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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

APPENDIX D 

FINAL DRAFT SOCIOECONOMIC IMPACT ANALYSIS REPORT 

FOR REVISED PROPOSED AMENDMENTS 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-2 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rules 4692 
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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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: Socioeconomic Impact Analysis Report October 8, 2009 

ANALYZING INDUSTRY STAKEHOLDER COSTS 

The San Joaquin Valley Unified Air Pollution Control 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 this 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 below identifies costs for four difference control 

measures. These control measures are as follows: 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 

Applied Development Economics, Inc. 1 

Final Staff Report With Appendices 

For Revised Proposed Amendments to Rules 4692 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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 manner. 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, cafeterias-buffets, and snack\non-alcoholic beverage 

bars). Using Dun and Bradstreet, we further distribute each broad category into six types of 

eating places (ethnic restaurants, family restaurants, 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 Development Department LMID, US Economic Census 2002, California Board 

of Equalization, US Internal Revenue Services, and Dun and Bradstreet ZAPData (January 2009). Data in this table slightly vary with 

Table 5 in socioeconomic impact analysis, as this table incorporates establishment and employment for all of 2008, whereas initially 

we estimated 2008 trends based on two quarters of data. 

Applied Development Economics, Inc. 2 

Final Staff Report With Appendices 

For Revised Proposed Amendments to Rules 4692 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

As the table above shows, there are approximately 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 $1,641,700 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 precipitator 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 places 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 electrostatic 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 revenues to accommodate the $14,638 cost per 

restaurant in a less than significant manner. Restaurants employing at least 50 workers 

represent almost nine percent of all full-service restaurants. While full-service restaurants 

employing at least 100 workers can accommodate all four industry-priced control measures, 

Applied Development Economics, Inc. 3 

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For Revised Proposed Amendments to Rules 4692 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

Applied Development Economics, Inc. 4 

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 service 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 stakeholder 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. 

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Appendix D: Socioeconomic Impact Analysis Report 

TABLE 4. EATING PLACES: FULL-SERVICE RESTAURANTS, 2008: SAN JOAQUIN VALLEY REGION 

Ethnic Family Fast Food Seafood Ste

Establishments Avg. Rev. Establishments Avg. Rev. Establishments Avg. Rev. Establishments Avg. Rev. Establishm

Total 1,225 $646,358 172 $1,726,592 20 $761,197 

Establishments employing 1-4 workers 459 $63,570 65 $169,303 7 $81,029 

Establishments employing 5-9 workers 225 $222,495 32 $592,561 3 $283,602 

Establishments employing 10-19 workers 222 $476,774 31 $1,269,774 3 $607,720 

Establishments employing 20-49 workers 215 $1,176,043 30 $3,132,108 3 $1,499,042 Establishments employing 50-99 workers 74 $2,383,872 9 $7,395,784 1 $3,038,598 

Establishments employing 100-249 workers 28 $5,767,361 4 $14,814,026 1 $3,164,176 Establishments employing 250-499 workers 1 $11,919,359 1 $5,640,852 1 $294,799 

Establishments employing >500 workers 

Source: ADE, Inc. based on California Employment Development Department, County Business Patterns, and US Economic Census 

Applied Development Economics, Inc. 

Final Staff 

For Revised Proposed Am
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Appendix D: Socioeconomic Impact Analysis Report 

Applied Development Economics, Inc. 

Final Staff 

For Revised Proposed Am

Source: ADE, Inc. based on California Employment Development Department, County Business Patterns, and US Economic Census

TABLE 5. EATING PLACES: LIMITED-SERVICE RESTAURANTS, 2008: SAN JOAQUIN VALLEY REGIO

Ethnic Family Fast Food Seafood Stea

Establishments Avg. Rev. Establishments 

Avg. Rev. Establishments Avg. Rev. Establishments 

Avg. Rev. Establish

Total 2,089 $796,123 

Establishments employing 1-4 workers 476 $73,361 

Establishments employing 5-9 workers 301 $257,151 

Establishments employing 10-19 workers 481 $549,944 Establishments employing 20-49 workers 735 $1,358,077 Establishments employing 50-99 workers 88 $2,773,077 

Establishments employing 100-249 workers 7 $6,122,636 Establishments employing 250-499 workers 

Establishments employing >500 workers 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report 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 workers 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 productivity. 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 positions 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 impacts without any significant loss to productivity. 

