1

February 2 0

, 201 4

MEMORANDUM

SUBJECT: E conomic Impact Analysi s for the Section 111(b) Rev iew of the Kraft

Pulp Mills New Source Performance Standards Subpart BB

FROM: Alexander Macpherson, A ir Economics Group

Health and Environmental Impacts Division, OAQPS (C439

- 02)

TO: Kelley Spence

, Natural Resources Group

Sector Policies and Programs Division, OAQPS (E143

- 03)

The U.S. Environmental Protection Agency ( EPA ) perform ed a review of the New Source Performance Standards (NSPS ) for kraft pulp mills in the pulp and paper industry

. The NSPS ( Subpart BB) regulate emis sions of particulate matter (PM) from new, modified, and reconstructed recovery furnace s, smelt diss olving tanks , and lime kilns at kraft pulp mills. The NSPS also regulate emission s of total reduced sulfur (TRS) compounds from new, modified, and reconstructed digester s , brown stock washers, multiple

- effect evaporator s , condensate stripper s, recovery fur naces, smelt dissolving

tank s, and lime kilns at kraft pulp mills.

Under th e final revisions (included in a new subpart BBa) , affected pulp and paper facilities would be r equired to implement additional testing , monitoring, reporting

, and recordkeeping r equirements

. As part of the regulatory process, EPA is required to develop an economic impact analysis (EIA) and small entity impacts analysis for the potentially a ffected industries. This memorandum serves as this EIA. Readers interested in a general d iscussion of the pulp and paper industry are referred to the Industry Pr ofile

section of the Economic Impact Analysis Final Revisions to the National Emission Standards for Hazardous Air Pollutants Subpart S (MACT I and MACT III) for the Pulp and Paper Industry

. 1

This memorandum presents s ummary information from other

, more detailed technical analyses. The first analysis p rojects the number of new, modified, and reconstructed emission units that may trigger NSPS in the 5

- year period following the applicability date for the NSPS review. 2 The second analysis (1) estimate s current emissions of PM and TRS; (2) estimate s incre mental emissions reductions and costs

1 U.S. Envi ronmental Protection Agency. 201 2

. Economic Impact Analysis Final Revisions to the National Emission Standards for Hazardous Air Pollutants Subpart S (MACT I and MACT III) for the Pulp and Paper Industry

. < http://www.epa.gov/ttnecas1/regdata/EIAs/pulp_and_paper_final_EIA.pdf >.

2 Hanks, K. , Holloway, T., and Gooden, C. RTI International. “ Projections of the Number of New, Modified, and Reconstructed Emission Units for the Kraft Pulp Mill NSPS Review. ” Memorandum to U.S. Environmental Protection Age ncy, February 4, 2013.2

associated with the NSPS review based on the emission units projected for construction, modification, or reconstruction; and (3) estimate s incremental secondary environmental and energy impacts associated with the NSPS review. 3

Costs Impacts

Total capital and annualized engineering costs measure the costs incurred by affected industries. A total of 10 mills are projected to be impacted by the revised NSPS during the 5

- year period following the applicability date for th e NSPS review for which impacts are considered. The nationwide incremental capital and annualized engineering costs (in 2012 dollars) associated with the NSPS review were estimated at $580,000 and $390 ,000, respectively

.

In comparison, EPA recently finali zed Risk and Technology Review (RTR) that

focused on the National Emission Standards for Hazardous Air Pollutants (NESHAP) Subpart S for the pulp an d paper industry. The annualized engineering costs associated

with the finalized Subpart S revisions were estimated at $2.1 million. The EIA accompanying the finalized Subpart S revisions estimated that p aper and paperboard product prices would increase less than 0.01% on average, while production levels would

also decrease less than 0.01% o n average as a result of imposing additional regulatory compliance costs

. With these results in mind, th is final action is not expected to induce

measurable c hanges in the average national price and production of pulp and paper products.

Emissions Imp acts

Because the maximum achievable control technology ( MACT ) standards for existing sou r ces are the same or more stringent that the current NSPS standards, emission sources are already required to be compliant with the PM emission limits in Subpart BB

,

ev en if the emission unit has not triggered NSPS. For new units (which have no actual performance data), the emission limits associated with Subpart BB or existing source MACT (whichever is more stringent) were used to calculate baseline emissions.

For t he final revisions (included in a new subpart BBa) , no incremental emissions

reductions would be obtained

, because the final revisions are the same as the current

MACT limits for PM and are equal baseline (for PM and TRS)

. No changes are finalized for the subpart BB TRS concentration limits. Additionally, no emissions changes are anticipated from the finalized changes to testing , monitoring, reporting

, and recordkeeping requirements.

3 Holloway, T., K. H anks , RTI International. “ Emissions Inventory for Kraft Pulp Mills and Costs/Impacts

of the Section 111(b) Review of the Kraft Pulp Mills NSPS

. ” Memorandum to U.S. Environmental Protection Agency

. February 4, 2013.3 Because the final revisions to testing , monitoring, reporting

, and recordkeeping requirements, we expect minimal secondary energy or emissions impacts. We also expect no incremental solid waste and wastewater impacts at pulp mills.

Small Entity Impacts

Two of the 10 mills projected to be impacted are small businesse s. Because small entities may be affected, E PA performed an analysis for impacts on small businesses by comparing estimated annualized engineering compliance costs at the company level to company sales. The screening analysis found that the ratio of comp lian ce cost to company revenue is less than 0. 1% for the two small companies that are likely to be affected by the final NSPS revisions . Based upon this analysis, we conclude there is no significant economic impact on a substantial number of small entities (SISNOSE) arising

from the final NSPS revisions

.