# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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# APPENDIX D

FINAL DRAFT SOCIOECONOMIC IMPACT ANALYSIS REPORT

FOR REVISED PROPOSED AM ENDMENTS TO RULE 4692

October 8, 2009

D-1 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

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D-3 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# SOCIO-ECONOMIC IMPACT ANALYSIS: RULE

4692: ADDENDUM: ANALYZING INDUSTRY

STAKEHOLDER COSTS

AUGUST 3, 2009

Prepared for 

# San Joaquin Valley Unified Air Pollution Control District

Prepared by 

# Applied Development Economics

100 Pringle Avenue, Suite 560  Walnut Creek, California 94596  (925) 934-8712

2150 River Plaza Drive, Suite 168  Sacramento, CA 95833  (916) 923-1562

www.adeusa.com

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# ANALYZING INDUSTRY STAKEHOLDER COSTS

The San Joaquin Valley Unified Air Pollution Co ntrol District (“District”) seeks to evaluate
the socioeconomic impacts of costs recently submitted by industry stakeholders concerned
about the char-broilers rule (Rule 4692). In particular, the District seeks to understand how
much revenue a restaurant must generate to industry stakeholders’ compliance cost less than
significant? How many restaurants in the region generate this amount of revenues?

The first part of this briefing summarizes the recently submitted compliance cost estimates
submitted industry stakeholders. Following this summary, we calculate the amount of
revenue needed to support stakeholders’ cost compliance in a less than significant manner.
We also discuss how many restaurants generate th is amount of revenue. Further analyzing
cost figures submitted by affected stakeholders , in the final section we discuss possible ways
restaurants might treat costs stemming from recent modifications to Rule 4692, and
conclude by saying certain restaurants (those employing at least 20 workers) could mitigate
costs without any loss to productivity.



# 1. Industry-Stakeholder Annual Compliance Cost

Estimates

Private sector vendors recently submitted to the San Joaquin Valley Unified Air Pollution
Control District (“District”) cost figures for a variety of control measures that satisfy the
recently-adopted char-broiler rule. Table 1 belo w identifies costs for four difference control

measures. These control measures are as follo ws: electrostatic precipitator, the annual cost
of which is $14,635; HEPA system-vendor 1 ($26,379); HEPA system-vendor 2 ($16,148);
and wet scrubber ($15,588).

TABLE 1

INDUSTRY STAKEHOLDER COST SCENARIOS

Estimated

control efficiency

(%) One-time Cost ($) Annualized

one-time cost * ($/yr) Ongoing Cost ($/yr) Total Annual

Cost (ongoing plus

annualized one-time)

($/yr)

Electrostatic Precipitator (Vendor 1) 98% $57,000 $9,273 $5,364 $14,638

HEPA system (Vendor 2) 99% $10,3761 $16,881 $9,497 $26,379

HEPA system (Vendor 3) 99% $46,000 $7,484 $8,664 $16,148

Wet scrubber (multi-stage) (Vendor 4) 99% $37,440 $6,091 $9,497 $15,588



## Source: San Joaquin Valley Unified Air Pollution Control District

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# 2. Revenue Point When Industry-Stakeholder Costs Are Less than Significant

In this section, we analyze the amount of revenues needed support stakeholders’ cost
compliance figures in a less than significant mann er. First, we review industry trends. Then,
we identify the revenue level at which industry costs are less than significant.

Table 2 identifies the number of restaurants in the eight-county San Joaquin Valley region.
In addition, eating places are organized by broad eating place categories (full-service

restaurants, limited-service restaurants, caf eterias-buffets, and snack\non-alcoholic beverage
bars). Using Dun and Bradstreet, we further di stribute each broad category into six types of
eating places (ethnic restaurants, family restau rants, fast food restaurants, steak and BBQ
houses, and all other restaurants).

TABLE 2

SAN JOAQUIN VALLEY REGION EATING PLACES BY TYPE OF RESTAURANT, 2008

---------------------- ---San Joaquin Valley Region , 2008------------

------ -------

Ethnic Family Fast Food Seafood Steak and

BBQ All Other

Total Eating Places

Establishments 4,485 1,226 206 2,602 19 77 355 Employment 78,076 19,107 4,843 44, 585 441 1,507 7,593 Revenues (estimated) $3,444,511,266 $791,542,675 $338, 842,005 $1,914,177,918 $15,509, 572 $64,691,836 $319,747,261
Avg. Revenues $768,060 $645,814 $1,641,740 $735, 690 $823,186 $836,385 $901,766 Net Profit (estimated) $148,113,984 $34,036,335 $14, 570,206 $82,309,650 $666,912 $2,781,749 $13,749,132



### Full Service Restaurants

Establishments 1,777 1,226 173 0 19 77 283 Employment 31,880 19,107 3,867 0 441 1,507 6,958 Revenues (estimated) $1,449,614,659 $791,542,675 $296,769,006 $0 $15,509, 572 $64,691,836 $281,101,570 Avg. Revenues $815,767 $645,814 $1,719,970 $823,186 $836,385 $994,649 Net Profit (estimated) $62,333,430 $34,036,335 $12,761,067 $0 $666, 912 $2,781,749 $12,087,368



### Limited-Service Restaurants

Establishments 2,127 0 0 2,089 0 0 38 Employment 38,969 0 0 38,785 0 0 184 Revenues (estimated) $1,675,454,882 $0 $0 $1,663,405,018 $0 $0 $12,049,863 Avg. Revenues $787,524 $796,123 $316,133 Net Profit (estimated) $72,044,560 $0 $0 $71,526,416 $0 $0 $518,144


### Cafeterias, Buffets

Establishments 68 0 34 0 0 0 34 Employment 1,428 0 976 0 0 0 451 Revenues (estimated) $68,668,826 $0 $42,072,998 $0 $0 $0 $26,595,828 Avg. Revenues $1,014,344 $1,242,965 $785,722 Net Profit (estimated) $2,952,760 $0 $1,809,139 $0 $0 $0 $1,143,621



### Snacks\non-Alcoholic Bev Bars

Establishments 513 0 0 513 0 0 0 Employment 5,800 0 0 5,800 0 0 0 Revenues (estimated) $250,772,899 $0 $0 $250,772,899 $0 $0 $0 Avg. Revenues $489,313 $489,313 Net Profit (estimated) $10,783,235 $0 $0 $10,783,235 $0 $0 $0 

## Source: ADE, Inc., based on California Employment Developmen t Department LMID, US Economic Census 2002, California Board of Equalization, US Internal Revenue Services, and Dun and Bradst reet ZAPData (January 2009). Data in this table slightly vary with Table 5 in socioeconomic impact analysis, as this table incorpor ates establishment and employme nt for all of 2008, whereas init ially we estimated 2008 trends based on two quarters of data.

