Document ID: EPA-HQ-OAR-2002-0054-0006
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2003-02-28T05:00Z

United
States
Office
Of
Air
Quality
EPA­
452/
R­
03­
006
Environmental
Protection
Planning
And
Standards
February
2003
Agency
Research
Triangle
Park,
NC
27711
Air
A­
99­
30
IV­
A­
2
Economic
Impact
Analysis
for
the
Brick
and
Structural
Clay
Products
Manufacturing
NESHAP:
Final
Rule
Economic
Impact
Analysis
for
the
Brick
and
Structural
Clay
Products
Manufacturing
NESHAP:
Final
Rule
U.
S.
Environmental
Protection
Agency
Office
of
Air
Quality
Planning
and
Standards
Innovative
Strategies
and
Economics
Group,
MD­
C339­
01
Research
Triangle
Park,
NC
27711
February
2003
This
report
has
been
reviewed
by
the
Emission
Standards
Division
of
the
Office
of
Air
Quality
Planning
and
Standards
of
the
United
States
Environmental
Protection
Agency
and
approved
for
publication.
Mention
of
trade
names
or
commercial
products
is
not
intended
to
constitute
endorsement
or
recommendation
for
use.
Copies
of
this
report
are
available
through
the
Library
Services
(
MD­
35),
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711,
or
from
the
National
Technical
Information
Services
5285
Port
Royal
Road,
Springfield,
VA
22161.
Acronyms
BSCP
Brick
and
Structural
Clay
Products
CAA
Clean
Air
Act
DIFF
Dry
Injection
Fabric
Filter
EIA
Economic
Impact
Analysis
EPA
United
States
Environmental
Protection
Agency
HAPs
Hazardous
Air
Pollutants
HCl
Hydrogen
Chloride
(
also
known
as
Hydrochloric
Acid)

HF
Hydrogen
Fluoride
ISEG
Innovative
Strategies
and
Economics
Group
MACTMaximum
Achievable
Control
Technology
MRR
Monitoring,
Recordkeeping,
and
Recording
NAICSNorth
American
Industry
Classification
System
NESHAP
National
Emission
Standards
for
Hazardous
Air
Pollutants
OAQPS
Office
of
Air
Quality
Planning
and
Standards
O&
M
Operating
and
Maintenance
RFA
Regulatory
Flexibility
Act
SBE
Standard
Brick
Equivalent
SBREFA
Small
Business
Regulatory
Enforcement
Fairness
Act
SIC
Standard
Industrial
Classification
TAC
Total
Annual
Costs
VOS
Value
of
Shipments
1­
1
ECONOMIC
IMPACT
ANALYSIS:

BRICK
AND
STRUCTURAL
CLAY
PRODUCTS
1
INTRODUCTION
Pursuant
to
Section
112
of
the
Clean
Air
Act,
the
U.
S.
Environmental
Protection
Agency
(
EPA
or
the
Agency)
is
developing
National
Emissions
Standards
for
Hazardous
Air
Pollutants
(
NESHAPs)
to
control
emissions
released
from
the
domestic
production
of
bricks
and
structural
clay
products
(
BSCP).

Production
of
BSCP
entails
the
firing
of
shaped
clay
minerals
in
kilns,
a
process
that
results
in
emissions
of
hazardous
air
pollutants
(
HAPs).
The
NESHAP
which
this
economic
impact
analysis
(
EIA)
addresses
is
scheduled
to
be
proposed
in
mid­
2001.
The
Innovative
Strategies
and
Economics
Group
(
ISEG)
of
the
Office
of
Air
Quality
Planning
and
Standards
(
OAQPS)
has
developed
this
analysis
in
support
of
the
evaluation
of
impacts
associated
with
the
BSCP
manufacturing
NESHAP.

1.1
Scope
and
Purpose
This
report
evaluates
the
economic
impacts
of
pollution
control
requirements
on
BSCP
operations.
The
Clean
Air
Act
(
CAA)
was
designed
to
protect
and
enhance
the
quality
of
the
nation's
air
resources
and
Section
112
of
the
CAA
establishes
the
authority
to
control
HAP
emissions.
A
large
percentage
of
the
HAP
compounds
released
from
BSCP
facilities
are
hydrogen
fluoride
(
HF)
and
hydrochloric
acid
(
HCl).
To
reduce
emissions
of
these
HAPs
and
other
HAP
metals,
the
Agency
establishes
maximum
achievable
control
technology
(
MACT)
standards.
The
term
"
MACT
floor"
refers
to
the
minimum
control
technology
on
which
MACT
standards
can
be
based.
The
MACT
floor
is
set
by
the
average
emissions
limitation
achieved
by
the
best
performing
12
percent
of
sources
in
a
category
or
subcategory
when
that
category
or
subcategory
contains
at
least
30
sources.
The
estimated
costs
for
individual
BSCP
facilities
to
comply
with
these
standards
are
inputs
to
the
economic
impact
analysis
presented
in
this
report.
2­
1
1.2
Organization
of
the
Report
The
economic
impact
analysis
is
organized
into
four
sections.
Section
2
provides
a
profile
of
the
industry
which
includes
a
description
of
the
producers
and
consumers
of
BSCP.
This
section
also
presents
available
market
data
and
trends
in
the
industry,
including
domestic
production,
foreign
trade,

and
apparent
U.
S.
consumption.
Section
3
describes
the
facility­
level
costs
of
complying
with
this
NESHAP
and
Section
4
provides
facility­,
market­,
and
society­
level
impacts
of
complying
with
this
rule.

Small
business
considerations
are
made
in
Section
5
as
required
by
the
Regulatory
Flexibility
Act
(
RFA)

which
was
modified
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
SBREFA).

2
INDUSTRY
PROFILE
The
industry
profile
is
organized
as
follows:
Section
2.1
describes
the
processes
and
costs
of
producing
BSCP,
as
well
as
the
types
of
emissions
released
during
production.
Section
2.2
explains
the
various
uses,
consumers,
and
substitute
products
available
for
BSCP.
Section
2.3
provides
a
summary
profile
of
the
BSCP
industry,
including
a
description
of
the
manufacturing
facilities
and
the
companies
that
own
them.

Bricks
and
structural
clay
products
are
among
the
most
commonly
used
materials
in
the
construction
of
homes
and
buildings.
These
products
are
durable,
weather­
resistant,
and
fireproof,

thereby
making
them
suitable
for
use
in
construction
(
Brick
Industry
Association,
1999).
Bricks
are
cemented
together
to
erect
the
walls
of
buildings
while
other
structural
clay
products
are
used
in
various
building
applications.
For
example,
clay
pipe,
structural
clay
tile,
and
drain,
sewer,
and
roofing
tile,
are
used
in
plumbing
systems
and
roofing
applications.

BSCP
manufacturing
falls
under
the
following
Standard
Industrial
Classification
(
SIC)
codes:

°
SIC
3251,
Brick
and
Structural
Clay
Tile;
and
°
SIC
3259,
Structural
Clay
Products,
not
elsewhere
classified
(
n.
e.
c).

These
correspond
to
the
following
North
American
Industrial
Classification
System
(
NAICS)
codes:
1
Of
these
stages
of
production,
only
the
firing
stage
is
impacted
by
the
NESHAP.

2­
2
°
NAICS
327121,
Brick
and
Structural
Clay
Tile
Manufacturing;
and
°
NAICS
327123,
Other
Structural
Clay
Products
Manufacturing.

Production
of
bricks
and
structural
clay
products
follows
a
similar
process.
Regardless
of
the
structural
clay
product
being
produced,
the
production
process
results
in
HAP
emissions.
The
primary
HAPs
emitted
are
hydrogen
fluoride
(
HF)
and
hydrogen
chloride
(
HCl)
and
the
major
source
of
these
emissions
are
kilns
used
to
fire
BSCP.

2.1.
Production
Overview
This
section
provides
a
description
of
the
production
of
BSCP.
Section
2.1.1
provides
an
overview
of
the
stages
of
production,
while
Section
2.1.2
briefly
describes
the
emissions
released
as
BSCP
are
produced.
Section
2.1.3
addresses
the
costs
of
producing
BSCP
and
last,
Section
2.1.4
provides
average
values
of
the
types
of
clay
minerals
used
in
the
production
of
BSCP.

2.1.1
Stages
of
Production
As
shown
in
Figure
2­
1,
there
are
several
steps
involved
in
the
production
of
BSCP.
Clay
minerals,
the
primary
raw
materials
used
in
BSCP
manufacturing,
must
first
be
mined.
The
mined
materials
are
then:

°
prepared
through
crushing,
grinding,
and
screening;

°
shaped
into
BSCP
through
forming
and
cutting;

°
dried
in
dryers;

°
fired
in
tunnel
or
periodic
kilns;
and
then
°
cooled
prior
to
packaging
and
shipping1.
2­
3
Mining
or
Quarrying
Primary
Crushing
Grinding
and
Screening
Forming
and
Cutting
Drying
Firing,
Flashing,
and
Cooling
Storing
and
Shipping
Production
Process
Product
Raw
clay
minerals
Crushed
clay
minerals
Ground
clay
minerals
Unfired
bricks
Dried
unfired
bricks
Finished
bricks
2­
4
Figure
2­
1.
Brick
and
Structural
Clay
Products
Manufacturing
Process
Source:
U.
S.
Environmental
Protection
Agency.
1997.
Emission
Factor
Documentation
for
AP­
42,
Section
11.3,
"
Brick
and
Structural
Clay
Products
Manufacturing:
Final
Report."
2­
5
A
detailed
discussion
of
the
production
process
below
focuses
on
brick
manufacturing,
as
structural
clay
products
typically
are
produced
in
a
similar
manner.
The
primary
difference
in
the
production
processes
of
bricks
and
structural
clay
products
is
how
the
prepared
clay
minerals
are
shaped
and
sized.
Information
in
this
section
was
taken
from
EPA's
Emission
Factor
Documentation
on
Brick
and
Structural
Clay
Products
Manufacturing
(
1997).

Production
of
brick
begins
with
the
mining
of
raw
material,
such
as
common
clay
and
shale.
This
is
the
most
common
type
of
clay
used
in
the
production
of
BSCP.
Producers
of
BSCP
acquire
their
raw
material
either
by
mining
it
themselves
or
by
purchasing
it
from
local
mineral
processing
plants.
Often,
a
company
owns
a
mining
pit
as
well
as
facilities
at
which
BSCP
are
produced.
After
the
material
is
mined
or
purchased,
it
is
fed
into
a
crusher
for
initial
size
reduction.
The
material
next
passes
through
grinders
to
produce
a
finely
ground
material.
This
product
is
then
screened
for
size
and
oversized
material
is
returned
to
the
grinders.
The
finely
ground
material
is
next
conveyed
to
the
mill
room
where
it
is
formed
into
bricks.

The
following
processes
exist
to
shape
bricks:

°
stiff
mud
extrusion,

°
soft
mud
press
process,
and
°
dry
press
process.

Most
brick
is
formed
through
the
stiff
mud
extrusion
process.
This
process
begins
with
the
use
of
a
pug
mill.
In
the
mill,
finely
ground
clay
minerals
are
mixed
with
water
and
are
then
transferred
into
a
vacuum
chamber.
Producers
at
this
point
can
introduce
additives,
such
as
barium
carbonate,
to
prevent
sulfates
present
in
the
clay
minerals
from
rising
to
the
surface
of
the
bricks.
Next,
air
is
removed
from
the
material
in
the
chamber,
and
the
material
is
extruded
through
dies.
Surface
treatments
can
be
introduced
at
this
point
to
add
specific
color
or
texture
to
the
product.
Some
of
these
surface
treatments
include
manganese
dioxide,
iron
oxide,
and
iron
chromite.
The
extruded
column
of
material
is
then
cut
into
individual
bricks
using
a
wire­
cutting
machine.
The
bricks
are
set
onto
kiln
cars
and
proceed
to
the
dryers,

which
are
typically
heated
to
204
degrees
Celsius.

The
soft
mud
process
is
used
to
produce
bricks
when
clay
is
too
wet
for
extrusion.
In
this
process,
finely
ground
clay
minerals
are
blended
with
water
and
then
formed
into
bricks
using
molds.
The
bricks
are
dried
before
proceeding
to
the
kilns.
In
the
dry
press
process,

clay
is
mixed
with
a
small
amount
of
water
and
steel
molds
are
used
to
shape
the
individual
bricks.
Pressure
of
500
to
1,500
pounds
per
square
inch
is
then
applied
to
the
molds
to
bond
the
material
into
bricks.
These
bricks
then
proceed
to
the
dryers.
2­
6
From
the
dryer,
the
bricks
enter
the
kiln
for
firing.
There
are
several
steps
to
firing
the
bricks
in
the
kiln.
These
steps
are
the
evaporation
of
free
water,
dehydration,
oxidization,

vitrification,
and
flashing.
Flashing
refers
to
the
process
of
introducing
uncombusted
fuel
into
the
kiln
atmosphere
in
order
to
add
color
to
the
surface
of
the
bricks.
Most
kilns
are
fired
with
natural
gas,
although
coal,
sawdust,
fuel
oil,
and
landfill
gas
are
also
used.
Once
the
bricks
have
been
fired,
they
are
then
cooled
to
ambient
temperatures
before
they
leave
the
kiln.
This
completes
the
process
of
brick
manufacturing.

2.1.2
Emissions
from
the
Brick
and
Structural
Clay
Product
Facilities
Production
of
BSCP
requires
a
number
of
steps
that
result
in
the
emissions
of
HAPs
and
other
pollutants.
These
pollutants
include
particulate
matter
(
PM),
sulfur
dioxide
(
SO
2),
nitrogen
oxides
(
NO
x),
carbon
monoxide
(
CO),
carbon
dioxide
(
CO
2),
volatile
organic
compounds
(
VOCs),
and
HAPs
including
HCl,
HF,
and
HAP
metals.
The
grinding
and
screening
operations
and
kilns
emit
PM
emissions.
Kiln
fuel
combustion
and
some
dryer
combustion
also
result
in
emissions
of
SO
x,
NO
x,
CO,
and
CO
2.
However,
the
primary
source
of
SO
2
emissions
from
the
kilns
is
the
raw
material,
which
contains
sulfur
compounds.
These
sulfur
compounds
form
SO
2
when
the
raw
material
is
fired.
Similarly,
the
kilns
release
HF
and
HCl
due
to
the
presence
of
fluoride
and
chloride
compounds
in
the
raw
material.

2.1.3
Costs
of
Production
This
section
discusses
the
costs
of
producing
BSCP.
There
are
several
types
of
production
costs
such
as:

°
capital
expenditures,
including
the
costs
of
equipment
and
its
installation;

°
energy
costs,
which
are
the
costs
of
electricity
and
fuels
used
in
the
production
of
BSCP;

°
labor
costs,
including
the
costs
associated
with
employees
wages
and
benefits;
and
°
the
cost
of
materials,
which
are
the
costs
of
tangible
inputs
such
as
clay
minerals,
parts,
and
additives.

Tables
2­
1
and
2­
2
show
the
historical
production
cost
data
for
the
brick
and
structural
clay
tile
industry
(
SIC
3251)
and
the
other
structural
clay
product
industry
(
SIC
3259)
that
were
gathered
from
the
U.
S.
Census
Bureau.
2­
7
Table
2­
1.
Production
Costs
for
the
Brick
and
Structural
Clay
Tile
Industry
(
SIC
3251)
($
106)

Year
Labor
Costs
Material
Costs
Energy
Costs
Capital
Expenditures
Value
of
Shipments
1992
$
213.9
$
229.5
$
142.7
$
42.9
$
1,116.0
1993
$
229.3
$
280.0
$
157.3
$
56.1
$
1,199.1
1994
$
233.9
$
312.2
$
151.2
$
63.8
$
1,319.1
1995
$
235.2
$
300.8
$
139.8
$
77.1
$
1,283.3
1996
$
246.7
$
304.0
$
160.3
$
132.9
$
1,421.9
1997
$
262.2
$
282.0
$
175.6
$
72.1
$
1,452.2
Avg.
$
236.9
$
288.0
$
154.5
$
74.2
$
1,298.6
Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1999.
1997
Economic
Census,

Manufacturing
Industry
Series,
"
Brick
and
Structural
Clay
Tile
Manufacturing."

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
1996
Annual
Survey
of
Manufactures,

M96(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1996.
1994
Annual
Survey
of
Manufactures,

M94(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1995.
1993
Annual
Survey
of
Manufactures,

M93(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

Similar
trends
can
be
seen
in
the
production
costs
across
both
SIC
codes.
For
both
the
brick
and
structural
clay
tile
industry
(
SIC
3251)
and
the
other
structural
clay
products
industry
(
SIC
3259),
the
cost
of
materials
accounts
for
the
largest
share
of
the
value
of
shipments
(
VOS).
For
SIC
3251,
cost
of
materials
were
equal
to
about
$
288
million
on
average,
or
22
percent
of
the
brick
and
structural
clay
tile
industry's
(
SIC
3251)
VOS.
For
SIC
3259,
material
costs
on
average
were
almost
$
38
million,
or
27
percent
of
the
industry's
(
SIC
3259)
VOS.
Labor
costs
represent
the
next
largest
share
of
the
VOS
for
both
markets,

approximately
20
percent,
and
energy
costs
are
approximately
11
percent
of
their
VOS.

Capital
expenditures
represent
the
smallest
share
of
VOS
for
both
SIC
3251
and
SIC
3259.
2­
8
Table
2­
2.
Production
Costs
for
the
Other
Structural
Clay
Products
Industry
(
SIC
3259)
($
106)

Year
Labor
Costs
Material
Costs
Energy
Costs
Capital
Expenditures
Value
of
Shipments
1992
$
23.5
$
34.3
$
15.0
$
5.4
$
125.8
1993
$
25.2
$
30.6
$
17.0
$
6.8
$
118.3
1994
$
28.7
$
41.5
$
15.5
$
4.0
$
142.1
1995
$
29.7
$
43.2
$
16.3
$
4.4
$
150.4
1996
$
37.6
$
52.3
$
21.7
$
4.2
$
177.5
1997
$
22.9
$
25.9
$
8.9
$
4.9
$
118.3
Avg.
$
28.0
$
38.0
$
15.7
$
5.0
$
138.7
Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1999.
1997
Economic
Census,

Manufacturing
Industry
Series,
"
Other
Structural
Clay
Product
Manufacturing."

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1996
Annual
Survey
of
Manufactures,

M96(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1994
Annual
Survey
of
Manufactures,

M94(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1993
Annual
Survey
of
Manufactures,

M93(
AS)­
1
Statistics
for
Industry
Groups
and
Industries.

Upon
examination
of
both
tables,
the
data
clearly
show
that
the
size
of
the
brick
and
structural
clay
tile
industry
is
much
larger
than
the
other
structural
clay
products
industry.
In
fact,
the
value
of
shipments
for
the
brick
and
structural
tile
industry
(
SIC
3251)
is
almost
ten
times
greater
than
the
value
of
shipments
for
the
other
structural
clay
products
industry
(
SIC
3259).

