1 

U.S. Environmental Protection Agency 

Office of Air Quality Planning and Standards 

June 2015 

Economic Impact and Small Business Analysis –Mineral Wool and Wool Fiberglass RTRs and 

Wool Fiberglass Area Source NESHAP 

1. Introduction 

This report is the economic impact analysis for the final Mineral Wool Production and 

Wool Fiberglass Manufacturing Risk and Technology Review (RTR) standards and also the final 

Wool Fiberglass Area Source NESHAP. Promulgation of these standards is scheduled to occur 

under court-order on June 18, 2015. The report presents impacts to firms affected by the 

requirements in the rules and their consumers. Results are presented individually for each final 

rule, and a discussion of cumulative impacts from all 3 rules is presented at the end of the 

report. Impacts to small firms are accounted for in adherence to the Regulatory Flexibility Act 

as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). The 

industries affected by this rulemaking are found in NAICS 327993. 

 This final action is the culmination of three proposals. On November 25, 2011 (76 FR 

72770), the EPA proposed revisions to the Mineral Wool Production and Wool Fiberglass 

Manufacturing NESHAP based on the risk and technology review which was conducted under 

Clean Air Act (CAA) sections 112(f)(2) and (d)(6). The EPA proposed to discontinue using 

formaldehyde as a surrogate for phenol and methanol in both source categories, and 

discontinue using carbon monoxide (CO) as a surrogate for carbonyl sulfide (COS) in the Mineral 

Wool Production source category. The EPA also proposed MACT standards under CAA sections 

112(d)(2) and (3) for hazardous air pollutants (HAP) that were previously unregulated or that 

had previously been regulated by a surrogate. The limits in those proposed amendments would 

apply only to major sources, that is, sources emitting at least 10 tons per year of a single HAP or 

25 tons per year of any combination of HAP; area sources emit less than this amount. 

On April 15, 2013 (78 FR 22370), the EPA issued a supplemental proposal that was based 

on comments and new information we received after the November 2011 proposal. In that 

action EPA proposed first-time standards for area sources in the Wool Fiberglass Manufacturing 

source category. 

On November 13, 2014 (79 FR 68012), the EPA issued a second supplemental proposal 

to explain changes to previously proposed emissions limits for sources in these source 
2 

categories, proposed work practice standards under CAA section 112(h) in lieu of certain 

emission limits, and clarified the EPA’s use of the upper predictive limit (UPL) in setting 

Maximum Achievable Control Technology (MACT) floors. 

This final action includes chromium emission limits for gas-fired glass-melting furnaces 

used to make wool fiberglass that are located at area sources (to be subject to subpart NN) and 

amends the existing major source rules for Mineral Wool Production (subject to subpart DDD) 

and Wool Fiberglass Manufacturing (subject to NNN). It also adds these sources to the source 

category list for the Urban Air Toxics Strategy of the Clean Air Act. 

1.A. Summary of November 2011 revisions 

On November 25, 2011 (76 FR 72770) the EPA proposed revisions to the Mineral Wool 

and the Wool Fiberglass Manufacturing NESHAP, 40 CFR part 63, subparts DDD and NNN, 

respectively, to address the results of the residual risk and technology review (RTR) that the 

EPA is required to conduct under sections 112(d)(6) and 112(f)(2)(at 76 FR 72812). In the 

November 25, 2011 notice, we proposed several amendments to both NESHAP and announced 

our intention to list and regulate area sources in the wool fiberglass area source category 

pending the collection of new test data. 

The agency also noted that since promulgation of the 1999 NESHAP, at least 20 of the 

existing 30 wool fiberglass facilities are now exempt from the rule due to elimination of phenolformaldehyde binders and are also area sources. As noted previously, a facility that no longer 

uses phenol-formaldehyde binders does not meet the definition of “wool fiberglass facility” 

under Subpart NNN. However, the glass-melting furnaces at these sources continue to emit 

chromium and other HAP metal compounds, and are completely separate and independent 

from emissions from the bonding portion of the process. Further, while replacement of phenolformaldehyde binders with non-HAP binders is an environmentally responsible, or ‘green’ 

choice within the wool fiberglass manufacturing industry, recent data from industry show that 

gas-fired glass-melting furnaces specifically continue to emit chromium and other HAP metal 

compounds, and for furnaces located at area sources these emissions are not currently 

regulated pursuant to CAA section 112. We are now including regulation of wool fiberglass 

area sources in this final rule as a new subpart, NN. 
3 

1.B. Summary of the April 15, 2013 supplemental proposal. 

On April 15, 2013 (78 FR 22370), the EPA published a supplemental proposal to the RTR. 