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## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

As the table above shows, there are approxima tely 4,485 eating places in the region, which
employ almost 78,100 workers. At 2,602 establishments out of a total of 4,485, fast food
restaurants represent slightly more than half of all eating places. On average, eating places
generate $768,100 in revenues. Family restaurants generate $1,6 41,700 on average, with fast
food eating places generating on average $796,100.

Table 3 below identifies revenue levels needed to accommodate costs associated with the
char broiler rule, using annual compliance cost figures submitted by industry stakeholders.
Starting with annual costs and working backwards – assuming a 4.3 percent after-tax net
profit rate and 10 percent threshold of significant level – we arrive at the following. To
support the electrostatic pr ecipitator annual cost of $14,638 , eating places subject to the
char-broilers rule would need to generate at a minimum $3,400,200 a year. To support
Vendor 2’s $26,379 HEPA system, eating pl aces must generate at least $6,134,700, or
$3,755,400 to support Vendor 3’s $16,148 HEPA system. The $15,588 requires at least

$3,625,116 in annual revenues.

TABLE 3

MINIMUM ANNUAL REVENUES NEEDED TO ACCOMMODATE

INDUSTRY COST SCENARIOS IN LESS THAN SIGNIFICANT

MANNER

Industry

Stakeholder

Annual Cost Minimum Required

Revenue

Electrostatic Precipitator (Vendor 1) $14,638 $3,404,186

HEPA system (Vendor 2) $26,379 $6,134,651

HEPA system (Vendor 3) $16,148 $3,755,349

Wet scrubber (multi-stage) (Vendor 4) $15,588 $3,625,116



## Source: ADE, Inc.



# Table 4 segregates full-service restaurants by size of establishment, which is defined by
number of employed workers. Of the four control measures in the industry-stakeholder cost
scenario, the least expensive is the electrostati c precipitator, at $14,638. In general, full
service restaurants do not begin to generate $3 million in annual sales needed to
accommodate the annual cost of EP in a less than significant manner unless they employ at least

50 workers . At $2,338,900, $3,038,598, and $3,087 ,300 respectively, the average full service ethnic restaurant, seafood house, and steak/BBQ establishment employing at least fifty
workers still do not generate enough revenu es to accommodate the $14,638 cost per

restauran t in a less than significant manner. Restaurants employing at least 50 workers
represent almost nine percent of all full-servi ce restaurants. While full-service restaurants
employing at least 100 workers can accommodate all four industry-priced control measures,

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## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

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## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# these restaurants comprise less than three percent of all full-service restaurants in the region,

or 47 out of 1,777 full serv ice eating establishments

Table 5 is similar to Table 4 except it analyzes the extent to which limited-service restaurants
can accommodate any of the industry stakehol der cost scenarios. Except for fast food
restaurants that employ at least 100 workers, most eating places in this broad category
cannot sustain the costs in a less than significant manner.

[This space is blank on purpose]SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix D: Socioeconomic Impact Analysis ReportOctober 8, 2009TABLE 4. EATING PLACES: FULL-SERVICE RESTAURANTS, 2008: SAN JOAQUIN VALLEY REGIONEthnicFamilyFastFoodSeafoodSteak and BBQAll OtherEstablishmentsAvg.Rev.EstablishmentsAvg. Rev.EstablishmentsAvg. Rev.EstablishmentsAvg. Rev.EstablishmentsAvg. Rev.EstablishmentsAvg. Rev.Total1,225$646,358172$1,726,59220$761,19778$64,691,836$282$997,368Establishments employing 1-4workers459$63,57065$169,3037$81,02929$2,387,128$106$97,907Establishments employing 5-9 workers225$222,49532$592,5613$283,60214$4,085,662$52$342,675Establishments employing 10-19 workers222$476,77431$1,269,7743$607,72014$8,656,619$51$734,303Establishments employing 20-49 workers215$1,176,04330$3,132,1083$1,499,04214$20,625,052$48$1,867,100Establishments employing 50-99 workers74$2,383,8729$7,395,7841$3,038,5985$14,509,675$17$3,671,516Establishments employing100-249 workers28$5,767,3614$14,814,0261$3,164,1762$13,198,066$7$8,566,871Establishments employing 250-499workers1$11,919,3591$5,640,8521$294,7991$1,229,633$1$5,343,053Establishmentsemploying>500workersSource: ADE, Inc. based on California Employment Development Department, County Business Patterns, and US Economic CensusApplied Development Economics, Inc.5Final Staff Report With AppendicesFor Revised Proposed Amendments to Rules 4692SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix D: Socioeconomic Impact Analysis ReportOctober 8, 2009Applied Development Economics, Inc.6Final Staff Report With AppendicesFor Revised Proposed Amendments to Rules 4692Source: ADE, Inc. based on California Employment Development Department, County Business Patterns, and US Economic CensusTABLE 5. EATING PLACES: LIMITED-SERVICE RESTAURANTS, 2008: SAN JOAQUIN VALLEY REGIONEthnicFamilyFastFoodSeafoodSteak and BBQAll OtherEstablishmentsAvg.Rev.EstablishmentsAvg.Rev.EstablishmentsAvg.Rev.EstablishmentsAvg.Rev.EstablishmentsAvg.Rev.EstablishmentsAvg.Rev.Total2,089$796,12338$316,133Establishments employing 1-4 workers476$73,3619$28,048Establishments employing5-9workers301$257,1516$93,141Establishments employing10-19workers481$549,9448$239,031Establishments employing20-49workers735$1,358,07712$600,940Establishments employing50-99workers88$2,773,0772$883,891Establishments employing 100-249 workers7$6,122,6361$310,471Establishments employing250-499workersEstablishmentsemploying>500workers

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# 3. HOW INDUSTRY MIGHT DEAL WITH COSTS

Starting with cost figures submitted by affected industry stakeholders and working backwards to

arrive at the amount of revenues needed to accommodate costs associated with Rule 4692, we
determine that a small percentage of restaurants generate enough revenues to accommodate industry
costs in a less than significant manner. Yet, in examining the data another way, we see that industry
could potentially bear industry stakeholders’ version of costs.

