total cost impacts. 5028 5029 For wholesalers, 43 percent of the firms that ar e not currently complyin g with the CARB ATCM 5030 (because their products are not sold in California) ar e assumed to incur recurring recordkeeping costs that 5031 were estimated to average $4,980 and $100 per year fo r employer and nonemployer firms, respectively. 5032 This is $4,739 and $95 per year when annualized ove r 30 years using a three percent discount rate. The 5033 analysis assumes that these recordk eeping costs include a fixed cost co mponent associated with 2 hours of 5034 labor ($48.60 annualized, based on labor rates at wholesal er firms) and a variable cost component that is 5035 estimated as a function of revenue. The variable co st component is estimated to be 0.06 percent of 5036 revenue, which is calculated by taking the employer variable cost of $4,690 and dividing by the average 5037 employer firm revenue of $8.3 million. (Given the revenue distribution for wholesalers shown in Table 5038 5-11, this is equivalent to a range of recurring recordkeeping costs of $65 to $59,410 per year for 5039 employer firm wholesalers, and a range of $48 to $2,935 per year for non-employer firm wholesalers.) 5040 As shown in Table 5-12, the average annualized cost per firm to wholesalers for the other rule’s other 5041 requirements ranges from $18 to $220 per year. The cost impacts from these cost s are combined with the 5042 cost impacts from recurring recordkeepi ng to calculate total cost impacts. 5043 5044 5045 5.3.4 Small Business Impact Summary for Fabricators, Wholesalers, and Retailers 5046 5047 Table 5-13 presents the small business impacts on fabr icators, wholesalers and retailers. Overall, 5048 about 95 percent of small firms are expected to have cost impacts that are less than one percent of their 5049 revenue, about 4 percent of small firms are expected to have cost impacts between one and three percent 5050 of their revenue, and about 1 percent of small firms ar e expected to have cost impacts that exceed three 5051 percent of their total revenue. The number of firms by cost-revenue ratio bracket is estimated from the 5052 estimated number of firms, the per-firm costs show n in Table 5-12, and th e revenue distributions 5053 presented above in Table 5-11. 5054 5055 For example, 3,154 fabricator firms with em ployees are estimated to comply with the CARB 5056 ATCM because their products may be sold in Califor nia. These firms incur the incremental cost of 5057 $14.29 for rule familiarization with the TSCA Title VI rule, but do not incur incremental costs for the 5058 rule’s other requirements. Thus, only firms w ith revenues below $476 ($14.29 divided by 3%) would 5059 have cost-impact ratios above three percent and firm s with revenue below $1,429 ($14.29 divided by 1%) 5060 would have cost-impact ratios above one percent. Since the 1st percentile for employer fabricators is 5061 greater than $1,429, it is estimated that all 3,154 of these employer fabricators have cost-impact ratios 5062 below one percent. It is also estimated that 5,032 fabricators that are nonemployer firms comply with the 5063 CARB ATCM because their products may be sold in California. Like the compliant firms with 5064 employees, these nonemployer firms only incur the incremen tal cost of $14.29 for rule familiarization. 5065 However, since the 1st percentile for nonemployer fabricators is greater than $476 and the 3 rd 

### percentile 5066 for revenue is greater than $1,429, it is estimated th at 2 percent, or 101 of these firms have cost-impact 5067 ratios of between one and three percent, while the re maining 4,931 firms have cost-impact ratios of less 5068 than one percent. 5069 5070 5071

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### Table 5-13: Small Business Impacts on Fabr icators, Wholesalers, and Retailers

Description of Costs Incurred Number of Small Firms Average Cost Per Firm for Small Firms a 

### (annualized, 3 percent) Number of Firms with Impacts

<1% 1-3% >3%

Fabricator Employers
Rule Fam. 3,154 $14.29 3,154
- - Rule Fam. and Labe ling (minor cost) 21,570 $20.74 21,570 Rule Fam. and Labeling (major cost) 1,460 $235.26 1,460 -
- Rule Fam., Labeling (major cost) and Rec.Rec. a 1,694 $282.53 1,626 68
- Total 27,879 

### Fabricator Nonemployers
Rule Fam. 5,032 $14.29 4,931 101
- Rule Fam. and Labe ling (minor cost) 34,413 $20.74 32,004 2,409
- Rule Fam. and Labeling (major cost) 2,329 $235.26 885 629 815 Rule Fam., Labeling (major cost) and Rec.Rec. a 2,703 $282.53 730 811 1,162 Total 44,478 

### Wholesale Employers
Rule Fam. 30,884 $18.11 30,884
- - Rule Fam., Initial Rec. 845 $140.00 845 -
- Rule Fam., Initial Rec., Rec.Rec. a 2,252 $188.60 2,252 -
- Rule Fam., Initial Rec., Rec.Rec. a , Initial Labeling 343 $409.56 329 14
- Total 34,325 

### Wholesale Nonemployers
Rule Fam. 45,539 $18.11 43,717 1,822
- Rule Fam., Initial Rec. 1,247 $140.00 761 249 237 Rule Fam., Initial Rec., Rec.Rec. a 3,321 $188.60 1,760 764 797 Rule Fam., Initial Rec., Rec.Rec. a , Initial Labeling 506 $409.56 182 127 197 Total 50,613 

### Retail Employers
Rule Fam. 202,630 $13.73 202,630
- - Total 202,630 

### Retail Nonemployers
Rule Fam. 511,359 $13.73 496,018 15,341
- Total 511,359 

### All Fabricators, Wholesale and Retail Firms

All Costs 871,283 - 845,738 22,335 3,208

a The analysis estimates impacts due to rule familiarization, no tification, labeling, and initial recordkeeping using an average cost that is treated as a fixed cost per firm , although in reality costs will vary by firm . By contrast, recurring recordkeeping (o r “Rec. Rec.”) costs are estimated as a fixed cost plus a variable cost that is a function of revenue, since these costs are expected t o be larger for firms with larger sales volumes. These variable costs are es timated to be 0.3% of fabricator revenues and 0.06% of wholesa le firm revenues. 

### 5072

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## 5.4 Summary of Small Business Impacts 5073 5074 Table 5-14 presents a summary of the small busin ess impacts from the proposed TSCA Title VI 5075 Implementation Rule. As indicated, 851,296 small firm s (about 97 percent) are expected to have costs 5076 impacts that are less than one percent of their reve nues, 22,133 firms (about 3 percent) are expected to 5077 experience impacts at levels between one and three pe rcent of their revenue, and 4,369 firms (less than 1 5078 percent) are expected to incur costs exc eeding three percent of their revenues. 5079 5080 Note that many of the firms with cost impacts above 1 percent of their revenues are fabricators, 5081 wholesalers, and retailers with annualized costs less than $250 (as shown in Table 5-13). All fabricators 5082 except those with recurring recordkeeping costs a nd all wholesalers except those with initial labeling 5083 costs that had impacts above 1% of their revenues ha d annualized costs that were below $250. Note that 5084 this implies that their revenues were below $25,000) . These firms account for 92 percent of the firms 5085 with cost impacts that are between 1 and 3 percent and 42 percent of the firms with cost impacts that 5086 exceed 3 percent. 5087 5088 Table 5-14: Summary of Small Business Impacts

Employer Status Firm Type Number of Affected Small Firms Number of Firms by Cost-Impact Ratio
<1% 1-3% >3%

Employers Stock Panel Producer 31 25 5 1
Wood Veneer Laminated Product 5,260 4,873 249 138
Fabricator 27,879 27,810 68 -
Wholesale 34,324 34,310 14 -
Retail 202,630 202,630 - -
All Firms 270,123 269,648 336 139

Nonemployers Stock Panel Producer - - - - Wood Veneer Laminated Product 2,226 659 545 1,021
Fabricator 44,478 38,550 3,949 1,977
Wholesale 50,612 46,420 2,961 1,231
Retail 511,359 496,018 15,341 -
All Firms 608,675 581,648 22,797 4,230

All Firms Stock Panel Producer 31 25 5 1
Wood Veneer Laminated Product 7,486 5,532 795 1,159
Fabricator 72,357 66,360 4,017 1,977
Wholesale 84,936 80,730 2,975 1,231
Retail 713,989 698,648 15,341 -
All Firms 878,798 851,296 23,133 4,369

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# 6 Environmental Justice and Other Impacts 5089 5090 In addition to the cost analysis presented in Ch apter 2, the small business analysis presented in 5091 Chapter 5, several other types of impacts are impor tant to consider in evaluating the effects of a 5092 regulation. This chapter presents the incremental im pact of the proposed TSCA Title VI Implementation 5093 Rule on: 5094 5095