The supplemental proposal made corrections to the November 2011 proposal for both source 

categories, responded to comments, and proposed first time standards for gas-fired glassmelting furnaces at area sources in the wool fiberglass source category under EPA’s urban air 

toxics strategy (Strategy) as required by CAA Sections 112(c)(3) and 112(k)(3)(B)(ii). 

1.C. Summary of the November 13, 2014 supplemental proposal. 

On November 13, 2014 (79 FR 68012), the EPA issued a second supplemental proposal 

to explain changes to previously proposed emissions limits for sources in these source 

categories, proposed work practice standards under CAA section 112(h) in lieu of certain 

emission limits, clarified our use of the upper predictive limit (UPL) in setting Maximum 

Achievable Control Technology (MACT) floors, revised startup and shutdown standards for both 

source categories 

1.D. What is the purpose of this final rule? 

Mineral Wool Production 

 For the Mineral Wool Production source category, regulated under subpart DDD, the 

EPA is finalizing the emissions limits as proposed in the November 2014 supplemental proposal. 

The EPA is removing the surrogacy of CO for COS and finalizing COS emission limits for two 

subcategories of cupolas according to design (open-top or closed –top). The EPA is finalizing 

emission limits for HF an HCl for two subcategories of cupolas according to raw material use 

(those processing slag and those not processing slag). The EPA is also removing the surrogacy of 

formaldehyde for phenol and methanol and finalizing emission limits for formaldehyde, 

methanol and phenol from three subcategories of bonded lines according to design 

(horizontal, vertical, or drum). The EPA is not amending the PM emission limit for the Mineral 

Wool Production source category. 

Wool Fiberglass Manufacturing Major Sources (NNN) 

 For the Wool Fiberglass Manufacturing source category, the EPA is finalizing emission 

limits for chromium compounds from gas-fired glass-melting furnaces at major sources 
4 

(regulated under subpart NNN). The final chromium emission limits are slightly higher than 

previously proposed. 

 The EPA is amending the PM limit for all furnaces at major sources subject to NNN to 

0.33 lb/ton (down from 0.5 lb/ton). 

 The EPA is also removing the surrogacy of formaldehyde for phenol and methanol, and 

finalizing emission limits for phenol, formaldehyde and methanol emissions from existing and 

new FA lines subject to NNN. The applicability of the rule as it applies to FA lines is being 

amended by the final rule. In this final rule, all FA lines are subject to the FA line emission limits

regardless of the product manufactured. 

 The EPA is deferring amending emission limits for RS lines pending new information to 

be collected under section 114 authority. 

Wool Fiberglass Manufacturing Area Sources (NN) 

 For the Wool Fiberglass Manufacturing source category, the EPA is finalizing emission 

limits for chromium compounds from gas-fired glass-melting furnaces at area sources 

(regulated under a new subpart NN). The emission limits for area sources are slightly higher 

than previously proposed, and are the same as those for major sources. 

We estimate the economic impacts of these standards in this report for all of the 

different rules covered in this final rulemaking. 

2. The Mineral Wool Industry 

2.A. Background on Mineral Wool Industry 

 Mineral wool often is defined as any fibrous glassy substance made from minerals or 

mineral products such as slag and glass. The chemical composition of mineral wool can vary 

widely. The basic materials for glass wool manufacture include sand, soda ash, dolomite, 

limestone, sodium sulfate, sodium nitrate, and minerals containing boron and alumina. 

Traditional stone wool production involves melting a combination of alumino-silicate rock 

(usually basalt), blast furnace slag, and limestone or dolomite. In addition, for both glass and 

stone wool the batch may contain recycled process or product waste. For glass wool, other 

forms of waste glass (cullet) are also used as feedstock. 
5 

 These materials are processed into insulation and other fibrous building materials that 

are used for structural strength and fire resistance. Generally, these products take one of four 

forms: “blowing” wool or “pouring” wool, which is put into the structural spaces of buildings; 

batts, which may be covered with a vapor barrier of paper or foil and are shaped to fit between 

the structural members of buildings; industrial and commercial products such as high-density 

fiber felts and blankets, which are used for insulating boilers, ovens, pipes, refrigerators, and 

other process equipment; and bulk fiber, which is used as a raw material in manufacturing 

other products, such as ceiling tile, wall board, spray-on insulation, cement, and mortar. 

 Glass wool and stone wool production make use of different proprietary technologies, 

including melting, fiberizing and curing. Production of mineral wool is a high temperature, 

energy intensive process. Mineral wool plants use a mix of technologies and fuels: a total of 11 

proprietary fiberizing technologies are employed worldwide. Glass wool furnaces are 

predominantly gas fired, but there are a substantial number of furnaces that are electrically 

heated. 

In the production of mineral wool products that do not require high rigidity, oil is 

typically applied to suppress dust and add some strength to the fiber; the fiber is then sized and 

bagged or baled. This is known as a “nonbonded” product which is manufactured on a 

“nonbonded” production line. 