Translating annual costs into full-time equivalent employment impacts, we see that industry could
potentially absorb costs described above without impacting performance. Table 6 shows that
average wages for full-service restaurants and limited-service restaurant amount to $14,900 and
$12,600 respectively. Converting annual costs for any one of the four control measures by $14,900

results in the direct loss of 1.0, 1.8, 1.1, or 1.0 FTEs at a full-service restaurant. More than likely, the
rule will affect businesses employing at least 20 wo rkers given how the rule impacts establishments
cooking a certain amount of beef, meaning that full -service restaurant subject to this could mitigate
impacts without any significant loss to producti vity. Likewise for limited-service restaurants:
converting vendors’ annual costs for any one of the four control measures by $12,600 results in
potential direct loss of 1.2, 2.1, 1.3, or 1.2 FTE po sitions at a limited-service restaurant. More than
likely, the rule will affect businesses employing at least 20 workers, meaning that limited-service
restaurants subject to this rule could mitigate impa cts without any significant loss to productivity.

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## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

D-11 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# SOCIO-ECONOMIC IMPACT ANALYSIS

PROPOSED AMENDMENTS TO RULE 4692 (CHARBROILERS)

FINAL DRAFT

MAY 21, 2009

Prepared for 

# San Joaquin Valley Unified Air Pollution Control District

Prepared by 

# Applied Development Economics

100 Pringle Avenue, Suite 560  Walnut Creek, California 94596  (925) 934-8712

2151 River Plaza Drive, Suite 150  Sacramento, CA 95833  (916) 923-1562

www.adeusa.com

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# CONTENTS

1. Executive Summary ...........................................................................................................................1

2. Introduction ........................................................................................................................................3

3. Description of Draft Amendments to Rule 4692 .........................................................................5

4. Methodology .......................................................................................................................................7

5. Impacted Industries Subject To Proposed Amendments to Rule 4692 ....................................9

6. Socio-economic Impacts ...................................................................................................................31

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# 1. EXECUTIVE SUMMARY

District staff estimates that 670 restaurants will be subject to the rule as amended, as these restaurants operate auto charbroilers and/or un derfired charbroilers in ways that trigger
enforcement per the proposed amendments to Rule 4692. Slightly over half of all impacted

sources are fast food restaurants (or, 367 out of 670 restaurants).

In aggregate, restaurants operating chain- driven charbroilers subject to the proposed
amendments can expect annual costs ranging from $157,215 to $7,153,935, depending on
type of equipment used to handle emissions subject to the proposed amendments.
According to the District, in aggregate, restaurants operating under-fired charbroilers will
experience costs ranging from $5.4 million to $60.4 million, again depending on the control
measure adopted. Private vendors say that w et scrubber or electrostatic precipitator will
between $15.8 million to $18.9 million for restaurants using under-fired charbroilers.

Costs associated with catalytic oxidizers, HEPA filters, and electrostatic precipitators are less
than significant, in the case of the 71 restaurants operating non-conforming auto
charbroilers. For the most part, costs can be passed onto the consumers without
jeopardizing sales.

Costs associated with control measures for rest aurants employing underfired charbroilers are
less than significant, particularly for HEPA f ilters and electrostatic precipitators. Costs will
be significant for restaurants adopting wet scrubbers and thermal incinerators per the

District cost scenario and wet scrubbers and el ectrostatic precipitators per private vendor
cost scenario, but these restaurants will be able to pass costs to consumers.

Restaurants operating underfired charbroilers will experience significant costs that cannot be
passed if they adopt thermal incinerators as their control measure. Since the bulk of
restaurants subject to proposed amendments to Rule 4692 will adopt catalytic oxidizers,
HEPA filters, and electrostatic precipitators, we conclude by saying the proposed
amendments do not result in significant impacts.

While the bulk of restaurants are small businesses, given that impacts are less than significant
or, if significant, can be passed to the con sumer for the most part, we also conclude by
saying that small businesses are not disproportionately impacted by the proposed

amendments.

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# 2. INTRODUCTION

This report describes the socioeconomic impacts of Draft Amendments to Rule 4692 dated
February 26, 2009, which implements an em ission control measure in the District’s 2008

PM2.5 Plan . Following this introduction, the re port summarizes the proposed amendments
and describes the methodology for the socioeconomic analysis. In Section 5, the report
describes the economic characteristics of sources affected by the proposed amendments.
The sixth section analyzes the socioeconomic impacts of compliance costs on the affected
sources and the regional economy.

The report is prepared pursuant to the provisions of AB2051 (Section 40728.5 of the
California Health and Safety Code), which requires an assessment of socioeconomic impacts
of proposed air quality rules. The findings in this report can assist District staff in
understanding the socioeconomic impacts of the proposed amendments, and can assist staff
in preparing a refined version of the rule. Figu re 1 is a map of the eight-county region that
comprises the San Joaquin Valley Air Basin. As indicated in the map, Kern County is not
completely in the District.

FIGURE 1

MAP OF SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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# 3. DESCRIPTION OF DRAFT AMENDMENTS TO

RULE 4692

This section of the report begins by reviewing the context within which the District seeks to

amend Rule 4692. Then, this section discusses Rules 4692 and 2020 as currently written, and
summarizes proposed changes to these rules.

District staff would amend Rule 4692 to implement an emission control measure in the

District’s 2008 PM2.5 Plan . The main objective of this rule project is to obtain as much
reduction of particulate matter (PM) from commercial charbroiling as is expeditiously
practicable, technologically feasible, and economically reasonable. 1 

# In addition to Rule 4692,
District seeks to amend Rule 2020, to exempt under-fired charbroilers from permits because
District staff is proposing that these units be subject to registration through District Rule
2250 (Permit-Exempt Equipment Registration) rather than required to obtain a Permit-toOperate.



# CURRENT RULE 4692 (COMMERCIAL CHARBROILING) AND

PROPOSED CHANGES

Rule 4692 applies to owners and operators of commercial cooking operations using chaindriven charbroilers to cook beef, lamb, pork, poultry, fish, and seafood. The rule applies to
operators who cook more than 875 pounds of meat per week on a chain-driven charbroiler
and emit more than one pound per day of an y criteria pollutant. The current rule limits
emission of volatile organic compound (VOC ) and particulate matter with aerodynamic
diameter of 10 micrometers or less (PM10). The ru le requires that chain-driven charbroilers
be equipped and operated with a catalytic oxid izer control device and maintained in good
working order to minimize visible emissions to the atmosphere.