 Environmental Justice, as required by Executive Order 12898–Environmental Justice; 5096

 Employment impact analysis 5097

 Paperwork burden, as required by the Paper Work Reduction Act; 5098

 State and Local Governments, as required by the Unfunded Mandates Reform Act; 5099

 Federalism, as required by Ex ecutive Order 13132–Federalism; 5100

 Tribal governments, as required by Executiv e Order 13175–Consultation and Coordination 5101 with Indian Tribal Governments; 5102

 The environmental health risk or safety risk to children due to the regulation, as required by 5103 Executive Order 13045–Protection of Children From Environmental Health & Safety Risks; 5104 and 5105

 Whether voluntary consensus standards are used in its regulatory activities. 5106

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## 6.1 Environmental Justice 5107 5108 This proposed rule establishes standards that reduce emissions of formaldehyde from composite 5109 wood products. Formaldehyde exposure may cause a ra nge of health effects including nasopharyngeal 5110 cancer, sensory irritation, asthma, a nd female reproductive toxicity. 5111
5112 The Economic Analysis for this rule moneti zes the benefits from reducing each of these four 5113 identified health impacts, and estimates total benef its as the sum of these four categories. Benefits 5114 valuation is done for formaldehyde exposure in five climate zones from nine different housing types (five 5115 types of new housing and four types of renovated housi ng), allowing for off-gassing of up to ten years, as 5116 well as occupational, school, and outside formaldehyde exposure. The population in these climate zones 5117 and housing types is broken down into broad age and employment categories to assess exposure. 5118
5119 Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on 5120 Environmental Justice (EJ). Its main provision directs Federal agencies, to the greatest extent practicable 5121 and permitted by law, to make EJ part of their mi ssion by identifying and addressing, as appropriate, 5122 disproportionately high and adverse human health or environmental effects of their programs, policies, 5123 and activities on minority and low-income populations in the U.S. 5124
5125 This Environmental Justice analysis expands on the primary analysis by analyzing the impacts 5126 specifically for minority and low-income populations. The methodology used in this analysis is a 5127 disaggregation of impacts, i.e. number of cases avoi ded, by environmental justice groups, specifically 5128 minority, tribal, and low-income populations. Disag gregation takes into account the differences in 5129 housing types, climate zones, and age and employ ment categories, across environmental justice 5130 populations. Data are the same as used in the total be nefits analysis, presented earlier in this Economic 5131 Analysis, and are taken from the American Community Survey (information on race and ethnicity, age, 5132 family composition, and incomes: 2007 – 2009), the American Housing Survey (information on housing 5133 types, age, and renovations: 2009), and th e exposure assessment for this rule. 5134
5135 The race and ethnicity categories in the Amer ican Communities Survey (ACS) are self-reported 5136 and not mutually exclusive. In order to avoid d ouble-counting populations, all individuals who identified 5137 as Hispanic separately were counted as such, regardl ess of any other reported racial category. For non5138 vacant households in which no race or ethnicity da ta was reported, the ACS reports the previous 5139 occupant’s racial category, which was used in this analysis. The ACS survey weights take into account 5140 other sources of demographic information, in additio n to race and ethnicity, making the sample nationally 5141 representative. The ACS also contains detailed inform ation on housing, including ag e and type of housing 5142 (mobile home or trailer, single-family detached, singl e-family attached, apartment, and RVs). Population 5143 and housing information were combined to estimat e the number of cases avoided by environmental 5144 justice population. As with the total benefits monetization, the number of cases avoided, by 5145 environmental justice population, were then multiplie d by monetization measures (e.g. willingness to pay, 5146 or cost of illness) to obtain benefits estimates by environmental justice population. This approach 5147 incorporates differences in housing type s across minority and income groups. 5148
5149 Table 6-1 and Table 6-2 present the estimated number of adverse health cases avoided for each 5150 year the regulation is in place. Table 6-1 presents the number of cases by health effect, option, and 5151

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### minority group and Table 6-2 presents the number of c ases by health effect, option, income group. Table 5152 6-3 and Table 6-4 present the number of cases avoided by option aggregated across all health effects by 5153 minority and income population, respectively. 5154 5155

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### 5156 Table 6-1: Number of Cases Avoided by Minority Population (Average Number of Cases Avoided Per Year of Regulation)

Analytical Option Cancer Eye Irritation Asthma Fertility Lower Higher Lower Higher Lower Higher
All Individuals Option SE 9 21 22,133 170,214 2,469 3,416 1,501 Option SI/SC/SCR 10 24 23,650 191,590 2,799 3,864 1,696 Option SN 11 25 24,154 198,950 2,915 4,019 1, 765 Option CE 7 16 18,015 130,720 1,899 2,627 1 ,144 Option CI 8 19 19,563 148,389 2,166 2,988 1 ,301 Option NE 39 92 58,492 626,726 9,554 13,235 6,5 66 Option NI 40 97 58,494 645,678 9,968 13,800 6,8 74 Non-Hispanic White Option SE 5 12 12,511 101,464 1,301 1,783 876 Option SI/SC/SCR 6 14 13,375 114,319 1,477 2,017 989 Option SN 6 15 13,657 118,743 1,538 2,098 1 ,028 Option CE 4 9 10,219 78,039 1,003 1,373 669 Option CI 5 11 11,076 88,658 1,145 1,562 759 Option NE 22 53 35,781 376,411 5,004 6,876 3, 817 Option NI 23 55 35,783 387,742 5,222 7,167 3, 993 Non-Hispanic Black Option SE 1 3 3,144 23,118 399 532 212 Option SI/SC/SCR 1 3 3,367 26,011 451 601 240 Option SN 1 3 3,443 27,008 469 625 249 Option CE 1 2 2,542 17,703 306 408 162 Option CI 1 3 2,778 20,096 348 464 184 Option NE 5 13 6,738 83,156 1,561 2,079 929 Option NI 6 13 6,738 85,808 1,629 2,170 974 All Hispanic Option SE 2 4 4,805 31,388 551 789 276 Option SI/SC/SCR 2 5 5,116 35,314 626 895 314 Option SN 2 5 5,222 36,666 652 932 327 Option CE 1 3 3,902 24,102 423 606 210 Option CI 2 4 4,234 27,352 484 692 240 Option NE 8 19 12,361 115,160 2,133 3,053 1 ,213 Option NI 8 20 12,362 118,593 2,227 3,187 1 ,272 Non-Hispanic Native American or Alaskan Indian Option SE 0 0 108 942 17 23 10 Option SI/SC/SCR 0 0 117 1,075 19 26 11 Option SN 0 0 120 1,121 20 27 12 Option CE 0 0 87 727 13 17 7 Option CI 0 0 97 837 15 20 9 Option NE 0 1 267 3,334 62 84 41 Option NI 0 1 267 3,450 65 88 43 Non-Hispanic Other Race Option SE 1 2 1,566 13,301 201 289 127 Option SI/SC/SCR 1 2 1,675 14,870 226 325 143 Option SN 1 2 1,712 15,412 235 337 149 Option CE 1 1 1,265 10,149 154 222 97 Option CI 1 1 1,377 11,446 175 250 109 Option NE 3 8 3,345 48,665 793 1,142 566 Option NI 3 8 3,345 50,085 825 1,187 592 Option SCR is the proposed option.

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### 5157 Table 6-2: Number of Cases Avoided by Income Population (Average Number of Cases Avoided Per Year of Regulation)

Analytical Option Cancer Eye Irritation Asthma Fertility Lower Higher Lower Higher Lower Higher
Number of Cases Avoide d in Typical Year
All Individuals Option SE 9 21 22,133 170,214 2,469 3,416 1,501 Option SI/SC/SCR 10 24 23,650 191,590 2,799 3,864 1,696 Option SN 11 25 24,154 198,950 2,915 4,019 1, 765 Option CE 7 16 18,015 130,720 1,899 2,627 1 ,144 Option CI 8 19 19,563 148,389 2,166 2,988 1 ,301 Option NE 39 92 58,492 626,726 9,554 13,235 6,5 66 Option NI 40 97 58,494 645,678 9,968 13,800 6,8 74 Individuals Living Above Poverty Line Option SE 8 18 17,551 142,637 1,997 2,743 1,223 Option SI/SC/SCR 9 20 18,682 160,241 2,260 3,095 1,378 Option SN 9 21 19,056 166,305 2,352 3,217 1 ,433 Option CE 6 14 14,341 109,557 1,536 2,108 933 Option CI 7 15 15,517 124,097 1,748 2,392 1 ,057 Option NE 33 77 48,806 530,167 7,758 10,677 5,3 59 Option NI 34 80 48,808 545,677 8,086 11,117 5,6 01 

### Individuals Living Below Poverty Line Option SE 1 4 4,551 27,046 442 631 278 Option SI/SC/SCR 2 4 4,935 30,750 506 721 318 Option SN 2 4 5,064 32,023 528 752 332 Option CE 1 3 3,647 20,756 341 486 211 Option CI 1 3 4,017 23,829 392 558 243 Option NE 6 15 9,641 94,701 1,683 2,397 1,207 Option NI 6 16 9,642 98,084 1,766 2,514 1,274 Option SCR is the proposed option. 