For mineral wool products requiring a higher structural rigidity, a HAP-based 

(phenol/formaldehyde) binder may be applied to the fiber. This is known as a “bonded” 

product made on a bonded production line. The binder-laden fiber mat is then thermoset in a 

curing oven and cooled. The major differences between the “nonbonded” and bonded 

production lines are the application of binder during the collection process followed by the 

curing oven. Four facilities only manufacture nonbonded products, while the other 3 facilities 

operate both bonded and nonbonded production lines. A total of 11 cupolas and 3 curing ovens 

are operated by the facilities in this source category. 

2.B. Economic Impact Estimates 

As mentioned previously, mineral wool manufacturing facilities are included in NAICS 

327993. The industry’s revenue for 2012 was reported at $5.6 billion, and the estimated 

gross profit was 32.07%. Exports from US mineral wool firms exceeded imports by about $600 
6 

million in 2012.1 The year 2012 is the most recent year for which we are able to obtain 

economic data for NAICS 327993. According to the size definition applied to this industry by 

the U.S. Small Business Administration (SBA) (750 company employees or less)2, five of the 

seven parent firms in this industry affected by this final rule are classified as small businesses. 

Of the five small firms, their average number of employees is 108. All of these firms are U.S. 

owned except for Roxul USA. Roxul USA is a subsidiary of a Danish company, Rockwool 

International, which is the world’s largest producer of mineral wool insulation. Roxul USA’s 

facility is located in Byhalia, Mississippi. Roxul USA broke ground in 2012 and completed 

construction on the new facility in 2014. Roxul USA uses a different cupola design (similar to 

others used in Europe) to produce mineral wool and bonded products. This facility will be 

subject to the amended emission limits for new sources in the Mineral Wool Production MACT 

rule. The company is not a small business. We have included this new production facility as part 

of the estimated cost impacts. Based on the emissions test data provided by the industry, none 

of the existing facilities will have to install additional control equipment to comply with the 

proposed rule requirements. 

We estimate that all 8 of the mineral wool production facilities will incur additional 

testing costs to demonstrate compliance with the new carbonyl sulfide (COS), hydrochloric acid 

(HCl), and hydrofluoric acid (HF) emission limits for cupolas. We also estimate that the 3 

existing facilities with bonded product lines will incur additional testing costs to demonstrate 

compliance with the revised formaldehyde and new phenol and methanol emission limits that 

will apply to collection and curing operations combined. We only have general information on 

the planned new facility but to estimate costs conservatively, we assume in the cost estimation 

that it would operate two cupolas and two bonded product lines that would be subject to the 

limits in the rule. All of the new testing associated with the final rule requirements is based on a 

5-year frequency. Therefore, the initial (first year) testing costs were divided by 5 to come up 

with “annualized” testing costs. 

This economic analysis identified the businesses that will be affected by this rule and 

provides an analysis at a screening level to assist in determining whether this rule is likely to 

 

1

 Mineral Wool Manufacturing Industry in the U.S. and its International Trade (2014 Edition). LLC Supplier 

Relations US. Available on February 17, 2014. Can be found at http://www.marketresearch.com/SupplierRelations-US-LLC-v3418/Mineral-Wool-Manufacturing-International-Trade-8033092/. 

2

 Found at the web site for the U.S. Small Business Administration (http://www.sba.gov/size), with small business 

size standards updated as of July 14, 2014. 
7 

impose a significant economic impact on affected businesses. The analysis employed here is a 

“sales test” that computes the annualized compliance costs as a share of sales for each 

company. The annualized cost per sales for a company represents the maximum price increase 

in affected product needed for the company to completely recover the annualized costs 

imposed by the regulation. A partial equilibrium analysis, a type of economic impact analysis 

that estimates changes in prices and output for the regulated sector resulting from a rule’s 

implementation, is deemed more than necessary for this final rule given the expected size of 

the impacts. 

The “sales test” is the impact methodology EPA employs in economic impact analysis 

such as this one as opposed to a “profits test”, in which annualized compliance costs are 

calculated as a share of profits.3 This is because revenues or sales data are commonly available 

data for entities normally impacted by EPA regulations and profits data normally made 

available are often not the true profits earned by firms due to accounting and tax 

considerations. Firms and entities often have ways legally available in the tax code to minimize 

their reported profits; thus, using reported profits may lead to a less than accurate estimate of 

the economic impact of a regulation to an affected firm or entity and their consumers. While 

screening level analyses are often employed to estimate impacts to small business or entities as 

part an analysis in compliance with the Regulatory Flexibility Act (RFA) as amended by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA), a screening level analysis can also be 

employed in an economic impact analysis such as this one whose focus is on the regulated 

companies. The costs used as input to the economic impact and small business analysis include 

the cost of emissions control and the costs of monitoring, recordkeeping, reporting and testing. 

