Document ID: EPA-HQ-OAR-2003-0048-0159
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2004-02-26T05:00Z

4­
1
4
ECONOMIC
IMPACT
ANALYSIS
4.1
Results
in
Brief
This
economic
impact
analysis
presents
the
results
of
modeling
the
effects
of
the
plywood
and
composite
wood
products
NESHAP
upon
affected
facilities,
firms,
markets,
and
industries.
The
analysis
shows
that
product
prices
increase
for
each
of
the
four
industry
sectors
included
in
the
economic
model,
from
0.9
percent
for
the
softwood
plywood
industry
to
2.5
percent
for
the
particleboard
and
medium
density
fiberboard
industry.
Output
is
expected
to
decrease
from
0.1
percent
for
the
softwood
plywood
industry
to
0.7
percent
for
the
particleboard
and
medium
density
fiberboard
industry.
Exports
of
these
products
are
expected
to
decline
by
no
more
than
0.7
percent
for
these
four
industries,
while
imports
are
expected
to
rise.
Only
one
product
line
closure
at
an
affected
facility
is
expected,
and
employment
at
affected
firms
is
expected
to
decline
by
only
0.3
percent.
In
addition,
an
analysis
of
effects
of
this
rule
on
the
supply,
distribution,
or
use
of
energy
finds
that
these
effects
are
not
significant.

The
economic
and
energy
impacts
depending
on
eligibility
of
sources
to
become
part
of
a
delisted
low­
risk
subcategory
can
be
found
in
Appendix
A
of
this
RIA.

4.2
Introduction
This
NESHAP
addresses
the
emissions
of
hazardous
air
pollutants
(
HAPs)
from
facilities
that
produce
plywood
and
composite
wood
products.
As
described
in
Chapter
3,
the
rule
will
result
in
some
facilities
in
this
industry
incurring
costs
associated
with
controlling
HAP
emissions.
The
addition
of
these
control
costs
will
directly
affect
the
individual
facilities
because
their
costs
of
production
will
increase.
In
addition,
the
addition
of
compliance
costs
may
also
have
an
effect
on
the
overall
markets
for
plywood
and
composite
wood
products
through
market
price
changes.
Depending
on
market
conditions,
these
changes
could
occur
if
facilities
with
compliance
costs
increase
their
prices,
reduce
their
output,
or
cease
operations
altogether.

This
chapter
presents
the
result
of
the
Economic
Impact
Analysis
(
EIA)
performed
to
estimate
the
economic
changes
that
are
expected
to
occur
as
a
result
of
the
NESHAP
for
the
plywood
and
composite
wood
products
industry
U.
S.
EPA,
1999a).
The
goal
of
the
assessment
is
to
develop
estimates
of
the
following
impact
measures.

$
Market
price
changes
$
Market
quantity
changes
$
International
trade
effects
$
Size
and
distribution
of
social
costs
Chapter
2
presented
a
profile
of
the
different
sectors
within
the
plywood
and
composite
wood
industry,
which
provides
market
information
necessary
to
design
and
implement
the
EIA
for
this
industry.
4­
2
The
plywood
and
composite
wood
products
manufacturing
industry
affected
by
the
proposed
NESHAP
rule
includes
five
distinct
market
sectors.

$
Softwood
Plywood
and
Veneer
(
SWPW)

$
Oriented
Strandboard
(
OSB)

$
Other
Wood
Composites
(
OWC),
including
$
Particleboard
and
Medium
Density
Fiberboard
(
PB/
MDF)

$
Hardboard
(
HB)

$
Engineered
Wood
Products
(
EWP)

For
all
but
the
EWP
market
sector,
the
Agency
applied
partial
equilibrium
(
P/
E)
modeling
techniques
to
estimate
the
economic
impacts
of
the
NESHAP
rule
for
plywood
and
composite
wood
products.
For
reasons
presented
in
Section
4.4
below,
developing
an
estimate
of
the
economic
impacts
of
the
rule
on
the
EWP
sector
required
a
qualitative
approach.

Section
4.3
presents
the
inputs
for
the
P/
E
economic
analysis,
including
producer
characterization,
market
characterization,
and
compliance
costs
of
the
regulation.
Section
4.4
describes
the
approach
to
estimating
the
economic
impacts
on
the
SWPW,
OSB,
PB/
MDF,
and
HB
industry
sectors,
and
Section
4.5
presents
the
results
of
the
economic
impact
analysis.
Section
4.6
presents
the
qualitative
analysis
of
the
EWP
market
sector.
The
economic
analysis
methodology
and
inputs
are
described
more
fully
in
the
EIA.