### 5158

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### Table 6-3: Summary of Number of Cases Avoided by Race and Ethnicity

Analytical Option Population Affected (thousands) Population Affected as Percent

of Total Affected Population Total Lower Estimates of Cases Avoided Total Higher Estimate of Cases Avoided Percentage of Total Cases

Avoided Lower Estimate Percentage of Total Cases

Avoided Higher Estimate All Individuals Option SE

106,057 100.0% 26,112 175,152 100% 100% Option SI/SC/SCR 28,156 197,175 100% 100% Option SN 28,844 204,759 100% 100% Option CE 21,066 134,508 100% 100% Option CI 23,037 152,696 100% 100% Option NE 74,650 646,619 100% 100% Option NI 75,378 666,449 100% 100% Non-Hispanic White Option SE

69,169 65.2% 14,693 104,135 56.3% 59.5% Option SI/SC/SCR 15,847 117,339 56.3% 59.5% Option SN 16,230 121,885 56.3% 59.5% Option CE 11,895 80,090 56.5% 59.5% Option CI 12,985 90,989 56.4% 59.6% Option NE 44,625 387,157 59.8% 59.9% Option NI 45,022 398,957 59.7% 59.9% Non-Hispanic Black Option SE

12,540 11.8% 3,756 23,865 14.4% 13.6% Option SI/SC/SCR 4,059 26,855 14.4% 13.6% Option SN 4,163 27,885 14.4% 13.6% Option CE 3,010 18,275 14.3% 13.6% Option CI 3,310 20,746 14.4% 13.6% Option NE 9,233 86,177 12.4% 13.3% Option NI 9,347 88,966 12.4% 13.3% Non-Hispanic Other Race Option SE

7,381 7.0% 1,896 13,720 7.3% 7.8% Option SI/SC/SCR 2,045 15,340 7.3% 7.8% Option SN 2,096 15,900 7.3% 7.8% Option CE 1,516 10,468 7.2% 7.8% Option CI 1,662 11,807 7.2% 7.7% Option NE 4,707 50,381 6.3% 7.8% Option NI 4,765 51,873 6.3% 7.8% Non-Hispanic Native American or Alaskan Indian Option SE

652 0.6% 134 975 0.5% 0.6% Option SI/SC/SCR 148 1,112 0.5% 0.6% Option SN 152 1,160 0.5% 0.6% Option CE 108 752 0.5% 0.6% Option CI 120 866 0.5% 0.6% Option NE 369 3,459 0.5% 0.5% Option NI 375 3,582 0.5% 0.5% All Hispanic Option SE

16,318 15.4% 5,633 32,458 21.6% 18.5% Option SI/SC/SCR 6,057 36,528 21.5% 18.5% Option SN 6,203 37,930 21.5% 18.5% Option CE 4,537 24,922 21.5% 18.5% Option CI 4,960 28,288 21.5% 18.5% Option NE 15,715 119,444 21.1% 18.5% Option NI 15,869 123,071 21.1% 18.5% Option SCR is the proposed option. 

### 5159

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### Table 6-4: Summary of Number of Cases Avoided by Income

Analytical Option Population Affected (thousands) Population Affected as Percent of Total Affected Population Total Lower Estimates of Cases Avoided Total Higher Estimate of Cases Avoided Percentage of Total Cases

Avoided Lower Estimate Percentage of Total Cases

Avoided Higher Estimate

All Individuals Option SE

106,057 100.0% 26,543 175,572 100% 100% Option SI/SC/SCR 28,611 197,670 100% 100% Option SN 29,307 205,281 100% 100% Option CE 21,440 134,798 100% 100% Option CI 23,438 153,049 100% 100% Option NE 75,298 648,430 100% 100% Option NI 76,026 668,305 100% 100% Individuals Living Below Poverty Line Option SE

13,081 12.3% 5,211 27,891 20.3% 16.0% Option SI/SC/SCR 5,683 31,722 20.5% 16.1% Option SN 5,843 33,038 20.6% 16.2% Option CE 4,156 21,400 20.0% 15.9% Option CI 4,599 24,574 20.2% 16.1% Option NE 12,108 98,058 16.8% 15.2% Option NI 12,229 101,607 16.8% 15.3% Individuals Living Above Poverty Line Option SE

92,631 87.3% 20,459 146,312 79.5% 83.7% Option SI/SC/SCR 21,939 164,406 79.3% 83.6% Option SN 22,435 170,640 79.2% 83.5% Option CE 16,609 112,349 79.8% 83.7% Option CI 18,070 127,285 79.5% 83.5% Option NE 59,846 545,209 83.0% 84.5% Option NI 60,307 561,338 83.0% 84.4% Option SCR is the proposed option. 

### 5160
5161 Table 6-5 presents a summary of benefits for minority populations. Benefits estimates are 5162 presented, for each analytical option, in both totals for each envir onmental justice population group and 5163 then as estimates for individuals within that group. As with the total benefits analysis for this rule, a 5164 range of estimates is presented: from lower to highe r. Estimates are reported in 2010 dollars, annualized 5165 at a 3% rate. Results indicate that disaggregation of total benefits by population groups leads to variation 5166 in the range of individual benefits, by minority populati on. The population of all individuals affected by 5167 the rule shows the same estimates reported in the tota l benefits analysis; annualized benefits ranging from 5168 $162 to $289 million for the options with emissions standards that are consistent with the statute, and 5169 $1.53 to $2.73 per individual. The affected Non- Hispanic White population accounted for 65 percent of 5170 the total affected population, accrue d 54 percent of the total annualized benefits, and experienced average 5171 annualized benefits ranging from $1.26 to $2.25 per in dividual. In comparison, benefits for minority 5172 populations are higher. Minority populations represent a bout 35 percent of the individuals affected by the 5173 rule and are estimated to accrue about 46 percent ofthe proposed rule’s total benefits. The affected Non5174 Hispanic Black population accounted for 12 percent of the total affected population, accrued 15 to 16 5175 percent of the total annualized be nefits, and experienced average an nualized benefits ranging from $2.05 5176 to $3.49 per individual. The affected Hispanic popul ation accounted for 15 percent of the total affected 5177 population, accrued 22 percent of the total annuali zed benefits, and experienced average annualized 5178 benefits ranging from $2.17 to $3.94 per individual. The affected Non-Hispanic Native American or 5179 Alaskan Indian population accounted for 0.6 percent of the total affected population, accrued 0.7 percent 5180

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### of the total annualized benefits, and experienced av erage annualized benefits ranging from $1.66 to $2.93 5181 per individual. 5182 5183 Following the Census methodology, low-income families are identified in this analysis as 5184 having annual incomes below the poverty threshold. The poverty threshold, as determined by the U.S. 5185 Census Bureau, varies by family size, age, and composition and is adjusted for inflation. 5186 5187 Table 6-6 presents a summary of benefits for lo w-income populations. As with the total benefits 5188 analysis for this rule, a range of estimates is presen ted: from lower to higher. Estimates are reported in 5189 2010 dollars, annualized at a 3% rate. Results indicat e that disaggregation of total benefits by population 5190 groups leads to variation in the range of individual benefits, by income category. The population of all 5191 individuals affected by the rule shows the same estimates reported in the total benefits analysis; 5192 annualized benefits ranging from $162 to $289 million for the options with emissions standards that are 5193 consistent with the statute, and $1.53 to $2.73 per individual. The affected low-income population 5194 accounted for 12 percent of the total affected populat ion, accrued 18 percent of the total annualized 5195 benefits, and experienced average annualized benefits ranging from $2.17 to $3.99 per individual. 5196 5197 This Environmental Justice analysis shows sli ghtly larger individual benefits for affected 5198 minority and low-income population groups (see Table 6-7). Minority populations represent 35 percent of 5199 the individuals affected by the rule and are estimated to accrue 46 percent of the proposed rule’s total 5200 benefits. Individuals living below the poverty line represent 12 percent of the individuals affected by the 5201 rule and are estimated to accrue 15 to 16 percent of the proposed rule’s total benefits. Given these 5202 results, EPA has determined that this proposed ru le will not have dispropor tionally high and adverse 5203 human health or environmental effects on any pop ulation, including any minority or low-income 5204 population. These proposed standards would reduce emissions of formaldehyde from composite wood 5205 products for all populations that are exposed, with sli ghtly larger benefits for individuals from minority or 5206 low-income affected populations. 5207 5208

