### 1



### MEMORANDUM

DATE: September 16 , 2014

SUBJECT: Economic Impact Analysis for the Final Amendments to the NESHAP for Acrylic

and Modacrylic Fibers, Amino/Phenolic Resins , and Polycarbonate Production

FROM: Julia Gamas , EPA/OAR/OAQPS/HEID/AEG

TO: Nick Parsons, EPA/OAR/OAQPS/SPPD/RCG

This memorandum contains the economic impact analysis for the final amendments to the NESHAP for Acrylic and Modacrylic Fibers, Amino/Phenolic Resins , and Polycarbonate
Production

.
Economic Impact Analysis for the Final Amen dments to the Acrylic and Modacrylic Fibers, Amino/Phenolic Resins , and Polycarbonate Production NESHAP

The economic i mpact and small business analyse s for this final rulemaking are reported
in this document. Two National Emission Standards for Hazardous Air Pollut ants (NESHAP) rule
reviews are finalized for: Acrylic and Modacrylic Fibers, Amino / Phenolic Resins , and Polycarbonate Production . The rules are: NESHAP for Source Categories: Generic Maximum Achievable Control Technology Standards ; and NESHAP: Manufacture of Amino/Phenolic

Resins

. Table 1 lists the industries affected by these rules and covered in this analysis. These
rules are promulgated under court order by September 16, 2014

. M ore in formation on the final
rules can be found in the preamble for this rulemaking.

Table 1. Industrial Source Categories Affected by this Final NESHAP Review

NAICS Code ( 2012 ) Category & Description Plants

325220 Acrylic and Modacrylic Fibers and Filaments Manufacturing (AMF): Production

of either of the following synthetic fibers: (i) Acrylic fiber. (ii) Modacrylic fiber. 1

325211 Polycarbonate Resins Manufacturing (PC) 4

325211 Amino and Phenolic Resins Manufacturing (APR) 19



### This document contains a screening analysis for these three industries. It is expected that the economic and small business impact of the final standard will be small given that the total capital costs of the rule reviews are e stimated to be $ 4.1 million 2013 dollars and the annualized costs (annualized capital costs, operation and maintenance costs and labor expenses) are e stimated to be $1.05 million 2013 dollars. The rule will affect plants owned by large, mostly U.S. owned multinational companies with substantial annual revenues and

### 2



### extensive product mixes. Therefore, we assume zero or very small impacts outs ide of the
affected industries.

A partial equilibrium analy sis , 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 given the expected size of the impacts. Therefore, a screening analysis

was c onducted by calculating the percent of sales that the annual costs of compliance
represent. The annualized cost per sales estimated for a company represents the maximum price increase in affected product needed for the company to completely recover the

ann ualized costs imposed by the final 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. 1 

### T his 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 of 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 large, regulated companies.

Table 2 shows the estimated annualized cost faced by each parent company in order to comply as well as the perc entage this cost represents from its total revenues. The percentages
for all of the in dustries are between 0% and 0.02 %, and at an a verage of 0 %.

None of the affected companies are small businesses, either because their employment levels exceed the Small Business Administration (SBA) threshold for a small business or because they are owned by a parent company that is not a small business given its a nnual receipts in dollars or employment levels. 2 

### Therefore there is no small business impact from these NESHAP rule reviews, and there is no significant impact on a substantial number of small entities (SISNOSE) that results from this rulemaking.

1 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.p df , pp. 32

- 33.

2 SBA small business size definitions are found at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf . This is the small business size t able as of July 14, 2014. NAICS codes in this table reflect the 2012 NAICS version.

### 3



### Table 2. Economic Impacts to Parent Firms

Source Category Parent Company Number of plants Parent Company

Revenues (Thousand 2013 Dollars) Total Annualized Costs for

Affected Parent Company (Thousand 2013 Dollars) Total Annualized Cost/Revenues for Affected
Parent Companies (%) Acrylic and Modacrylic Fibers (AMF) Cytec Industries Inc. 1 $ 1,935,000.00 $ 11.57 0.00%

Polycarbonates Production (PC) Bayer AG 1 $ 51,286,079.18 $ 13.74 0.00%

Dow Chemical Company 1 $ 57,080,000.00 $ 6.87 0.00% General Electric Company 2 $ 146,045,000.00 $ 6.87 0.00%
Amino and Phenolic Resins (APR) Dynea Oy 1 $ 477,520.00 $ 7.97 0.00%

Emerald Performance Materials, LLC 1 $ 163,600.00 $ 7.97 0.00% Ineos Capital Limited 1 $ 47,000,000.00 $ 7.97 0.00% Koch Industries, Inc. 6 $ 115,000,000.00 $ 916.01 0.00% Momentive Performance Materials Holdings, LLC 1 $ 2,577,300.00 $ 7.97 0.00% Nuplex Resins 1 $ 1,310,953.54 $ 7.97 0.00% Occidental Petroleum Corporation 1 $ 2,577,300.00 $ 7.97 0.00%
Panolam Industries International 2 $ 75,200.00 $ 15.94 0.02% SI Group International 1 $ 1,600,000.00 $ 7.97 0.00%
Eastman 1 $ 9,350,000.00 $ 7.97 0.00%
Tembec 1 $ 1,555,555.56 $ 7.97 0.00%
3M 2 $ 30,871,000.00 $ 15.94 0.00%
Source: Plant and cost data: U.S. EPA; Revenue data: Company Annual Reports, company website reported revenues and sales, and Hoovers company profiles.