Applied Development Economics, Inc. 7 

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For Revised Proposed Amendments to Rules 4692 
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Appendix D: Socioeconomic Impact Analysis Report 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: Socioeconomic Impact Analysis Report 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

D-12 Final Staff Report With Appendices 

For Revised Proposed Amendments to Rules 4692 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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 underfired 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 wet 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 restaurants employing underfired charbroilers are 

less than significant, particularly 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 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 consumer for the most part, we also conclude by 

saying that small businesses are not disproportionately impacted by the proposed 

amendments. 

Applied Development Economics, Inc. 1 

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For Revised Proposed Amendments to Rules 4692 
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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

2. INTRODUCTION 

This report describes the socioeconomic impacts of Draft Amendments to Rule 4692 dated 

February 26, 2009, which implements an emission control measure in the District’s 2008 

PM2.5 Plan. Following this introduction, the report 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. Figure 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

Applied Development Economics, Inc. 3 

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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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 any 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 rule requires that chain-driven charbroilers 

be equipped and operated with a catalytic oxidizer 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-broilers installed after June 30, 2010 would be 

subject to the emission limits at the date of installation. 

Chain-driven charbroilers would also be affected by the draft amendments. The minimum 

cooked meat to be subject to control requirements 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 proposed 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 Emissions from Restaurant Operations) as well as rules and regulations in other 

air districts inside and outside of California. 

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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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 the affected sources are a part, analyzing data on 

the number of jobs, sales levels, the typical profit ratios and other economic indicators for 

each industry. 

This report relies heavily on the most current data 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 Department (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 estimate 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 socioeconomic analysis shows what proportion of 

profits the compliance costs represent. Based on assumed thresholds of significance, ADE 

discusses in the report whether the affected sources 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 accepted methodologies discussed in a 1995 

California Air Resources Board report called “Development 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 methodology to assess the impact that California 

Environmental Protection Agency proposed regulations 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 associated 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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Appendix D: Socioeconomic Impact Analysis Report October 8, 2009 

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

seems reasonable or even conservative.” 

Applied Development Economics, Inc. 8 

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SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Impact Analysis Report 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 part 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 economic characteristics of potentially impacted 

industries that might be subject to these rules. 

5.1 REGIONAL DEMOGRAPHIC AND ECONOMIC TRENDS 

REGIONAL DEMOGRAPHIC TRENDS

The San Joaquin Valley region experienced tremendous population growth during the 1990s. 

Many came to this area because of affordable housing. As a result, population increased 

significantly. The eight-county region’s population 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 regional 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 California 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 and 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 respectively, 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 during the 1990s and into the new century 

significantly influenced the economy of this eight-county region. 

Applied Development Economics, Inc. 9 

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Appendix D: Socioeconomic Impact Analysis Report 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 546,852 616,477 685,660 2.4% 2.2% 2.3% 

 Stanislaus 428,272 483,705 525,903 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

REGIONAL ECONOMIC TRENDS

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 regional 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. Accrued 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 industries 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 Joaquin 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 employed by industries within agriculture, as 

Table 2 shows. In 1996, approximately 13.1 percent 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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transition toward a services economy was in place 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 industries 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 percent, 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; however, with the downturn in the national 

economy, these industries’ rates of growth have 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 grown 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 substantial 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.
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TABLE 2 

ECONOMIC TRENDS: SAN JOAQUIN VALLEY, 1998-2008 

Em

D

----------------1998--------------- ----------------2003---------------- ----------------2008--------------- 2008 