The compliance costs by mineral wool facility are shown below in Table 1, and all compliance 

costs are in 2013$. More details on the compliance costs can be found in the mineral wool RTR 

cost memo prepared for this rulemaking.4

 

3

 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 

4 Memo from David Reeves, RTI, to Susan Fairchild, US EPA. Estimated Cost Impact for Mineral Wool Production 

Industry to Comply with Proposed Residual Risk and Technology Review (RTR) Amendments. August 29, 2014. 
8 

Table 1. Mineral Wool Production Facilities Costs to Comply with RTR Amendments - Summary 

Cupolasa Combined 

Collection/Curing

# 

Cupolas

Annualized 

(New) COS 

Testing Costb

# 

Bonded 

Lines 

Annualized 

(New) 

Testing 

Costc Facility Location 

Annualized 

(New) HCl/HF 

Testing Costb

Total FacilAnnualized 

Industrial Insulation Group (IIG) 

Phenix City, AL 1 $2,800 $800 1 $800 $

Thermafiber Wabash IN 2 5,200 1,600 1 800 USG Interiors Red Wing, MN 2 5,200 1,600 0 0 USG Interiors Walworth, WI 1 2,800 800 0 0 Amerrock Products Nolanville, TX 2 5,200 1,600 0 0 Isolatek Int’l Huntington, IN 2 5,200 1,600 0 0 Rock Wool Mfg Leeds, AL 1 2,800 800 1 800 Roxul USA Byhalia, MS 2 5,200 1,600 2 1,600 

SubTotal 13 $34,400 $10,400 5 $4,000 $

a – 8 of the 13 cupolas currently have (or will have) incineration/afterburner controls. None of the facilities are expected to have any additional equipment or material cost impacts to meet the proposed emission limits. b – Cupola testing costs reflect incremental (new) costs for COS, HF, and HCl testing; current test requirements 

 for PM not included. c – Collection/curing costs reflect incremental costs for phenol and methanol testing; current test requiremen

 for formaldehyde not included. 
9 

For these mineral wool firms, the impacts of the final rule range from 0.006 percent to 

0.1 percent, expressed as annual compliance costs as a percent of sales.5 The price elasticity of 

demand for mineral wool is estimated at -0.86, and the price elasticity of supply for mineral 

wool is estimated at -0.7.7 With the responsiveness of mineral wool demand and supply being 

less in percentage terms than the change in product price as approximated by the cost to 

revenue ratio, since this ratio is the maximum price change that producers may face, and with 

this ratio at or below 1 percent for the majority of production from this industry, it is expected 

that mineral wool price and output changes in response to this final rule will be less than 1 

percent.8

 The total annual compliance costs (TAC) of the final rule for this industry are $48,800 

(2013 dollars) as shown in Table 1.9 Since confidential business information (CBI), particularly 

revenue data, received from the subject firms has been used to estimate these impacts, we will 

not provide economic impact estimates by firm. 

3. The Wool Fiberglass Industry 

3.A. Background 

Wool fiberglass is a thick, fluffy material made from discontinuous fibers, is used for 

thermal insulation and sound absorption. It is commonly found in ship and submarine 

bulkheads and hulls; automobile engine compartments and body panel liners; in furnaces and 

air conditioning units; acoustical wall and ceiling panels; and architectural partitions. Fiberglass 

can be tailored for specific applications such as Type E (electrical), used as electrical insulation 

 

5

 Use of this metric for economic impacts when small businesses are prevalent in an industry affected by a 

regulation is consistent with the EPA guidance on SBREFA compliance 

(http://www.epa.gov/sbrefa/documents/Guidance-RegFlexAct.pdf), chapters 2 and 3. 

6

 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. Http://Www.Rff.Org/Publications/Pages/Publicationdetails.Aspx?. Publicationid=20680 

Accessed August 2009. Table 8.A.6. 

7 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” <http://faculty. 

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/ 

TradeElasticities.html . 

8

 This conclusion is consistent with the existence of perfect competition for this industry. This conclusion may 

change somewhat to the extent that this industry is imperfectly competitive. 

9

For more information on the costs of the rule, please refer to the cost memo prepared for this industry as part of 

this rule, which is a memo from Dave Reeves, RTI, to Susan Fairchild, US EPA. Estimated Cost Impact for Mineral 

Wool Production Industry to Comply with Residual Risk and Technology Review (RTR) Amendments. August 29, 

2014. 
10 

tape, textiles and reinforcement; Type C (chemical), which has superior acid resistance, and 

Type T, for thermal insulation. 