4.3
Economic
Impact
Analysis
Inputs
The
first
step
of
an
impact
assessment
is
developing
information
used
to
characterize
the
baseline
conditions
of
the
industry.
Key
information
needed
for
EIA
inputs
is
used
to
characterize
the
following.

°
Individual
producers
°
Product
markets
°
Compliance
costs
4.3.1
Producer
Characterization
The
primary
source
of
baseline
data
on
individual
producers
used
in
the
EIA
is
a
database
developed
using
the
data
collected
by
1998
ICR
described
in
Chapter
2
(
U.
S.
EPA,
1998).
The
information
in
the
facility
database
allowed
the
characterization
of
facilities
according
to
several
features
needed
for
the
analysis,
including
major
products
(
SWPW,
OSB,
etc),
baseline
production
volumes,
and
facility
capacity.
The
baseline
year
for
the
analysis
is
1997
as
it
corresponds
to
the
year
for
which
plywood
and
composite
wood
producers
provided
this
information
for
the
ICR.

For
certain
facilities,
production
and
capacity
information
was
not
available,
and
was
supplemented
by
additional
research.
Those
facilities
without
specific
production
and
capacity
data
were
assigned
an
estimate
based
on
the
average
production
and
capacity
data
for
facilities
within
the
same
market
sector
and
size
category
(
as
determined
by
employment).

4.3.2
Plywood
and
Composite
Wood
Markets
1As
mentioned
in
Chapter
1,
some
facilities
in
the
"
unaffected"
category
have
monitoring,
reporting,
and
record
keeping
costs
of
$
25,194
per
year.

4­
3
The
Plywood
and
Composite
Wood
Products
industry
is
a
broad
category
encompassing
the
four
distinct
markets
listed
above:
(
1)
SWPW,
(
2)
OSB,
(
3)
OWC,
and
(
4)
EWP.
For
reasons
discussed
in
the
EIA,
the
OWC
sector
is
decomposed
into
two
markets:
PB/
MDF
and
HB.
The
Agency
developed
P/
E
models
representing
each
of
these
four
markets.

Market
level
data
used
in
this
EIA
are
presented
in
Exhibit
4­
1.
The
market
prices
and
elasticities
for
each
of
the
four
markets
were
obtained
from
various
industry
market
reports
and
economic
literature
as
described
in
Chapter
2.
Total
market
volumes
used
in
the
models
for
each
product
are
the
sum
of
the
production
of
all
identified
U.
S.
facilities
(
from
the
facility
database)
and
imports
from
foreign
producers.
Total
U.
S.
production
for
each
market
is
the
total
production
of
all
facilities
identified
in
the
EPA's
facility
database.
The
production
was
also
separated
in
to
two
subsets
­
the
total
production
of
affected
facilities
and
the
total
production
of
unaffected
facilities.
1
The
source
of
foreign
trade
data
on
exports
and
imports
of
these
products
was
presented
in
Chapter
2.

Exhibit
4­
1:
Baseline
Characterization
of
Plywood
and
Composite
Wood
Markets:
1997
Softwood
Plywood
Oriented
Strandboard
"
Other
Composites"

PB/
MDF
HB
Market
price
(
1997$/
cubic
meter)
$
235
$
185
$
169
$
1,322
Price
Elasticity
of
Demand
Construction
­
0.1034
­
0.1034
­
0.1149
­
0.1149
Manufacturing/
Other
­
0.2585
n/
a
­
0.2872
­
0.2872
Price
Elasticity
of
Supply
0.42
0.42
0.42
0.42
Market
quantity
(
thousand
cubic
meters)
17,568,254
9,595,121
11,646,227
1,768,930
Domestic
production
17,568,162
9,590,456
11,644,523
1,768,545
Affected
11,680,778
4,691,645
9,670,639
1,768,545
Unaffected
5,887,384
4,898,811
1,973,884
n/
a
Exports
1370
148
333
371
Imports
92
4,666
1,705
385
Sources:
U.
S.
EPA
facility
database;
Section
2;
and
Appendix
B
of
the
Economic
Impact
Analysis.