NAICS Estab. Employment 

Average 

Pay Estab. Employment 

Average 

Pay Estab. Employment 

Average 

Pay Regio

ALL 80,398 1,060,454 $33,566 92,231 1,209,849 $40,577 100,414 1,317,365 $39,543 100.0% Ag, Natural Resources 11 7,580 139,953 $18,285 8,646 169,556 $23,354 7,371 178,522 $21,714 13.6Utilities 21 251 9,533 $66,831 213 8,340 $81,309 185 10,512 $82,627 0.8Mining 22 165 4,231 $72,458 179 5,071 $86,065 169 5,618 $81,296 0.4Construction 23 6,124 49,851 $38,969 6,074 69,065 $46,870 6,705 72,312 $44,716 5.5Manufacturing 31-33 2,998 113,344 $40,989 2,779 110,002 $48,735 2,662 115,153 $43,352 8.7Wholesale 42 2,749 33,365 $47,726 2,722 37,124 $53,053 3,027 45,299 $46,510 3.4Retail 44-45 9,586 121,132 $26,446 8,941 132,956 $31,349 8,882 143,910 $25,892 10.9Transport Warehousing 48-49 2,306 33,821 $38,946 2,237 38,554 $44,962 1,957 36,514 $40,166 2.8Information 51 653 14,885 $43,401 692 14,257 $53,695 625 15,328 $47,417 1.2Finance and Insurance 52 2,637 27,792 $46,709 3,046 30,690 $59,530 3,373 32,027 $50,112 2.4Real Estate 53 2,575 13,180 $26,755 2,607 15,932 $34,144 2,784 15,897 $32,633 1.2Prof Technical Services 54 4,064 25,130 $44,216 4,501 31,812 $52,467 4,839 36,411 $46,773 2.8Management of Companies 55 321 17,997 $52,338 316 13,988 $60,045 288 10,551 $55,323 0.8Admn and Waste Services 56 2,910 44,283 $22,362 2,768 48,182 $28,986 2,947 58,761 $27,165 4.5Private Educational Services 61 459 7,107 $25,456 480 9,298 $29,532 497 10,781 $27,407 0.8Health Services 62 6,082 90,304 $38,243 6,526 110,647 $47,867 6,983 126,598 $44,058 9.6Arts, Entertainment, Rec 71 617 10,386 $16,985 621 10,244 $20,192 641 11,172 $17,305 0.8Food and Accommodations 72 5,050 70,335 $12,860 4,942 78,805 $15,831 5,312 90,404 $14,020 6.9Other Services 81 20,157 41,069 $21,165 30,390 47,370 $25,731 35,629 52,505 $21,606 4.0Unclassified 99 85 199 $38,033 1,769 2,534 $26,836 0.2Local Govt. 409 51,325 $45,674 437 60,768 $56,307 477 68,469 $51,051 5.2Local Govt., Education 881 90,200 $39,664 1,487 109,087 $48,304 1,792 118,716 $78,718 9.0State, ALL 1,464 23,639 $46,051 1,166 28,463 $56,515 1,078 31,639 $51,222 2.4Federal, ALL 360 27,592 $52,749 376 29,439 $66,395 424 27,732 $58,945 2.1Source: ADE, Inc., based on California Employment Development Department, LMID 
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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 amendments. 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 the San Joaquin Valley region, focusing on eating 

places as reported by the US Census and 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 state 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 increased annually by 1.7 percent between 2003 and 

2008, compared to California’s slightly lower annual 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. 
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TABLE 3 

EATING PLACES TRENDS: SAN JOAQUIN VALLEY: 1998-2008 

---------------- San Joaquin Valley Region ------------------- -------------------------------- California --