 The basic raw materials for fiberglass products are a variety of natural minerals and 

manufactured chemicals. The major ingredients are silica sand, limestone, and soda ash. Other 

ingredients may include calcined alumina, borax, feldspar, nepheline syenite, magnesite, and 

kaolin clay, among others. Silica sand is used as the glass former, and soda ash and limestone 

help primarily to lower the melting temperature. Other ingredients are used to improve certain 

properties, such as borides for chemical resistance and ductability. Waste glass, also called 

cullet, is also used as a raw material and may be ‘internal’ from the production of fiberglass or 

may be ‘external’ from glass recycling. The raw materials must be carefully weighed in exact 

quantities, their chemical compositions evaluated, and thoroughly mixed together (called 

batching) before being melted into glass for the manufacture of fiberglass. 

3.B. Economic Impacts for Wool Fiberglass RTR Final Rule 

Based on the information provided by the wool fiberglass manufacturing industry and 

their primary trade association, North American Insulation Manufacturers Association (NAIMA), 

there are currently 30 facilities in the U.S. producing wool fiberglass. A letter from NAIMA dated 

June 8, 2011, stated “non-formaldehyde binder products represent the vast majority of the 

industry” and “all major sources have already converted or have announced plans to convert to 

non-phenol formaldehyde binders.” Based on a review of the current permit status of all 

sources and recent information provided by industry, 10 facilities are major sources (subject to 

the existing MACT rule, subpart NNN) and 20 facilities are area source facilities. The 10 facilities 

operate 8 gas-fired glass-melting furnaces and 13 flame attenuation (FA) manufacturing lines 

that will have to comply with the RTR amendments to the NESHAP (subpart NNN) 

requirements. Based on our current emissions data, two of the major source facilities, 

operating a total of two gas-fired glass-melting furnaces will be required by the final rule to 

reduce chromium compound emissions. 

We estimate that there are currently eight gas-fired furnaces located at five facilities 

designated as major sources. We also estimate that there are currently three gas-fired furnaces 

located at two facilities that emit chromium compounds above the final chromium emission 

limit. We have estimated the cost impact for those facilities based on the assumption that 

those furnaces will have a shortened operational life cycle and be rebuilt (or replaced) earlier 

than they might have been otherwise. The associated costing of this scenario is referred to as 
11 

the replacement cost approach which is described in the EPA Air Pollution Control Cost Manual 

(EPA/452/B-02-001), January 2002. Based on comments received in response to the November 

13, 2014 supplemental proposal, we changed from using the net present value (NPV) approach 

to using this replacement cost method for estimating the annualized cost of rebuilding a 

furnace. An explanation of why EPA changed its approach can be found in the cost 

memorandum for this final wool fiberglass RTR.10

The furnace age and chromium emissions data show that furnaces may operate into 

their 10th year and still emit chromium at levels below the chromium emission limit. The data 

also show that all furnaces older than 10 years emitted chromium at levels exceeding the 

proposed emission limit. We considered basing the cost estimate on an expected 12-year 

furnace life and an early rebuild at 10 years. While supported by the available data and 

resulting in a lower cost estimate, we decided to use a more conservative (i.e., more likely to 

overstate than understate cost estimates) approach and based our costs on an expected 10-

year furnace life and an early rebuild at 7 years. This approach is supported by industry 

comments. The associated costing of this scenario is referred to as the replacement cost 

approach which is described in the EPA Air Pollution Control Cost Manual (EPA/452/B-02-001), 

January 2002. More information on the furnace life cycle cost estimation approach can be 

found in the cost memo for the wool fiberglass RTR. 11 Using this more conservative approach, 

the total annualized cost per affected furnace is estimated at $426,000. 

Industry comments on the proposed major source rule amendments (76 FR 72770) 

stated that some of the major source facilities have already switched some or most of their RS 

lines to non-HAP binders and thus would no longer be subject to subpart NNN. With the phaseout of phenol-formaldehyde binders on RS lines, those sources will also be redesignated as area 

sources. While industry sources also predicted before proposal of the RTR amendments that no 

major sources would exist by the end of 2012, we now believe this to be inaccurate. According 

to the most current industry information, at least one RS bonded line that uses a phenolformaldehyde binder is still operated by each wool fiberglass company. The following cost 

impacts are based on the estimated 10 facilities that were identified as major sources (i.e., 

 

10 Susan Fairchild, US EPA. Costs and Emission Reductions for the Final Wool Fiberglass Manufacturing NESHAP – 

Residual Risk and Technology Review (RTR) Amendments. June 24, 2015. 

11 Susan Fairchild, US EPA. Control Cost Evaluation for Evaluation for Glass-Melting Furnaces and Manufacturing 

Lines – Final Wool Fiberglass Manufacturing NESHAP Residual Risk and Technology Review Amendments. June 18, 

2015. 
12 

those operating a bonded line using a phenol-formaldehyde binder) in the most recent industry 

information provided in December 2012. 