4.3.3
Facility
Compliance
Costs
As
described
in
Chapter
3,
the
Agency
developed
compliance
costs
estimates
for
those
facilities
that
must
control
HAP
emissions
in
accordance
with
the
regulatory
requirements
of
the
NESHAP
rule.
The
EIA
uses
these
costs
to
develop
a
"
with
regulation"
market
equilibrium
scenario
used
to
estimate
changes
in
individual
facility
production,
total
market
volumes,
market
price,
and
social
costs.
Typically,
the
Agency
adjusts
the
compliance
cost
estimates
from
nominal
dollars
to
baseline
dollars
using
the
plant
4­
4
cost
indices
to
be
consistent
with
the
baseline
industry
characterization
of
the
economic
model
(
U.
S.
EPA,
1999b).
In
this
case,
there
was
virtually
no
change
in
the
plant
cost
indices
between
the
baseline
year
of
1997
and
current
period,
so
no
adjustment
was
made
to
the
costs
used
in
this
analysis.

4.4
Economic
Impact
Analysis
Methodology
The
following
section
presents
a
summary
of
the
approach
used
to
assess
the
economic
impacts
of
the
NESHAP
.
The
EIA
contains
a
more
detailed
description
of
the
methodology
used
to
analyze
the
economic
impact
of
this
regulation
on
each
of
the
markets
analyzed.
The
purpose
of
the
EIA
is
to
model
the
responses
of
individual
producers
and
the
overall
market
to
the
imposition
of
compliance
costs.
For
this
EIA,
the
agency
used
a
market­
based
economic
model
that
reflects
the
production
choices
producers
make
in
the
face
of
changes
in
their
individual
production
costs
and
changes
in
overall
market
prices.

The
economic
model
used
in
this
analysis
simulates
the
short
run
decisions
of
the
producers
in
response
to
operating
cost
and
price
changes
within
a
given
market.
For
each
of
the
four
markets,
the
model
used
in
this
analysis
assumes
that
the
market
is
perfectly
competitive,
based
on
the
conclusions
drawn
from
the
information
in
the
industry
profile.
In
a
competitive
market,
each
individual
facility
takes
the
price
as
determined
by
the
market
because
they
do
not
have
the
power
to
set
the
market
price
of
the
product.
The
approach
used
for
this
EIA
assumes
that
the
competitive
market
for
each
of
the
four
products
determines
both
prices
and
quantities
(
U.
S.
EPA,
1999b).

In
the
short
run,
a
firm
with
an
existing
plant
will
decide,
based
on
the
market
price,
how
much
output
to
produce
with
its
capital
stock
(
e.
g.,
fixed
investment
in
the
plant
and
equipment)
considered
as
constant.
In
this
decision,
the
firm
considers
the
costs
of
inputs
that
vary
with
output
levels,
such
as
materials
and
labor
(
U.
S.
EPA,
1999b).
When
the
market
price
is
equal
to
the
average
variable
(
operating)
costs,
the
firm
is
only
recouping
the
cost
of
its
variable
inputs.
When
the
price
is
less
than
the
firm's
variable
costs,
it
will
no
longer
produce
output
because
it
cannot
recover
all
of
its
variable
costs
in
the
short
run.
When
the
market
price
exceeds
variable
costs,
the
firm
can
also
recover
a
part
of
its
fixed
investment
in
the
plant
and
equipment.
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.
In
this
analysis,
which
is
short­
run
in
timeframe,
the
model
assumes
that
all
firms
wish
to
maximize
its
profits
and
will
produce
output
using
their
existing
plants
as
long
as
the
market
price
even
marginally
exceeds
their
variable
costs
of
producing
output.
The
short­
run
focus
for
this
analysis
is
appropriate
since
full
implementation
with
this
rule
is
required
by
3
years
from
promulgation.
Thus,
implementation
by
affected
firms
must
occur
by
2007.
Most
of
the
economic
impacts
associated
with
this
rule
are
therefore
likely
to
occur
between
promulgation
and
2007.
In
addition,
the
statutes
and
Executive
Orders
that
call
for
economic
impact
analyses
for
regulations
implicitly
call
for
an
assessement
of
impacts
on
current
producers
and
consumers.
Therefore,
a
long­
run
approach
has
some
weaknesses
in
addressing
the
requirements
that
an
analysis
like
this
one
must
adhere
to.
Thus,
short­
run
modeling
of
the
economic
impacts
of
this
rule,
which
means
presuming
the
capital
stock
as
a
constant,
is
a
reasonable
approach.