2.1.4
Value
of
Clay
Minerals
The
most
common
raw
materials
used
to
produce
BSCP
are
common
clay
and
shale.

Fire
clay,
kaolin,
and
other
materials
are
also
used,
but
to
a
lesser
degree.
The
average
value
2­
9
per
metric
ton
of
common
clay
and
shale
over
the
years
1993
to
1997
was
$
5.64.
For
fire
clay,
the
average
value
over
the
same
time
period
was
$
21.64
and
for
kaolin,
it
was
$
114.42.

Based
on
the
differences
in
the
average
values
across
these
clay
types,
it
is
clear
why
common
clay
and
shale
would
be
used
as
an
input
since
it
is
suitable
for
BSCP.
It
is
a
relatively
cheaper
input
that
possesses
the
necessary
attributes
to
produce
BSCP.

Table
2­
3
shows
the
difference
in
values
of
common
clay
and
shale,
fire
clay,
and
kaolin
produced
and
sold
in
the
U.
S.
for
the
years
1993
through
1997.
The
productionweighted
average
price
for
clay
minerals
used
in
BSCP
is
also
derived.
Since
the
weighted
average
prices
are
relatively
low,
it
is
clear
that
common
clay
and
shale
is
more
heavily
relied
upon
relative
to
fire
clay
and
kaolin
for
production
of
BSCP.
In
fact,
on
average
over
this
time
period,
98
percent
of
the
clay
minerals
used
in
BSCP
were
common
clay
and
shale
(
Virta,
1999).

Table
2­
3.
Price
Value
of
Clay
Minerals
Used
in
BSCP:
1993
­
1997
($/
metric
ton)

Clay
Minerals
1993
1994
1995
1996
1997
Avg.

Common
Clay
&
Shale
$
5.42
$
5.31
$
5.90
$
5.50
$
6.08
$
5.64
Fire
Clay
$
25.05
$
25.44
$
21.96
$
21.19
$
14.56
$
21.64
Kaolin
$
108.38
$
116.31
$
117.09
$
119.83
$
110.52
$
114.42
Weighted
Averagea
$
7.23
$
6.97
$
7.82
$
7.34
$
6.47b
$
6.97
Notes:
aWeighted
average
reflects
the
production­
weighted
prices
for
clay
minerals
used
to
produce
BSCP.

bProduction­
weighted
average
price
for
the
year
1997
does
not
include
fire
clay
because
quantity
of
this
clay
mineral
used
in
BSCP
was
not
available
for
this
year.

Source:
Virta,
Robert.
1999.
"
Clays,"
In:
Minerals
Yearbook,
Metals
and
Minerals
1997:
Volume
1.

U.
S.
Geological
Survey.
U.
S.
Government
Printing
Office.

Virta,
Robert.
1998.
"
Clays,"
In:
Minerals
Yearbook,
Metals
and
Minerals
1996:
Volume
1.

U.
S.
Geological
Survey.
U.
S.
Government
Printing
Office.

Virta,
Robert.
1997.
"
Clays,"
In:
Minerals
Yearbook,
Metals
and
Minerals
1995:
Volume
1.

U.
S.
Geological
Survey.
U.
S.
Government
Printing
Office.

Virta,
Robert.
1996.
"
Clays,"
In:
Minerals
Yearbook,
Metals
and
Minerals
1994:
Volume
1.

U.
S.
Geological
Survey.
U.
S.
Government
Printing
Office.
2­
10
The
value
of
common
clay
and
shale
remained
relatively
constant,
although
it
did
reach
a
peak
price
of
$
6.08
per
metric
ton
in
1997.
Contrary
to
the
behavior
of
the
value
of
common
clay
and
shale,
both
fire
clay
and
kaolin
sharply
dropped
in
value
in
1997.
In
fact,

fire
clay
shows
a
general
declining
trend
over
the
years
1993
to
1997
while
kaolin
steadily
increased
in
value
until
it
reached
a
peak
of
$
119.83
in
1996.
It
then
sharply
fell
in
value
in
1997.

2.2
Uses,
Consumers,
and
Substitutes
Clay
minerals
are
the
main
input
used
to
produce
BSCP.
These
products
are
then
used
by
the
construction
industry
to
build
several
different
types
of
structures,
including
homes,
buildings,
and
office
facilities.
The
following
section
describes
the
uses,
consumers,

and
substitutes
of
BSCP.
In
Section
2.2.1,
the
various
uses
for
BSCP
are
described.
Section
2.2.2
identifies
the
intermediate
and
final
consumers
of
bricks
and
structural
clay
products.

Last,
the
different
products
that
can
act
as
substitutes
for
bricks
and
structural
products
are
described
in
Section
2.2.3.

2.2.1
Uses
of
Brick
and
Structural
Clay
Products
Bricks
and
structural
clay
products
are
used
as
inputs
to
the
production
of
buildings,

homes,
and
structures.
Building,
face,
and
common
bricks
are
used
to
erect
the
walls
of
structures,
while
glazed
bricks
are
used
for
flooring.
Other
structural
clay
products,
such
as
clay
pipe,
structural
clay
tile,
chimney
pipe,
flue
linings,
and
drain,
sewer,
and
roof
tile
are
used
in
the
installation
of
plumbing
systems,
fireplaces,
and
roofs.
Brick
and
structural
clay
products
have
a
variety
of
characteristics
desirable
in
building
materials.
They
are
durable,

resistant
to
fire,
weather,
and
pests,
and
require
little
maintenance.
Use
of
bricks
enhances
the
resale
value
of
homes
and
is
considered
energy
efficient
since
they
absorb
heat
and
slow
down
heat
transfer.
In
the
summer
a
brick
exterior
retards
the
absorption
of
heat
and
in
the
winter,

the
exterior
retains
heat
indoors
(
Brick
Industry
Association,
1999).

Census
Data
provide
the
1997
values
of
select
BSCP
produced
by
SICs
3251
and
3259.
As
Figure
2­
2
shows,
the
value
of
common,
building,
and
face
brick
represents
95
percent
($
1.34
billion)
of
the
value
of
shipments
for
selected
products
in
the
brick,
structural
clay
tile,
and
structural
clay
products
industries.
The
rest
of
the
end
uses
represented
here,

facing
tile,
glazed
and
unglazed
brick,
structural
clay
tile,
and
vitrified
clay
sewer
pipe
and
fittings,
together
comprise
only
5
percent
of
the
value
of
shipments.
This
distribution
is
perhaps
explained
by
the
fact
that
there
are
a
number
of
less
expensive
2­
11
Building,
common,
and
face
brick
95%
Facing
t
ile
and
glazed
and
unglazed
brick
1%
Structural
clay
tile
1%
Vit
rified
clay
sewer
pipe
and
fit
t
ings
3%

1997
Value
of
Shipments
=
$
1.41
Billion
Figure
2­
2.
Distribution
of
BSCP
Shipments
by
End
Use:
1997
Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
Current
Industrial
2­
12
Reports
for
Clay
Construction
Products
­
Summary
1997.

products
that
compete
with
structural
clay
products,
such
as
concrete
and
PVC
pipes
and
asphalt
roofing
materials.
Structural
clay
products
are,
for
the
most
part,
specialty
items
in
many
parts
of
the
country.
It
is
important
to
note
that
the
above
pie
chart
represents
selected
BSCP
in
both
SICs
3251
and
3259.
The
value
of
shipments
of
these
products,
$
1.41
billion,

is
therefore
less
than
the
sum
of
the
value
of
shipments
for
the
entire
BSCP
industry
($
1.57
billion).

2.2.2
Consumers
of
Brick
and
Structural
Clay
Products
The
immediate
purchasers
of
these
products
are
construction
companies
who
use
them
as
inputs
to
the
production
of
homes,
buildings,
and
structures.
Construction
companies
or
contractors
may
also
buy
these
products
to
specifically
install
plumbing
systems,
fireplaces,

and
new
roofs
and
floors
to
existing
structures.
Consumers
then
purchase
the
homes,

structures,
and
buildings
produced
by
construction
companies,
or
they
hire
contractors
to
make
improvements
to
existing
structures
using
structural
clay
products.
These
consumers
therefore
have
an
indirect
demand
for
BSCP.
However,
if
they
build
homes
or
make
improvements
themselves,
then
consumers
directly
demand
these
products.

2.2.3
Substitutes
for
Brick
and
Structural
Clay
Products
Aside
from
brick,
there
are
a
number
of
alternative
building
materials
that
can
be
used
for
the
exterior
walls
of
buildings,
homes,
and
structures.
Common
alternatives
are
stucco,

wood,
hardboard,
and
aluminum
and
vinyl
siding.
There
are
certain
advantages
and
disadvantages
to
using
these
materials
instead
of
brick.

Stucco
is
made
from
sand,
Portland
cement,
and
water
and
is
extremely
durable.
It
is
applied
in
three
coats
with
pigment
mixed
in
so
that
painting
is
not
necessary.
While
stucco
can
create
an
extremely
strong
and
long­
lasting
exterior,
it
can
be
difficult
to
apply
and
is
subject
to
cracking
if
applied
incorrectly.
Wood
is
the
oldest
siding
material
used
to
build
exterior
walls
for
homes
and
buildings.
It
comes
in
a
variety
of
forms
including
shingles,

panels,
and
natural
logs.
When
used
for
exterior
walls,
wood
can
be
left
as
is,
or
can
be
painted
over
therefore
offering
flexibility
in
its
appearance.
It
is
organic
which
makes
it
an
attractive
option,
however
exposure
to
severe
weather
can
result
in
wood
rot
and
decay.
In
addition,
wood
is
vulnerable
to
pests,
such
as
termites,
that
can
damage
the
structure
of
homes.
Hardboard
is
a
wood
composite
made
by
mixing
wood
fiber
and
a
natural
or
chemical
binder
and
pressing
the
mixture
into
panels
or
lap
siding.
Hardboard
siding
is
coated
with
a
water
resistant
primer
and
is
painted.
Aluminum
and
vinyl
siding
are
simple
exterior
materials
to
care
for,
as
they
are
nailed
to
the
exterior
of
structures.
These
sidings
do
not
need
to
be
painted
and
can
be
easily
cleaned
by
washing
with
water
(
Better
Business
Bureau,
2000).
2­
13
There
are
also
alternatives
to
roofing
tiles
and
glazed
brick
for
roofing
and
flooring
applications.
Roofing
tile
is
one
option
for
roofing,
however
wood
shingles,
asphalt,
and
metal
can
also
be
used.
One
of
the
characteristics
common
to
roofing
tile,
asphalt,
and
metal
is
that
they
are
all
fireproof.
Wood
shingles
are
not
as
common
as
they
once
were
because
they
do
not
possess
this
quality.
Alternatives
to
clay
tiles
for
flooring
are
wood,
marble,
vinyl,

and
linoleum.
These
options
vary
by
price,
quality,
and
appearance.
Marble,
clay
tile,
and
hardwood
floors
are
relatively
sturdy,
and
therefore
more
expensive
than
vinyl
and
linoleum.

2.3
Industry
Organization
This
report
addresses
the
economic
impacts
of
pollution
control
requirements
on
facilities
that
produce
bricks
and
structural
clay
products.
Because
there
are
costs
associated
with
the
control
of
HAPs,
it
is
important
to
determine
how
the
industry
may
be
affected.
This
section
provides
a
description
of
the
industry's
organization
at
both
the
facility­
level
and
company­
level.
Section
2.3.1
first
provides
an
overview
of
the
market
structure
of
the
BSCP
manufacturing
industry.
Section
2.3.2
characterizes
the
manufacturing
facilities
in
this
industry,
while
the
parent
companies
of
these
facilities
are
described
in
Section
2.3.3.
Last,

Section
2.3.4
provides
data
on
domestic
production,
foreign
trade,
and
apparent
consumption
of
bricks
and
structural
clay
products.

2.3.1
Market
Structure
Market
structure
is
of
interest
because
it
determines
the
behavior
of
producers
and
consumers
in
the
industry.
In
perfectly
competitive
industries,
no
producer
or
consumer
is
able
to
influence
the
price
of
the
product
sold.
In
addition,
producers
are
unable
to
affect
the
price
of
inputs
purchased
for
use
in
production.
This
condition
is
most
likely
to
hold
if
the
industry
has
a
large
number
of
buyers
and
sellers,
the
products
sold
and
inputs
used
in
production
are
homogeneous,
and
entry
and
exit
of
firms
is
unrestricted.
Entry
and
exit
of
firms
are
unrestricted
for
most
industries,
except
in
cases
where
the
government
regulates
who
is
able
to
produce
output,
where
one
firm
holds
a
patent
on
a
product,
where
one
firm
owns
the
entire
stock
of
a
critical
input,
or
where
a
single
firm
is
able
to
supply
the
entire
market.
In
industries
that
are
not
perfectly
competitive,
producer
and/
or
consumer
behavior
can
have
an
effect
on
price.

Concentration
ratios
(
CRs)
and
the
Herfindahl­
Hirschman
index
(
HHIs)
can
provide
some
insight
into
the
competitiveness
of
an
industry.
The
U.
S.
Department
of
Commerce
reports
these
ratios
and
indices
for
the
four­
digit
SIC
code
level
for
1992,
the
most
recent
year
available.
Table
2­
4
provides
the
four­
and
eight­
firm
concentration
ratios
(
CR4
and
CR8,
respectively),
and
the
Herfindahl­
Hirschman
index
for
both
the
brick
and
structural
clay
2­
14
tile
industry
(
SIC
3251)
and
for
the
other
structural
clay
products
industry
(
SIC
3259).
For
SIC
3251,
the
CR4
was
34
percent,
and
the
CR8
was
52
percent.
For
SIC
3259,
the
CR4
was
35
percent
and
the
CR8
was
60
percent.

The
criteria
for
evaluating
the
HHIs
are
based
on
the
1992
Department
of
Justice's
Horizontal
Merger
Guidelines.
According
to
these
criteria,
industries
with
HHIs
below
1,000
are
considered
unconcentrated
(
i.
e.,
more
competitive),
those
with
HHIs
between
1,000
and
1,800
are
considered
moderately
concentrated
(
i.
e.,
moderately
competitive),
and
those
with
HHIs
above
1,800
are
considered
highly
concentrated
(
i.
e.,
less
competitive).
In
general,

firms
in
less
concentrated
industries
are
more
likely
to
be
price
takers,
while
those
in
more
concentrated
industries
have
more
ability
to
influence
market
prices.
Based
on
these
criteria,

both
the
brick
and
structural
clay
tile
industry
and
the
other
structural
clay
products
industry
can
be
modeled
as
perfectly
competitive
for
the
purpose
of
this
EIA.

Table
2­
4.
Market
Concentration
Measures
for
the
Brick
and
Structural
Clay
Tile
Industry
(
SIC
3251)
and
the
Other
Structural
Clay
Products
Industry
(
SIC
3259)

SIC
Code
Value
of
Shipments
($
106)
CR4
CR8
HHI
3251
$
1,452.19
34%
52%
433
3259
$
118.35
35%
60%
560
Note:
CR4
and
CR8
are
the
concentration
ratios
of
the
top
4
and
8
firms
in
the
industry
(
by
sales),

respectively.
HHI
refers
to
the
Herfindahl­
Hirschman
Index
which
is
the
sum
of
squared
market
shares
for
each
company
in
a
given
industry.

Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1999.
1992
Concentration
Ratios
in
Manufacturing.
<
http://
www.
census.
gov/
epcd/
www/
concentration.
html>.

2.3.2
Manufacturing
Facilities
As
of
1996,
there
were
189
facilities
producing
bricks
and
structural
clay
products
in
the
United
States.
Of
these
facilities,
164
were
brick
producers,
19
were
structural
clay
product
producers,
and
6
produce
both
product
types.
Regardless
of
the
type
of
product
the
facility
produces,
it
can
be
classified
as
either
one
of
two
types
of
producers:
a
non­
integrated
producer
or
an
integrated
producer.
Non­
integrated
BSCP
producers
purchase
clay
mineral
inputs
to
use
in
production
and
then
complete
the
manufacture
of
the
final
products.
2­
15
Integrated
producers
of
BSCP
are
vertically
integrated,
which
means
they
mine
their
own
clay
mineral
inputs
to
use
in
the
production
of
their
final
products.

The
size
of
facilities
depends
on
whether
they
are
non­
integrated
or
integrated
producers.
Plants
that
perform
their
own
mining
operations
tend
to
be
larger
in
size
than
those
that
purchase
their
inputs
from
a
minerals
processing
plant.
Even
if
facilities
are
nonintegrated
producers,
it
is
likely
that
they
are
located
near
sources
of
clay
minerals
so
that
the
transportation
cost
of
this
essential
input
remains
low.
Thus
the
locations
of
the
189
facilities
are
determined
by
the
location
of
common
clay
and
shale
deposits.
These
facilities
are
located
across
39
states
with
the
highest
concentrations
in
Ohio,
with
22
facilities,
North
Carolina
with
20
facilities,
Texas
with
18
facilities,
and
Alabama
with
11
facilities
(
see
Figure
2­
3).

2.3.3
Firm
Characteristics
The
Agency
identified
90
ultimate
parent
companies
that
owned
and
operated
the
189
potentially
affected
facilities
within
this
source
category
during
1996.
Sales
and
employment
data
were
obtained
for
these
owning
entities
from
either
their
survey
response
or
one
of
the
following
secondary
sources:

American
Business
Directory
(
American
Business
Information,
1999),

Dun
&
Bradstreet
Market
Identifiers
(
Dun
&
Bradstreet,
1999),

Gale
Group
Company
Intelligence
(
Gale
Group,
1999),

Hoover's
Online
(
Hoover's,
2001),

The
Handbook
of
Texas
Online
(
1999),
or

Standard
&
Poor's
Register­
Corporate
(
Standard
&
Poor's
Corp.,
1998)

Appendix
A
provides
a
listing
of
the
companies
identified
by
the
Agency
that
own
the
potentially
affected
facilities
within
this
source
category.