As noted previously, several facilities have already switched all or most of their rotary 

spin (RS) manufacturing lines to non-PF binders. Based on the most recent information 

provided by industry, two of those facilities also have 13 bonded flame attenuation (FA) lines, 

all of the FA lines continue to us a phenol/formaldehyde binder, and all of the FA lines are in 

compliance with the emission limits in the final rule. Therefore, additional controls are not 

needed for existing FA lines. However, the two facilities will incur additional testing costs to 

demonstrate compliance with the new emission limits for FA lines. 

In sum, the total annualized costs to the industry for this rule are $1.014 million (2013 

dollars). 

This economic impact analysis identified the businesses that will be affected by this rule 

and provides an analysis at a screening level to assist in determining whether this rule is likely 

to impose a significant economic impact on affected businesses. The analysis employed here is 

a “sales test” that computes the annualized compliance costs as a share of sales for each 

company. The annualized cost per sales for a company represents the maximum price increase 

in affected product needed for the company to completely recover the annualized costs 

imposed by the regulation. This is the same methodology employed for the economic impact 

analysis for the mineral wool RTR, shown earlier in this report. 

The “sales test” is the impact methodology EPA employs in economic impact analysis 

such as this one as opposed to a “profits test”, in which annualized compliance costs are 

calculated as a share of profits.12 This is because revenues or sales data are commonly available 

data for entities normally impacted by EPA regulations and profits data normally made 

available are often not the true profits earned by firms due to accounting and tax 

considerations. Firms and entities often have ways legally available in the tax code to minimize 

their reported profits; thus, using reported profits may lead to a less than accurate estimate of 

the economic impact of a regulation to an affected firm or entity and their consumers. While 

screening level analyses are often employed to estimate impacts to small business or entities as 

part an analysis in compliance with the Regulatory Flexibility Act (RFA) as amended by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA), a screening level analysis can also be 

 

12 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 
13 

employed in an economic impact analysis such as this one whose focus is on the regulated 

companies. 

As mentioned earlier, wool fiberglass facilities are also included in NAICS (North 

American Industrial Classification System) 327993 along with mineral wool facilities. There are 

five parent firms owning these facilities with HAP sources affected by the major source RTR 

proposal, and these firms are shown in Table 2. None of these firms is a small business as 

defined by the SBA (750 employees or less for an ultimate parent company, as mentioned 

earlier for the relevant NAICS code). Each of these firms has revenues in excess of $3 billion in 

2013, as shown in Table 2. All of the firms are owned by parent companies based in the U.S. 

except for CertainTeed, which is owned by Saint-Gobain, a French conglomerate, and Knauf, 

Inc., which is owned by the Knauf Group, Inc.) , a German conglomerate. Table 2 provides the 

annualized costs and economic impacts to the affected firms from this major source rule. With 

Guardian, Inc. and Knauf, Inc. not incurring any costs from this rule, the impacts to these firms 

from this rule are zero. All estimates of annualized costs are taken from the cost memo for the 

wool fiberglass RTR. EPA used no CBI in generating economic impacts for this industry. 
14 

Table 2: Wool Fiberglass Firms that Are Affected by the Major Source RTR, their Revenues 

and Costs Incurred from the Major Source RTR, and Economic Impacts from this Major Source 

RTR 

Wool Fiberglass Firm Annual Revenues 

in 2013 (billions) 

Total Annualized 

Costs (2013 

dollars)f 

Annualized Costs as a 

Percentage of Annual 

Revenues in 2013 

Owens Corning $5.30a $492,000 0.0093 

Johns Manville (owned by 

Berkshire-Hathaway) $182.15b

 40,400 0.000022 

Certain Teed (owned by 

Saint-Gobain) $31.64c

 482,000 0.0015 

Guardian, Inc. $5.60d 0 0 

Knauf, Inc. (owned by the 

Knauf Group) $4.72e 0 0 

a

Taken from http://investor.owenscorning.com/financial-news/financial-news-details/2014/OwensCorning-Reports-Fourth-Quarter-and-Full-Year-2013-Results/default.aspx. 

b

 Taken from the 2013 Berkshire-Hathaway annual report at 

http://www.berkshirehathaway.com/2013ar/2013ar.pdf, p. 26. 

c

 Taken from the 2013 annual report for Saint-Gobain, Inc. http://www.saintgobain.com/files/DDR_2013_GB.pdf, p. 6. Conversion from euros uses euro to U.S. dollar value as an 

average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

d

 Revenues available at http://www.forbes.com/companies/guardian-industries/. 