The Districts seeks to revise Rule 4692 to add under-fired charboilers to the operations
subject to the rule with attendant exemptions , testing, certification, and recordkeeping for
these units. Compliance with the emission rate limit would be July 1, 2014 for under-fired
charbroilers already in use. Under-fired char-b roilers installed after June 30, 2010 would be
subject to the emission limits at the date of installation.

Chain-driven charbroilers would also be a ffected by the draft amendments. The minimum
cooked meat to be subject to control requi rements would be reduced by more than 50
percent. This means that more chain-driven charbroilers would be subject to the rule’s
control requirements.

1 

## As guidelines for developing the propo sed changes to Rule 4692, District staff studied Bay Area Air Quality Management District (BAAQMD) Regulation 6 Rule 2 (Commercial Cooking Equipment) and South Coast Air Quality Management District (SCAQMD) Rule 1138 (Control of Em issions from Restaurant Operations) as well as rules and regulations in other

air districts inside and outside of California.

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# 4. METHODOLOGY

The socioeconomic analysis involves the use of information provided directly by affected
sources, as well as secondary data used to describe the industries affected by the proposed
amendments to the Rule 4692. The approach is briefly described below.

Applied Development Economics (ADE) began the analysis by preparing a statistical
description of the industry groups of which th e affected sources are a part, analyzing data on
the number of jobs, sales levels, the typical pr ofit ratios and other economic indicators for
each industry.

This report relies heavily on the most current da ta available from a variety of sources, such
as the 2002 Economic Census, the State of California’s Board of Equalization, and the State
of California’s Employment Development De partment (EDD) Labor Market Information
Division. For purposes of estimating profits, ADE reviewed a number of sources, including

Dun and Bradstreet, the US Internal Revenue Services, and corporate annual reports of
types of companies subject to Rule 4692.

With the above information, ADE was able to es timate net after tax profit ratios for sources
affected by the proposed amendments. ADE calculated ratios of profit per dollar of revenue

for affected industries. The result of the soci oeconomic analysis shows what proportion of
profits the compliance costs represent. Based on assumed thresholds of significance, ADE
discusses in the report whether the affected sour ces are likely to reduce jobs as a means of
recouping the cost of rule compliance or as a result of reducing business operations. To the
extent that such job losses appear likely, the indirect multiplier effects of the jobs losses are
estimated using a regional IMPLAN input-output model.

When analyzing the socioeconomic impacts of proposed new rules and amendments, ADE
works closely within the parameters of a ccepted methodologies discussed in a 1995
California Air Resources Board report called “D evelopment of a Methodology to Assess the Economic Impact Required by SB513/AB969” (by Peter Berck, PhD, UC Berkeley
Department of Agricultural and Resources Economics, Contract No. 93-314, August, 1995).
The author of this report reviewed a method ology to assess the impact that California
Environmental Protection Agency proposed re gulations would have on the ability of
California businesses to compete. The California Air Resources Board (ARB) has
incorporated the methodologies described in this report in its own assessment of
socioeconomic impacts of rules generated by ARB. One methodology relates to determining

a level above or below which a rule and its asso ciated costs is deemed to have significant
impacts. When analyzing the degree to which its rules are significant or insignificant, ARB
employs a threshold of significance that ADE follows. Berck reviewed the threshold in his
analysis and wrote, “The Air Resources Board’ s (ARB) use of a 10 percent change in [Return
on Equity] ROE (i.e. a change in ROE from 10 percent to a ROE of 9 percent) as a

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threshold for a finding of no significant, ad verse impact on either competitiveness or jobs

seems reasonable or even conservative.”

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## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# 5. IMPACTED INDUSTRIES SUBJECT TO PROPOSED

AMENDMENTS TO RULE 4692

This section of the socioeconomic analysis describes demographic and economic trends in
the San Joaquin Valley region. The first part of this section compares the San Joaquin Valley
region against California as a whole, and provides a context for understanding demographic
and economic changes that occurred within the San Joaquin Valley region between 1998 and
2008. Starting with sub-section 5.2, the second pa rt of this section narrows the focus of the
socioeconomic analysis to industries affected by the proposed changes to Rule 4692. The
second part of this section describes the ec onomic characteristics of potentially impacted
industries that might be subject to these rules.



# 5.1 REGIONAL DEMOGRAPHIC AND ECONOMIC TRENDS

R EGIONAL 

# D EMOGRAPHIC 

# T RENDS



# The San Joaquin Valley region experienced trem endous population growth during the 1990s.
Many came to this area because of afford able housing. As a result, population increased
significantly. The eight-county region’s populati on increased by 24 percent (or approximately
2.2 percent annually), from 3.2 million in 1998 to 3.9 million in 2007. In the last five years,
population growth rate slightly declined, as re gional population grew by 2.2 percent annually

between 2003 and 2008. While the State of California’s population increased by 14 percent
(or approximately 1.4 percent annually) between 1998 and 2008, all the counties in the region
experienced faster rates of growth than Califor nia over the period, as Table 1 shows. While,
by many standards, Madera County continues to be a small county– at 150,887 residents
according to the Department of Finance–it still experienced an annual growth rate of 2.8
percent between 1998 and 2008. Between 2003 an d 2008, this county continued to grow
annually but at a slightly lesser rate of 2.7 percent. In the same five-year period, Kern,
Merced, and San Joaquin Counties experienced rapid growth, growing annually by 2.9
percent, 2.4 percent, and 2.2 percent respective ly, as Table 1 below shows. As demonstrated
in the following section on regional economic trends, the demographic changes that
occurred in the San Joaquin Valley region du ring the 1990s and into the new century
significantly influenced the economy of this eight-county region.

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Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

TABLE 1

POPULATION TRENDS

1998 2003 2008 98-03 03-08 98-08

State 33,225,655 35,652,700 38, 049,462 1.4% 1.3% 1.4% Region 3,192,439 3,540,392 3,956,003 2.1% 2.2% 2.2%

Fresno 781,936 846,485 931,098 1.6% 1.9% 1.8%

Kern 637,227 708,753 817, 517 2.2% 2.9% 2.5% Kings 120,957 137,411 154, 434 2.6% 2.4% 2.5%

Madera 114,137 131,821 150,887 2.9% 2.7% 2.8%

Merced 203,181 227,132 255,250 2.3% 2.4% 2.3% San Joaquin 546,852 616,47 7 685,660 2.4% 2.2% 2.3%

Stanislaus 428,272 483,70 5 525,903 2.5% 1.7% 2.1%

Tulare 359,877 388,608 435,254 1.5% 2.3% 1.9% 

## Source: ADE, Inc., based on California Department of Finance



# R EGIONAL 

# E CONOMIC 

# T RENDS



# Economic development practitioners and planners have traditionally divided economies into
two broad industrial categories—the economic base and local support industries. Economic

base industries are the drivers of local and re gional economies in that these industries draw
income into a local economy by selling products outside of the local economy, much like the
export industries of a national economy. Accr ued earnings then circulate throughout the
local area in the form of wages and salaries; investments; purchases of fixed assets, goods,
and services; and generation of more jobs and wealth.