Annual
sales
and
employment
data
were
available
for
86
of
the
90
companies
(
96
percent).
The
average
(
median)
sales
of
companies
reporting
data
were
$
124.5
million
($
8.0
million).
This
includes
revenue
from
operations
other
than
BSCP
manufacturing.
The
average
(
median)
employment
for
these
companies
was
987
(
92)
workers.
As
of
1998,
the
top
four
companies
in
annual
sales
are:

°
Hanson,
PLC
­
$
3.0
billion
with
27,000
employees,

°
Certainteed
Corporation
­
$
1.6
billion
with
6,950
employees,

°
Wienerberger
Baustoffindustrie
AG
­
$
1.5
billion
with
10,370
employees,
and
2­
16
°
Texas
Industries,
Incorporated
­
$
1.2
billion
with
4,100
employees.
2­
17
18
2
2
4
1
2
1
5
10
2
1
5
2
2
7
2
3
1
6
6
1
4
9
4
1
6
8
3
2
8
20
1
22
3
1
1
1
1
Figure
2­
3.
Location
of
Brick
and
Structural
Clay
Product
Facilities
2
Company
revenues
were
estimated
by
multiplying
baseline
price
by
reported
production
totals
of
their
brick
and
structural
clay
product
facilities.
2­
18
2.3.4
Small
Business
Annual
Sales
EIA
estimated
revenues
derived
from
company
survey
responses
were
used
to
represent
annual
sales
for
small
businesses
when
these
estimated
revenues
were
greater
than
the
annual
sales
reported
in
publicly
available
company
profiles,
or
when
annual
sales
figures
were
not
available2.
By
definition,
company
sales
are
at
least
equal
to
the
sum
of
the
revenues
generated
at
its
facilities.
Therefore,
in
the
cases
where
annual
sales
were
less
than
the
EIA
estimated
revenues
for
the
small
firms,
EPA
chose
to
rely
upon
revenue
estimates
based
on
company
survey
responses.
Sales
may
be
under­
reported
in
the
secondary
sources
listed
above
because
they
represent
the
annual
sales
of
a
subsidiary
or
branch
of
a
company
or
because
these
providing
organizations
generated
their
sales
estimates.
Additionally,
relying
on
estimated
revenues
instead
of
potentially
under­
reported
company
sales
data
makes
consistent
the
results
across
the
facility­
level
economic
impacts
model
(
in
Section
4)
and
the
small
business
cost­

tosales
ratio
screening
analysis
(
in
Section
5).
Of
the
77
small
businesses,
36
had
estimated
revenues
in
excess
of
their
publicly
available
sales
data
and
an
additional
3
small
companies
had
no
available
sales
data.
Table
2­
5
provides
comparative
statistics
on
company
sales
and
their
estimated
revenues
for
this
subset
of
small
companies.

Table
2­
5.
Summary
Statistics
for
Small
Company
Sales
Data:
1999
Publicly
Reported
Sales
($
106/
yr)
EIA
Estimated
Revenues
($
106/
yr)

Companies
(#)
36
39
Average
5.7
10.0
Median
4.2
6.1
Minimum
1.0
1.1
Maximum
22.0
48.2
2­
19
Note:
The
summary
statistics
calculated
for
annual
sales
from
publicly
available
sources
excludes
three
companies
that
were
included
in
the
summary
statistics
for
annual
estimated
revenues
because
no
annual
sales
data
were
reported.

Table
2­
6
presents
a
frequency
distribution
of
the
discrepancy
between
annual
sales
and
estimated
annual
revenues
for
the
small
companies
with
identified
data
discrepancies.
It
is
clear
that
for
a
large
share
of
these
firms,
the
discrepancy
between
reported
sales
and
EIA
estimated
revenues
are
rather
large.
In
fact,
over
35
percent
of
the
36
companies
have
estimated
revenues
that
are
over
100
percent
greater
than
the
reported
annual
sales.
The
magnitude
of
the
discrepancy
supports
a
replacement
of
the
annual
sales
data
with
EIA
estimated
annual
revenues,
at
least
for
the
small
companies,
whose
sole
business
it
is
to
produce
and
sell
brick
and
structural
clay
products.

Table
2­
6.
Summary
of
Discrepancy
Between
Annual
Sales
and
Estimated
Annual
Revenues
for
Small
Companies:
1999
Discrepancy
Size
Number
of
Firms
Share
of
Firms
Average
Annual
Sales
($
106)

<
5
%
1
3
%
$
4.5
5
­
10
%
4
11
%
$
6.8
10
­
20
%
4
11
%
$
6.4
20
­
50
%
9
25
%
$
3.7
50
­
100
%
5
14
%
$
8.2
>
100
%
13
36
%
$
5.8
2.3.5
Market
Data
and
Trends
This
section
presents
historical
market
data
for
select
BSCP.
Historical
market
data
include
U.
S.
volumes
for
manufacturers'
shipments,
foreign
trade,
and
apparent
consumption.
Data
were
obtained
from
various
years
of
Current
Industrial
2­
20
Reports
published
by
the
U.
S.
Bureau
of
the
Census.
Table
2­
7
provides
data
for
common,
building,
and
face
bricks,
and
structural
clay
tile,
while
Table
2­
8
presents
data
for
facing
tile,
glazed
and
unglazed
brick,
and
vitrified
clay
and
sewer
pipe.

As
shown
in
Table
2­
7,
the
brick
market
shows
an
overall
increasing
trend
in
the
quantity
of
shipments,
exports,
imports,

as
well
as
apparent
consumption.
This
is
evident
from
an
examination
of
the
average
annual
growth
rates.
The
average
annual
growth
rate
of
brick
shipments
from
1993
to
1997
was
4.3
percent.
For
brick
imports,
the
rate
is
24.2
percent,
much
larger
relative
to
the
average
annual
growth
rates
of
shipments,
exports,
or
apparent
consumption.

This
high
average
annual
growth
rate
is
due
to
the
large
increases
in
imports
over
the
time
period
presented.
Specifically,

the
imports
of
bricks
increased
significantly
from
about
9
million
bricks
in
1994
to
16.9
million
bricks
in
1995.
Imports
then
increased
to
over
20
million
bricks
in
1996.
Brick
exports
have
remained
between
42
and
43
million
until
the
year
1997,
when
exports
peaked
at
a
quantity
of
46.5
million.

As
shown
earlier
in
Figure
2­
2,
the
market
for
other
structural
clay
products
is
much
smaller
than
the
brick
market,

however
it
still
represents
an
important
sector
of
the
BSCP
industry.
As
Table
2­
8
shows,
the
average
annual
growth
rate
of
select
structural
clay
products
is
approximately
­
3.3
percent
for
the
years
1993
to
1997,
which
is
very
close
to
the
average
annual
growth
rate
for
apparent
consumption
of
these
same
products
(­
3.4
percent).
While
shipments
and
consumption
decline
over
the
time
period
examined,
the
average
annual
growth
rate
of
exports
is
extremely
high
at
236.9
percent.
While
this
growth
rate
looks
large,
it
is
relatively
small
in
absolute
terms.
This
average
growth
rate
is
due,
in
particular,
to
a
large
increase
in
exports
of
vitrified
sewer
pipe
from
1993
to
1994.
In
1993,
287
short
tons
were
exported
from
the
U.
S.
and
in
1994,
exports
dramatically
rose
to
3,187
short
tons.
This
is
the
main
cause
of
such
a
large
average
annual
growth
rate
of
exports
over
the
time
period
represented
here.
Imports
of
structural
clay
products
were
small,
never
exceeding
1
thousand
short
tons
in
any
year
between
1993
and
1997.
To
determine
how
significant
international
trade
of
bricks
and
structural
clay
products
is,
foreign
trade
concentration
ratios
are
calculated.
Foreign
trade
concentration
ratios
demonstrate
what
share
of
domestically
produced
BSCP
is
exported
and
what
share
of
apparent
consumption
is
imported.
Table
2­
9
presents
the
concentration
ratios
for
brick
and
structural
clay
tile
and
it
shows
that
foreign
trade
of
these
products
is
small
relative
to
the
amounts
produced
and
consumed
domestically.
Of
the
total
quantity
produced,
only
six­
tenths
of
a
percent
is
exported
on
average.
The
share
of
bricks
and
structural
clay
tile
consumed
from
abroad
is
even
less
at
0.2
percent.
2­
21
Table
2­
7.
Historical
Data
for
Brick
and
Structural
Clay
Tile
(
103
bricksa):
1993
­
1997
Year
Shipment
of
Bricks
Exports
Imports
Apparent
Consumptionb
1993
6,623,300
42,643
10,170
6,590,827
1994
7,200,000
43,733
8,967
7,165,234
1995
7,243,900
43,627
16,867
7,217,140
1996
7,426,400
42,759
20,629
7,404,270
1997
7,837,600
46,518
20,267
7,811,349
Average
Annual
Growth
Rates
1993
­
1997
4.34%
2.28%
24.21%
4.38%

Note:
aBricks
are
2­
1/
4
inch
by
3­
5/
8
inch
by
7­
5/
8
inch
brick
equivalent.

bApparent
Consumption
=
Shipments
of
Bricks
­
Exports
+
Imports
Source:
Same
data
sources
as
those
used
for
Table
2­
6
below.

Table
2­
8.
Historical
Data
for
Select
Structural
Clay
Products
(
short
tons):
1993
­
1997
Year
Shipments
of
Select
SCPa
Exports
Imports
Apparent
Consumptionb
1993
62,552
287
615
62,880
1994
53,959
3,187
915
51,687
1995
51,738
1,543
388
50,583
1996
47,943
1,610
345
46,678
2­
22
1997
53,750
1,334
888
53,304
Average
Annual
Growth
Rates
1993
­
1997
­
3.27%
236.88%
34.40%
­
3.37%

Note:
aSCP
refers
to
structural
clay
products.

bApparent
Consumption
=
Shipments
of
Select
SCP
­
Exports
+
Imports
Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1997.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1996.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1995.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1995.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1994.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

Table
2­
10
presents
the
foreign
trade
concentration
ratios
for
facing
tile,
glazed
and
unglazed
brick,
and
vitrified
clay
and
sewer
pipe.
The
ratios
for
this
market
segment
are
low,
but
not
as
low
as
those
calculated
for
brick
and
structural
clay
tile.
In
this
case,
3
percent
of
domestically
produced
structural
clay
products
is
exported
and
approximately
1
percent
of
domestic
consumption
is
supplied
from
abroad.
These
calculated
ratios
shown
in
Tables
2­
9
and
2­
10
provide
evidence
of
the
minimal
foreign
trade
of
BSCP
relative
to
the
quantities
produced
and
consumed
domestically.
3­
1
Table
2­
9.
Foreign
Trade
Concentration
Ratios
of
Brick
and
Structural
Clay
Tile:

1993
­
1997
Year
Exports/
Production
Imports/
Apparent
Consumption
1993
0.64%
0.15%

1994
0.61%
0.13%

1995
0.60%
0.23%

1996
0.58%
0.28%

1997
0.59%
0.26%

Average
0.60%
0.21%

Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1997.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1996.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1995.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1995.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1994.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

Table
2­
10.
Foreign
Trade
Concentration
Ratios
of
Select
Structural
Clay
Products:

1993
­
1997
Year
Exports/
Production
Imports/
Apparent
Consumption
1993
0.46%
0.98%

1994
5.91%
1.77%

1995
2.98%
0.77%
3­
2
1996
3.36%
0.74%

1997
2.48%
1.67%

Average
3.04%
1.18%

Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1997.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1996.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1995.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>

U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1995.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1994.
<
http://
www.
census.
gov:
80/
cir/
www/
mq32d.
html>
3­
1
3
ENGINEERING
COST
ANALYSIS
Production
of
BSCP
results
in
emissions
of
HF,
HCl,
and
HAP
metals
from
the
kilns
used
in
the
production
process.
To
control
these
emissions,
EPA
has
developed
emission
standards
for
these
HAPs
under
the
authority
of
Section
112
of
the
CAA.

This
section
explains
how
the
nationwide
estimate
of
compliance
costs
associated
with
this
regulation
was
developed.
Section
3.1
presents
the
development
of
model
kilns,
while
Section
3.2
explains
how
the
costs
of
controlling
the
kilns
to
meet
the
MACT
floor
are
developed.
Section
3.3
then
describes
how
the
compliance
costs
associated
with
model
kilns
are
assigned
to
the
kilns
used
in
the
production
of
BSCP.
The
nationwide
estimate
of
compliance
costs
associated
with
this
rule
is
also
provided
in
this
section.

3.1
Development
of
Model
Kilns
Based
on
information
provided
from
EPA's
Section
114
questionnaires
(
hereafter
called
EPA's
facility
database)
of
the
BSCP
industry,
kilns
in
the
BSCP
facilities
were
determined
to
be
potential
major
sources
of
HAP
emissions.
The
varying
sizes
of
kilns
used
by
BSCP
facilities
necessitates
using
model
kilns
to
simulate
the
effects
of
applying
this
regulation
to
the
industry.

A
model
kiln
does
not
represent
any
particular
kiln;
rather
it
represents
a
range
of
kilns
with
similar
characteristics
that
may
be
affected
by
the
regulation.
Each
kiln
is
characterized
by
type
(
either
periodic
or
tunnel),
size
(
based
on
production
rate),
and
other
parameters
that
influence
the
estimates
of
emissions
and
control
costs.
Section
3.1.1
explains
how
model
tunnel
kilns
were
developed
and
Section
3.1.2
discusses
the
development
of
model
periodic
kilns.

3.1.1
Model
Tunnel
Kilns
When
the
model
kilns
were
developed,
EPA's
facility
database
had
production
information
for
287
of
the
308
tunnel
kilns
of
varying
size
that
are
in
operation
at
the
189
BSCP
plants.
To
develop
model
tunnel
kilns,
size
ranges
of
small,
medium,
large,

and
extra­
large
were
defined
based
on
a
comparison
of
stack
gas
volumetric
flow
rates
and
kiln
production
rates.
Based
on
this
comparison,
four
model
tunnel
kilns
were
defined
by
their
production
rates
(
in
tons
per
hour
[
tph])
as
shown
in
Table
3­
1.
To
assign
each
tunnel
kiln
at
BSCP
facilities
a
size
as
defined
in
this
report,
the
following
criteria
were
used:
kilns
with
capacities
less
than
8
tph
were
considered
small
kilns;
those
with
capacities
ranging
from
8
tph
to
12.5
tph
were
considered
medium
kilns;
those
with
capacities
ranging
from
12.5
tph
to
17.5
tph
were
considered
large;
and
kilns
with
capacities
greater
than
or
equal
to
17.5
tph
were
considered
extra­
large
kilns.
3­
2
3­
3
Table
3­
1.
Model
Tunnel
Kiln
Definitions
Tunnel
Kiln
Size
Range
Production
Rate
(
tons
per
hour)

Small
5
Medium
10
Large
15
Extra­
large
20
Source:
U.
S.
Environmental
Protection
Agency.
May
10,
2000.
"
Model
Plants
­
Kilns,
Brick
and
Structural
Clay
Products
Manufacturing
Industry
Maximum
Achievable
Control
Technology
(
MACT)

Standard
Support",
Memorandum
from
Brian
Shrager
and
Mike
Abraczinskas,
Midwest
Research
Institute,
to
Mary
Johnson,
Environmental
Protection
Agency,
Office
of
Air
Quality
Planning
and
Standards,
Emissions
Standards
Division.

A
total
of
269
tunnel
kilns
(
for
which
production
and
capacity
information
are
available)
were
operating
in
1999
at
155
plants.
Table
3­
2
specifies
the
number
of
tunnel
kilns
assigned
to
each
model
tunnel
kiln
size.
The
number
of
kilns
by
model
size
increases
as
the
size
of
the
kiln
decreases.
Separate
model
kilns
were
developed
for
tunnel
kilns
that
duct
some
or
all
of
the
kiln
exhaust
to
sawdust
dryers
prior
to
release
to
the
atmosphere.
Table
3­
3
shows
the
number
of
tunnel
kilns/
sawdust
dryers
assigned
to
each
model
size.

Table
3­
2.
Number
of
Tunnel
Kilns
by
Model
Size
Small
Medium
Large
Extra­
large
Total
138
82
43
6
269
Source:
U.
S.
Environmental
Protection
Agency.
May
10,
2000.
"
Model
Plants
­
Kilns,
Brick
and
Structural
Clay
Products
Manufacturing
Industry
Maximum
Achievable
Control
Technology
(
MACT)

Standard
Support",
Memorandum
from
Brian
Shrager
and
Mike
Abraczinskas,
Midwest
Research
Institute,
to
Mary
Johnson,
Environmental
Protection
Agency,
Office
of
Air
Quality
Planning
and
3­
6
Standards,
Emissions
Standards
Division.

Table
3­
3.
Number
of
Tunnel
Kilns/
Sawdust
Dryers
by
Model
Size
Small
Medium
Large
Extra­
large
Total
11
5
2
1
19
Source:
U.
S.
Environmental
Protection
Agency.
May
10,
2000.
"
Model
Plants
­
Kilns,
Brick
and
Structural
Clay
Products
Manufacturing
Industry
Maximum
Achievable
Control
Technology
(
MACT)

Standard
Support",
Memorandum
from
Brian
Shrager
and
Mike
Abraczinskas,
Midwest
Research
Institute,
to
Mary
Johnson,
Environmental
Protection
Agency,
Office
of
Air
Quality
Planning
and
Standards,
Emissions
Standards
Division.

3.1.2
Model
Periodic
Kilns
Across
the
industry,
there
are
219
periodic
kilns
(
for
which
capacity
could
be
estimated)
in
operation.
Unlike
tunnel
kilns,

insufficient
data
are
available
to
allow
EPA
to
compare
flow
rates
to
production
rates
for
model
periodic
kilns.
Nominal
production
rates,
based
on
the
limited
available
kiln
capacity
data,
of
0.25
tph
and
1
tph
were
chosen
for
small
and
large
model
periodic
kilns,
respectively.
Table
3­
4
shows
the
number
of
kilns
assigned
to
small
and
large
model
periodic
kilns.

Table
3­
4.
Number
of
Periodic
Kilns
by
Model
Size
Small
Large
Total
167
52
219
Source:
U.
S.
Environmental
Protection
Agency.
May
10,
2000.
"
Model
Plants
­
Kilns,
Brick
and
Structural
Clay
Products
Manufacturing
Industry
Maximum
Achievable
Control
Technology
(
MACT)

Standard
Support",
Memorandum
from
Brian
Shrager
and
Mike
Abraczinskas,
Midwest
Research
Institute,
to
Mary
Johnson,
Environmental
Protection
Agency,
Office
of
Air
Quality
Planning
and
Standards,
Emissions
Standards
Division.
3
Standard
brick
equivalent
(
SBE)
is
equal
to
a
4
pound
brick
and
is
the
standard
measure
used
in
the
engineering
analysis.

3­
7
3.2
Costs
of
Control
This
section
provides
the
estimated
costs
of
installing
and
operating
control
technologies
that
meet
the
MACT
floor.
The
cost
of
the
add­
on
control
devices
varies
based
on
the
size
and
the
type
of
kiln
upon
which
it
will
be
installed.
Table
3­
5
summarizes
the
total
and
annualized
capital
costs,
operating
and
maintenance
expenses,
and
total
annual
costs
by
model
kiln.

These
costs
have
been
scaled
to
the
fourth
quarter
of
the
year
2000.
For
the
purpose
of
this
analysis,
those
major
sources
that
must
reduce
emissions
to
comply
with
the
standard
are
expected
to
install
and
operate
a
control
on
each
existing
tunnel
kiln
with
a
capacity
greater
than
or
equal
to
10
tph.
Existing
tunnel
kilns
capacities
below
the
10
tph
level
and
existing
periodic
kilns
will
not
incur
costs
related
to
this
regulation.
Though
all
tunnel
kilns
defined
as
small
required
no
control
equipment
to
be
installed,
costs
were
developed
to
determine
what
it
would
have
cost
a
facility
to
install
and
operate
a
control
device.