Full Service Restaurants 1998 2003 2008 98-03 03-08 1998 2003 2008  Establishments 1,651 1,605 1,792 -0.6% 2.2% 22,670 22,986 2 Employment 24,305 28,245 32,995 3.1% 3.2% 398,597 462,416 53 Payroll $344,839,496 $424,716,272 $491,034,723 4.3% 2.9% $7,112,680,453 $8,549,625,088 $9,884,63 Average Wages $14,188 $15,037 $14,882 1.2% -0.2% $17,844 $18,489 $1Limited-Service Restaurants  Establishments 2,022 2,052 2,122 0.3% 0.7% 23,537 23,090 2 Employment 32,923 35,495 38,589 1.5% 1.7% 354,418 369,417 39 Payroll $375,745,690 $441,768,322 $487,515,906 3.3% 2.0% $4,881,153,642 $5,472,926,269 $5,779,50 Average Wages $11,413 $12,446 $12,634 1.7% 0.3% $13,772 $14,815 $1Cafeterias, Buffets  Establishments 61 52 56 -3.1% 1.6% 1,130 905  Employment 1,175 1,115 1,113 -1.0% 0.0% 15,490 13,987 1 Payroll $15,987,704 $15,615,204 $17,869,114 -0.5% 2.7% $255,225,594 $264,139,149 $254,46 Average Wages $13,607 $14,005 $16,055 0.6% 2.8% $16,477 $18,885 $1Snacks\non-Alcoholic Beverage Bars  Establishments 280 319 511 2.6% 9.9% 4,160 4,982  Employment 1,744 2,996 5,831 11.4% 14.2% 37,254 51,837 8 Payroll $18,451,729 $39,350,400 $69,053,000 16.4% 11.9% $507,804,045 $757,516,913 $1,172,47 Average Wages $10,580 $13,134 $11,842 4.4% -2.0% $13,631 $14,613 $1Source: ADE, Inc., based on California Employment Development Department LMID
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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 aggregate profits. Sales estimates are based on US 

Economic Census data for the San Joaquin Valley region, which were then adjusted using data for 

restaurants from the California Board of Equalization. Aggregate net profit estimates presented 

here are based on overall after tax 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 

 Total 

Full Service 

Restaurants 

Limited-Service 

Restaurants 

Cafeterias, 

Buffets 

Snacks\nonAlcoholic 

Beverage Bars 

 Establishments 4,481 1,792 2,122 56 511 

 Employment 78,528 32,995 38,589 1,113 5,831 

 Payroll $1,065,472,743 $491,034,723 $487,515,906 $17,869,114 $69,053,000 

 Average Wages $13,568 $14,882 $12,634 $16,055 $11,842 

 Sales (est) $3,498,565,062 $1,411,584,590 $1,708,087,994 $83,704,599 $295,187,879 

 Net Profits (est) $150,438,298 $60,698,137 $73,447,784 $3,599,298 $12,693,079 

Source: ADE, Inc., based on California Employment Development 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 (“ethnic restaurants,” “family 

restaurants,” “fast food restaurants,” and “steak and BBQ restaurants”). 
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TABLE 5 

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

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

Ethnic Family Fast Food Seafood Steak and 

Total Eating Places 

 Establishments 4,481 1,236 202 2,594 19  Employment 78,528 19,776 4,763 44,238 456  Revenues (estimated) $3,498,565,062 $770,776,865 $340,268,719 $1,990,991,313 $15,102,684 $62

 Net Profit (estimated) $150,438,298 $33,143,405 $14,631,555 $85,612,626 $649,415 $2

 Full Service Restaurants  Establishments 1,792 1,236 174 0 19  Employment 32,995 19,776 4,002 0 456  Revenues (estimated) $1,411,584,590 $770,776,865 $288,983,389 $0 $15,102,684 $6 Net Profit (estimated) $60,698,137 $33,143,405 $12,426,286 $0 $649,415 $ Limited-Service Restaurants  Establishments 2,122 0 0 2,083 0  Employment 38,589 0 0 38,407 0  Revenues (estimated) $1,708,087,994 $0 $0 $1,695,803,434 $0  Net Profit (estimated) $73,447,784 $0 $0 $72,919,548 $0  Cafeterias, Buffets  Establishments 56 0 28 0 0  Employment 1,113 0 761 0 0  Revenues (estimated) $83,704,599 $0 $51,285,330 $0 $0 