The economic base is typically comprised of in dustries within the manufacturing, mineralsresource extraction, and agricultural sectors. There are also the “local support industries”
such as retail or service sectors, the progress of which is a function of the economic base
and demographic changes, and more so the latter than the former. As population increases
in a given area, demand for services–such as realtors, teachers, and healthcare–increases, as
does demand for basic retail items like groceries, gas for commuting, or clothing at the local
apparel shops.

Agriculture is the economic base of the San Joa quin Valley region by virtue of the amount of
goods this sector produces and exports throughout the nation and the globe. Slightly less
than 14 percent of all workers in the region are em ployed by industries within agriculture, as
Table 2 shows. In 1996, approximately 13.1 per cent of all workers worked in agriculture. By
2003, this ratio stood at 14 percent. In fact, over the five-year period between 2003 and
2008, employment in agriculture increased at a modest pace of one percent per year.

Between 2001 and 2006, local support industries gained in prominence within the San
Joaquin Valley region. Service-rendering industries employed the most workers as a
proportion of total employment in the region. Service-rendering industries comprise 71
percent of all jobs, including public sector positions. In other words, 932,713 jobs out of a
total of 1,317,365 jobs are in service-rendering industries. Excluding the public sector,
service-rendering jobs account for 52 percent of all jobs in 2006. In 2003, service-rendering
industries (excluding the public sector) represented 51 percent of all jobs, indicating that the

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Applied Development Economics, Inc. 11 

## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# transition toward a services economy was in pla ce as early as the mid to late 1990s with the
significant increase in the number of people during that time.

Employment increases in service-rendering in dustries are consistent with regional population
growth. In the region, local support industries of local and private education, and health, and
financial activities increased annually by 3.9 pe rcent, 3.0 percent, and 2.7 percent respectively

between 2003 and 2008.

Construction and financial services are two other local support industries that grew in
accordance with the region’s population surge; ho wever, with the downturn in the national
economy, these industries’ rates of growth ha ve lowered dramatically. Employment in
construction grew by a 6.7 percent per year in the five-year period stretching from 1998 to
2003. Between 2003 and 2008, construction continued to grow but by a slower rate of 0.9
percent per year. Likewise for financial services, which grew annually by 3.9 percent
between 1998 and 2003, and has since gr own by a slight 0.9 percent per year.

Close examination of Table 2 shows that the region experienced modest growth in
manufacturing, as employment in this sector grew annually by 0.9 percent between 2003 and

2008. This modest increase reversed substanti al declines experienced between 1998 and
2003, when manufacturing employment dropped annually by 0.6 percent. What was a
regional bright spot between 1998 and 2003, transportation and warehousing experienced
negative 1.1 percent declines between 2003 and 2008, as compared to the 2.7 percent annual
growth in the previous five-year period.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix D: Socioeconomic Impact Analysis ReportOctober 8, 2009Applied Development Economics, Inc.12Final Staff Report With AppendicesFor Revised Proposed Amendments to Rules 4692TABLE 2ECONOMIC TRENDS: SAN JOAQUIN VALLEY, 1998-2008EmploymentDistributionEmployment:Annual PercentChange----------------1998-------------------------------2003--------------------------------2008---------------200898-0303-08NAICSEstab.EmploymentAveragePayEstab.EmploymentAveragePayEstab.EmploymentAveragePayRegionCaliforniaALL80,3981,060,454$33,56692,2311,209,849$40,577100,4141,317,365$39,543100.0%100.0%2.7%1.7%Ag, Natural Resources117,580139,953$18,2858,646169,556$23,3547,371178,522$21,71413.6%2.5%3.9%1.0%Utilities212519,533$66,8312138,340$81,30918510,512$82,6270.8%0.0%-2.6%4.7%Mining221654,231$72,4581795,071$86,0651695,618$81,2960.4%0.4%3.7%2.1%Construction236,12449,851$38,9696,07469,065$46,8706,70572,312$44,7165.5%5.7%6.7%0.9%Manufacturing31-332,998113,344$40,9892,779110,002$48,7352,662115,153$43,3528.7%9.3%-0.6%0.9%Wholesale422,74933,365$47,7262,72237,124$53,0533,02745,299$46,5103.4%4.6%2.2%4.1%Retail44-459,586121,132$26,4468,941132,956$31,3498,882143,910$25,89210.9%10.8%1.9%1.6%Transport Warehousing48-492,30633,821$38,9462,23738,554$44,9621,95736,514$40,1662.8%2.7%2.7%-1.1%Information5165314,885$43,40169214,257$53,69562515,328$47,4171.2%3.0%-0.9%1.5%Finance and Insurance522,63727,792$46,7093,04630,690$59,5303,37332,027$50,1122.4%4.0%2.0%0.9%Real Estate532,57513,180$26,7552,60715,932$34,1442,78415,897$32,6331.2%1.8%3.9%0.0%Prof Technical Services544,06425,130$44,2164,50131,812$52,4674,83936,411$46,7732.8%6.8%4.8%2.7%Management of Companies5532117,997$52,33831613,988$60,04528810,551$55,3230.8%1.3%-4.9%-5.5%Admn and Waste Services562,91044,283$22,3622,76848,182$28,9862,94758,761$27,1654.5%6.4%1.7%4.0%Private Educational Services614597,107$25,4564809,298$29,53249710,781$27,4070.8%1.7%5.5%3.0%Health Services626,08290,304$38,2436,526110,647$47,8676,983126,598$44,0589.6%8.8%4.1%2.7%Arts, Entertainment, Rec7161710,386$16,98562110,244$20,19264111,172$17,3050.8%1.6%-0.3%1.7%Food and Accommodations725,05070,335$12,8604,94278,805$15,8315,31290,404$14,0206.9%8.3%2.3%2.8%Other Services8120,15741,069$21,16530,39047,370$25,73135,62952,505$21,6064.0%4.6%2.9%2.1%Unclassified9985199$38,0331,7692,534$26,8360.2%0.3%Local Govt.40951,325$45,67443760,768$56,30747768,469$51,0515.2%5.2%3.4%2.4%Local Govt., Education88190,200$39,6641,487109,087$48,3041,792118,716$78,7189.0%5.9%3.9%1.7%State, ALL1,46423,639$46,0511,16628,463$56,5151,07831,639$51,2222.4%2.9%3.8%2.1%Federal, ALL36027,592$52,74937629,439$66,39542427,732$58,9452.1%1.6%1.3%-1.2%Source: ADE, Inc., based on California Employment Development Department, LMID

