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Economic Impact Analysis for the Proposed Secondary Lead NESHAP 

This report is the economic impact analysis for the proposed Secondary Lead NESHAP, 

which will be signed as per a court-ordered schedule on April 29, 2011. Implementation of the 

proposed rule is required by 3 years after promulgation of the final rule. The proposed standard 

is the MACT floor of control for each source type controlled. Details on the proposed rule can 

be found in the preamble contained in the public docket for this rulemaking. 

Secondary lead smelters can be found worldwide. Fourteen smelters can be found in the 

U.S. Production of secondary lead totaled 1.15 million tons in 2010, an amount equivalent to 82 

percent of reported domestic lead consumption. Nearly all of it was recovered from old (postconsumer) scrap.

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 A new secondary lead smelter will be completed in Florence, SC in 2012, an 

existing facility in Tampa, FL will expand by 400% in 2012. 

There are six parent owner companies affected by the proposed rule. These companies 

are found in NAICS (331492). One of these firms. Gopher Resources, LLC, is a small business 

as defined by the Small Business Administration (SBA) for this industry – 750 employees or less 

for a parent owner in the secondary smelting and refining of nonferrous metal (except copper and 

aluminum) industry.

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 A separate memo provides the impacts of the proposed rule on this small 

company, and concludes that there is no significant economic impact on a substantial number of 

small entities (SISNOSE) as a result of this rule.3 

The total annualized costs (TAC) of the proposed rule for each parent owner company, 

which includes control and monitoring and recordkeeping costs as taken from the cost and 

emission reductions memo prepared for US EPA4, are in Table 1. The nationwide total 

annualized costs of this rule are $12.6 million. All costs are in 2009 dollars. 

Table 1. TAC for Each Parent Owner 

Parent Owner and Subsidiary Total Annualized Costs per Parent Owner 

Exide Technologies (owner of Exide 

Electronics) 

$5,574,530 

Quexco (owner of Revere Smelting and 

Refining) 

$86,876 

 

1 U.S. Geological Survey, Mineral Commodity Summaries, Lead. January 2011. Found on the Internet at 

http://minerals.usgs.gov/minerals/pubs/commodity/lead/mcs-2011-lead.pdf. 

2 U.S. Small Business Administration, Table of Size Standards. November 5, 2010. Found on the Internet at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 

3 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Draft Small Business 

Evaluation for the Secondary Lead Smelting Source Category.” Prepared by ERG, Inc. for Chuck French, U.S. 

Environmental Protection Agency, Office of Air Quality Planning and Standards. March, 2011. 

4 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Cost and Emission 

Reductions of the MACT Floor Level of Control for the Secondary Lead Smelting Source Category.” Prepared by 

ERG, Inc. for Chuck French, U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. 

April, 2011. 
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The Renco Group (owner of Doe Run 

Resources) 

$3,547,631 

East Penn Manufacturing $379,416 

Sanders Lead $2,047,789 

Gopher Resources, LLC $736,452 

Total: $12,553,906 

 

 

This 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 

proposed regulation. 

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.5 This is because revenues or sales data is commonly available 

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

is 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. 

Economic impact estimates are shown in Table 2 below. The table lists the 6 ultimate 

parent companies impacted by the rule, the costs of the rule for each company basis, the annual 

revenues for these companies, and then the impact to the company on a cost to sales basis. 

Revenues are for the ultimate parent owner. Revenues are for 2009 to be consistent with the year 

for the cost estimates. Applying such a calculation yields the following results as shown below: 

Table 2: Economic Impact Results by Parent Owner for the Secondary Lead NESHAP 

Parent Owner and 

Subsidiary 

Total Annualized 

Costs per Parent 

Owner 

Total Revenues in 

2009 per Parent 

Owner (billions US 

dollars) 

Annualized Costs 

per Revenues for 

Each Parent Owner 

(in %) 

Exide Technologies (owner $5,574,530 $3.32a 

 

5 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. 
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of Exide Electronics) 0.168 

Quexco (owner of Revere 

Smelting and Refining and 

Quemetco) 

$268,088 $0.44b

0.061

The Renco Group (Doe Run 

Resources) 

$3,547,631 $4.75c

0.075

East Penn Manufacturing $379,416 $1.1d0.038

Sanders Lead Company 

(part of Wiley Sanders 

Truck Lines and KW 

Plastics) 

$2,047,789 $0.10e

0.944

Gopher Resources, LLC $736,452 N/A <1%f

a

Exide Technologies annual revenue for 2009 is found in the Annual Report for 2009 at 

http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/xide2009.pdf., p. 2. 

bQuexco’s revenue estimated for 2009 can be found at 

http://www.hoovers.com/company/Quexco_Incorporated/hkhyki-1.html. 

cThe Renco Group (Doe Run Resources)’s revenue estimated for 2009 can be found at 

http://www.forbes.com/lists/2010/21/private-companies-10_Renco-Group_QQ4T.html. 

dEast Penn Manufacturing’s revenue in 2009 can be found at http://www.indeed.com/cmp/East-PennManufacturing. 

e The Sanders’s companies’s revenue in 2009 is the sum of the revenues for Wiley Sanders Truck Lines, KW 

Plastics, and the Sanders Lead Company as taken from lower-bound estimates of revenues for each company found 

at www.manta.com. 

f Gopher Resources, LLC’s revenue is such that the TAC of this proposed rule is less than 1% of its revenues in 

2009. See U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Draft Small 

Business Evaluation for the Secondary Lead Smelting Source Category” for more details. 

On a firm by firm basis, the results show that no parent owner affected by this proposed 

rule will experience an annualized compliance cost of more than 1 percent of its sales. 

It should be noted that this analysis does not presume any incidence of the costs on the 

consumers of secondary lead and other products made by these companies. Thus, no estimate of 

the impact of this rule on secondary lead consumers, for intermediate or end-use, is included in 

this report. However, the direct impact of this proposed rule appears quite minor, and thus it is 

reasonable to infer that the impact on secondary lead consumers from this rule should also be 

minor. The TAC is taken from the cost memorandum mentioned earlier that was prepared by 

U.S. EPA for the proposed rule and in that memorandum can be found more information on the 

cost analysis.