The
market
model
developed
by
the
Agency
for
this
EIA
is
based
on
a
series
of
equations
that
represent
the
market
supply
and
demand
functions
for
a
given
product.
The
demand
functions
use
baseline
price,
total
domestic
production,
import,
and
export
data,
as
well
as
estimates
of
the
price
elasticity
of
4­
5
demand
for
a
given
product
as
inputs.
The
market
supply
function
is
based
on
an
estimated
supply
function
for
each
plywood
or
composite
wood
product
at
all
production
facilities.
The
Agency
developed
a
spreadsheet
model
for
each
of
the
four
markets
to
represent
the
conceptual
model
described
below.
The
EIA
provides
a
description
of
this
process.

Figure
4­
1
shows
a
generalized
upward­
sloping
supply
function
that
characterizes
the
production
function
of
each
facility
included
in
the
analysis
(
affected
and
unaffected).
In
the
EIA
model,
this
function
represents
the
marginal
cost
curve
for
each
supplier
of
the
product
within
the
market.
The
minimum
constraint
on
this
function
is
zero,
and
the
maximum
constraint
is
each
facility's
capacity.
If
the
market
price
is
above
a
given
facility's
average
variable
cost,
the
facility
will
produce
output
up
to
the
point
where
production
equals
the
facility's
production
capacity.
If
a
given
facility's
marginal
production
cost
is
above
the
market
price,
it
will
produce
zero
output
(
EPA,
1999b).

The
model
then
aggregates
the
supply
functions
of
the
individual
facilities
within
a
market
to
represent
the
market
level
supply
curve.
Next,
the
model
equilibrates
the
market
demand
curve
and
the
market
supply
curve
according
to
the
baseline
market
price
and
quantity
values.
Figure
4­
2
shows
that
market
prices
and
quantities
are
set
in
the
baseline
according
to
the
intersection
of
the
supply
and
demand
curves
in
the
baseline
(
the
period
prior
to
the
imposition
of
compliance
costs
on
affected
facilities).
The
baseline
scenario
equilibrium
market
price
and
quantity
(
P,
Q)
are
the
points
on
the
graph's
axes
points
where
the
downward­
sloping
market
demand
curve
(
DM)
intersects
with
the
upward­
sloping
market
supply
curve
(
SM).
In
the
baseline,
at
price
P,
the
industry
produces
total
output,
Q,
with
affected
facilities
producing
the
amount
qa
and
unaffected
facilities
producing
qu
(
EPA,
1999b).

Next
the
same
facility­
specific
supply
functions
in
the
model
are
recalculated
after
taking
into
account
the
increase
in
production
costs
associated
with
the
imposition
of
annual
compliance
costs
on
some
producers.
The
costs
are
expresses
in
terms
of
dollars
per
unit
of
output
in
the
baseline
(
in
this
case
per
thousand
cubic
meter
of
product).
Figure
4­
1(
b)
show
the
effect
of
the
compliance
costs:
the
supply
curve
for
the
affected
producers
shift
upward
Sa
to
Sa'
.
This
raises
the
point
at
which
market
price
must
cover
variable
production
costs
from
pa
to
pa'.
The
supply
curve
Su
for
the
unaffected
facilities
remain
the
same.
When
the
supply
curves
for
the
affected
and
unaffected
facilities
are
aggregated
to
represent
the
market
level
supply
curve,
the
market
supply
curve
also
shifts
upward
from
SM
to
SM'.
Using
the
original
market
demand
curve,
DM,
the
new
equilibrium
price
increases
from
P
to
P'
and
market
output
declines
from
Q
to
Q'.
This
reduction
in
market
output
is
the
net
result
from
reductions
at
affected
facilities
and
increases
at
unaffected
facilities
(
EPA,
1999b).
4­
6
$/
lb
S
lbs/
year
Figure
4­
1.
Supply
Curves
for
Affected
Facilities
Source:
U.
S.
EPA,
1999b.
4­
7
p
S
a
q
a
q
u
Q
Affected
Facilities
S
u
SM
DM
p
p
+
=

Unaffected
Facilities
Market
a)
Baseline
Equilibrium
p
q 
a
q
u
Q 

Affected
Facilities
S
u
SM 

DM
p
p
+
=

Unaffected
Facilities
Market
b)
With
Regulation
Equilibrium
p 
S
a
q
a
q 
u
Q
SM
p 
p 
S 
a
Figure
4­
2.
Market
Equilibrium
Without
and
With
Regulation
Source:
U.
S.
EPA,
1999b.