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

Applied Development Economics, Inc. 13 

## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# 5.2 DESCRIPTION OF AFFECTED INDUSTRIES

Whereas the previous section described the larger economic context within which the
District is contemplating proposed amendments to Rule 4692, this section analyzes trends of
industries directly affected by the proposed amen dments. For the most part, this rule affects
eating places that operate equipment subject to Rule 4692. Types of restaurants affected by
this rule include fast food restaurants, ethnic foods restaurants, family restaurants, some
seafood restaurants, and steakhouses and barbeque shops. This analysis includes an estimate
on how many of these types of restaurants are affected by the rule. This discussion directly
below examines trends in eating places in th e San Joaquin Valley region, focusing on eating
places as reported by the US Census an d the California Employment Development
Department, which organizes data by four broad categories, “full service restaurants,”

“limited service restaurants,” “cafeterias and buffets,” and “snacks and non-alcoholic bars.”

Table 3 below shows that there are 1,792 full service restaurants in the region. These
restaurants employ 32,995 workers, which is up from the amount employed in 2003, or
28,245. Employment grew at an annual pace of 3.2 percent between 2003 and 2008, slightly
ahead of the annual pace experienced in the stat e as a whole, or 2.0 percent per year. There
are 2,122 limited-service restaurants (primarily fast foods) in the region, and these restaurants
employ 38,589 workers. Employment increase d annually by 1.7 percent between 2003 and
2008, compared to California’s slightly lower a nnual growth of 1.3 percent. Altogether,
there are 4,481 eating places in the San Joaquin region, and these establishments employ
78,528 workers. It is important to note that wages tend to be low across the board in food

services, as indicated in Table 3 below.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix D: Socioeconomic Impact Analysis ReportOctober 8, 2009Applied Development Economics, Inc.14Final Staff Report With AppendicesFor Revised Proposed Amendments to Rules 4692TABLE 3EATING PLACES TRENDS: SAN JOAQUIN VALLEY: 1998-2008---------------- San Joaquin Valley Region --------------------------------------------------- California -----------------------------Full Service Restaurants19982003200898-0303-0819982003200898-0303-08Establishments1,6511,6051,792-0.6%2.2%22,67022,98625,5180.3%2.1%Employment24,30528,24532,9953.1%3.2%398,597462,416535,2923.0%3.0%Payroll$344,839,496$424,716,272$491,034,7234.3%2.9%$7,112,680,453$8,549,625,088$9,884,637,0703.7%2.9%Average Wages$14,188$15,037$14,8821.2%-0.2%$17,844$18,489$18,4660.7%0.0%Limited-ServiceRestaurantsEstablishments2,0222,0522,1220.3%0.7%23,53723,09023,005-0.4%-0.1%Employment32,92335,49538,5891.5%1.7%354,418369,417393,4020.8%1.3%Payroll$375,745,690$441,768,322$487,515,9063.3%2.0%$4,881,153,642$5,472,926,269$5,779,506,6532.3%1.1%Average Wages$11,413$12,446$12,6341.7%0.3%$13,772$14,815$14,6911.5%-0.2%Cafeterias,BuffetsEstablishments615256-3.1%1.6%1,130905680-4.3%-5.6%Employment1,1751,1151,113-1.0%0.0%15,49013,98713,287-2.0%-1.0%Payroll$15,987,704$15,615,204$17,869,114-0.5%2.7%$255,225,594$264,139,149$254,461,3670.7%-0.7%Average Wages$13,607$14,005$16,0550.6%2.8%$16,477$18,885$19,1522.8%0.3%Snacks\non-Alcoholic Beverage BarsEstablishments2803195112.6%9.9%4,1604,9827,1513.7%7.5%Employment1,7442,9965,83111.4%14.2%37,25451,83784,6596.8%10.3%Payroll$18,451,729$39,350,400$69,053,00016.4%11.9%$507,804,045$757,516,913$1,172,478,2848.3%9.1%Average Wages$10,580$13,134$11,8424.4%-2.0%$13,631$14,613$13,8491.4%-1.1%Source: ADE, Inc., based on California Employment Development Department LMID

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

Applied Development Economics, Inc. 15 

## Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692 

# Table 4 is similar to the previous table except that it isolates on the most current data available, and
includes estimates on aggregate sales and aggreg ate profits. Sales estimates are based on US
Economic Census data for the San Joaquin Valley re gion, which were then adjusted using data for
restaurants from the California Board of Equalizat ion. Aggregate net prof it estimates presented

here are based on overall after ta x net profit rate for all restaurants (including those reporting no
profits) for a five year period between 2000 and 2005, or 4.3 percent.

TABLE 4

PROFILE OF INDUSTRIES SUBJECT TO PROPOSED RULE, 2008

Tota l Full Service

Restaurants Limited-Service

Restaurants Cafeterias,

Buffets Snacks\nonAlcoholic Beverage Bars

Establishmen ts 4,481 1,792 2,122 56 511 Employment 78,528 32,995 38,589 1,113 5,831 Payroll $1,065,472,743 $491,0 34,723 $487,5 15,906 $17,869,114 $69,05 3,000 Average Wages $13,56 8 $14,882 $12,634 $16,05 5 $11,842 Sales (est) $3,498, 565,062 $1,411,5 84,59 0 $1,708,0 87,994 $83, 704,599 $295,1 87,879 Net Profits (est) $150,438,29 8 $60,698,137 $73,447,784 $3,599,298 $12,693,079 

## Source: ADE, Inc., based on California Employment Developmen t Department LMID, US Economic Census 2002, California Board of Equalization, and US Internal Revenue Services