3.3
National
Control
Cost
Estimates
As
discussed
in
Section
3.2,
the
Agency
developed
facility­
specific
estimates
of
total
annual
compliance
costs
associated
with
pollution
control
equipment
needed
by
the
point
sources
to
meet
the
MACT
emission
limits.
This
was
done
by
summing
the
total
annual
compliance
costs
over
all
kilns
at
each
facility.
The
nationwide
annual
compliance
cost
estimate
for
the
affected
sources
at
BSCP
facilities
is
estimated
to
be
$
23.96
million,
or
less
than
$
0.02
per
standard
brick
equivalent
(
SBE)
3
produced
domestically.
Note
however,
that
these
cost
estimates
do
not
account
for
behavioral
responses
(
i.
e.,
changes
in
price
and
output
rates).
Table
3­
5.
Emissions
Control
Costs
of
the
BSCP
Manufacturing
NESHAP
($
103)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
2
small
$
0
$
0
$
0
$
0
$
0
$
0
4
small
$
0
$
0
$
0
$
0
$
0
$
0
3
small
$
0
$
0
$
0
$
0
$
0
$
0
66
large
$
0
$
0
$
0
$
0
$
0
$
0
8
large
$
0
$
0
$
0
$
0
$
0
$
0
148
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
8
110
large
$
0
$
0
$
0
$
0
$
0
$
0
111
large
$
0
$
0
$
0
$
0
$
0
$
0
112
large
$
0
$
0
$
0
$
0
$
0
$
0
130
large
$
0
$
0
$
0
$
0
$
0
$
0
149
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
133
large
$
215,468
$
325,630
$
6,330
$
8,052
$
16,082
$
571,562
7
large
$
0
$
0
$
0
$
0
$
0
$
0
5
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
6
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
146
large
$
0
$
0
$
0
$
0
$
0
$
0
12
large
$
0
$
0
$
0
$
0
$
0
$
0
13
large
$
0
$
0
$
6,330
$
8,052
$
16,082
$
30,464
11
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
74
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
10
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
138
large
$
0
$
0
$
0
$
0
$
0
$
0
82
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
131
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
132
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
81
large
$
271,392
$
397,104
$
9,495
$
12,078
$
16,082
$
706,151
72
large
$
125,004
$
193,262
$
3,165
$
4,026
$
16,082
$
341,539
73
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
51
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
16
small
$
0
$
0
$
0
$
0
$
0
$
0
17
small
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
105
small
$
0
$
0
$
0
$
0
$
0
$
0
152
small
$
0
$
0
$
0
$
0
$
0
$
0
18
small
$
0
$
0
$
0
$
0
$
0
$
0
181
large
$
0
$
0
$
0
$
0
$
0
$
0
19
small
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
14
small
$
0
$
0
$
0
$
0
$
0
$
0
15
small
$
0
$
0
$
0
$
0
$
0
$
0
20
small
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
33
small
$
0
$
0
$
0
$
0
$
0
$
0
34
small
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
(
Table
3­
5
Continued)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
9
134
small
$
271,392
$
397,104
$
9,495
$
12,078
$
16,082
$
706,151
64
small
$
0
$
0
$
0
$
0
$
0
$
0
83
small
$
0
$
0
$
0
$
0
$
0
$
0
84
small
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
21
small
$
0
$
0
$
0
$
0
$
0
$
0
188
large
$
0
$
0
$
0
$
0
$
0
$
0
189
large
$
0
$
0
$
0
$
0
$
0
$
0
153
small
$
0
$
0
$
0
$
0
$
0
$
0
23
small
$
0
$
0
$
0
$
0
$
0
$
0
65
small
$
0
$
0
$
0
$
0
$
0
$
0
24
small
$
0
$
0
$
0
$
0
$
0
$
0
161NR
small
$
0
$
0
$
0
$
0
$
0
$
0
162NR
small
$
0
$
0
$
0
$
0
$
0
$
0
163NR
small
$
0
$
0
$
0
$
0
$
0
$
0
158
small
$
0
$
0
$
0
$
0
$
0
$
0
29
large
$
0
$
0
$
0
$
0
$
0
$
0
28
large
$
0
$
0
$
0
$
0
$
0
$
0
31
large
$
180,928
$
264,736
$
12,660
$
16,104
$
16,082
$
490,510
150
large
$
0
$
0
$
6,330
$
8,052
$
16,082
$
30,464
77
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
67
large
$
0
$
0
$
0
$
0
$
0
$
0
70
large
$
0
$
0
$
6,330
$
8,052
$
16,082
$
30,464
25
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
32
large
$
0
$
0
$
0
$
0
$
0
$
0
26
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
27
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
30
large
$
0
$
0
$
0
$
0
$
0
$
0
78
small
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
63
small
$
0
$
0
$
0
$
0
$
0
$
0
38
small
$
0
$
0
$
0
$
0
$
0
$
0
174NR
small
$
0
$
0
$
0
$
0
$
0
$
0
169NR
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
167NR
large
$
0
$
0
$
0
$
0
$
0
$
0
165NR
large
$
0
$
0
$
0
$
0
$
0
$
0
(
Table
3­
5
Continued)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
10
166NR
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
168NR
large
$
125,004
$
193,262
$
3,165
$
4,026
$
16,082
$
341,539
173NR
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
41
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
164NR
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
170NR
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
171NR
large
$
200,826
$
295,921
$
6,330
$
8,052
$
16,082
$
527,211
172NR
large
$
215,468
$
325,630
$
6,330
$
8,052
$
16,082
$
571,562
178NR
small
$
0
$
0
$
0
$
0
$
0
$
0
71
small
$
0
$
0
$
0
$
0
$
0
$
0
177NR
small
$
0
$
0
$
0
$
0
$
0
$
0
9
small
$
0
$
0
$
0
$
0
$
0
$
0
35
small
$
0
$
0
$
0
$
0
$
0
$
0
36
small
$
90,464
$
132,368
$
6,330
$
8,052
$
16,082
$
253,296
145
large
$
0
$
0
$
0
$
0
$
0
$
0
125
large
$
0
$
0
$
0
$
0
$
0
$
0
97
large
$
271,392
$
397,104
$
9,495
$
12,078
$
16,082
$
706,151
98
large
$
200,826
$
295,921
$
6,330
$
8,052
$
16,082
$
527,211
127
large
$
0
$
0
$
0
$
0
$
0
$
0
126
large
$
0
$
0
$
0
$
0
$
0
$
0
94
large
$
0
$
0
$
0
$
0
$
0
$
0
92
large
$
0
$
0
$
0
$
0
$
0
$
0
118
large
$
0
$
0
$
0
$
0
$
0
$
0
129
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
143
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
99
large
$
0
$
0
$
0
$
0
$
0
$
0
151
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
95
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
128
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
96
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
93
large
$
0
$
0
$
0
$
0
$
0
$
0
175NR
small
$
0
$
0
$
0
$
0
$
0
$
0
104
small
$
0
$
0
$
0
$
0
$
0
$
0
37
small
$
0
$
0
$
0
$
0
$
0
$
0
(
Table
3­
5
Continued)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
11
139
small
$
0
$
0
$
0
$
0
$
0
$
0
135
small
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
142
small
$
0
$
0
$
0
$
0
$
0
$
0
183
small
$
0
$
0
$
0
$
0
$
0
$
0
40
small
$
0
$
0
$
0
$
0
$
0
$
0
50
small
$
0
$
0
$
0
$
0
$
0
$
0
42
small
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
107
small
$
0
$
0
$
0
$
0
$
0
$
0
109
small
$
0
$
0
$
0
$
0
$
0
$
0
106
small
$
0
$
0
$
0
$
0
$
0
$
0
108
small
$
0
$
0
$
0
$
0
$
0
$
0
184
small
$
0
$
0
$
0
$
0
$
0
$
0
113
small
$
0
$
0
$
0
$
0
$
0
$
0
79
small
$
0
$
0
$
0
$
0
$
0
$
0
114
small
$
0
$
0
$
0
$
0
$
0
$
0
87
small
$
0
$
0
$
0
$
0
$
0
$
0
88
small
$
0
$
0
$
0
$
0
$
0
$
0
43
small
$
0
$
0
$
0
$
0
$
0
$
0
156
small
$
0
$
0
$
0
$
0
$
0
$
0
122
small
$
0
$
0
$
0
$
0
$
0
$
0
136
small
$
0
$
0
$
0
$
0
$
0
$
0
68
small
$
0
$
0
$
0
$
0
$
0
$
0
69
small
$
0
$
0
$
0
$
0
$
0
$
0
44
small
$
0
$
0
$
0
$
0
$
0
$
0
176NR
small
$
0
$
0
$
0
$
0
$
0
$
0
123
large
$
0
$
0
$
0
$
0
$
0
$
0
86
large
$
0
$
0
$
0
$
0
$
0
$
0
154
large
$
0
$
0
$
6,330
$
8,052
$
16,082
$
30,464
137
small
$
361,856
$
529,472
$
12,660
$
16,104
$
16,082
$
936,174
159
small
$
0
$
0
$
0
$
0
$
0
$
0
45
small
$
0
$
0
$
0
$
0
$
0
$
0
89
small
$
0
$
0
$
0
$
0
$
0
$
0
157
small
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
48
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
(
Table
3­
5
Continued)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
12
49
large
$
345,728
$
520,368
$
9,495
$
12,078
$
16,082
$
903,751
179
small
$
0
$
0
$
0
$
0
$
0
$
0
76
small
$
0
$
0
$
0
$
0
$
0
$
0
185
small
$
0
$
0
$
0
$
0
$
0
$
0
90
small
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
140
small
$
0
$
0
$
0
$
0
$
0
$
0
160NR
small
$
0
$
0
$
0
$
0
$
0
$
0
115
small
$
0
$
0
$
0
$
0
$
0
$
0
141
small
$
0
$
0
$
0
$
0
$
0
$
0
46
small
$
0
$
0
$
0
$
0
$
0
$
0
91
small
$
0
$
0
$
0
$
0
$
0
$
0
80
small
$
0
$
0
$
0
$
0
$
0
$
0
39
small
$
0
$
0
$
0
$
0
$
0
$
0
116
small
$
0
$
0
$
0
$
0
$
0
$
0
186
large
$
0
$
0
$
0
$
0
$
0
$
0
187
large
$
0
$
0
$
0
$
0
$
0
$
0
117
small
$
0
$
0
$
0
$
0
$
0
$
0
47
small
$
0
$
0
$
0
$
0
$
0
$
0
144
large
$
0
$
0
$
0
$
0
$
0
$
0
121
large
$
0
$
0
$
0
$
0
$
0
$
0
120
large
$
0
$
0
$
0
$
0
$
0
$
0
155
small
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
119
small
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
180NR
small
$
0
$
0
$
0
$
0
$
0
$
0
124
small
$
0
$
0
$
0
$
0
$
0
$
0
75
small
$
0
$
0
$
0
$
0
$
0
$
0
60
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
52
large
$
180,928
$
264,736
$
6,330
$
8,052
$
16,082
$
476,128
53
large
$
125,004
$
193,262
$
3,165
$
4,026
$
16,082
$
341,539
100
large
$
0
$
0
$
0
$
0
$
0
$
0
61
large
$
90,464
$
132,368
$
3,165
$
4,026
$
16,082
$
246,105
56
large
$
0
$
0
$
0
$
0
$
0
$
0
22
large
$
0
$
0
$
0
$
0
$
0
$
0
1
large
$
0
$
0
$
3,165
$
4,026
$
16,082
$
23,273
(
Table
3­
5
Continued)

Facility
Number
Company
Size
Annualized
Capital
Cost
Annual
O&
M
Cost
Annual
Monitoring
Cost
Annualized
Compliance
Testing
Cost
Annual
Reporting
Cost
Total
Annualized
Cost
3­
13
85
large
$
0
$
0
$
0
$
0
$
0
$
0
57
large
$
0
$
0
$
0
$
0
$
0
$
0
58
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
59
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
101
large
$
110,362
$
163,553
$
3,165
$
4,026
$
16,082
$
297,188
54
large
$
220,724
$
327,106
$
6,330
$
8,052
$
16,082
$
578,294
102
large
$
0
$
0
$
0
$
0
$
0
$
0
103
large
$
0
$
0
$
0
$
0
$
0
$
0
62
large
$
0
$
0
$
0
$
0
$
0
$
0
55
large
$
200,826
$
295,921
$
6,330
$
8,052
$
16,082
$
527,211
182NR
small
$
0
$
0
$
0
$
0
$
0
$
0
147
small
$
0
$
0
$
0
$
0
$
0
$
0
Source:
U.
S.
Environmental
Protection
Agency.
November
21,
2002.
"
BCSP
and
Clay
Ceramics
NESHAP:
Final
Rule
Economic
Inputs
for
Brick
and
Structural
Clay
Products
Manufacturing."
Memorandum
from
Brian
Shrager,
Midwest
Research
Institute,
to
Mary
Johnson,
Environmental
Protection
Agency,
Office
of
Air
Quality
Planning
and
Standards,
Emissions
Standards
Division.
4­
1
4
ECONOMIC
IMPACT
ANALYSIS
The
proposed
rule
to
control
the
release
of
HAPs
from
brick
and
structural
clay
product
facilities
will
directly
(
through
imposition
of
compliance
costs)
or
indirectly
(
through
changes
in
market
prices)
affect
the
entire
U.
S.
industry.
Implementation
of
the
proposed
rule
will
increase
the
costs
of
producing
BSCP
at
affected
plants.
These
costs
will
vary
across
facilities
depending
on
their
physical
characteristics
and
baseline
controls.
The
response
by
producers
to
these
additional
costs
will
determine
the
economic
impacts
of
the
regulation.
Specifically,
the
cost
of
the
regulation
may
induce
some
owners
to
change
their
current
operating
rates
or
to
close
their
operations.
These
choices
affect,
and
in
turn
are
affected
by,
the
market
prices
for
bricks
and
structural
clay
products.

This
section
describes
the
data
and
approach
used
to
estimate
the
economic
impacts
of
this
proposed
regulation.

Section
4.1
presents
the
inputs
for
the
economic
analysis,
including
producer
characterization,
market
characterization,
and
compliance
costs
of
the
regulation.
Section
4.2
describes
the
methodological
approach
to
estimating
the
economic
impacts
on
the
industry,
and
Section
4.3
presents
the
results
of
the
economic
impact
analysis.
Section
4.4
provides
an
economic
analysis
of
new
sources
that
are
projected
to
be
built
for
the
production
of
BSCP.

4.1
Economic
Analysis
Inputs
Inputs
to
the
economic
analysis
are
a
baseline
characterization
of
the
producers
of
BSCP
that
includes
their
production
levels
and
capacity,
their
markets,
and
the
estimated
costs
of
complying
with
the
proposed
regulation.
There
are
two
distinct
markets
in
which
the
BSCP
facilities
may
operate
in
depending
on
the
products
they
produce.
The
economic
analysis
therefore
examines
both.
The
market
for
bricks
is
analyzed
separately
from
the
market
for
other
structural
clay
products.

4.1.1
Producer
Characterization
The
baseline
characterization
of
BSCP
producers
is
based
principally
on
the
information
in
EPA's
facility
database.
The
information
contained
in
the
EPA
facility
database
was
based
on
industry's
response
to
an
Information
Collection
Request
(
ICR)

and
in
general,
describes
the
facilities
and
their
production
activities
for
the
year
1996.
This
database,
along
with
average
plant
capacity
utilization
rates
and
volume
of
shipments
data
gathered
from
various
Bureau
of
the
Census
publications,
were
used
to
develop
a
1999
baseline
characterization
of
the
brick
and
structural
clay
products
markets.
Using
the
1996
baseline
characterization
would
not
be
adequate
since
new
kilns
that
are
estimated
to
incur
compliance
costs
have
been
installed
at
some
4
The
average
capacity
utilization
rate
for
SIC
3251
(
Brick
and
Structural
Clay
Tile)
in
the
Current
Industrial
Reports
­
1998
Survey
of
Plant
Capacity
(
U.
S.

Census
Bureau,
2000)
was
used
in
this
analysis
since
a
majority
of
the
BSCP
facilities
are
owned
by
companies
in
this
SIC
code
category.

5
Facility
size
is
based
on
whether
it
is
owned
by
a
small
or
large
company,
as
defined
by
the
Small
Business
Administration
size
standards.

4­
2
facilities
since
1996.
Because
the
emissions
from
these
kilns
may
have
to
be
controlled
to
comply
with
this
regulation,
they
are
included
in
the
analysis.

The
nature
of
the
BSCP
industry
changed
during
the
latter
half
of
the
1990s.
Market
demand
steadily
increased
throughout
1997
and
1998,
thereby
leading
to
increasing
plant
capacity
utilization
as
well
as
the
installation
of
new
kilns
to
boost
production.
Since
EPA's
facility
database
includes
information
on
the
BSCP
industry
for
the
year
1996,
projections
about
facility
production
and
capacity
were
made
in
order
to
reflect
the
industry
as
it
existed
in
1999.
While
the
average
capacity
utilization
rate
for
SIC
3251
in
1996
was
87
percent,
it
increased
to
over
90
percent
in
1997
and
continued
to
grow4.
To
account
for
the
increased
output
of
bricks
and
structural
clay
products
in
1999,
the
production
levels
of
those
facilities
with
significantly
low
capacity
utilization
rates
in
1996
were
increased
based
on
the
1998
average
capacity
utilization
rate
for
the
industry
(
94
percent),

the
latest
year
for
which
this
measure
is
available.

In
addition,
some
facilities
included
in
the
database
were
missing
data.
These
facilities
were
either:

°
missing
production
or
capacity
data;
or
°
missing
both
production
and
capacity
data.

For
those
facilities
that
were
missing
either
production
or
capacity
data,
the
1998
average
capacity
utilization
rate
for
SIC
3251
was
used
to
estimate
the
missing
information.
For
those
facilities
for
which
no
production
or
capacity
data
were
available
(
all
of
which
were
brick
manufacturing
facilities),
the
residual
difference
between
the
1999
brick
production
total
reported
in
the
Current
Industrial
Reports
for
Clay
Construction
Products
(
U.
S.
Census
Bureau,
2000)
and
the
production
total
of
the
brick
facilities
in
the
database
was
allocated
across
facilities
based
on
whether
they
are
considered
small
or
large5.
The
allocation
of
the
residual
brick
production
was
based
on
a
ratio
of
the
average
production
quantities
for
the
small
and
large
brick
manufacturing
facilities
in
the
database.
Additionally,
the
production
capacity
data
for
these
facilities
were
based
on
the
average
capacity
utilization
rates
of
the
small
and
large
facilities
in
the
database.
4­
3
These
facility­
specific
data
on
existing
major
sources
were
supplemented
with
secondary
information
on
bricks
and
structural
clay
products
from
the
Brick
Industry
Association
(
BIA),
market
prices
for
bricks
and
for
structural
clay
products
derived
from
various
publications
released
by
the
U.
S.
Bureau
of
the
Census,
and
BSCP
cost
equations
developed
for
this
analysis
(
as
described
fully
in
Appendix
B).