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### Table 6-5: Summary of Benefits by Race and Ethnicity (annualized at 3% rate)

Analytical Option Population Affected (thousands) Population Affected as Percent

of Total Affected Population Total Benefits Lower Estimate (millions 2010$ or percent of total) Total Benefits Higher Estimate (millions 2010$ or percent of total) Total Benefits per Affected Individual

Lower Estimate

(in dollars) Total Benefits per Affected Individual

Higher Estimate (in dollars) All Individuals Option SE

106,057 100.0% $162 $245 $1.53 $2.31 Option SI/SC/SCR $184 $278 $1.74 $2.62 Option SN $192 $289 $1.81 $2.73 Option CE $125 $188 $1.18 $1.77 Option CI $142 $214 $1.34 $2.02 Option NE $639 $970 $6.02 $9.15 Option NI $667 $1,013 $6.29 $9.55 Non-Hispanic White Option SE

69,169 65.2% 53.5% 53.7% $1.26 $1.90 Option SI/SC/SCR 53.6% 53.8% $1.43 $2.16 Option SN 53.6% 53.8% $1.49 $2.25 Option CE 53.6% 53.8% $0.97 $1.46 Option CI 53.7% 53.8% $1.11 $1.67 Option NE 53.3% 53.6% $4.93 $7.52 Option NI 53.3% 53.6% $5.14 $7.85 Non-Hispanic Black Option SE

12,540 11.8% 15.9% 15.1% $2.05 $2.96 Option SI/SC/SCR 15.8% 15.1% $2.32 $3.35 Option SN 15.8% 15.1% $2.42 $3.49 Option CE 15.8% 15.1% $1.57 $2.26 Option CI 15.8% 15.1% $1.79 $2.58 Option NE 16.0% 15.2% $8.14 $11.77 Option NI 16.0% 15.2% $8.49 $12.29 Non-Hispanic Other Race Option SE

7,381 7.0% 8.1% 8.3% $1.78 $2.76 Option SI/SC/SCR 8.0% 8.3% $2.01 $3.11 Option SN 8.0% 8.2% $2.09 $3.23 Option CE 8.1% 8.3% $1.36 $2.11 Option CI 8.0% 8.2% $1.55 $2.39 Option NE 8.2% 8.5% $7.14 $11.12 Option NI 8.2% 8.4% $7.43 $11.57 Non-Hispanic Native American or Alaskan Indian Option SE

652 0.6% 0.7% 0.6% $1.66 $2.43 Option SI/SC/SCR 0.7% 0.7% $1.92 $2.80 Option SN 0.7% 0.7% $2.01 $2.93 Option CE 0.7% 0.7% $1.28 $1.88 Option CI 0.7% 0.7% $1.49 $2.17 Option NE 0.6% 0.6% $6.29 $9.27 Option NI 0.6% 0.6% $6.62 $9.74 All Hispanic Option SE

16,318 15.4% 21.8% 22.2% $2.17 $3.33 Option SI/SC/SCR 21.9% 22.2% $2.47 $3.78 Option SN 21.9% 22.2% $2.57 $3.94 Option CE 21.8% 22.1% $1.67 $2.55 Option CI 21.9% 22.2% $1.91 $2.92 Option NE 21.8% 22.1% $8.53 $13.12 Option NI 21.8% 22.1% $8.91 $13.71 Option SCR is the proposed option. 

### 5209

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### 5210 Table 6-6: Summary of Benefits by Po verty Status (annualized at 3% rate)

Analytical Option Population Affected (thousands) Population Affected as Percent of Total Affected Population Total Benefits Lower Estimate (millions 2010$ or percent of total) Total Benefits Higher Estimate (millions 2010$ or percent of total) Total Benefits per Affected Individual Lower Estimate

(in dollars) Total Benefits per Affected Individual Higher Estimate (in dollars) All Individuals Option SE

106,057 100.0% $162 $245 $1.53 $2.31 Option SI/SC/SCR $184 $278 $1.74 $2.62 Option SN $192 $289 $1.81 $2.73 Option CE $125 $188 $1.18 $1.77 Option CI $142 $214 $1.34 $2.02 Option NE $639 $970 $6.02 $9.15 Option NI $667 $1,013 $6.29 $9.55 Individuals Living Below Poverty Line Option SE

13,081 12.3% 17.5% 17.8% $2.17 $3.33 Option SI/SC/SCR 17.7% 18.0% $2.49 $3.82 Option SN 17.7% 18.0% $2.60 $3.99 Option CE 17.5% 17.8% $1.67 $2.56 Option CI 17.7% 18.0% $1.93 $2.95 Option NE 17.2% 17.4% $8.38 $12.90 Option NI 17.3% 17.5% $8.80 $13.55 Individuals Living Above Poverty Line Option SE

92,631 87.3% 81.4% 81.1% $1.43 $2.15 Option SI/SC/SCR 81.3% 80.9% $1.62 $2.43 Option SN 81.2% 80.9% $1.68 $2.53 Option CE 81.4% 81.1% $1.10 $1.64 Option CI 81.2% 80.9% $1.25 $1.87 Option NE 81.8% 81.5% $5.64 $8.54 Option NI 81.7% 81.4% $5.88 $8.90 Option SCR is the proposed option.
The number of individuals above and below the poverty line does not sum to the total number of individuals because poverty stat us could
not be determined for some individuals. 

### 5211 Table 6-7: Summary of Benefits by Race, Ethnici ty, and Poverty Status under the Proposed Option (annualized at 3% rate)

Population Affected Population Affected (thousands) Population Affected as Percent of Total Affected

Population Total Benefits Lower Estimate (millions 2010$) Total Benefits Higher Estimate (millions 2010$) Total Benefits Lower Estimate (% of total

affected population) Total Benefits Higher Estimate (% of total

affected population) All Individuals 106,057 100% $184 $278 100.0% 100.0% Minority Race/Ethnicity 36,888 35% $86 $128 46.4% 46.2% Poverty Status 13,081 12% $28 $44 15.4% 15.7% 

### 5212

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### Table 6-8: Summary of Number of Cases Avoided by Race, Ethnicity, and Poverty Status under the Proposed Option (annualized at 3% rate)

Population Affected Cancer Eye Irritation Asthma Fertility Total 

### lower higher lower higher lower higher lower higher
Number of Cases Avoided All Individuals 10 24 23,650 191, 590 2,799 3,864 1,696 28,156 197,175 Minority Race/Ethnicity 4 10 10,275 77,271 1,322 1,847 708 12,309 79,836 Poverty Status 2 4 4,935 30,750 506 721 318 5,761 31,793 

### 5213

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## 6.2 Employment Impact Analysis 5214 5215 While a standalone analysis of employment impa cts is not included in a standard cost-benefit 5216 analysis 61 