# Table 5 below is based on Table 4 but, using data from 2006 and 2008 Dun and Bradstreet, we
convert the number of restaurants by function ( “full services” “limited service,” “cafeterias and
buffets,” and “snacks and non-alcoholic bars”) into restaurants by type (“ethni c restaurants,” “family

restaurants,” “fast food restaurants, ” and “steak and BBQ restaurants”).SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix D: Socioeconomic Impact Analysis ReportOctober 8, 2009Applied Development Economics, Inc.16Final Staff Report With AppendicesFor Revised Proposed Amendments to Rules 4692TABLE 5SAN JOAQUIN VALLEY REGION EATING PLACES BY TYPE OF RESTAURANT, 2008--------------------------------------San Joaquin Valley Region, 2008--------------------------------------EthnicFamilyFastFoodSeafoodSteak and BBQAll OtherTotal Eating PlacesEstablishments4,4811,2362022,5941978351Employment78,52819,7764,76344,2384561,5607,735Revenues (estimated)$3,498,565,062$770,776,865$340,268,719$1,990,991,313$15,102,684$62,994,671$318,430,810Net Profit (estimated)$150,438,298$33,143,405$14,631,555$85,612,626$649,415$2,708,771$13,692,525Full Service RestaurantsEstablishments1,7921,23617401978285Employment32,99519,7764,00204561,5607,201Revenues (estimated)$1,411,584,590$770,776,865$288,983,389$0$15,102,684$62,994,671$273,726,981Net Profit (estimated)$60,698,137$33,143,405$12,426,286$0$649,415$2,708,771$11,770,260Limited-Service RestaurantsEstablishments2,122002,0830038Employment38,5890038,40700182Revenues (estimated)$1,708,087,994$0$0$1,695,803,434$0$0$12,284,560Net Profit (estimated)$73,447,784$0$0$72,919,548$0$0$528,236Cafeterias, BuffetsEstablishments5602800028Employment1,1130761000352Revenues (estimated)$83,704,599$0$51,285,330$0$0$0$32,419,268Net Profit (estimated)$3,599,298$0$2,205,269$0$0$0$1,394,029Snacks\non-Alcoholic Beverage BarsEstablishments51100511000Employment5,831005,831000Revenues (estimated)$295,187,879$0$0$295,187,879$0$0$0Net Profit (estimated)$12,693,079$0$0$12,693,079$0$0$0Source: ADE, Inc., based on California Employment Development Department LMID, US Economic Census 2002, California Board of Equalization, US Internal Revenue Services,and Dun and BradstreetZAPData (January 2009)

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

The discussion directly above reviewed existing cond itions of restaurant industry in the San
Joaquin Valley region. This industry has grown at a faster rate in the region versus the state
as a whole, in large part mirroring the region’s population growth. However, the data shows
that the industry tends to be low-paying. While the discussion above reviewed the larger
trends, it is important to note that not all rest aurants are subject to this rule. District staff
estimates that 670 restaurants will be subject to the rule as amended, as these restaurants operate auto charbroilers and/or underfired char broilers in ways that trigger enforcement
per Rule 4692 as amended. Table 6 below distributes the affected restaurants by type. As
the table shows, slightly over half of all impacted sources are fast food restaurants (or, 367
out of 670 restaurants).

TABLE 6

RESTAURANTS SUBJECT TO PROPOSED AMEN DMENTS TO RULE 4692 AND RULE 2020
San Joaquin Valley Region, 2008

Ethnic Family Fast

Food Seafood Steak

and

BBQ All

Other
Total Eating Pl aces 4,480 1,236 202 2,594 19 78 351 Eating Places Subject to Rule 670 231 50 367 4 18 0

Auto Charbroilers 71 6 3 61 0 1 0

Underfired Charbroilers 599 225 47 306 4 17 0 

## Source: ADE, Inc., based on California Employment Deve lopment Department LMID, US Economic Census 2002, Dun and Bradstreet ZAPData (January 2009), and San Joa quin Valley Unified Air Pollution Control District



# Table 7 profiles the economic characteristics of impacted sources. As these restaurants tend
to be national chain restaurants, or operate their equipment at levels that suggest greater
volume of business, we estimate that on averag e, these affected sources will generate more
revenue relative to the average for all 4,481 ea ting places. Moreover, these restaurants will
have higher profit rates (6.7 percent) relative to the rates for all restaurants (4.3 percent).

TABLE 7

PROFILE OF RESTAURANTS SUBJECT TO PR OPOSED AMENDMENTS TO RULE 4692

AND RULE 2020

Establishments Employment Revenues Net Profits
Eating Places Subj ect to Rule 670 10,866 1,005,000,000 67,335,000

Auto Ch arbroilers 71 1,227 $106,500,000 $7,135,500

Underfired Charbroilers 599 9,639 $898,500,000 $60,199,500 

## Source: Applied Development Economics, based on various corporate annual reports [10-K reports] (www.sec.gov)

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Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# 6. SOCIO-ECONOMIC IMPACTS

This section of the report compares the economic ch aracteristics of affected industries against the
annual compliance costs. The first part of this section discusses annual compliance costs. Section 6.2
discusses general business responses to compliance costs. Section 6.3 analyzes the socioeconomic
impacts of the proposed amendments to Rules 4692.



# 6.1 COMPLIANCE COST ESTIMATES

Table 8 summarizes the estimated annualized costs associated with proposed amendments to Rule
4692. The table includes cost estimates issued by the District and private vendors. In aggregate,
restaurants operating chain-driven charbroilers subject to the proposed amendments can expect
annual costs ranging from $157,215 to $7,153,9 35, depending on type of equipment used to handle
emissions subject to the proposed amendments. Accord ing to the District, in aggregate, restaurants
operating under-fired charbroilers will experience costs ranging from $5.4 million to $60.4 million,
again depending on the control measure adopted. Private vendors say that wet scrubber or
electrostatic precipitator will between $15.8 million to $18.9 million fo r restaurants using under-fired
charbroilers. More than likely, impacted sources will adopt either the catalytic oxidizer, HEPA

filters, or the electros tatic precipitator.