e Taken from https://www.linkedin.com/company/knauf. Conversion from euros uses euro to U.S. dollar 

value as an average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

 The economic impact on these wool fiberglass firms as result of the major source RTR 

rule, measured in annual compliance costs as a percent of sales or revenues, is less than 0.005 

percent for each of the affected parent firms based on using available revenue data for 2013 to 

be consistent with the year for the cost estimates. The price elasticity of demand for wool 
15 

fiberglass is estimated at -0.813, and the price elasticity of supply for wool fiberglass is 

estimated at -0.7.14 With the responsiveness of wool fiberglass demand and supply at less than 

1:1 compared to a price change of 1 percent, and with the change in product price as 

approximated by the cost to revenue ratio at less than 0.1 percent, for this ratio is the 

maximum price change that producers may face, it is expected that wool fiberglass price and 

output changes will be clearly less than 0.1 percent.15 Hence, the overall economic impact of 

this rule should be low on the affected industry and its consumers. 

Wool Fiberglass Area Source Rule 

4.A. Background 

Based on the information provided by the wool fiberglass manufacturing industry and 

their primary trade association, North American Insulation Manufacturers Association (NAIMA), 

there are currently 30 facilities in the U.S. producing wool fiberglass. A letter from NAIMA dated 

June 8, 2011, stated “non-formaldehyde binder products represent the vast majority of the 

industry” and “all major sources have already converted or have announced plans to convert to 

non-phenol formaldehyde binders.” Based on a review of the current permit status of all 

sources and recent information provided by industry, 10 facilities are major sources (subject to 

the existing MACT rule, subpart NNN) and 20 facilities are area source facilities. These 30 

facilities operate a total of 54 glass-melting furnaces. Five of the area source facilities operate 

eight furnaces which meet the applicability requirements in the proposed area source NESHAP 

(subpart NN). Based on our current emissions data, none of these furnaces will be required by 

the rule to reduce chromium compound emissions. 

Industry comments on the proposed major source rule amendments (76 FR 72770) 

stated that some of the major source facilities have already switched some or most of their 

lines to non-HAP binders and would no longer be subject to subpart NNN. With the phase-out 

of phenol-formaldehyde binders, these sources will also be redesignated as area sources. While 

 

13 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. http://www.rff.org/Publications/Pages/Pulbicationdetails.aspx publicationid=20680. 

Accessed August 2009. Table 8.A.6. 

14 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” http://faculty. 

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/ 

TradeElasticities.html. 

15 This conclusion is consistent with the existence of perfect competition for this industry. This conclusion may 

change somewhat to the extent that this industry is imperfectly competitive. 
16 

industry sources also predicted before proposal of the RTR amendments to NNN that no major 

sources would exist by the end of 2012, we now believe this to be inaccurate. Table 2 of the 

wool fiberglass area source cost memo provides further information on wool fiberglass 

furnaces by furnace type and whether furnaces would currently be subject to the area source 

rule under subpart NN. The following cost impacts are based on the estimated five facilities and 

eight gas-fired glass-melting furnaces that would be subject to the area source rule 

requirements. 

 
17 

4.B. Economic Impact Estimates 

We estimate that there are currently eight gas-fired furnaces located at five facilities 

designated as area sources. We also estimate that none of the gas-fired furnaces located at 

area source facilities emit chromium compounds above the final chromium emission limit (2.5E04 lb/ton of glass pulled). Therefore, none of the gas-fired glass-melting furnaces at area 

sources must be rebuilt to comply with subpart NN. However, the facilities must conduct 

annual compliance testing for each furnace (annualized cost of $10,000 per furnace for a total 

annualized cost of $80,000). 

Thus, the total annualized cost of the final area source rule is $80,000 (2013 dollars). 

 We prepared a similar economic impact analysis for the wool fiberglass area source final 

rule as that for the final RTR shown earlier in this report. As mentioned earlier, wool fiberglass 

facilities are also included in NAICS (North American Industrial Classification System) 327993 

along with mineral wool facilities. There are three parent firms owning these facilities with 

HAP sources affected by the area source rule, and these firms are shown in Table 3. None of 

these firms is a small business as defined by the SBA (750 employees or less for an ultimate 

parent company, as mentioned earlier for the relevant NAICS code). Each of these firms has 

revenues in excess of $3 billion in 2013, as shown in Table 3. These firms are owned by parent 

companies based in the U.S. except for CertainTeed, which is owned by Saint-Gobain, a French 

conglomerate, and Knauf, Inc., which is owned by the Knauf Group, a German conglomerate. 