4.5
Economic
Impact
Analysis
Results
The
following
section
presents
the
results
of
the
Agency's
implementation
of
the
EIA
models
described
in
the
previous
section.
The
results
are
presented
at
three
levels:
market,
industry,
and
societal.
The
market
level
results
present
the
impacts
in
terms
of
changes
in
price
and
quantity
for
each
of
the
four
markets.
The
industry
level
impacts
include
changes
in
revenues,
production,
employment,
and
number
of
operating
production
lines.

4.5.1
Market­
Level
Results
Exhibit
4­
2
presents
the
expected
impacts
of
the
regulation
at
the
market­
level.
These
changes
include
the
new
price
and
quantity
for
each
product
and
changes
in
foreign
trade.
In
each
market,
prices
increase
and
production
quantities
decrease
due
to
the
imposition
of
compliance
costs
on
the
affected
producers.
The
reduction
in
market
quantities
of
each
product
reflect
reductions
in
domestic
production
(
including
production
for
exports)
and
increases
in
foreign
imports.
The
reduction
in
domestic
production
4­
8
reflects
production
decreases
by
affected
producers
and
increases
by
unaffected
producers
(
EPA,
1999b).

For
softwood
plywood,
the
market
price
is
expected
to
increase
by
0.9
percent,
while
market
quantity
declines
by
0.1
percent,
or
26,207
thousand
cubic
meters
(
or
M
cubic
meters)
per
year.
For
oriented
strandboard,
the
market
price
is
expected
to
increase
by
1.3
percent,
while
market
quantity
declines
by
0.1
percent,
or
12,945
M
cubic
meters
per
year.
For
particleboard
and
medium
density
fiberboard,
the
market
price
is
expected
to
increase
by
2.5
percent,
while
market
quantity
declines
by
0.7
percent,
or
78,595
M
cubic
meters
per
year.
Finally,
for
hardboard,
the
market
price
is
expected
to
increase
by
1.0
percent,
while
market
quantity
will
decline
by
0.3
percent,
or
4,727
M
cubic
meters
per
year.

Generally,
increases
in
market
price
result
in
changes
in
foreign
trade
of
these
products:
exports
decrease
and
imports
increase.
Exhibit
4­
2
shows
that
exports
of
softwood
plywood
from
the
United
States
are
expected
to
decline
by
0.2
percent
(
or
2
M
cubic
meters
per
year);
exports
of
oriented
strandboard
are
expected
to
decline
by
0.1
percent
(
or
0.2
M
cubic
meters
per
year);
exports
of
particleboard
and
medium
density
fiberboard
are
expected
to
decline
by
0.7
percent
(
or
2
M
cubic
meters
per
year);
and
exports
of
hardboard
are
expected
to
decline
by
0.2
percent
(
or
1
M
cubic
meter
per
year).
Imports
of
each
of
these
products
to
the
United
States
are
expected
to
increase
as
follows:
SWPW
by
685
percent
(
or
630
M
cubic
meters
per
year),
OSB
by
28.82
percent
(
or
1,345
M
cubic
meters
per
year),
PB/
MDF
by
85
percent
(
or
1,451
M
cubic
meters
per
year),
and
HB
by
100
percent
(
or
387
M
cubic
meters
per
year).

Exhibit
4­
2.
Market­
Level
Impacts
of
the
NESHAP
Industry
Sector
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
Softwood
Plywood
Market
price
(
1997$/
cubic
meter)
$
235
$
237.20
$
2.20
0.9%

Market
output
(
M
cubic
meters/
yr)
17,568,254
17,542,048
­
26,206
­
0.1%

Domestic
production
17,568,162
17,541,326
­
26,837
­
0.2%

Affected
Facilities
11,680,778
11,629,258
­
51,520
­
0.4%

Unaffected
Facilities
5,887,384
5,912,067
24,683
0.4%

Exports
1,370
1,368
­
2
­
0.2%

Imports
92
722
630
685.1%

Oriented
Strandboard
Market
price
(
1997$/
cubic
meter)
$
185
$
187.43
$
2.43
1.3%