4.1.2
Brick
and
Structural
Clay
Product
Markets
Table
4­
1
provides
baseline
data
on
the
U.
S.
brick
and
structural
clay
products
markets
used
in
this
analysis.
The
market
price
for
bricks
was
derived
by
dividing
the
1999
value
of
brick
shipments
by
the
quantity
of
bricks
produced
in
that
year
(
U.
S.

Census
Bureau,
2000).
The
market
price
for
structural
clay
products
was
calculated
in
a
similar
manner.
Market
production
volumes
for
bricks
and
for
structural
clay
products
are
the
sum
of
U.
S.
production
and
foreign
imports.
The
Current
Industrial
Reports
for
Clay
Construction
Products
(
U.
S.
Bureau
of
the
Census,
2000)
reports
U.
S.
production
of
bricks
and
structural
clay
products
for
1999.
Foreign
trade
data
on
exports
and
imports
of
these
products
were
also
taken
from
the
same
publication.

Table
4­
1.
Baseline
Characterization
of
U.
S.
Brick
and
Structural
Clay
Products
Markets:
1999
Brick
Structural
Clay
Products
Market
price
($/
SBEa)
$
0.19
$
0.80
Market
production
(
1,000
SBE)
8,573,450
316,586
Domestic
production
(
1,000
SBE)
8,552,821
310,706
Foreign
Trade
(
1,000
SBE)

Exports
42,759
1,945
Imports
20,629
5,880
Note:
aSBE
means
standard
brick
equivalent,
based
on
a
4
pound
brick.
Prices
are
based
on
1999
value
of
shipments
divided
by
1999
market
production.

Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1999.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
1999.

4.1.3
Regulatory
Control
Costs
The
Agency
developed
compliance
cost
estimates
for
each
of
the
189
BSCP
manufacturing
facilities
potentially
affected
by
the
regulation.
These
estimates
reflect
the
"
most­
reasonable"
scenario
for
this
industry
in
that
they
estimate
the
costs
of
installing
and
operating
pollution
control
equipment.
Though
the
baseline
characterization
of
the
brick
and
structural
clay
4­
4
products
manufacturing
facilities
represents
the
industry
in
year
1999,
the
regulatory
control
costs
are
current
as
of
the
4th
quarter
of
year
2000.
For
this
source
category,
compliance
costs
for
the
facilities
arise
from
the
installation
of
dry
injection
fabric
filters
on
tunnel
kilns
with
design
capacities
equal
to
or
greater
than
10
tph,
as
well
as
the
operation,
maintenance,
and
testing
of
this
pollution
control
equipment.
Other
costs
may
stem
from
monitoring,
recordkeeping,
and
reporting
of
emissions
as
well
as
testing
costs.
These
cost
estimates
serve
as
inputs
to
the
economic
analysis
and
affect
the
operating
decisions
for
each
potentially
affected
facility.
A
total
of
68
facilities
are
expected
to
incur
positive
compliance
costs
to
comply
with
the
NESHAP
that
totaled
$
23.96
million.
Revenues
for
each
facility
were
estimated
based
on
the
market
prices
for
bricks
and
structural
clay
products
shown
in
Table
4­
1
and
their
reported
production
levels
from
the
1999
baseline
producer
characterization.

4.2
Economic
Impact
Methodology
This
section
summarizes
the
Agency's
economic
approach
to
modeling
the
responses
by
producers
of
BSCP
and
markets
to
the
imposition
of
this
proposed
regulation.
In
conducting
an
economic
analysis,
the
alternatives
available
to
each
producer
in
response
to
the
regulation
and
the
context
of
these
choices
are
important
in
determining
the
economic
impacts.
Based
on
the
regulatory
control
cost
estimates,
the
Agency
has
evaluated
the
economic
impacts
of
this
NESHAP
using
a
market­
based
approach
that
gives
producers
the
choice
of
whether
to
continue
producing
BSCP
and,
if
so,
to
determine
the
optimal
level
consistent
with
market
signals.

The
Agency's
approach
is
soundly
based
on
standard
microeconomic
theory,
employs
a
comparative
statics
approach,
and
assumes
certainty
in
relevant
markets.
Prices
and
quantities
are
determined
in
perfectly
competitive
markets
for
both
bricks
and
structural
clay
products.
Production
decisions
involve
whether
a
firm
with
a
plant
and
equipment
already
in
place
purchases
inputs
to
produce
output.
These
are
sometimes
called
short­
run
decisions
since
the
plant
and
equipment
are
fixed.
A
profitmaximizing
firm
will
operate
existing
capital
as
long
as
the
market
price
for
its
output
exceeds
its
per­
unit
variable
production
costs.
As
long
as
the
market
price
even
marginally
exceeds
the
average
variable
(
operating)
costs,
the
firm
will
cover
not
only
the
cost
of
its
variable
inputs
but
also
part
of
its
capital
costs.
Thus,
in
the
short
run,
a
profit­
maximizing
firm
will
not
pass
up
an
opportunity
to
recover
even
part
of
its
fixed
investment
in
the
plant
and
equipment.
However,
in
the
long
run,
the
firm
must
cover
all
of
its
fixed
investment
in
the
plant
and
equipment.
Under
this
more
stringent
condition,
the
market
price
must
exceed
its
average
total
costs,
which
include
capital
and
variable
input
costs.
For
this
analysis,
the
Agency
employs
the
short­
run
criteria
to
estimate
the
economic
impacts
of
the
proposed
NESHAP.
4­
5
Figure
4­
2.
Supply
Curve
for
Affected
Facilities
The
Agency
developed
cost
curves
for
each
type
of
product
at
affected
facilities.
Given
the
capital
in
place,
each
product
at
an
affected
facility
is
characterized
by
an
upward­
sloping
supply
function,
as
shown
in
Figure
4­
2.
The
supply
function
lies
along
the
same
locus
of
points
as
the
marginal
cost
curve,
which
is
bounded
by
zero
and
by
the
technical
capacity
at
the
facility.

The
facility
owner
is
willing
to
supply
output
according
to
this
schedule
as
long
as
market
price
is
sufficiently
high
to
cover
average
variable
costs.
If
the
market
price
falls
below
the
average
variable
costs,
then
the
firm's
best
response
is
to
cease
production
because
total
revenue
does
not
cover
total
variable
costs
of
production.
In
other
words,
when
price
is
less
than
average
variable
costs,
the
supply
curve
lies
along
the
vertical
axis
because
zero
quantity
is
supplied
at
those
prices.

The
individual
facility­
level
supply
decisions
can
be
aggregated
to
develop
the
market
supply
curve.
This
economic
analysis
assumes
that
prices
for
bricks
and
structural
clay
products
are
determined
in
perfectly
competitive
markets
(
i.
e.,

individual
facilities
have
negligible
power
over
the
market
price
of
the
products
and
thus
take
the
prices
as
"
given"
by
the
market).

As
shown
in
Figure
4­
3(
a),
under
perfect
competition,
market
prices
and
quantities
are
determined
by
the
intersection
of
market
4­
6
supply
and
demand
curves.
The
initial
baseline
scenario
consists
of
a
market
price
and
quantity
(
P,
Q)
that
is
determined
by
the
downward­
sloping
market
demand
curve
(
DM)
and
the
upward­
sloping
market
supply
curve
(
SM)
that
reflects
the
sum
of
the
individual
supply
curves
of
affected
and
unaffected
facilities.
Now
consider
the
effect
of
the
regulation
on
the
baseline
scenario.

Incorporating
the
regulatory
control
costs
will
involve
shifting
upward
the
supply
curve
for
each
affected
facility
by
the
per­
unit
compliance
cost
(
operating
and
maintenance
plus
annualized
capital).
As
a
result
of
the
upward
shift
in
the
supply
curve
for
each
affected
facility,
the
market
supply
curve
for
each
product
will
shift
upward
to
reflect
the
increased
costs
of
production
at
affected
facilities.
The
estimated
per­
unit
total
annual
compliance
cost
of
the
MACT
standards
is
incorporated
into
the
baseline
market
scenario
as
shown
in
Figure
4­
3(
b).
In
the
baseline
scenario
without
the
MACT
standards,
at
the
projected
price,
P,
the
industry
would
produce
total
output,
Q,
with
affected
facilities
producing
the
amount
q
d
and
unaffected
facilities
accounting
for
Q
minus
q
d,
or
q
i.
The
regulation
raises
the
average
total
production
cost
(
annualized
capital
costs
plus
annual
operating
and
maintenance
costs)
of
affected
facilities
causing
their
supply
curves
to
shift
upward
from
S
d
to
S
d'
and
the
market
supply
curve
to
shift
upward
to
SM'.
At
the
new
equilibrium
with
the
regulation,
the
market
price
increases
from
P
to
P'
and
market
output
(
as
determined
from
the
market
demand
curve,
DM)
declines
from
Q
to
Q'.
This
reduction
in
market
output
is
the
net
result
from
reductions
at
affected
facilities
and
increases
at
unaffected
facilities.

To
estimate
the
economic
impacts
of
the
regulation
under
this
scenario,
the
conceptual
model
described
above
was
operationalized
in
a
Lotus
1­
2­
3
multiple
spreadsheet
model
for
both
the
brick
and
structural
clay
product
markets.
Appendix
B
provides
the
details
of
the
operational
market
model
for
this
economic
analysis.
In
summary,
this
model
characterizes
domestic
and
foreign
producers
and
consumers
of
each
product
and
their
behavioral
responses
to
the
imposition
of
the
regulatory
compliance
costs.
These
costs
are
expressed
per
standard
brick
equivalent
(
SBE)
for
each
facility
and
serve
as
the
input
to
the
market
model,
or
the
"
cost
shifters"
of
the
baseline
supply
curves
at
the
facility.
Given
these
costs
for
directly
affected
facilities,

the
model
determines
a
new
equilibrium
solution
with
higher
market
prices
and
reductions
in
output
of
each
product.
4­
7
4­
8
P
S
d
q
d
q
i
Q
Facilities
Directly
Affected
S
i
SM
DM
P
P
+
=

Facilities
Indirectly
Affected
Market
a)
Baseline
Equilibrium
P
q 
q
Q 

Facilities
Directly
Affected
S
i
SM 
DM
P
P
+
=

Facilities
Indirectly
Affected
Market
b)
With­
Regulation
Equilibrium
P 
S
d
q
q 
Q
SM
P 
P 

S 
d
Figure
4­
3.
Market
Equilibrium
Without
and
With
Regulation
4­
9
4.3
Economic
Impact
Results
This
section
provides
the
economic
impacts
of
the
regulation
under
the
approach
described
in
Section
4.2.
The
model
results
are
summarized
below
as
market­,
industry­,
and
society­
level
impacts
due
to
the
regulation.

4.3.1
Market­
Level
Results
Table
4­
2
provides
the
market­
level
impacts
of
the
regulation,
which
include
the
market
adjustments
in
price
and
quantity
for
bricks
and
structural
clay
products
and
the
changes
in
foreign
trade.
The
increased
cost
of
controlling
HAPs
causes
affected
producers
to
increase
the
price
of
bricks.
As
price
increases,
consumers
may
buy
fewer
bricks
and
instead
purchase
substitute
house
siding
materials
such
as
wood
or
vinyl
siding.
The
industry
has
indicated
that
stron
competition
exist
between
brick
and
vinyl
siding
products.
These
price
and
output
changes
affects
equilibrium
in
the
brick
market.
No
structural
clay
product
producers
face
costs
of
controlling
HAPs,
however,
so
price
and
output
of
structural
clay
products
are
unaffected
by
the
regulation.
The
proposed
regulation
will
increase
the
price
of
bricks
and
reduce
market
output.
The
market
price
for
bricks
is
expected
to
increase
by
0.9
percent,
while
market
quantity
will
decline
by
1.4
percent,
or
117
million
SBE
per
year.
The
reduction
in
market
quantities
of
bricks
are
the
net
effect
of
reductions
in
domestic
production
and
increases
in
foreign
imports.

The
NESHAP
impacts
foreign
trade
of
bricks
by
reducing
exports
and
increasing
imports.
As
shown
in
Table
4­
2,
exports
of
bricks
from
the
U.
S.
are
expected
to
decline
by
1.4
percent
(
or
584
thousand
SBE
per
year).
Alternatively,
imports
of
bricks
to
the
U.
S.
are
expected
to
increase
by
1.4
percent
(
or
286
thousand
SBE
per
year).
Once
again,
because
there
is
no
change
in
price
in
the
structural
clay
products
market,
exports
and
imports
in
this
market
are
unaffected.
4­
10
4­
11
Table
4­
2.
Summary
of
Market­
Level
Impacts
of
the
Proposed
NESHAP:
1999
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
Brick
Market
price
($/
SBE)
$
0.19
$
0.19
$
0.002
0.9%

Market
output
(
1,000
SBE/
yr)
8,573,450
8,456,366
­
117,084
­
1.4%

Domestic
production
(
1,000
SBE/
year)
8,552,821
8,435,451
­
117,370
­
1.4%

Exports
42,759
42,175
­
584
­
1.4%

Imports
20,629
20,915
286
1.4%

Structural
Clay
Products
Market
price
($/
SBE)
$
0.80
$
0.80
$
0.000
0.0%

Market
output
(
1,000
SBE/
yr)
316,586
316,586
0
0.0%

Domestic
production
310,706
310,706
0
0.0%

Exports
1,945
1,945
0
0.0%

Imports
5,880
5,880
0
0.0%

Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1998.
Current
Industrial
Reports
for
Clay
Construction
Products
­
Summary
2000.

4.3.2
Industry­
Level
Results
Table
4­
3
summarizes
the
national­
level
industry
impacts
associated
with
this
regulation.
Industry­
level
impacts
include
an
evaluation
of
the
changes
in
revenue,
costs,
profits,
potential
facility
closures,
and
the
change
in
employment
attributable
to
projected
closures
and
reductions
in
production
of
BSCP
from
affected
facilities.

The
industry
revenues
and
costs
change
as
brick
prices
and
production
levels
adjust
to
the
imposition
of
the
regulation.

While
the
initial
engineering
cost
estimate
of
the
rule
is
$
23.9
million,
after
accounting
for
market
adjustments,
the
industry
is
expected
to
incur
$
22.5
million
annually
in
regulatory
compliance
costs.
The
primary
reason
for
the
difference
in
the
engineering
cost
estimate
of
the
rule
and
the
resulting
regulatory
cost
after
accounting
for
market
adjustments
is
the
estimation
that
2
facilities
would
close
and
not
incur
regulatory
cost.
As
shown
in
Table
4­
3,
based
on
projected
individual
and
market
responses,
the
4­
12
economic
analysis
estimates
industry
profits
to
decrease
by
$
8.7
million.
The
reduction
in
profits
results
from
a
reduction
in
revenues
and
an
increase
in
costs
due
to
the
regulation.
This
reduction
in
profits
is
less
than
the
regulatory
costs
brick
producers
incur
because
they
reduce
their
production,
resulting
in
higher
market
prices
per
SBE,
which
effectively
shifts
a
portion
of
the
regulatory
burden
onto
consumers.
In
addition
to
the
reduction
in
revenues,
increase
in
costs,
and
reduction
in
profits,
the
economic
analysis
predicts
a
decline
in
employment
by
167
full­
time
equivalents
due
to
the
proposed
regulation.

Table
4­
3.
National­
Level
Industry
Impacts
Summary
of
the
Proposed
NESHAP:
1999
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
Revenues
($
103/
yr)
$
1,873,601
$
1,8663,061
­$
7,540
­
0.4%

Costs
($
103
/
yr)
$
1,787,415
$
1,788,545
$
1,129
0.1%

Regulatory
control
costs
$
0
$
22,512
$
22,512
NA
Production
costs
$
1,787,415
$
1,766,032
­
$
21,383
­
1.2%

Profits
($
103/
yr)
$
86,185
$
77,516
­$
8,669
­
10.1%

Employment
(
FTEs)
12,230a
12,063
­
167
­
1.0%

Operating
facilities
(#)
189
187
­
2
­
1.1%

Note:
NA
means
not
applicable.

A.
The
change
in
profit
is
based
on
a
ratio
of
baseline
profits
to
baseline
vale
of
shipments.
This
ratio
is
applied
to
the
change
in
value
of
shipments
to
derive
the
estimated
change
in
profits.

B.
FTE
refers
to
full­
time
equivalents.
The
change
in
employment
is
based
on
a
ratio
of
baseline
employment
to
baseline
production.
This
ratio
is
applied
to
the
change
in
production
to
derive
the
change
in
employment.

CRepresents
total
number
of
employees
in
167
facilities
that
provided
data.

Table
4­
3
also
shows
that
the
economic
model
projects
closures
of
BSCP
facilities
associated
with
imposition
of
the
rule.

Two
facilities
are
projected
to
close,
neither
of
which
is
owned
by
a
small
business.
It
is
important
to
point
out
that
the
estimates
of
facility
closures
are
sensitive
to
the
accuracy
of
the
baseline
characterization
of
the
BSCP
facilities
and
the
estimation
of
incremental
compliance
costs
for
these
plants.
Uncertainty
regarding
the
accuracy
of
the
closure
estimates
is
introduced
through
4­
13
the
use
of
a
generalized
cost
function
to
project
baseline
operating
costs
at
specific
facilities
and
the
assumptions
required
to
project
production
and
capacity
and
compliance
costs
at
each
facility.
These
uncertainties
are
likely
to
influence
the
specific
type
of
plant
projected
to
close
more
so
than
the
aggregate
estimate
of
closures.

Table
4­
4
presents
distributional
industry
impacts
of
the
rule
that
are
not
apparent
from
the
aggregate
national
level
industry
impacts
shown
in
Table
4­
3.
Impacts
are
examined
across
those
firms
that
are
projected
to
experience
a
loss
in
profits,

and
a
gain
in
profits
due
to
the
imposition
of
the
regulation.
Of
the
189
facilities
in
the
BSCP
source
category,
55
facilities
(
29
percent)
are
expected
to
lose
profits,
while
134
(
71
percent)
are
expected
to
gain
profits
due
to
the
increase
in
market
price
for
bricks.
Thus,
the
industry­
level
loss
in
profits
of
$
8.7
million
is
the
net
measure
of
profit
losses
at
the
55
facilities
(
totaling
$
15.0
million)
and
the
profit
gains
at
the
134
facilities
(
totaling
$
6.4
million).

As
shown,
the
BSCP
facilities
with
profit
losses
are
slightly
larger
in
terms
of
capacity
utilization,
generate
larger
volumes
of
BSCP,
and
incur
much
higher
incremental
compliance
costs
(
in
aggregate,
per
1,000
SBE)
than
those
facilities
with
profit
increases.
In
addition,
Table
4­
4
shows
that
the
negatively
affected
facilities,
as
a
group,
slightly
reduced
their
capacity
utilization
from
84.6
percent
in
baseline
to
80.2
percent,
while
positively
affected
facilities,
as
a
group,
slightly
increased
their
capacity
utilization
from
74.4
percent
in
baseline
to
75.1
percent
with
the
rule.
Employment
is
also
impacted
by
the
regulation.
It
is
estimated
that
employment
will
decline
by
167
employees
due
to
the
rule.