 Net Profit (estimated) $3,599,298 $0 $2,205,269 $0 $0 

 Snacks\non-Alcoholic Beverage Bars  Establishments 511 0 0 511 0  Employment 5,831 0 0 5,831 0  Revenues (estimated) $295,187,879 $0 $0 $295,187,879 $0  Net Profit (estimated) $12,693,079 $0 $0 $12,693,079 $0 Source: ADE, Inc., based on California Employment Development Department LMID, US Economic Census 2002, California Board of Equalization, US 

and Dun and Bradstreet ZAPData (January 2009) 
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The discussion directly above reviewed existing conditions 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 restaurants 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 charbroilers 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 AMENDMENTS TO RULE 4692 AND RULE 2020 

San Joaquin Valley Region, 2008 

Ethnic Family 

Fast 

Food Seafood 

Steak 

and 

BBQ 

All 

Other 

 Total Eating Places 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 Development Department LMID, US Economic Census 2002, Dun 

and Bradstreet ZAPData (January 2009), and San Joaquin 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 average, these affected sources will generate more 

revenue relative to the average for all 4,481 eating 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 PROPOSED AMENDMENTS TO RULE 4692 

AND RULE 2020 

Establishments Employment Revenues Net Profits 

 Eating Places Subject to Rule 670 10,866 1,005,000,000 67,335,000 

 Auto Charbroilers 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: Socioeconomic Impact Analysis Report October 8, 2009 

6. SOCIO-ECONOMIC IMPACTS 

This section of the report compares the economic characteristics 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 $7,153,935, 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 wet scrubber or 

electrostatic precipitator will between $15.8 million to $18.9 million for restaurants using under-fired 

charbroilers. More than likely, impacted sources will adopt either the catalytic oxidizer, HEPA 

filters, or the electrostatic 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 Precipitator (EP) $7,500 $532,493 

Wet Scrubber $11,974 $850,172 

Thermal Incinerator $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 Precipitator (EP) $9,720 $5,822,370 

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

 Thermal Incinerator $100,760 $60,355,027 

Vendor Costs 

 Wet Scrubber $26,379 $15,801,129 

 Electrostatic Precipitator (EP) $31,521 $18,880,969 

Source: San Joaquin Valley Unified Air Pollution Control District 

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Appendix D: Socioeconomic Impact Analysis Report 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 affected 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 purchasers 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. However, at the April 9, 2009 workshop, affected 

stakeholders indicated that businesses needing to finance equipment upgrades will experience 

difficulty in obtaining loans. Commercial loans have 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 ground-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 (quarter pounder). Expressing the annual cost of a 

catalytic oxidizer ($9,020) in terms of pounds of ground 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 burger by four cents and increase the price of other 

items to make up the difference. 

In analyzing private vendors’ cost estimates for wet 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 scrubber per private vendors ($26,379) in terms of 

ground beef results in $0.81 per pound of ground beef. To recover this cost, a fast food restaurant 

would need to increase burger prices (assuming quarter pounds per patty) by $0.20, raising the 

overall unit price from an average of $2.50 to $2.70. As indicated earlier, a restaurant paying $26,379 

a year for a wet scrubber could spread the cost across different products, not just ground beef goods 

alone. 

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Appendix D: Socioeconomic Impact Analysis Report 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 implementation of proposed amendments to Rule 4692. 

SOCIO-ECONOMIC ANALYSIS AND SMALL BUSINESS DISPROPORTIONATE IMPACT 

ANALYSIS: INDUSTRIES AFFECTED BY PROPOSED AMENDMENTS TO RULE 4692 

As Tables 9 shows, 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 restaurants employing underfired charbroilers are 

less than significant, particularly 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 precipitators 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 cannot 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. While 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 these businesses remain exempt 

from rule control requirements 

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