Table 3 provides the annualized costs and economic impacts to the affected firms from this 

area source rule. All estimates of annualized costs are taken from the cost memo for the wool 

fiberglass area source final rule. EPA used no CBI in generating economic impacts for this 

industry. It should be noted that Guardian, Inc. and Johns Manville do not have area sources 

that are subject to this rule. Thus, the cost to each of these firms as a result of this area source 

NESHAP is zero. 
18 

Table 3: Wool Fiberglass Firms that Are Affected by the Area Source Rule, their Revenues and 

Costs Incurred from the Area Source Rule, and Economic Impacts from this Area Source Rule 

Wool Fiberglass Firm Annual Revenues 

in 2013 (billions) 

Total Annualized 

Costs (2013 

dollars)

Annualized Costs as a 

Percentage of Annual 

Revenues in 2013 

Owens Corning $5.30a $40,000 0.0007 

Certain Teed (owned by 

Saint-Gobain) $31.64b $20,000 0.00006 

Knauf, Inc. (owned by The 

Knauf Group) $4.72c

 $20,000 0.0094 

a

Taken from http://investor.owenscorning.com/financial-news/financial-news-details/2014/OwensCorning-Reports-Fourth-Quarter-and-Full-Year-2013-Results/default.aspx. 

b

 Taken from 2013 annual report for Saint-Gobain, Inc. http://www.saintgobain.com/files/DDR_2013_GB.pdf, p. 6. Conversion from euros uses euro to U.S. dollar value as an 

average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

c

Taken from https://www.linkedin.com/company/knauf. Conversion from euros uses euro to U.S. dollar 

value as an average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

The economic impact on these wool fiberglass firms as result of the area source rule, 

measured in annual compliance costs as a percent of sales or revenues, is less than 0.01 

percent for each of the affected parent firms based on using available revenue data for 2013 to 

be consistent with the year for the cost estimates. The price elasticity of demand for wool 

fiberglass is estimated at -0.816, and the price elasticity of supply for wool fiberglass is 

 

16 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. http://www.rff.org/Publications/Pages/Pulbicationdetails.aspx publicationid=20680. 

Accessed August 2009. Table 8.A.6. 
19 

estimated at -0.7.17 With the responsiveness of wool fiberglass demand and supply at less than 

1:1 compared to a price change of 1 percent, and with the change in product price as 

approximated by the cost to revenue ratio at less than 0.1 percent, for this ratio is the 

maximum price change that producers may face, it is expected that wool fiberglass price and 

output changes will be less than 0.1 percent.18 Hence, the overall economic impact of this rule 

should be low on the affected industry and its consumers. 

4. Conclusion – Summary of Cumulative Impacts Across Rules 

 The total annualized costs of the RTR and area source rules for the mineral wool and 

wool fiberglass manufacturing categories combined are $1,143,200 (2013 dollars), with 

$1,094,400 incurred by the wool fiberglass industry. For more information on the annualized 

compliance costs (i.e., the costs of control + the costs of monitoring, testing, and other 

administrative costs), please refer to the cost memos for this rule for these industries. We also 

see that no firm is expected to experience an impact of more than 0.010 percent of annualized 

costs as a percent of sales from the cumulative costs of these rules. Guardian, Inc. is not 

expected to incur costs from either the wool fiberglass RTR or the wool fiberglass area source 

rule. 

 For the rules, we find individually that we can certify that there is not a significant 

impact on a substantial number of small entities (or SISNOSE). This is based on no small firm 

being significantly impacted by this rule as shown in the impact results presented in this 

economic impact and small business impact analysis. We include all small firms affected by this 

rule in the determination of this conclusion. Of the eleven firms affected by these three rules, 

five mineral wool companies are small firms, and none of the small firms is affected 

significantly. All of these small firms are mineral wool manufacturers; no wool fiberglass 

manufacturer is a small business. Since the major and area source rules for wool fiberglass 

manufacturing do not impact small businesses, the Agency can provide a certification of no 

SISNOSE for the entire rulemaking in today’s action. 

 

17 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” http://faculty. 

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/ 

TradeElasticities.html. 

18 This conclusion is consistent with the existence of perfect competition for this industry. This conclusion may 

change somewhat to the extent that this industry is imperfectly competitive. 
20 

Although these rules would not have a significant economic impact on a substantial 

number of small entities, the EPA nonetheless has tried to reduce the impact that these rules 

would have on small entities. The actions we are taking to reduce impacts on small businesses 

include less frequent compliance testing for the entire mineral wool industry and 

subcategorizing the Mineral Wool Production Source Category in developing the COS, HF and 

HCl emissions limits. 

Finally, the small changes in price and output expected as a rule of any one or all three 

of these rules, and the minimal additional labor that will be required as a result of the 

compliance requirements, both from controls and monitoring, recordkeeping, reporting, and 

testing, suggests that net employment impacts (that is, all employment impacts of any kind) 

resulting from this final rulemaking will be negligible.