### , such an analysis is of particular concern in the current economic climate of sustained levels of 5217 high unemployment. Executive Order 13563, states, “Our regulatory system must protect public health, 5218 welfare, safety, and our environment while promoting economic growth , innovation, competitiveness, and 5219 job creation ” (emphasis added). For this rule, EPA presents a qualitative assessment of the potential for 5220 employment impacts in the short and long term for pr oducers, fabricators, distributors, and retailers of 5221 composite wood products a nd goods made from them. 5222 5223 An environmental regulation can be understood as an increase in demand for a particular output: 5224 environmental quality. Meeting this new demand can result in increased demand for the various factors 5225 of production (including labor) available to the econo my. However, regulated sectors generally have to 5226 rely on revenues generated by their other (market) outputs to cover the costs of satisfying society's 5227 increased demand for environmental quality. This incr ease in the costs can lead to reduced demand by 5228 regulated sectors for labor and other factors of producti on. The net effect of an environmental regulation 5229 on employment in the regulated sectors and the overa ll economy is therefore indeterminate. The costs 5230 imposed on directly regulated sectors may affect thei r competitive position and put some specific jobs at 5231 risk. At the same time, environmental regulations may create jobs in other sectors, e.g. in the 5232 environmental protection sector. Tracing out these opposing effects against the temporal dynamics of 5233 labor markets is complex and makes deriving estimat es of how regulations will impact economy-wide net 5234 employment a difficult task. 5235 5236 Adding to this complexity, effects on employment are also likely to change over time. 5237 Employment in some sectors will be affected at th e time of promulgation or when a regulation becomes 5238 effective, while others will only be affected farthe r into the future. When the economy is at full 5239 employment, an environmental regulation is unlikely to have a considerable impact on long run net 5240 employment; instead, labor would primarily be reallo cated from one productive use to another, e.g. from 5241 producing electricity or steel to producing pollution abatement equipment. Theory and peer-reviewed 5242 published empirical evidence support the argument that, in the case of full employment, the net 5243 employment effects from environmental regulation are likely to be small and transitory even in the 5244 regulated sector and therefore would have an imperceptible impact on the macro economy. 62 

### 5245 5246 On the other hand, Schmalansee and Stavins (2 011) point out that positive net employment 5247 effects are possible in the near term, during a period of sustained unemployment, due to the potential 5248 hiring of previously unemployed workers by the regulat ed sector to help meet new requirements (e.g., to 5249 install new equipment) or by the environmental prot ection sector to produce new abatement capital. On 5250 the other hand, it is also theoretically possible to ha ve near term negative net employment effects. For 5251 example, during periods of sustained high unemplo yment it may take workers displaced by regulations 5252 longer to find alternative employment. In the longer term, the net effect on employment is more difficult 5253 to predict and will depend on the way in which the related industries respond to the regulatory 5254 requirements and whether the labor market remains in sustained disequilibrium or returns to full 5255 employment. There are also significant methodological challenges in assessing the net employment 5256 impacts when the economy is not at full employment. Fo r example, the opportunity cost of labor is more 5257 difficult to assess, labor demand caused by an envi ronmental regulation may have positive external 5258 effects (the unemployment rate is reduced as workers are hired), and reductions in labor may give rise to 5259

61 Except to the extent that labor costs are part of total costs in a benefit cost analysis.
62 See Berman and Bui 2001, Morgenstern, et al. 2002.

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### negative external effects (as higher unemployment ra tes can be associated with longer durations of 5260 unemployment). 5261 5262 Section 6.2.1 discusses the qualitative assessment of immediate and short term impacts. Section 5263 6.2.2 describes longer term impacts, focusing primarily on annual, or ongoing, employment impacts in the 5264 regulated sectors. 5265 5266 6.2.1 Immediate and Short Term Employment Impacts 5267 5268 There are a number of initial activities that firms may need to perform to comply with this rule, 5269 depending on the type of firm (pan el producer, fabricator, wholesaler, or retailer) and their baseline status. 5270 In the short term these activities include: 5271 5272 Rule Familiarization: Firms will need to read the rule in order to understand the requirements; 5273 5274 Testing and Certification: Panel producers will need to perfo rm formaldehyde emission testing on 5275 their composite wood products and attain certifi cation from an accredited TPC. These entities must 5276 undergo qualifying tests at a TPC lab, obtain an on-site audit from a TPC, implement quality control 5277 systems, and train quality control employees in order to receive initial certification; 5278 5279 Recordkeeping : Some firms will need to revise their recor dkeeping systems in order to comply with 5280 the chain of custody requirements in the rule; and 5281 5282 Labeling : Firms that package or repackage composite wood products or finished goods containing 5283 composite wood products will need to modify their la bels to include their name, the date the finished 5284 good was produced, and a statement of compliance. 5285 5286 Furthermore, some panel producers may need to change their production processes and raw 5287 materials in order to meet the emission levels required by the rule or to achieve NAF certification. Some 5288 panel producers may choose to install an on-site lab fo r quality control testing, so that they can receive 5289 test results (and thus ship tested lots ) quicker than if they hired an off-site lab to perform the testing. And 5290 some laminators may choose to switch to NAF resins in order to avoid being considered a panel producer 5291 under the rule. 5292 5293 The average first year cost per firm is shown in Table 6-9. There will be a range of actual costs 5294 incurred, depending on such factors as whether or not the firm is in compliance with the CARB ATCM in 5295 the baseline; whether or not the firm’s existing reco rdkeeping systems are suffici ent to comply with the 5296 rule’s chain of custody requirements; the size and comp lexity of the firm’s operations; and whether or not 5297 a laminator uses NAF resins and compliant platform s (and thus whether it is considered a platform 5298 producer or a fabricator under the rule). However, for the sectors with the largest number of firms 5299 affected by the rule (fabricators, wholesalers, and retaile rs), the average cost per firm in the first year is 5300 relatively modest, and is unlikely to create significant em ployment effects. To the extent that firms in 5301 these industries have costs that are significantly above average, they will typically be larger firms that 5302 have additional resources to comply with the rule’s requirements. 63 

### 5303 5304 Costs per firm are higher for panel producers and laminators. Costs are likely to be the highest 5305 for stock panel producers that are not CARB certifie d in the baseline, and for laminators that are 5306

63 The average employer firms in the affected fabricator, whol esale, and retail industries ha ve 26, 17, and 32 employees per firm, respectively.

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### considered panel producers. The average number of employees in employer firms in the affected NAICS 5307 codes is 38 employees per firm for stock panel prod ucers and 26 employees per firm for laminators. 5308 However, there are only 11 stock panel producers in th e U.S. that are not CARB certified for any of their 5309 products and another 5 that are CARB certified for some but not all of their products. While the analysis 5310 assumes that 150 to 277 U.S. laminato rs will be considered panel producers because they will continue to 5311 use NAF resins, information is not cu rrently available to indicate the particular industries such firms are 5312 likely to be in, the specific types of products they make, their firm sizes or production volumes, or other 5313 characteristics that would provide insights into how their employment might be affected by the rule. 5314 5315 Table 6-9: Average First Year Co st per Firm for Affected Firms

Type of Firm Total First Year Cost ($ million) Number of Firms Average First Year Cost per Firm Low End Scenario High End Scenario Low End Scenario High End Scenario Low End Scenario High End Scenario
Stock Panel Producers $3 $3 62 62 $48,387 $48,387

Laminators 1 $55 $102 7,486 13,875 $7,347 $7,351

Fabricators $91 $57 72,215 65,826 $1,260 $866

Wholesalers $71 $71 85,560 85,560 $830 $830

Retailers $215 $215 759,048 759,048 $283 $283

1 Costs to laminators represent the costs to all firms th at affix a wood or woody grass veneer to a purchased particleboard, MDF or veneer core plat form. This includes both laminators that use NAF resins to affix veneer to a compliant platform (that are considered to be fabricators under the proposed rule), and laminators that do not use NAF resins (that are considered panel producer s under the proposed rule). Low and high end scenarios reflect the estimated number of laminators and the number of product lines certified per firm, not the low and high costs for each category of entities. 

### 5316 6.2.2 Longer Term Employment Impacts 5317 5318 Determining the direction of ongoing employment e ffects in the regulated industry, in the longer 5319 term, is challenging due to competing effects. Co mplying with the new or more stringent regulation 5320 requires additional inputs, including labor, and may a lter the relative proportions of labor and capital used 5321 by regulated firms in their production processes. Mo rgenstern, Pizer and Shih (2002) demonstrate that 5322 environmental regulations can be understood as requiring regulated firms to add a new output 5323 (environmental quality) to their product mixes. A lthough legally compelled to satisfy this new demand, 5324 regulated firms have to finance this additional pr oduction with the proceeds of sales of their other 5325 (market) products. Satisfying this new demand requires additional inputs, including labor, and may alter 5326 the relative proportions of labor and capital used by regulated firms in their production processes. 5327 5328 More specifically, Morgenstern, Pizer, and Shih ( 2002) decompose the effect of regulation on net 5329 employment in the regulated sector into the following three subcomponents: 5330 5331

 

### The Demand Effect : higher production costs from complyi ng with the regulation will raise 5332 market prices in regulated industries, reduci ng consumption (and production) of their output, 5333 thereby reducing demand for labor within the regul ated industry. The “extent of this effect 5334 depends on the cost increase passed on to consumers as well as the demand elasticity of 5335 industry output” (p. 416). 5336 5337

 