4.3.3
Social
Costs
of
the
Regulation
The
value
of
a
regulatory
action
is
traditionally
measured
by
the
change
in
economic
welfare
that
it
generates
(
see
Appendix
C
for
a
discussion
on
economic
welfare).
Welfare
impacts
resulting
from
this
regulation
on
U.
S.
society
will
extend
to
the
many
consumers
and
producers
of
bricks.
Because
the
regulation
imposes
no
costs
on
structural
clay
product
facilities,
there
are
no
welfare
effects
on
consumers
and
producers
of
structural
clay
products.
Brick
consumers
will
experience
welfare
impacts
due
to
the
adjustments
in
market
prices
and
consumption
levels
of
brick
that
result
from
imposition
of
the
regulation.
Producer
welfare
impacts
result
from
the
changes
in
revenues
to
brick
producers
associated
with
the
imposition
of
the
rule
and
the
corresponding
changes
in
production
and
market
prices.
4­
14
4­
15
Table
4­
4.
Summary
of
Distributional
Industry
Impacts
of
the
Proposed
BSCP
NESHAP:
1999
With
Profit
Lossa
With
Profit
Gain
Total,

U.
S.

Number
55
134
189
Capacity
(
1,000
SBE)

Total
5,575,870
5,563,776
11,139,646
Per
Facility
101,379
41,521
58,940
Incremental
Compliance
Costs
Total
($
1,000/
yr)
$
22,179
$
334
$
22,512
Per
1,000
SBE
$
5.08
$
0.04
$
2.58
Capacity
Utilization
Baseline
84.6%
74.4%
77.3%

With
Regulation
80.2%
75.1%
78.5%

Change
in
Profits
($
103/
yr)
­$
15,037
$
6,367
­$
8,669
Note:
aThe
incremental
compliance
costs
for
the
facilities
with
projected
profit
loss
includes
the
estimated
costs
of
facilities
that
are
projected
to
close.

Based
on
applied
welfare
economics
principles,
Table
4­
5
presents
the
estimates
of
the
social
costs
and
their
distribution
by
stakeholder.
The
social
cost
of
the
proposed
NESHAP
is
estimated
to
be
$
23.3
million
annually
and
is
distributed
across
consumers
and
producers
of
bricks
based
on
the
projected
market
adjustments.
Consumers
of
BSCP
are
expected
to
incur
$
14.7
million
annually
due
to
the
increase
in
prices
and
reductions
in
consumption.
This
burden
is
borne
mostly
by
domestic
consumers
($
14.6
million)
as
compared
to
foreign
consumers
($
0.1
million).
Domestic
and
foreign
structural
clay
product
consumers
are
not
affected
by
this
rule.
4­
16
Producers
are
expected
to
absorb
$
8.6
million
annually
due
to
increased
costs
and
reduction
in
revenues
resulting
from
changes
in
market
prices
and
output.
Domestic
brick
producers
lose
about
$
8.7
million
annually,
which
equals
their
decrease
in
profits,
while
the
foreign
producers
of
brick
gain
by
almost
$
0.1
million
due
to
the
increase
in
U.
S.
price
for
bricks.
Once
again,

neither
the
domestic
or
foreign
structural
clay
product
producers
are
impacted
by
the
regulation.
Hence,
they
experience
no
changes
in
welfare.

Table
4­
5.
Distribution
of
Social
Costs
Associated
with
the
Proposed
NESHAP:
1999
Stakeholder
Change
in
Value
($
103)

Consumer
surplus,
total
­$
14,695
Domestic
Brick
­$
14,621
Structural
Clay
Products
$
0
Foreign
Brick
­$
74
Structural
Clay
Products
$
0
Producer
surplus,
total
­$
8,633
Domestic
Brick
­$
8,669
Structural
Clay
Products
$
0
Foreign
Brick
$
36
Structural
Clay
Products
$
0
Social
Costs
of
Regulation
$
23,328
6
For
simplicity,
impacts
are
considered
for
one
future
time
period.
4­
17
4.4
New
Source
Analysis
The
Agency
projects
13
new
15
tph
and
2
new
7.5
tph
kilms
to
begin
operation
during
the
five
year
period
following
promulgation
of
this
NESHAP.
New
suppliers
of
BSCP
have
an
investment
decision:
whether
to
commit
to
a
new
facility
of
a
given
scale.
They
have
no
fixed
factors
and
thus
may
select
any
technically
feasible
facility
configuration.
Of
course,
they
may
also
elect
not
to
make
an
investment
in
this
industry.
Economic
theory
suggests
investors
are
expected
to
invest
in
a
project
when
the
discounted
value
of
the
expected
stream
of
profits
over
the
lifetime
of
the
investment
exceeds
the
costs
of
the
investment,
or
alternatively
when
the
internal
rate
of
return
(
IRR)
is
greater
than
the
opportunity
cost
of
capital.
Commodity
prices
and
production
costs
are
central
to
this
decision.

The
competitive
model
of
price
formation
is
provided
in
Figure
4­
4.
In
the
figure,
the
willingness
of
existing
suppliers
to
produce
alternative
rates
of
bricks
and
structural
clay
products
is
represented
by
S
E
and
the
demand
for
BSCP
is
shown
as
D
0.
The
equilibrium
market
price,
P
0,
is
determined
by
the
intersection
of
these
curves.
If
this
price
exceeds
the
annualized
capital
costs
discounted
at
the
opportunity
cost
of
capital
for
an
investment
in
this
risk
class
divided
by
the
profit­
maximizing
output
rate
plus
the
unit
cost
of
other
inputs,
the
producer
commits
to
a
new
facility;
otherwise
no
investment
occurs.
Figure
4­
4
shows
a
constant
cost
industry
where
market
price
is
exactly
equal
to
the
unit
cost
of
new
facilities,
S
N.

In
a
growing
industry,
the
demand
for
the
commodity
is
shifting
outward
(
e.
g.,
to
D
1),
placing
upward
pressure
on
prices
and
providing
the
incentive
for
investors
to
add
new
productive
capacity.
6
As
new
capacity
enters
the
market,
the
new
equilibrium
price
is
P
1,
which
is
exactly
equal
to
the
unit
cost
of
supply
from
new
facilities.
In
this
example,
it
is
the
same
value
as
the
old
price,
P
0.
The
new
equilibrium
quantity,
Q
1,
includes
the
additional
output
supplied
by
new
sources:
(
Q
1
 
Q
0).

The
NESHAP
will
increase
existing
suppliers'
costs
of
producing
BSCP
if
they
use
tunnel
kilns
that
exceed
the
10
tph
threshold.
This
is
represented
by
a
shifting
of
existing
supply,
S
E,
up.
It
will
also
increase
the
costs
of
supply
from
new
facilities
using
tunnel
or
periodic
kilns
regardless
of
their
production
rate.
All
new
kilns
are
to
be
controlled
according
to
this
NESHAP.

These
increases
in
costs
will
place
upward
pressure
on
prices.
As
shown
in
Figure
4­
5,
with
demand
curve,
D
1,
prices
would
be
expected
to
increase
with
shifts
in
supply
until
the
price
of
bricks
and
structural
clay
products,
P
1

,
is
equal
to
the
unit
cost
of
supply
from
new
facilities
including
the
cost
of
the
NESHAP.
However,
as
shown
in
Figure
4­
6,
no
new
capacity
expansion
will
take
place
in
the
future
time
period
if
the
per­
unit
compliance
costs
at
new
facilities
exceeded
P
1

.
Thus,
the
simple
analytics
4­
18
lbs/
year
$/
lb
Q
0
P
0
=
P
1
Q
1
D
0
D
1
S
E
S
N
Figure
4­
4.
Baseline
Equilibrium
without
Regulation
presented
suggest
that
the
rule
will
likely
cause
investors
to
delay
construction
of
new
facilities
until
the
price
increase
is
just
enough
to
cover
all
the
costs
of
production.
4­
19
lbs/
year
$/
lb
Q
1
P
1
Q 
1
D
1
S
E
S
N
S 
N
P
1 
S 
E
Figure
4­
5.
With­
Regulation
Equilibrium
Case
1:
New
Sources
Added
lbs/
year
$/
lb
Q
1
P
1
D
1
S
E
S
N
S 
N
Q 
1
S 
E
P
1 

Figure
4­
6.
With­
Regulation
Equilibrium
Case
2:
No
New
Sources
Added
4­
20
Given
the
uncertainty
about
new
brick
facility
unit
costs
(
production
and
compliance)
and
future
market
conditions,
the
Agency
is
limited
to
general
assessments
of
the
rule's
impact
on
the
rate
of
new
facility
construction.
To
inform
these
assessments,
the
Agency
performed
the
following
analysis:


Computation
of
a
test
ratio
for
the
affected
brick
product
market.
Due
to
the
expected
increase
in
the
demand
for
brick,
the
numerator
of
this
ratio
is
the
engineering
estimate
of
the
unit
costs
of
compliance
for
new
brick
sources
(
approximately
$
0.01
per
SBE
for
a
new
kiln
subject
to
the
MACT
floor
standard).
The
denominator
for
this
ratio
is
the
unit
cost
of
a
new
brick
supplier,
which
is
assumed
to
be
equal
to
the
estimated
baseline
market
price.
As
shown
in
Table
4­
6,
the
production­
weighted
cost
share
for
the
market
is
4.2
%
under
the
MACT
floor
standard.

Table
4­
6.
New
Source
Analysis
of
Unit
Production
and
Compliance
Costs
for
BSCP
Markets
New
Source
Unit
Costs
($/
SBE)
a
New
Source
Unit
Compliance
Costs
($/
SBE)
Cost
Share
(%)

$.
19
$
0.008
4.2%

Note:
aEqual
to
the
baseline
market
price
by
assumption.


Projection
of
percentage
change
in
kiln
construction
with
regulation
for
a
future
time
period
(
2007).
Using
the
conceptual
approach
presented
in
Figures
4­
4
and
4­
5,
the
Agency
estimated
the
change
in
kiln
construction
for
the
five­
year
period
following
promulgation
of
this
regulation
as:
(
4.1)

 
Facilities

 
Q
2007
Z

 d

Q
2007

 
P
P
where
 d
=
Elasticity
of
demand
(
assumed
to
be
 
1.0)

Z
=
Average
size
of
a
new
kiln
(
56.5
million
SBE/
yr)

Q
2007
=
The
Census
(
U.
S.
Census
Bureau,
2000)
provided
a
brick
production
estimate
of
8.55
billion
SBE
for
1999,
the
latest
year
this
information
is
available.
For
the
five
year
period
following
promulgation,
the
engineering
4­
21
analysis
independently
projected
brick
growth
of
904
million
SBE.
Thus,
the
quantity
for
the
2007
is
projected
to
be
approximately
9.45
billion
SBE.

=
Calculated
using
the
ratio
of
production­
weighted
average
new
source
per­
unit
control
costs
to
baseline
price
 
P
P
(
4.2
percent
for
the
MACT
floor)

Using
this
approach,
the
Agency
estimated
a
40
percent
reduction
in
output
by
new
sources
under
the
MACT
floor
over
the
fiveyear
time
period
following
promulgation
(
see
Table
4­
7).

The
results
of
the
impact
of
the
BSCP
manufacturing
NESHAP
on
new
sources
has
three
alternative
interpretations:

°
If
it
is
assumed
all
new
kilns
produce
at
100
percent
capacity,
then
it
is
projected
that
the
construction
of
6
kilns
of
the
15
projected
to
come
on
line
would
be
delayed
due
to
the
regulation,

°
All
15
new
kilns
are
constructed
as
expected,
but
each
kiln
operates
at
a
capacity
utilization
rate
that
is
reduced
by
40
percent,
or
°
All
15
new
kilns
are
constructed,
but
since
they
use
the
latest
technology,
they
produce
at
lower
cost;
hence,
6
older
(
marginal)
kilns
shut
down
due
to
the
regulation.

Table
4­
7.
New
Source
Sensitivity
Analysis
for
the
Brick
and
Structural
Clay
Products
NESHAP
Elasticity
of
Demand
Projected
Reduction
in
Quantity
(
103
SBE)
Projected
%
Reduction
of
Total
Quantity
Number
of
Delayed
Kilns
­
1
358,888
39.7%
5.9
­
0.75
269,392
29.8%
4.5
­
0.5
178,992
19.8%
2.9
4­
22
The
above
results
are
sensitive
to
the
assumption
of
elasticity
of
demand.
Also
shown
in
Table
4­
7
are
the
results
of
a
sensitivity
analysis
where
the
elasticity
of
demand
of
BSCP
varies
from
unitary
elastic
to
inelastic.
As
these
results
show,
the
more
elastic
is
demand,
the
larger
is
the
impact
of
the
regulation.
For
example,
if
demand
elasticity
is
assumed
to
be
­
0.5,
then
it
is
expected
that
output
produced
by
the
new
kilns
would
on
be
reduced
by
about
20
percent.
This
means
that
if
new
sources
were
operating
at
maximum
capacity,
construction
of
only
3
kilns
is
projected
to
be
delayed.

If
we
compare
the
total
annual
compliance
costs
of
approximately
$
5.9
million
faced
by
the
9
of
the
projected
kilns
to
use
DIFF
($
470,000
per
tunnel
kiln),
4
are
projected
to
use
DLA
($
297,000
per
tunnel
kiln)
and
the
2
new
small
kilns
are
projected
to
use
DLA
(
195)
to
the
BSCP
manufacturing
value
of
shipments
for
1997,
the
latest
year
available
(
U.
S.
Census
Bureau,
1999),
we
find
that
these
costs
represent
less
than
0.4
percent
of
the
value
of
shipments.

4.5
Energy
Impacts
Executive
Order
13211
"
Actions
Concerning
Regulations
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use"

(
66
Fed.
Reg.
28355,
May
22,
2001)
requires
federal
agencies
to
estimate
the
energy
impact
of
significant
regulatory
actions.
The
proposed
NESHAP
will
trigger
both
an
increase
in
energy
use
due
to
the
operation
of
new
abatement
equipment
as
well
as
a
decrease
in
energy
use
due
to
a
decline
in
BSCP
production.
The
net
impact
will
be
an
overall
increase
in
the
industry's
energy
costs
by
about
$
3.22
million
per
year.
These
impacts
are
discussed
below
in
greater
detail.

4.5.1
Increase
in
Energy
Consumption
As
described
earlier
in
Section
3
of
this
report,
brick
and
structural
clay
products
manufacturing
facilities
that
do
not
meet
the
MACT
floor
are
projected
to
install
dry
injection
fabric
filters
to
reduce
their
HAP
emissions
in
compliance
with
the
proposed
regulation.
The
associated
increase
in
total
energy
demand
stemming
from
the
compliance
with
this
NESHAP
is
estimated
to
equal
91
billion
Btu/
year
or
approximately
26.7
million
kilowatthours/
year.
The
U.
S.
Department
of
Energy
reports
that
the
average
retail
prices
of
electricity
for
the
industrial
sector
was
$
0.044
per
kilowatthour
in
the
base
year
of
1999
(
DOE,
1999a).

Therefore,
the
nationwide
cost
of
the
energy
needed
to
operate
the
control
equipment
is
estimated
at
$
1.17
million
per
year.

4.5.2
Reduction
in
Energy
Consumption
The
economic
model
described
earlier
in
this
section
predicts
that
increased
compliance
costs
will
result
in
an
annual
production
decline
of
approximately
117,084
SBEs
valued
at
about
$
22.2
million
collectively.
This
production
decline
will
lead
5­
1
to
a
corresponding
decline
in
energy
usage
by
brick
and
structural
clay
product
manufacturers.
EPA
has
computed
an
average
`
energy
per
unit
output
ratio'
and
multiplied
it
by
the
decline
in
production
to
quantify
this
impact.

Census
data
presented
in
Table
4­
8
indicates
that
the
U.
S.
brick
and
structural
clay
products
manufacturing
industry
incurred
energy
costs
of
$
175.6
million
to
produce
$
1.45
billion
worth
of
bricks
and
structural
clay
products
in
1997.
This
translates
into
an
energy
consumption
per
unit
of
output
ratio
of
0.12
percent
for
the
BSCP
manufacturing
industry.
Therefore,

energy
costs
are
estimated
to
decline
by
$
0.03
million
per
year
if
the
industry's
production
declines
by
117,084
SBE
valued
at
$
22.2
million
per
year.

Table
4­
8.
Energy
Usage
in
Brick
and
Structural
Clay
Products
Manufacturing
Industry
Sector
NAICS
Code
Value
of
Shipments
($
106)
Fuel
&
Electricity
Costs
($
106)

Brick
and
Structural
Clay
Products
Manufacturing
327121
$
1,452.2
$
175.6
Source:
U.
S.
Department
of
Commerce,
Bureau
of
the
Census.
1999.
1997
Census
of
Manufacturing
Industry
Series:
Brick
and
Structural
Clay
Tile
Manufacturing.

4.5.3
Net
Impact
on
Energy
Consumption
The
operation
of
additional
abatement
capital
is
estimated
to
result
in
an
increase
in
energy
use
worth
$
1.17
million
per
year
while
the
decrease
in
BSCP
manufacturing
will
result
in
a
decrease
in
energy
use
worth
$
0.03
million
per
year.
These
competing
factors
will
result
in
a
net
increase
in
annual
energy
consumption
by
the
BSCP
industry
of
approximately
$
1.14
million,
on
balance.

The
total
electricity
generation
capacity
in
the
U.
S.
was
785,990
Megawatts
in
1999
(
DOE,
1999b).
Thus,
the
electricity
requirements
associated
with
the
proposed
abatement
capital
represent
a
small
fraction
of
domestic
generation
capacity.
Hence,

the
proposed
NESHAP
is
not
likely
to
have
any
significant
adverse
impact
on
energy
prices,
distribution,
availability
or
use.

5
SMALL
BUSINESS
ANALYSIS
5­
2
This
regulatory
action
will
potentially
affect
the
economic
welfare
of
owners
of
brick
and
other
structural
clay
product
facilities.
The
ownership
of
these
facilities
ultimately
falls
on
private
individuals
who
may
be
owner/
operators
that
directly
conduct
the
business
of
the
firm
or,
more
commonly,
investors
or
stockholders
that
employ
others
to
conduct
the
business
of
the
firm
on
their
behalf
(
i.
e.,
privately­
held
or
publicly­
traded
corporations).
The
individuals
or
agents
that
manage
these
facilities
have
the
capacity
to
conduct
business
transactions
and
make
business
decisions
that
affect
the
facility.
The
legal
and
financial
responsibility
for
compliance
with
a
regulatory
action
ultimately
rests
with
these
agents;
however,
the
owners
must
bear
the
financial
consequences
of
the
decisions.
Environmental
regulations
like
this
rule
potentially
affect
all
businesses,
large
and
small,

but
small
businesses
may
have
special
problems
in
complying
with
such
regulations.