TABLE 8

ANNUAL COSTS: PROPOSED AMENDMENTS TO RULE 4692 AND RULE 2020

Chain-Driven Charbroilers

Type of Control Total annual cost for all

affected restaurants (N = 71) ($/yr) Total Annual Cost per

restaurant ($/restaurant/yr)

Catalytic Oxidizer $2,214 $157,215

HEPA filters $6,397 $454,185 Electrostatic Precipit ator (EP) $7,500 $532,493

Wet Scrubber $11,974 $850,172

Thermal Incinerato r $100,760 $7,153,935



### Under-Fired Charbroilers

Type of Control Total Annual Cost per

restaurant ($/restaurant/yr) Total annual cost for all

affected restaurants

(N = 599) ($/yr)

BAAQMD Costs

HEPA filters $9,020 $5,402,920 Electrostatic Precip itator (EP) $9,720 $5,822,370

Wet Scrubber $12,556 $7,521,055

Thermal Incine rator $100,760 $60,355,027

Vendor Costs

Wet Scrubber $26,379 $15,801,129 Electrostatic Precipit ator (EP) $31,521 $18,880,969 

## Source: San Joaquin Valley Unified Air Pollution Control District



## D-31 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# 6.2 BUSINESS RESPONSES TO COMPLIANCE COSTS

Industries impacted by the proposed amendments may respond in a variety of ways when faced with
new regulatory costs. These responses may range from simply absorbing the costs and accepting a
lower rate of return, to shutting down the a ffected business operation altogether and, where
practical, shift from lower-value to higher-value product and or service. Impacted industries might
also seek to pass costs to users of services or purc hasers of goods. Affected sources may also seek to
renew efforts to increase productivity and reduce costs elsewhere in their operation in order to
recoup the regulatory costs and maintain profit levels.

Industry stakeholders did not submit comments with regard to the socioeconomic analysis at the
workshop conducted for this purpose. Thus, it is not clear how industry would respond to costs
associated with the proposed amendments. How ever, at the April 9, 2009 workshop, affected
stakeholders indicated that businesses needing to finance equipment upgrades will experience
difficulty in obtaining loans. Commercial loans ha ve slowed to a trickle because of the prolonged

economic downturn.

Despite possible difficulties in obtaining loans on favorable terms, we believe affected stakeholders
should be able to bear costs associated with the proposed amendments. In examining the cost as a
share of price of specific products sold, we believe that affected stakeholders utilizing under-fired
charbroilers can pass costs onto to consumers in most instances, except if they use thermal

incinerators as their control device.

A single restaurant such as McDonald’s (or any gr ound-beef serving fast food restaurant) will cook
approximately 32,500 pounds of ground beef a year, resulting in a variety of hamburger patties that
sell for, on average, $2.50 per unit with a drink (qua rter pounder). Expressing the annual cost of a
catalytic oxidizer ($9,020) in terms of pounds of gr ound beef results in $0.28 per pound. Thus, fast
food restaurants could increase the price of their burgers (assuming quarter pounds per patty) by
$0.07. Or, they could increase the price of a burg er by four cents and increase the price of other
items to make up the difference.

In analyzing private vendors’ cost estimates for we t scrubbers and electro-static precipitators to see
if these costs can be passed to the consumer, we believe that these costs could be passed to the
consumer. Expressing the annual cost of a wet sc rubber per private vendors ($26,379) in terms of
ground beef results in $0.81 per pound of ground b eef. To recover this cost, a fast food restaurant
would need to increase burger prices (assumin g quarter pounds per patty) by $0.20, raising the
overall unit price from an average of $2.50 to $2.70. As indicated ea rlier, a restaurant paying $26,379
a year for a wet scrubber could spread the cost across different products, not just ground beef goods

alone.

D-32 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009



# 6.3 IMPACTS ON AFFECTED INDUSTRIES

This section of the report analyzes estimated after tax net profits of affected industries against
anticipated costs associated with implementa tion of proposed amendments to Rule 4692.



# S OCIO 

# -E CONOMIC 

# A NALYSIS AND 

# S MALL 

# B USINESS 

# D ISPROPORTIONATE 

# I MPACT



# A NALYSIS 

# : I NDUSTRIES 

# A FFECTED BY 

# P ROPOSED 

# A MENDMENTS TO 

# R ULE 

# 4692

As Tables 9 shows, costs associated with cata lytic oxidizers, HEPA filters, and electrostatic
precipitators are less than significant, in the ca se of the 71 restaurants operating non-conforming
auto charbroilers. For the most part, costs ca n be passed onto the consumers without jeopardizing

sales. Costs associated with control measures fo r restaurants employing underfired charbroilers are
less than significant, particular ly for HEPA filters and electrostatic precipitators. Costs will be
significant for restaurants adopting wet scrubbers and thermal incinerators per the District cost
scenario and wet scrubbers and electrostatic precipi tators per private vendors cost scenario, but
these restaurants will be able to pass costs to consumers. Restaurants operating underfired
charbroilers will experience significant costs that ca nnot be passed if they adopt thermal incinerators

as their control measure.

TABLE 9

SOCIOECONOMIC IMPACT ANALYSIS: PROPOSED AMENDMENTS TO RULE 4692 AND RULE 2020

Establishments Net Profits Cost As Percent of

Net Profits Significant Eating Places Subject to Rule 670 67,335,000 

### Eating Place Subject To Rule:

Auto Charbroilers 71 $7,135,500 Catalytic Oxidizer $157,215 2.20% < significant

HEPA filters $454,185 6.37% < significant Electrostatic Precipitator (EP) $532,493 7.46% < significant

Wet Scrubber $850,172 11.91% significant*

Thermal Incinerator $7,153,935 100.26% Significant*



### Eating Place Subject To Rule:

Underfired Charbroilers 599 $60,199,500

District Costs

HEPA filters $5,402,920 8.98% < significant Electrostatic Precipitator (EP) $5,822,370 9.67% < significant

Wet Scrubber $7,521,055 12.49% Significant*

Thermal Incinerator $60,355,027 100.26% Significant*

Vendor Costs

Wet Scrubber $15,801,129 26.25% Significant* Electrostatic Precipitator (EP) $18,880,969 31.36% Significant* 

## Source: Applied Development Economics (*note = significant but not likely control measure)



# Since the bulk of restaurants subject to proposed amendments to Rule 4692 will adopt catalytic

oxidizers, HEPA filters, and electrostatic precipitators, we conclude by saying the proposed
amendments do not result in significant impacts. Wh ile the bulk of restaurants are small businesses,
exemptions in the proposed rule affect larger restaurants, meaning that restaurants that are small
businesses are not affected by the draft amendments. We conclude that small businesses are not
disproportionately impacted by the proposed amendments since th ese businesses remain exempt
from rule control requirements

D-33 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioecono mic Impact Analysis Repo rt October 8, 2009

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D-34 Final Staff Report With Appendices For Revised Proposed Amendments to Rules 4692