### The Cost Effect : Assuming that the capital/labor ratio in the production process is held fixed, 5338 as “production costs rise, more inputs, including labor, are used to produce the same amount 5339 of output,” (p. 416). For example, to reduce po llutant emissions while holding output levels 5340 constant, regulated firms may require additional labor. 5341 5342

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###  

### The Factor-Shift Effect : Regulated firms’ production technologies may be more or less labor 5343 intensive after complying with the regulation (i.e., more or l ess labor is required relative to 5344 capital per dollar of output). “Environmental activities may be more labor intensive than 5345 conventional production,” meaning that “the amount of labor per dollar of output will rise.” 5346 However, activities may, instead, be less labor intensive because “cleaner operations could 5347 involve automation and less employment, for example” (p. 416). 5348 5349 The demand effect is expected to have an unamb iguously negative effect on employment, the cost 5350 effect to have an unambiguously positive effect on em ployment, and the factor-shift effect to have an 5351 ambiguous effect on employment. Without more info rmation with respect to the magnitudes of these 5352 competing effects, it is not possible to predict the total effect an environmen tal regulation will have on 5353 overall employment levels in the regulated sector. Ho wever, regulations that impose smaller costs at the 5354 firm level are less likely to create noticeable net empl oyment impacts (whether positive or negative) than 5355 regulations with more significant cost impacts. 5356 5357 Morgenstern et al. estimated the effects of pol lution abatement expenditures on net employment 5358 in four highly polluting/regulated sect ors (pulp and paper, plastics, steel, and petroleum refining). They 5359 conclude that increased abatemen t expenditures generally have not caused a significant change in net 5360 employment in those sectors. More specifically, th eir results show that, on average across the industries 5361 studied, each additional $1 million (1987$) spent on pollution abatement results in a (statistically 5362 insignificant) net increase of 1.5 jobs. While the specific sectors Morgenstern et al. examined are 5363 different than the sectors considered here, the methodol ogy that Morgenstern et al. developed is still an 5364 informative way to qualitatively assess the effects of this rulemaking on employment in the regulated 5365
sector. 5366 5367 The activities required for compliance with the ru le in the longer term include the following: 5368 5369 Testing and Certification: Once certified, a panel producer is required to conduct on-going small 5370 scale quality control testing, submit reports to the certifying TPC, and receive on-site audits and large 5371 chamber testing to maintain its certified status; 5372 5373 Recordkeeping : Firms that import, produce, or manufacture composite wood products must keep 5374 records showing the date of purchase of the compos ite wood product, the supp lier, and all precautions 5375 taken to ensure that the product meets emissions standards; and 5376 5377 Labeling: Firms that package or repackage composite wood products or finished goods containing 5378 composite wood products will need to modify their la bels to include their name, the date the finished 5379 good was produced, and a statement of compliance. 5380 5381 Furthermore, panel producers and laminators that ch anged their raw materials inputs will continue to 5382 use the alternative materials. 5383 5384 The average subsequent year cost per firm is s hown in Table 6-10. Costs in subsequent years are 5385 less than the cost in the first year. There will be a range of actual costs incurred, based on the factors 5386 described above for the first year costs. As with th e first year costs, the average cost per firm for the 5387 sectors with the largest number of firms affected by the rule (fabricators, wholesalers, and retailers), is 5388 relatively modest and is unlikely to create significant employment effects for a typical firm. Costs per 5389 firm are higher for panel producers and laminators, pa rticularly for stock panel producers that are not 5390 CARB certified in the baseline, and for laminato rs that are considered panel producers. 5391 5392

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### Table 6-10: Average Subsequent Year Cost per Firm for Affected Firms

Type of Firm Total Subsequent Year Cost ($ million per year) Number of Firms Average Subsequent Year Cost per Firm Low End Scenario High End Scenario Low End Scenario High End Scenario Low End Scenario High End Scenario
Stock Panel Producers $2 $2 62 62 $32,258 $32,258

Laminators 1 $17 $30 7,486 13,875 $2,271 $2,162

Fabricators $24 $20 72,215 65,826 $332 $304

Wholesalers $14 $14 85,560 85,560 $164 $164

Retailers - - 759,048 759,048 - -0

1 Costs to laminators represent the costs to all firms th at affix a wood or woody grass veneer to a purchased particleboard, MDF or veneer core plat form. This includes both laminators that use NAF resins to affix veneer to a compliant platform (that are considered to be fabricators under the proposed rule), and laminators that do not use NAF resins (that are considered panel producer s under the proposed rule). Low and high end scenarios reflect the estimated number of laminators and the number of product lines certified per firm, not the low and high costs for each category of entities. 

### 5393 There are several reasons that the estimates from Morgenstern et al. cannot reasonably be applied 5394 in this setting to estimate the employment impacts of th is rule. First, the industries regulated by this rule 5395 are not among the four sectors analyzed by Morgenstern et al, and they are different enough in structure 5396 that estimates would not be directly comparable to the pulp and paper industry that was included in the 5397 study. Also, Morgenstern et al. focused on pollution ab atement costs rather than the types of certification, 5398 testing, chain of custody, and labeling required by this rule. Finally, the lack of published, peer-reviewed 5399 research on employment impacts from environmental regulation on the composite wood industry limits 5400 the ability to defensibly estimate employment im pacts of emission standards for composite wood 5401 products. 5402 5403 The three effects described by Morgenstern, Pizer, and Shih can be described for this rule, but the 5404 magnitudes cannot be estimated. Affected firms will face higher costs to produce and sell their products, 5405 as certification, quality control procedures, and/or r ecordkeeping are required for compliance. Economic 5406 theory, outlined by Morgenstern et al., suggests that the demand effect will have a negative impact on 5407 employment in the regulated sector. As firms face higher costs of production, market prices for outputs 5408 will rise and consumer demand will d ecline, reducing the quantity produced. But the size of the demand 5409 effect cannot be quantified in this case because inform ation about cost pass through to consumers is not 5410 available for the regulated sectors. The cost effect reflects the increase in employment required for firms 5411 to continue producing the same amount of output as prior to the regulation but without elasticity 5412 information for the markets affect ed by the rule, it is not possible to determine how production may 5413 change. The factor shift effect may be positive if quality control, recordkeeping, and other measures 5414 required by the rule are more labor-intensive than th e firms’ ordinary operations , but the relative labor 5415 intensity is not known. Because the magnitude of these three effects is not known, the net impact on 5416 employment cannot be estimated. 5417 5418 5419 6.2.3 Summary of Employment Impacts 5420 5421 The theoretical model developed in Morgenstern et al. cannot predict the net employment 5422 impacts in the regulated sectors due to the competing effects: the demand effect is negative, the cost 5423 effect is positive, and the factor shift effect is ambiguous. Therefore the overall effect is ambiguous. 5424 Because information is not available on the magnitude of each component effect, the overall net effect on 5425 employment cannot be determined. For example if th ere were two negative effects (assumes the factor5426 shift effect is negative) and one positive effect th e positive effect might dominate both negative effects, 5427

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### depending on their magnitudes, so the overall net e ffect depends on the magnitude of the competing 5428 effects. 5429 5430 Other uncertainties that characteriz e this analysis include: uncerta inties about firms’ adjustments 5431 of capital and labor in response to the regulation (f actor shift effect); uncertainties regarding labor 5432 intensities of different equipment and choice of resin types to comply with the standards; uncertainties 5433 about the types of technologies that may be used for quality control programs; uncertainty about how 5434 relative market shares of domestic production of co mposite wood products vers us imports may change 5435 over time; and uncertainties about how demand for composite wood products is affected by business 5436 cycle fluctuations. 5437 5438 Given the current level of unemployment, net positive employment effects are possible, 5439 especially in the near term, due to the potential hiri ng of idle labor resources by the regulated sector to 5440 plan for and meet new requirements. In the future , when full employment is expected to return, any 5441 changes in employment levels in the regulated sector due to this program are expected to be mostly offset 5442 by employment changes in other sectors. 5443 5444

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## 6.3 Paperwork Burden Analysis 5445 5446 This section presents a summary of the burden an d associated costs for the respondents associated 5447 with the recordkeeping and reporting requirements of the proposed TSCA Title VI Implementation Rule. 5448 The detailed paperwork burden analysis is presen ted in the information collection request (ICR) 5449 supporting statement for this proposed rulemaking. It provides the average annual burden and cost 5450 estimates for the next three years of the program. 5451 5452 The paperwork burden and associated costs include th e activity types listed below. Note that not 5453 all entities will incur burden or costs from these ac tivities because they may already be meeting the 5454 requirements under the CARB ATCM and/or their existing recordkeeping and labeling systems may 5455 already be sufficient. 5456 5457