The
Regulatory
Flexibility
Act
(
RFA)
of
1980
requires
that
special
consideration
be
given
to
small
entities
affected
by
federal
regulation.
The
RFA
was
amended
in
1996
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
to
strengthen
the
RFA's
analytical
and
procedural
requirements.
Under
SBREFA,
the
Agency
must
perform
a
regulatory
flexibility
analysis
for
rules
that
will
have
a
significant
impact
on
a
substantial
number
of
small
entities.

This
section
identifies
the
businesses
that
will
be
affected
by
this
proposed
rule
and
provides
an
analysis
to
assist
in
determining
whether
this
rule
is
likely
to
impose
a
significant
impact
on
a
substantial
number
of
the
small
businesses
within
this
industry.
The
screening
analysis
employed
here
is
a
"
sales
test"
that
computes
the
annualized
compliance
costs
as
a
share
of
sales
for
each
company.
In
addition,
it
provides
information
about
the
impacts
on
small
businesses
after
accounting
for
producer
responses
to
the
rule
and
the
resulting
changes
in
market
price
and
output,
as
detailed
in
Section
4.

5.1
Identifying
and
Characterizing
Small
Businesses
The
companies
operating
in
the
Brick
and
Structural
Clay
Products
industry
can
be
grouped
into
small
and
large
categories
using
Small
Business
Administration
(
SBA)
general
size
standard
definitions
for
NAICS
codes.
The
SBA
defines
a
small
business
in
terms
of
the
employment
or
annual
sales
of
the
owning
entity.
These
thresholds
vary
by
industry
and
are
evaluated
based
on
the
industry
classification
(
NAICS
codes)
of
the
impacted
facilities.
Five
different
NAICS
codes
are
represented
across
the
brick
and
other
structural
clay
product
facilities
with
a
small
business
definition
range
from
500
to
750
employees.
In
determining
the
companies'
NAICS
size
standard,
the
following
assumptions
were
made:

°
A
NAICS
code
for
one
company
could
not
be
found.
In
this
case,
the
most
conservative
size
standard
of
750
employees
was
applied.
5­
3
°
Seven
companies
own
facilities
that
did
not
report
SIC
codes,
NAICS
codes,
or
reported
incorrect
codes.
For
these
companies,
the
NAICS
codes
listed
in
publicly
accessible
databases,
such
as
Dun
&
Bradstreet,
were
assigned.

°
In
cases
where
companies
own
facilities
with
multiple
NAICS
codes,
the
most
conservative
SBA
definition
was
used.
For
example,
if
a
company
owned
facilities
with
NAICS
327121
(
size
standard
=
500
employees)
and
NAICS
327993
(
size
standard
=
750
employees),
the
size
standard
of
750
employees
was
applied.

Based
on
the
SBA
definitions,
the
Agency
identified
76
of
the
companies
owning
facilities
that
produce
BSCP
as
small
(
84
percent)
and
14
as
large
(
15
percent)
(
See
Appendix
A
for
a
detailed
listing).

5.2
Screening­
Level
Analysis
For
the
purposes
of
assessing
the
potential
impact
of
this
rule
on
these
small
businesses,
the
Agency
considered
the
MACT
floor
of
dry
injection
fabric
filters
and
calculated
the
share
of
annual
compliance
cost
relative
to
baseline
sales
for
each
company.
When
a
company
owns
more
than
one
facility,
the
costs
for
each
facility
it
owns
are
summed
to
develop
the
numerator
of
the
test
ratio.
For
this
screening­
level
analysis,
annual
compliance
costs
were
defined
as
the
engineering
control
costs
imposed
on
these
companies;
thus,
they
do
not
reflect
the
changes
in
production
expected
to
occur
in
response
to
imposition
of
these
costs
and
the
resulting
market
adjustments.

As
mentioned
in
Section
2.3
of
the
industry
profile,
the
annual
sales
figures
used
to
calculate
cost­
to­
sales
ratios
for
the
small
business
screening
analysis
are
from
publicly
available
company
profiles
or
are
estimated
in
the
EIA
based
on
production
values
reported
in
company
survey
responses.
For
39
of
the
77
small
businesses,
the
EIA
estimated
revenues
exceeded
publicly
reported
annual
sales
data.
In
these
cases,
the
EIA
estimated
revenues
were
used
in
the
calculation
of
cost­
to­
sales
ratio.
Sales
may
be
under­
reported
in
publicly
available
profiles
because
they
represent
the
annual
sales
of
a
subsidiary
or
branch
of
a
company
or
because
the
providing
organization
generated
their
sales
estimates.
Additionally,
relying
on
estimated
revenues
instead
of
potentially
under­
reported
company
sales
data
makes
consistent
the
results
across
the
facility­
level
economic
impacts
model
(
in
Section
4)
and
the
small
business
cost­
to­
sales
ratio
screening
analysis
(
in
Section
5).
For
more
details
about
the
EIA
estimated
revenues,
please
consult
Section
2.3.4.

Table
5­
1
reports
total
compliance
costs,
the
number
of
companies
impacted
at
the
zero,
one,
and
three
percent
levels,
and
provides
summary
statistics
for
the
cost­
to­
sales
ratios
(
CSRs)
for
small
companies.
As
shown
in
Table
5­
1,
the
aggregate
compliance
costs
of
small
businesses
totals
$
5
million,
which
is
17
percent
of
the
total
industry
costs
of
$
23.96
million
under
the
5­
4
MACT
floor
option.
Under
the
rule,
the
annual
compliance
costs
incurred
by
small
businesses
range
from
zero
to
approximately
4
percent
of
their
sales
with
80
percent
of
small
businesses
not
incurring
any
regulatory
costs.
The
61
companies
with
zero
cost­

tosales
ratio
own
brick
and
structural
clay
products
manufacturing
facilities
that
do
not
have
a
design
capacity
exceeding
10
tph
or
that
have
chosen
to
take
a
permit
that
effectively
limits
their
sources'
design
capacity
to
the
10
tph
cutoff.
While
there
a
large
number
of
small
business
incur
no
additional
compliance
costs,
there
are
still
some
small
firms
with
positive
cost­
to­
sales
ratios.

Of
the
small
companies
with
a
positive
cost­
to­
sales
ratio,
a
majority
have
CSRs
between
1
and
3
percent.

Table
5­
1
also
makes
a
comparison
across
the
small
companies
that
incur
compliance
costs
associated
with
this
regulation
to
the
entire
group
of
small
companies
operating
in
the
industry.
The
table
presents
an
average
(
median)
cost­
to­
sales
ratio
of
2.2
(
2.3)
percent
for
the
directly
affected
small
companies
with
a
distribution
ranging
from
a
minimum
of
0.2
percent
to
a
maximum
of
4.5
percent.
If
all
small
firms
operating
in
the
industry
are
considered
together
(
i.
e.,
those
not
affected
by
the
rule
and
those
directly
affected),
the
average
(
median)
cost­
to­
sales
ratio
is
0.4
(
0.0)
percent.
5­
5
5.3
Economic
Analysis
The
Agency
also
analyzed
the
economic
impacts
on
small
businesses
under
with­
regulation
conditions
expected
to
result
from
implementing
the
proposed
NESHAP.
Unlike
the
screening­
level
analysis
described
above,
this
approach
examines
small
business
impacts
in
light
of
the
expected
behavioral
responses
of
producers
and
consumers
to
the
regulation.
As
shown
in
Table
5­
2,
pre­
tax
earnings
for
facilities
owned
by
small
businesses
are
projected
to
decrease
by
a
little
over
$
500
thousand
under
the
MACT
floor.
Production
costs
are
expected
to
increase
due
to
regulatory
costs,
which
are
offset
by
a
reduction
in
the
change
in
the
quantity
of
bricks
produced.
Of
the
93
facilities
operated
by
small
businesses,
none
are
expected
to
close
due
to
the
regulation.
In
addition,
employment
at
small
firms
is
expected
to
decline
by
23
full­
time
equivalent
positions.

5.4
Assessment
At
proposal,
approximately
10
percent
of
small
businesses
had
a
cost­
to­
sales
ratio
(
CSR)
that
exceeded
3
percent.
Based
on
changes
made
for
the
final
rule
and
a
reduction
in
regulatory
costs
of
approximately
$
10
million,
we
estimate
3
small
firms
(
3.9
percent)
will
have
a
CSR
that
exceeds
3
percent.
In
addition,
we
estimate
that
9
firms
(
11.8
percent)
will
have
a
CSR
between
1
and
3
percent.
In
order
to
gain
better
insight
on
how
significantly
these
small
businesses
will
be
impacted
by
the
MACT
floor,
we
compare
the
estimated
CSRs
with
a
profitability
measure
for
these
firms.
While
data
on
the
profit
rates
of
the
firms
in
this
analysis
were
not
available,
the
U.
S.
Census
Bureau
reports
quarterly
return­
to­
sales
for
corporations
in
the
Standard
Industrial
Classification
(
SIC)
major
group
32
(
Stone,
Clay,
Glass,
and
Concrete
Products)
with
assets
less
than
$
25
million
(
U.
S.

Bureau
of
the
Census,
1998).
This
SIC
major
group
includes
more
than
just
the
firms
in
this
analysis,
but
it
still
provides
the
best
available
measure
of
their
profit
margin.
We
weighted
the
quarterly
rates
by
sales
to
derive
the
1997
return­
to­
sales
of
4.6
percent
for
this
industry
segment.
There
are
no
small
businesses
with
cost­
to­
sales
ratios
that
exceed
the
Census­
based
estimate
of
profit
margin
for
the
SIC
major
group
32.
This
means
that
though
the
compliance
costs
associated
with
this
regulation
may
lead
some
small
firms
to
incur
costs
that
are
greater
than
3
percent
of
sales,
they
are
not
high
enough
to
warrant
firm
closures
in
most
cases.

In
addition,
a
definitive
conclusion
cannot
be
drawn
using
the
SIC
major
group
32
profit
margin
because
its
calculation
included
more
than
brick
and
structural
clay
product
manufacturing
companies.
For
comparison
purposes,
we
also
calculated
this
profitability
measure
for
all
corporations
in
SIC
32
(
4.5
percent)
and
those
corporations
in
SIC
32
with
assets
over
$
25
million
(
4.1
percent).
The
Census
data
indicate
that
profit
rates
are
consistent
across
larger
and
smaller
corporations
within
this
SIC
major
group.
5­
6
Eighty
percent
of
small
businesses
in
the
brick
and
structural
clay
products
industry
will
face
zero
compliance
costs
associated
with
this
regulation.
While
there
are
some
small
businesses
that
do
have
positive
cost­
to­
sales
ratios,
there
are
few
in
number.
In
addition,
no
facilities
owned
by
a
small
business
are
projected
to
close
and
none
of
the
firms
have
cost­
to­
sales
ratio
that
exceed
the
average
profit
margin
for
the
SIC
group
the
brick
and
structural
clay
products
industry
is
in.
For
this
reason,
this
NESHAP
is
not
expected
to
have
a
significant
impact
on
a
substantial
number
of
small
businesses.
5­
7
Table
5­

1.

Summary
Statistics
for
Small
Business
Analysis
for
BSCP
Facilitiesa
Small
Share
of
Total
Total
Number
of
Companiesb
76
84.4%
Annual
MACT
Floor
Costs
($

103/

yr)

$

4,993
20.8%
Cost­

to­

Sales
Ratios
­

Distribution
Number
Share
Impacted
at
0%

c
61
80.2%
Impacted
<

1%

3
3.9%
Impacted
at

1
to
3%

9
11.8%
Impacted
at

3%

3
3.9%
Cost­

to­

Sales
Ratios
­

Summary
Statistics
Directly
Affected
All
Small
Firms
Average
2.2%

0.4%
Median
2.3%

0.0%
Maximum
4.5%

4.5%
Minimum
0.2%

0.0%

a
Screening
impacts
shown
in
this
table
do
not
account
for
firm
and
market
response
to
regulation,

i.

e.,

no
change
in
sales.

b
Sales
data
for
the
companies
are
taken
either
from
Dun
&

Bradstreet
data
or
are
estimated
based
on
production
figures
reported
in
company
survey
responses.

c
Companies
with
facilities
considered
synthetic
minors
or
taking
permit
limits
have
zero
costs,

and
therefore
have
cost­

to­

sales
ratios
equal
to
0%.
5­
8
Table
5­
2
Summary
of
Small
Business
Impacts
Proposed
BSCP
Manufacturing
NESHAP:
1999
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
Revenues
($
103
/
yr)
$
637,637
$
642,777
$
5,140
0.8%

Costs
($
103
/
yr)
$
608,306
$
613,949
$
5,643
0.9%

Regulatory
control
costs
$
0
$
4,993
$
4,993
NA
Production
costs
$
608,306
$
608,828
$
651
0.1%

Profits
($
103/
yr)
$
29,331
$
28,828
­$
503
­
1.7%

Employment
(
FTEs)
5,116
5,093
­
23
­
0.5%

Operating
facilities
(#)
93
93
0
0.0%

Note:
NA
means
not
applicable.

FTE
refers
to
full­
time
equivalents.

aRepresents
total
number
of
employees
in
82
facilities
owned
by
small
businesses
that
provided
data.
6­
1
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42
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Midwest
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Emissions
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Office
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Air
Quality
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and
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"
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Midwest
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Office
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Air
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and
Standards,
"
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2000.
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Brian
Shrager,
Midwest
Research
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to
Mary
Johnson,
Emissions
Standards
Division,
Office
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Air
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and
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"
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Shrager,

Midwest
Research
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to
Mary
Johnson,
Emissions
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Office
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Air
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"
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A­
4
APPENDIX
A:
SUMMARY
BRICK
AND
STRUCTURAL
CLAY
PRODUCTS
(
BSCP)
COMPANY
DATA
Table
A­
1.
Summary
Data
for
Companies
Operating
BSCP
Facilities
Company
Name
Number
of
Facilities
Employment
Sales
($
10^
6)
Small
Business
American
Eagle
Brick
Co.,
Inc.
1
NR
NR
Y
Atkinson
Brick
Co.,
Inc.
2
NR
NR
Y
Belden
Brick
Co.
8
NR
NR
N
Boral
Industries,
Inc.
1
18
NR
NR
N
Brick
and
Tile
Corp.
of
Lawrenceville
2
NR
NR
Y
Can­
Clay
Corp.
1
NR
NR
Y
Carolina
Ceramics,
LLC
1
NR
NR
Y
Castaic
Clay
Manufacturing
Co.,
Inc.
1
NR
NR
Y
Certainteed
Corp.
1
NR
NR
N
Cherokee
Brick
and
Tile,
Co.,
Inc.
1
NR
NR
Y
Clay
City
Pipe2
2
NR
NR
Y
Clinton­
Campbell
Contractor,
Inc.
1
NR
NR
Y
Colonial
Brick
Co.,
Inc.
1
NR
NR
Y
Columbus
Brick
Co.,
Inc.
1
NR
NR
Y
Commercial
Brick
Corp.
1
NR
NR
Y
Continential
Brick
Co.,
Inc.
1
NR
NR
Y
Cunningham
Brick
Co.,
Inc.
2
NR
NR
Y
D'Hanis
Clay
Products,
Inc.
1
NR
NR
Y
Dti
Investors,
L.
L.
C.
2
NR
NR
N
Elgin­
Butler
Brick
Co.
1
NR
NR
Y
Endicott
Clay
Products
Co.,
Inc.
1
NR
NR
Y
Eureka
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Florida
Brick
and
Clay
Co.,
Inc.
1
NR
NR
Y
General
Clay
Products
Corp.
3
NR
NR
Y
General
Finance,
Inc.
1
NR
NR
Y
A­
5
Hanson,
PLC
12
NR
NR
N
Henry
Brick
Co.,
Inc.
1
NR
NR
Y
Higgins
Brick
Co.,
Inc.
1
NR
NR
Y
Hoffman
Enterprises,
Inc.
1
NR
NR
Y
Hope
Brick
Works,
Inc.
1
NR
NR
Y
Ibstock
PLC
10
NR
NR
N
International
Chimney
Corp.
3
1
NR
NR
Y
Interpace
Industries,
Inc.
1
NR
NR
Y
Iskilar
Brick,
Inc.
4,5
1
NR
NR
Y
J.
L.
Anderson
Co.,
Inc.
1
NR
NR
Y
Company
Name
Number
of
Facilities
Employees
Sales
Small
Business
Jenkins
Brick
Co.,
Inc.
2
NR
NR
Y
Jordan
Industries6
1
NR
NR
N
Justin
Industries7
16
NR
NR
N
Kansas
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Kasten
Clay
Products,
Inc.
1
NR
NR
Y
Kentwood
Brick
and
Tile
Manufacturing
Co.,
Inc.
1
NR
NR
Y
L.
P.
McNear
Brick
Co.,
Inc.
1
NR
NR
Y
Lee
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Logan
Clay
Products
Co.,
Inc.
1
NR
NR
Y
London
Tile
Co.
1
NR
NR
Y
Louisville
Brick
Co.,
Inc.
1
NR
NR
Y
Marion
Ceramics,
Inc.
1
NR
NR
Y
Marseilles
Brick
Venture
Limited
Partnership
1
NR
NR
N
McAvoy
Vitrified
Brick
Co.
1
NR
NR
Y
MCP
Industries,
Inc.
4
NR
NR
Y
Metropolitan
Ceramics,
Inc.
1
NR
NR
Y
Morin
Brick
Co.,
Inc.
2
NR
NR
Y
Mutual
Materials
Co.,
Inc.
3
NR
NR
Y
Nash
Brick
Co.,
Inc.
1
NR
NR
Y
New
London
Brick,
Inc.
1
NR
NR
Y
Ochs
Brick
and
Tile
Co.
1
NR
NR
Y
A­
6
Old
Carolina
Brick
Co.
1
NR
NR
Y
Old
Virginia
Brick
Co.,
Inc.
2
NR
NR
Y
Owensboro
Brick
and
Tile
Co.
1
NR
NR
Y
Pacific
Clay
Products,
Inc.
1
NR
NR
Y
Pacific
Coast
Building
Products
3
NR
NR
N
Pine
Hall
Brick
Co.,
Inc.
1
NR
NR
Y
Ragland
Clay
Products
1
NR
NR
Y
Richards
Brick
Co.,
Inc.
1
NR
NR
Y
Richland
Moulded
Brick
Co.
1
NR
NR
Y
Robinson
Brick
Co.,
Inc.
1
NR
NR
Y
Roeben
Tonbaustoffe8
2
NR
NR
N
Saint
Joe
Brick
Works,
Inc.
1
NR
NR
Y
Scott
Jewett
Truck
Line,
Inc.
9
1
NR
NR
Y
Seneca
Tiles,
Inc.
1
NR
NR
Y
Sioux
City
Brick
and
Tile
Co.
10
2
NR
NR
Y
Snyder
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Southern
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Company
Name
Number
of
Facilities
Employees
Sales
Small
Business
Stark
Ceramics,
Inc.
1
NR
NR
Y
Statesville
Brick
Co.
1
NR
NR
Y
Stiles
and
Hart
Brick
Co.
1
NR
NR
Y
Stone
Creek
Brick
Co.,
Inc.
1
NR
NR
Y
Summit
Pressed
Brick
and
Tile
Co.,

Inc.
11
2
NR
NR
Y
Summitville
Tiles,
Inc.
2
NR
NR
N
Superior
Clay
Corp.
1
NR
NR
Y
Taylor
Clay
Products,
Inc.
1
NR
NR
Y
Texas
Industries,
Inc.
12
3
NR
NR
N
The
Denver
Brick
Co.,
Inc.
1
NR
NR
Y
Tri­
State
Brick
and
Tile
Co.,
Inc.
1
NR
NR
Y
Vermont
Brick
Manufacturing,
LP
1
NR
NR
Y
Watsontown
Brick
Co.,
Inc.
1
NR
NR
Y
Wheeler
Brick
Co.,
Inc.
1
NR
NR
Y
Wienerberger
Baustoffindustrie
AG13
18
NR
NR
N
A­
7
Yadkin
Brick
Co.
1
NR
NR
Y
Yankee
Hill
Brick
Manufacturing
Co.,

Inc.
1
NR
NR
Y
Totals
189
$
10,964
89,904
77
small,
13
large
NR
means
Not
Reported.
Employment
and
sales
data
were
used
in
the
economic
impact
analysis,
but
those
data
taken
from
Dun
&
Bradstreet
which
are
considered
proprietary
and
are
therefore
not
included
in
this
table.