 Rule Familiarization: All respondents will need to read the rule in order to understand 5458 the requirements; 5459

 Testing and Certification: All composite panel producers will need to perform 5460 formaldehyde emission testing on their com posite wood products and attain certification 5461 from an accredited TPC. These entities must undergo qualifying tests at a TPC lab, 5462 obtain an on-site audit from a TPC, implement quality control systems, and train quality 5463 control employees in order to receive initial certification. Once certified, a mill is 5464 required to conduct on-going small scale qualit y control testing, submit monthly reports 5465 to the certifying TPC, and receive quarterly on -site audits and large chamber testing to 5466 maintain its certified status. Mills that produ ce products made with NAF resins that meet 5467 more stringent emissions limits may apply for exemptions from some of the on-going 5468 testing requirements; 5469

 Recordkeeping : Firms that import, produce, or manufacture composite wood panels, 5470 component parts, or finished goods are required to keep records showing the date of 5471 purchase of the composite wood product, the s upplier, and all precautions taken to ensure 5472 that the product meets emissions standards. Wholesalers and retailers that do not import, 5473 produce, or manufacture composite wood panels, component parts, or finished goods are 5474 required to maintain invoices and bills of lading; and 5475

 Labeling: Firms that package or repackage composite wood products or finished goods 5476 containing composite wood produc ts will need to modify their labels to include their 5477 name, the date the finished good was produced, and a statement of compliance. 5478 5479 Note that the paperwork burden analysis in the ICR treats some baseline burdens and costs 5480 differently from the cost analysis in Chapter 2 of this economic analysis. Neither analysis includes 5481 burdens or costs that were already performed to m eet the CARB ATCM requirements and will not need to 5482 be performed again to comply with the TSCA Title VI requirements. For example, both analyses assume 5483 that mills making product lines that have a standard certification 64 

### or a NAF certification under the CARB 5484 ATCM will not need to submit new data or resubmit exis ting data to their existing TPC in order to receive 5485 the equivalent certification under the TSCA Title VI regulations and therefore burdens and costs are not 5486 estimated for these activities. 5487 5488

64 The term standard certification is used here to describe a certification other than an ultra-low-emitting formaldehyde (ULEF) or NAF certification. The proposed rule does not provide for reduced testing frequencies for products made with ULEF resins, so mills that have a ULEF certification under the CARB ATCM will incur additional costs under the TSCA Title VI rule.

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### The cost analysis in Chapter 2 of this economic analysis calculates the in cremental cost of the 5489 TSCA Title VI rule. The incremental cost excludes the costs associated with activities performed in the 5490 baseline such as TPC audits at CARB certified panel producers, and recordkeeping at firms that sell 5491 products in California. The paperwork burden analysis in the ICR calculates the incremental burdens and 5492 costs of the rule, but it also calculates total burde n and costs including activities that are performed to 5493 comply with the CARB ATCM in the baseline. Furtherm ore, the cost analysis in Chapter 2 is limited to 5494 domestic entities, while the ICR considers the burden and cost to both domestic and foreign entities. 5495
5496 Table 6-11 presents the summary of the three year average incremental and total cost burden. 5497 The columns labeled total burden and total cost present the bottom line burden and cost for the ICR. The 5498 columns labeled incremental burden and incremental co st present the burdens and costs with the baseline 5499 assumptions that are consistent with the economic analys is in Chapter 2. Note that these burden and cost 5500 estimates differ slightly from those presented in Ch apter 2 because the unit burdens and costs are rounded 5501 slightly differently for the calculations. This is necessary because a different level of disaggregation is 5502 needed for the ICR supporting statement. (The ICR supporting statement calculates the costs at the 5503 activity level, while the cost analysis calculates th em at the establishment level.) In addition, costs 5504 associated with changes to production processes or ra w materials are not considered paperwork burden 5505 and therefore not included in the paperwork burden analysis. See the ICR supporting statement for a 5506 detailed description of how these calculations were performed. 5507 5508 Table 6-11: Summary of Three Year Average Incremental and Total Burden and Costs, by Geographic Location ($2010)

Respondent Type Number of Respondents Incremental Burden (excludes baseline burden) Incremental Cost (excludes baseline cost) Total Burden (includes baseline burden) Total Cost (includes baseline cost)
Domestic Producers 370 193,453 $21,680,292 221,328 $24,683,876
Fabricators 79,701 1,837,729 $62,701, 579 2,608,828 $81,855,678
Wholesalers 85,560 841,827 $32,656,187 1,156,087 $40,682,387
Retailers 759,048 1,011,963 $71,555, 904 1,011,963 $71,555,904
Total 924,679 3,884,972 $188,593, 962 4,998,206 $218,777,845 Foreign Producers 1,129 234,293 $25,977,529 $477,692 $53,971,653
Fabricators 31,083 716,285 $24,441,066 1,020,576 $31,999,655
Wholesalers 33,368 1,029,608 $33,513, 802 1,467,274 $44,691,791
Retailers
- - - - - Total 65,580 1,980,186 $83,932, 397 2,965,542 $130,663,099
Total Producers 1,499 427,744 $47,657,678 $699,020 $78,655,528
Fabricators 110,784 2,554,012 $87,142, 555 3,629,402 $113,855,243
Wholesalers 118,928 1,871,434 $66,169, 963 2,623,362 $85,374,204
Retailers 759,048 1,011,963 $71,555, 904 1,011,963 $71,555,904
Total 990,259 5,865,153 $272,526, 100 7,963,747 $349,440,879 

### 5509

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## 6.4 Unfunded Mandates Reform Act (UMRA) 5510 5511 Title II of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4, establishes requirements 5512 for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal 5513 governments, and the private sector. Under section 202 of the UMRA, EPA generally must prepare a 5514 written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” 5515 that might result in expenditures by State, local, and Tribal governments, in the aggregate, or by the 5516 private sector, of $100 million or more (when adjusted annually for inflation) in any one year. The 5517 proposed rule is not expected to affect state, lo cal, or Tribal governments because the proposed rule 5518 affects entities that manufacture, import, or sell composite wood products, and government entities are 5519 not engaged in these activities. 5520
5521

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## 6.5 Executive Order 13132 - Federalism 5522 5523 Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), directs federal 5524 agencies to consider whether a rule has federalism im plications (i.e. whether it has substantial direct 5525 effects on the states, on the relationship between the national government and the states, or on the 5526 distribution of power and responsibilities among the various levels of government, as specified in 5527 Executive Order 13132). 5528 5529 The proposed rule does not have any direct effects on states or local governments (individually or 5530 collectively), on the relationship between the national gove rnment and the states, or on the distribution of 5531 power and responsibilities among the va rious levels of government. No state or local governments are 5532 expected to engage in the import, manufacture, or sale of composite wood products, and thus state and 5533 local governments will not incur direct compliance cost s as a result of the rule. The rule does not preempt 5534 state or local law, and the rule is required by statute. 5535 5536

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## 6.6 Executive Order 13175 - Tribal Implications 5537 5538 Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments 5539 (59 FR 22951, November 6, 2000), directs federal agencies to consider whether a rule has tribal 5540 implications (i.e. whether it has substantial direct effects on tribal governments, on the relationship 5541 between the Federal government and the Indian tribes , or on the distribution of power and responsibilities 5542 between the Federal government and Indian tribes). No tribal government is expected to engage in the 5543 import, manufacture, or sale of composite wood pr oducts, and thus tribal governments will not incur 5544 direct compliance costs as a result of the rule. Th e rule does not change the relationship between the 5545 Federal government and Indian tribes, or change the distribution of power. 5546 5547

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## 6.7 Executive Order 13045 - Protection of Children 5548 5549 Under Executive Order 13045, a regulation must be reviewed if the regulatory action is 5550 economically significant and concerns an environm ental health risk or safety risk that may 5551 disproportionately affect children. This analysis show s that the per-child benefits from this proposed rule 5552 are substantially larger than the average benefit pe r person across individuals of all ages. As shown in 5553 Table 6-12, children under the age of two represent 5 pe rcent of the individuals affected by the rule and 5554 are estimated to accrue between 0.3 and 1.7 percent of the proposed rule’s total benefits. Children aged 5555 two through fifteen represent 19 percent of the individu als affected by the rule and are estimated to accrue 5556 about 75 percent of the proposed rule’s total benefits . These results are driven by the benefits associated 5557 with avoiding asthma incidence, which are only estim ated for children ages 6 through 17 for the lower 5558 benefits estimate and for children ages 2 through 17 fo r the higher benefits estimate. Given these results, 5559 EPA has determined that this proposed rule will not have disproportionally high and adverse human 5560 health or environmental effects on children. These proposed standards would reduce emissions of 5561 formaldehyde from composite wood products for individua ls of all ages that are exposed and children are 5562 likely to accrue higher benefits from the exposure reductions compared to adults. 5563 5564 Table 6-12: Summary of Benefits for Children Compared with All Individuals under the Proposed Option (annualized at 3% rate)