1
Boral
Industries,
Inc.
owns
U.
S.
Tile.

2
Clay
City
Pipe
owns
Bowerston
Shale
Co.

3
International
Chimney
Corp.
owns
Continental
Clay
Co.

4
Iskilar
Brick,
Inc.
owns
Darlington
Brick
and
Clay
Products
Co.

5
Iskilar
Brick,
Inc.
owns
Powell
and
Minnock
Brick
Works,
Inc.

6
Jordan
Industries
owns
Daaco,
Inc..

7
Justin
Industries
owns
Texas
Clay
Products.

8
Roeben
Co.,
Inc.
owns
Triangle
Brick
Co.

9
Scott
Jewett
Truck
Line,
Inc.
owns
Mangum
Brick
Co.

10
Sioux
City
Brick
and
Tile
Co.
owns
United
Brick
and
Tile
Co.

11
Summit
Pressed
Brick
and
Tile
Co.,
Inc.
owns
Lakewood
Brick
and
Tile
Co.

12
Texas
Industries
owns
Athens
Brick
Co.

13
Wienerberger
Baustoffindustrie
AG
owns
General
Shale.
B­
8
APPENDIX
B
ECONOMIC
MODEL
OF
THE
BRICK
AND
STRUCTURAL
CLAY
PRODUCTS
MARKETS
Implementation
of
the
proposed
MACT
standards
will
affect
the
costs
of
production
in
the
brick
and
structural
clay
products
industry
for
existing
plants.
Responses
at
the
facility
level
to
these
additional
costs
will
collectively
determine
the
market
impacts
of
the
regulation.
Specifically,
the
cost
of
the
regulation
may
induce
some
facilities
to
alter
their
current
level
of
production
or
to
close.
These
choices
affect,
and
in
turn
are
affected
by,
the
market
price
for
each
product.
The
Agency
has
employed
standard
microeconomic
concepts
to
model
the
supply
of
each
product
and
the
impacts
of
the
regulation
on
production
costs
and
the
output
decisions
of
BSCP
facilities.
The
main
elements
of
the
analysis
are
to

characterize
production
of
each
product
at
the
individual
facility
and
market
levels,


characterize
demand
for
each
product,
and

develop
the
solution
algorithm
to
determine
the
new
post­
regulatory
equilibrium.

B.
1
Supply
of
Brick
and
Structural
Clay
Products
Market
supply
of
BSCP
(
Qs)
may
be
expressed
as
the
sum
of
domestic
and
foreign
supply,
or
imports:

Qs
=
qs
+
qI
(
B.
1)
B­
9
q
a
j

 j

 
2
1
p
1
2
(
B.
2)

where
qs
is
the
domestic
supply
of
a
particular
clay
product,
which
is
the
sum
of
production
from
affected
(
qa)
and
unaffected
(
qu)

facilities,
and
qI
is
the
foreign
supply,
or
imports.
Each
of
these
supply
components
is
described
below.

B.
1.1
Affected
Facilities
The
Agency
has
developed
individual
supply
functions
for
each
clay
product
at
affected
facilities.
Producers
of
bricks
and
structural
clay
products
have
the
ability
to
vary
output
in
the
face
of
production
cost
changes.
Upward­
sloping
supply
curves
for
each
product
are
developed
to
allow
these
facilities
to
respond
in
this
manner
when
regulatory
costs
are
imposed.
For
this
analysis,
the
generalized
Leontief
profit
function
was
used
to
derive
the
supply
curve
for
each
clay
product
at
each
facility.
This
functional
form
is
appropriate
given
the
fixed­
proportion
material
input
(
clay
minerals)
and
the
variable­
proportion
inputs
of
chemicals,
labor,
electricity,
and
energy.
Applying
Hotelling's
lemma
to
the
generalized
Leontief
profit
function
produces
the
following
general
form
of
the
supply
functions
at
affected
facilities
for
each
structural
clay
product:

where
p
is
the
market
price
for
the
each
product,
 j
and
 
are
model
parameters,
and
j
indexes
producers
(
i.
e.,
individual
affected
facilities).
The
theoretical
restrictions
on
the
model
parameters
that
ensure
upward­
sloping
supply
curves
are
 j
>
0
and
 
<
0.

Figure
B­
1
illustrates
the
theoretical
supply
function
of
Eq.
(
B.
2).
The
upward­
sloping
supply
curve
is
specified
over
a
productive
range
with
a
lower
bound
of
zero
that
corresponds
with
a
shutdown
price
equal
to
and
an
upper
bound
given
by
the
 2
4 
2
j
B­
10
 

 4q
a
1
p
 
1
2
(
B.
3)

productive
capacity
of
qM
j
that
is
approximated
by
the
supply
parameter
 j.
The
curvature
of
the
supply
function
is
determined
by
the
 
parameter.

To
specify
the
supply
function
of
Eq.
(
B.
2)
for
this
analysis,
the
 
parameter
is
computed
by
substituting
an
assumed
market
supply
elasticity
for
each
product
(
 ),
the
market
price
of
the
product
(
p),
and
the
production­
weighted,
average
annual
production
level
of
affected
facilities
into
the
following
equation:

(
q
a)

Absent
econometric
or
literature
estimates,
the
market­
level
supply
elasticity
will
be
assumed
to
be
1,
which
makes
supply
unit
elastic
(
i.
e.,
a
1
percent
change
in
price
leads
to
a
1
percent
change
in
output).
The
foreign
supply
elasticity
is
assumed
to
be
1.5.

The
1999
market
prices
of
each
product
are
given
as
described
above,
and
the
average
annual
production
level
B­
11
Figure
B­
1.
Theoretical
Supply
Function
for
Affected
Facilities
of
each
clay
product
per
facility
are
derived
from
facility­
level
information
in
the
EPA
facility
database.
The
 
parameter
for
each
structural
clay
product
is
then
calculated
by
incorporating
these
values
into
Eq.
(
B.
3).
Because
of
the
variation
in
size
across
brick
facilities,
a
distinct
 
parameter
is
estimated
for
the
small,
medium,
and
large
facility
categories.

Supply
Function
Intercept
The
intercept
of
the
supply
function,
 j,
approximates
the
productive
capacity
and
varies
across
products
at
each
facility.

This
parameter
does
not
influence
the
facility's
production
responsiveness
to
price
changes
as
does
the
 
parameter.
Thus,
the
B­
12
q
a
j

 j

 
2
I
j
p
j
 
c
j
1
2
(
B.
4)

q
u

Au
p
 
u
(
B.
5)

parameter
 j
is
used
to
calibrate
the
model
so
that
each
affected
facility's
supply
equation
is
exact
using
the
baseline
production
data
for
1999.

Regulatory
Response
The
production
decisions
at
these
facilities
are
affected
by
the
total
annual
compliance
costs,
c
j,
which
are
expressed
per
standard
brick
equivalent
(
SBE).
Total
annual
compliance
cost
estimates
were
provided
by
EPA's
engineering
analysis
and
include
annual
capital
costs,
annual
operating
and
maintenance
costs,
and
applicable
monitoring
costs.
Each
supply
equation
will
be
directly
affected
by
the
regulatory
control
costs,
which
enter
as
a
net
price
change
(
i.
e.,
p
j
 
c
j).
Thus,
the
supply
function
for
each
affected
facility
from
Eq.
(
B.
2)
above
becomes:

The
total
annual
compliance
costs
per
SBE
are
projected
given
the
annual
production
per
facility
and
EPA's
regulatory
cost
estimates
for
each
facility.

A.
1.2
Unaffected
Facilities
These
facilities
are
not
directly
affected
by
the
regulation
and
will
be
modeled
as
a
single
representative
supplier.
Supply
of
each
structural
clay
product
from
these
facilities
(
qu)
may
be
expressed
by
the
following
general
formula
for
each
product,
that
is,
B­
13
q
I

AI
p
 
I
(
B.
6)

where
p
is
the
market
price
for
the
product,
 
u
is
the
domestic
supply
elasticity
(
assumed
to
be
0.5),
and
Au
is
a
multiplicative
supply
parameter
that
calibrates
the
supply
equation
for
each
product
given
data
on
price
and
the
supply
elasticity
to
replicate
the
observed
1999
level
of
production
from
these
facilities.

B.
1.3
Foreign
Supply
(
Imports)

Similar
to
unaffected
facilities,
foreign
producers
are
not
directly
affected
by
the
regulation
but
will
be
included
in
the
model
as
a
single
representative
supplier.
Supply
of
clay
products
from
foreign
producers
(
qI)
may
be
expressed
by
the
following
general
formula
for
each
product:

where
p
is
the
market
price
for
the
product,
 
I
is
the
import
supply
elasticity
(
assumed
to
be
1.5),
and
AI
is
a
multiplicative
supply
parameter
that
calibrates
the
supply
equation
for
each
product
given
data
on
price
and
the
foreign
supply
elasticity
to
replicate
the
observed
1999
level
of
imports.

B.
2
Demand
for
Brick
and
Structural
Clay
Products
Market
demand
for
each
structural
clay
product
(
Qd)
may
be
expressed
as
the
sum
of
domestic
and
foreign
demand:

Qd
=
qd
+
qx
(
B.
7)

where
qd
is
the
domestic
demand
and
qx
is
the
foreign
demand,
or
exports,
as
described
below.

B.
2.1
Domestic
Demand
Domestic
demand
for
each
clay
product
may
be
expressed
by
the
following
general
formula
for
each
product:
B­
14
q
d

Bd
p
 
d
(
B.
8)

q
x

Bx
p
 
x
(
B.
9)

where
p
is
the
market
price
for
the
product,
 
d
is
the
domestic
demand
elasticity
(
assumed
to
be
­
1.5),
and
Bd
is
a
multiplicative
demand
parameter
that
calibrates
the
demand
equation
for
each
product
given
data
on
price
and
the
domestic
demand
elasticity
to
replicate
the
observed
1999
level
of
domestic
consumption.

B.
2.2
Foreign
Demand
(
Exports)

Foreign
demand,
or
exports,
for
each
structural
clay
product
may
be
expressed
by
the
following
general
formula
for
each
product:

where
p
is
the
market
price
for
the
product,
 
x
is
the
export
demand
elasticity
(
assumed
to
be
equal
to
­
1.5),
and
Bx
is
a
multiplicative
demand
parameter
that
calibrates
the
foreign
demand
equation
for
each
product
given
data
on
price
and
the
foreign
demand
elasticity
to
replicate
the
observed
1999
level
of
exports.

B.
3
Post­
Regulatory
Market
Equilibrium
Determination
Facility
responses
and
market
adjustments
can
be
conceptualized
as
an
interactive
feedback
process.
Facilities
face
increased
production
costs
due
to
compliance,
which
causes
facility­
specific
production
responses
(
i.
e.,
output
reduction).
The
cumulative
effect
of
these
responses
leads
to
an
increase
in
the
market
price
that
all
producers
(
affected
and
unaffected)
and
consumers
face,
which
leads
to
further
responses
by
producers
(
affected
and
unaffected)
as
well
as
consumers
and
thus
new
market
prices,
and
so
on.
The
new
equilibrium
after
imposing
the
regulation
is
the
result
of
a
series
of
iterations
between
B­
15
producer
and
consumer
responses
and
market
adjustments
until
a
stable
market
price
arises
where
total
market
supply
equals
total
market
demand
(
Qs
=
Qd).

This
process
for
determining
equilibrium
price
(
and
output)
with
the
increased
production
cost
is
modeled
as
a
Walrasian
auctioneer.
The
auctioneer
calls
out
a
market
price
for
each
product
and
evaluates
the
reactions
by
all
participants
(
producers
and
consumers),
comparing
total
quantities
supplied
and
demanded
to
determine
the
next
price
that
will
guide
the
market
closer
to
equilibrium
(
i.
e.,
where
market
supply
equals
market
demand).
Decision
rules
are
established
to
ensure
that
the
process
will
converge
to
an
equilibrium,
in
addition
to
specifying
the
conditions
for
equilibrium.
The
result
of
this
approach
is
a
vector
of
prices
with
the
proposed
regulation
that
equilibrates
supply
and
demand
for
each
product.

The
algorithm
for
deriving
the
post­
compliance
equilibria
in
all
markets
can
be
generalized
to
five
recursive
steps:

1)
Impose
the
control
costs
on
each
affected
facility,
thereby
affecting
their
supply
decisions.

2)
Recalculate
the
market
supply
of
each
structural
clay
product.

3)
Determine
the
new
prices
via
the
price
revision
rule
for
both
markets.

4)
Recalculate
the
supply
functions
of
all
facilities
with
the
new
prices,
resulting
in
a
new
market
supply
of
each
product.
Evaluate
market
demand
at
the
new
prices.

5)
Go
to
Step
#
3,
resulting
in
new
prices
for
each
product.
Repeat
until
equilibrium
conditions
are
satisfied
in
all
markets
(
i.
e.,
the
ratio
of
supply
to
demand
is
arbitrarily
small
for
each
product).
C­
16
APPENDIX
C
ESTIMATING
CHANGES
IN
ECONOMIC
WELFARE
The
economic
welfare
implications
of
the
market
price
and
output
changes
with
the
regulation
can
be
examined
using
two
slightly
different
tactics,
each
giving
a
somewhat
different
insight
but
the
same
implications:
(
1)
changes
in
the
net
benefits
of
consumers
and
producers
based
on
the
price
changes
and
(
2)
changes
in
the
total
benefits
and
costs
of
these
products
based
on
the
quantity
changes.
This
analysis
focuses
on
the
first
measure
 
the
changes
in
the
net
benefits
of
consumers
and
producers.

Figure
C­
1
depicts
the
change
in
economic
welfare
in
a
competitive
market
by
first
measuring
the
change
in
consumer
surplus
and
then
the
change
in
producer
surplus.
In
essence,
the
demand
and
supply
curves
previously
used
as
predictive
devices
are
now
being
used
as
a
valuation
tool.

This
method
of
estimating
the
change
in
economic
welfare
with
the
regulation
divides
society
into
consumers
and
producers.
In
a
market
environment,
consumers
and
producers
of
the
good
or
service
derive
welfare
from
a
market
transaction.

The
difference
between
the
maximum
price
consumers
are
willing
to
pay
for
a
good
and
the
price
they
actually
pay
is
referred
to
as
"
consumer
surplus."
Consumer
surplus
is
measured
as
the
area
under
the
demand
curve
and
above
the
price
of
the
product.

Similarly,
the
difference
between
the
minimum
price
producers
are
willing
to
accept
for
a
good
and
the
price
they
actually
receive
is
referred
to
as
"
producer
surplus"
or
profits.
Producer
surplus
is
measured
as
the
area
above
the
supply
curve
and
below
the
C­
17
price
of
the
product.
These
areas
can
be
thought
of
as
consumers'
net
benefits
of
consumption
and
producers'
net
benefits
of
production,
respectively.

In
Figure
C­
1,
baseline
equilibrium
in
the
competitive
market
occurs
at
the
intersection
of
the
demand
curve,
D,
and
supply
curve,
S.
Price
is
P
l
with
quantity
Q
l.
The
increased
cost
of
production
with
the
regulation
will
cause
the
market
supply
curve
to
shift
upward
to
S

.
The
new
equilibrium
price
of
the
product
is
P
2.
With
a
higher
price
for
the
product,
there
is
less
consumer
welfare,
all
else
being
unchanged
as
real
incomes
are
reduced.
In
Figure
C­
1(
a),
area
A
represents
the
dollar
value
of
the
annual
net
loss
in
consumers'
benefits
with
the
increased
price.
C­
18
P
1
P
2
Q
1
Q
2
S
S'

D
Q/
t
$/
Q
(
a)
Change
in
Consumer
Surplus
with
Regulation
P
1
P
2
Q
1
Q
2
S
S'

D
Q/
t
$/
Q
(
b)
Change
in
Producer
Surplus
with
Regulation
P
1
P
2
Q
1
Q
2
S
S'

D
Q/
t
$/
Q
(
c)
Net
Change
in
Economic
Welfare
with
Regulation
A
B
C
D
Figure
C­
1.
Economic
Welfare
Changes
with
Regulation
Under
Perfect
Competition
C­
19
The
rectangular
portion
represents
the
loss
in
consumer
surplus
on
the
quantity
still
consumed,
Q
2,
while
the
triangular
area
represents
the
foregone
surplus
resulting
from
the
reduced
quantity
consumed,
Q
l
 
Q
2.

In
addition
to
the
changes
in
consumer
welfare,
producer
welfare
also
changes
with
the
regulation.
With
the
increase
in
market
price,
producers
receive
higher
revenues
on
the
quantity
still
purchased,
Q
2.
In
Figure
C­
1(
b),
area
B
represents
the
increase
in
revenues
due
to
this
increase
in
price.
The
difference
in
the
area
under
the
supply
curve
up
to
the
original
market
price,
area
C,
measures
the
loss
in
producer
surplus,
which
includes
the
loss
associated
with
the
quantity
no
longer
produced.
The
net
change
in
producer
welfare
is
represented
by
area
B
 
C.

The
change
in
economic
welfare
attributable
to
the
compliance
costs
of
the
regulation
is
the
sum
of
consumer
and
producer
surplus
changes,
that
is,
 
(
A)
+
(
B
 
C).
Figure
C­
1(
c)
shows
the
net
(
negative)
change
in
economic
welfare
associated
with
the
regulation
as
area
D.
However,
this
analysis
does
not
include
the
benefits
that
occur
outside
the
market
(
i.
e.,
the
value
of
the
reduced
levels
of
air
pollution
with
the
regulation).
Including
this
benefit
will
reduce
the
net
cost
of
the
regulation,
and
may
result
in
overall
net
positive
benefits
to
society.