Population Affected Population Affected Annually (thousands) Population Affected as Percent of Total Affected

Population Total Benefits Lower Estimate (millions 2010$) Total Benefits Higher Estimate (millions 2010$) Total Benefits Lower Estimate (% of total

affected population) Total Benefits Higher Estimate (% of total

affected population) All Individuals 106,057 100.00% $184.31 $277.92 100.00% 100.00% Children ages 0-1 4,971 4.69% $0.47 $4.79 0.26% 1.72% Children ages 2-15 19,651 18.53% $136.95 $209.99 74.31% 75.56% 

### 5565 5566

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## 6.8 Executive Order 13211 - Energy Effects 5567 5568 Executive Order 13211, entitled Actions Concerning Re gulations that Significantly Affect Energy 5569 Supply, Distribution, or Use (66 FR 28355, May 22, 2001), directs federal agencies to identify actions 5570 that will have a significant adverse energy effect. Adverse effects are defined as: 5571 5572

 Reductions in crude oil supply in excess of 10,000 barrels per day; 5573

 Reductions in fuel production in excess of 4,000 barrels per day; 5574

 Reductions in coal production in excess of 5 million tons per year; 5575

 Reductions in natural gas production in excess of 25 million mcf per year; 5576

 Reductions in electricity production in excess of 1 billion kilowatt-hours per year or in excess of 5577 500 megawatts of installed capacity; 5578

 Increases in energy use required by the regulatory ac tion that exceed any of the thresholds above; 5579

 Increases in the cost of energy production in excess of one percent; 5580

 Increases in the cost of energy dist ribution in excess of one percent; or 5581

 Other similarly adverse outcomes. 5582 5583 The regulations under considerati on will not significantly reduce energy production nor significantly 5584 increase energy costs. 5585 5586

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## 6.9 National Technology Transfer and Advancement Act 5587 5588 Section 12(d) of the National Technology Transf er and Advancement Act of 1995 (“NTTAA”), 5589 Public Law No. 104-113 (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its 5590 regulatory activities unless to do so woul d be inconsistent with applicable law or otherwise impractical. 5591 Voluntary consensus standards are technical standa rds (e.g., materials specifications, test methods, 5592 sampling procedures, and business practices) that ar e developed or adopted by voluntary consensus 5593 standards bodies. 5594 5595 The proposed rule involves numerous technical standards, many of which EPA is directed to use 5596 by TSCA Title VI. Technical standards identified in the statute include the two quarterly test methods, 5597 ASTM E-1333-96 and ASTM D-6007-02, a quality cont rol test method, ASTM D-5582-00, and various 5598 standards that define specific composite wood pro ducts, such as ASTM D-5456-06 (Structural Composite 5599 Lumber Products), ASTM D-5055-05 (Prefabricated Wood I-Joists), ANSI A190.1 (Structural Glued 5600 Laminated Timber), ANSI/HPVA HP–1–2009 (Har dwood and Decorative Plywood), ANSI A208.2–2 5601 2009 (Medium Density Fiberboard), ANSI A208.1–2009 (Particleboard), PS-1-07 (Structural Plywood), 5602 and PS-2-04 (Wood-Based Structural-Use Panels). 5603 5604 The proposed rule also incorporates other voluntar y consensus standards that EPA has identified, 5605 including the standards that define hardboard ( ANSI A135.4, ANSI A135.5, and ANSI A135.6) and three 5606 alternative quality control test methods: EN 717-2 (gas analysis), EN 120 (perforator), and JIS A 1460 5607 (24-hour desiccator). 5608

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### U.S. Bureau of Labor Statistics. 2011b. Employer Costs for Emplo yee Compensation, Total 5809 Benefits, All civilian occupations. S eries ID CMU2030000000610 D, CMU2030000000610P, 5810 CMU2030000000620D, CMU2030000000620P

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. 5818

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. 5820

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U.S. Census Bureau. 2010b. Sector 42: EC0742A1: Wholesale Trade: Geographic Area Series: 5830 Summary Statistics for the United States

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. 5833

U.S. Census Bureau. 2010d. Sector 44: EC0744SSSZ3: Retail Trade: Subject Series - Estab & 5834 Firm Size: Summary Statistics for Single Unit and Multiunit Firms for the United States: 2007

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U.S. Census Bureau. 2010e. Data Item: Wholesale type of operation.” American FactFinder 5836 Help. Census Data Information

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U.S. Census Bureau. 2010f. Sector 31: EC0731A1: Manufacturing: Geographic Area Series: 5838 Industry Statistics for the States

. 5839
U.S. Census Bureau. 2010g. Sector 44: EC0744A1: Retail Trade: Geographic Area Series: 5840 Summary Statistics for the United States, Stat es, Metro Areas, Counties, and Places: 2007

. 5841

U.S. Census Bureau. 2010h. Number of Firms, Number of Establishments, Employment, Annual 5842 Payroll, and Estimated Receipts by Enterprise Em ployment Size for States, NAICS Sectors: 2007

. 5843 December 15, 2010. 5844

U.S. Census Bureau. 2010i. Sector 00: NS0800A1: 2008 Nonemployer Statistics: Geographic 5845 Area Series: Nonemployer Statistics by Legal Form of Organization: 2008 5846
U.S. Census Bureau. 2010j. Sector 44: EC0744SLLS1: Retail Trade: Subject Series - Product 5847 Lines: Product Lines Statistics by Kind of Business for the United States and States: 2007

. 5848

### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

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### U.S. Census Bureau. 2010k. Census Data Information. Survey Methodology: 2007 Economic 5849 Census: Retail Trade: Subject Series: Product Lines

. 5850

U.S. Census Bureau. 2010l. Census Data Information. Sector 44: EC0744SLLS1: Retail Trade: 5851 Subject Series - Product Lines: Product Lines Statis tics by Kind of Business for the United States 5852 and States: 2007. Data Item: Products and Services Code

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U.S. Census Bureau. 2010m. Sector 42: EC0742SSSZ2: Wholesale Trade: Subject Series - Estab 5854 & Firm Size: Summary Statistics by Employment Size of Establishments for the United States: 5855 2007

. 5856

U.S. Census Bureau. 2010n. Sector 44: EC0744SSSZ4: Retail Trade: Subject Series - Estab & 5857 Firm Size: Summary Statistics by Sales Size of Firms for the United States: 2007

. 5858

U.S. Census Bureau. 2010o. Sector 00: NS0800A2: 2008 Nonemployer Statistics: Geographic 5859 Area Series: Nonemployer Statistics for the US , States, Metropolitan Areas, and Counties: 2008

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U.S. Census Bureau. 2010p. Sector 31: EC0731SG3: Manufacturing: Summary Series: General 5861 Summary: Industry Statistics for Subsectors and Industries by Employment Size: 2007. 5862

U.S. Census Bureau. 2011. Sector 42: EC0742SLLS1: Wholesale Trade: Subject Series - Product 5863 Lines: Product Lines Statistics by Kind of Business for the United States and States: 2007

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U.S. Internal Revenue Service. 2007. Starting a Business and Keeping Records . Publication 583. 5886 Revised January 2007. 5887

U.S. International Trade Commission. 2008. Wood Flooring and Hardwood Plywood: 5888 Competitive Conditions Affecting the U.S. Industries

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### *** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During Review***

January 27, 2012 R-8 

### U.S. International Trade Commission. 2011. U.S. Interactive Tariff and Trade Dataweb

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U.S. International Trade Commission (U.S. ITC). 2011b. HTS - 4408: Veneer Sheets and Sheets 5894 for Plywood and Other Wood Sawn Lengthwise, Sliced or Peeled, Not More Than 6 mm (.263 in. 5895 Thick: U.S. Domestic Exports: Annual Data: 2007

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United States Postal Service. 2011. First-Class Mail Prices. Available at: 5897 http://www.usps.com/prices/first-class-mail-prices.htm (Accessed February 23,) 5898
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