Market
output
(
M
cubic
meters/
yr)
9,595,121
9,582,176
­
12,945
­
0.1%

Domestic
production
9,590,456
9,576,165
­
14,291
­
0.1%

Affected
Facilities
4,691,645
4,654,117
­
37,528
­
0.8%

Unaffected
Facilities
4,898,811
4,922,048
23,237
0.5%

Exports
147.8
147.6
­
0.2
­
0.1%

Imports
4,666
6,011
1,345
28.8%
Exhibit
4­
2.
Market­
Level
Impacts
of
the
NESHAP
Industry
Sector
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
4­
9
Particleboard
and
Medium
Density
Fiberboard
Market
price
(
1997$/
cubic
meter)
$
169
$
173.29
$
4.29
2.5%

Market
output
(
M
cubic
meters/
yr)
11,646,228
11,567,633
­
78,595
­
0.7%

Domestic
production
11,644,523
11,564,477
­
80,046
­
0.7%

Affected
Facilities
9,670,639
9,553,510
­
117,129
­
1.2%

Unaffected
Facilities
1,973,884
2,010,967
37,083
1.9%

Exports
333
331
­
2
­
0.7%

Imports
1,705
3,156
1,451
85.1%

Hardboard
Market
price
(
1997$/
cubic
meter)
$
1,322
$
1,335.17
$
13.17
1.0%

Market
output
(
M
cubic
meters/
yr)
1,768,930
1,764,203
­
4,727
­
0.3%

Domestic
production
1,768,545
1,763,431
­
5,114
­
0.3%

Affected
Facilities
1,768,545
1,763,431
­
5,114
­
0.3%

Unaffected
Facilities
n/
a
n/
a
0
n/
a
Exports
371
370
­
1
­
0.2%

Imports
385
772
387
100.5%

4.5.2
Industry­
Level
Results
Industry
impacts
associated
with
the
NESHAP
for
the
plywood
and
composite
wood
industry
are
presented
in
Exhibit
4­
3.
Industry­
level
impacts
include
changes
in
revenue,
production,
numbers
of
operating
product­
lines,
and
changes
in
employment.
The
estimates
for
changes
in
production
lines
and
employment
are
described
in
Section
4.5.3
below.

The
EIA
model
estimates
the
change
in
prices
and
production
levels
after
the
imposition
of
the
compliance
costs
on
the
affected
facilities.
Exhibit
4­
3
shows
that
overall
revenues
for
each
industry
increase
slightly.
Industry
revenues
increase
because
demand
elasticities
for
these
four
markets
mean
that
the
change
in
price
(
in
percentage
terms)
is
greater
than
the
percentage
reduction
in
output.
Affected
facilities
will
experience
an
increase
in
revenues
due
to
the
increase
in
the
market
price,
but
this
effect
is
likely
to
be
offset
by
the
increase
in
production
costs.
Changes
in
profits,
however,
could
not
be
estimated
due
to
lack
of
information
on
production
costs
at
the
facility
level.
4­
10
Exhibit
4­
3.
Industry­
Level
Impacts
of
the
NESHAP
Baseline
With
Regulation
Changes
from
Baseline
Absolute
Percent
Softwood
Plywood
Revenues
($
million/
yr)
$
4,128.5
$
4,161
$
32.4
0.78%

Production
(
M
cubic
meters/
yr)
17,568162
17,541,326
­
26,836
­
0.15%

Operating
product
lines
(#)
108
107
­
1
­
0.93%

Employment*
36,877
36,821
­
56
­
0.15%

Oriented
Strandboard
Revenues
($
million/
yr)
$
1,774.2
$
1,794.9
$
20.7
1.17%

Production
(
M
cubic
meters/
yr)
9,590,456
9,576,164
­
14,292
­
0.15%

Operating
product
lines
(#)
38
38
0
0.00%

Employment*
6,681
6,671
­
10
­
0.15%

Particleboard
&
Medium
Density
Fiberboard
Revenues
($
million/
yr)
$
1,967.9
$
2,004.0
$
36.1
1.83%

Production
(
M
cubic
meters/
yr)
11,644,523
11,564,477
­
80,046
­
0.69%

Operating
product
lines
(#)
83
83
0
0.00%

Employment*
20,424
20,284
­
140
­
0.69%

Hardboard
Revenues
($
million/
yr)
$
2,338.0
$
2,354.5
$
16.5
0.71%

Production
(
M
cubic
meters/
yr)
1,768,545
1,763,431
­
5,114
­
0.29%

Operating
product
lines
(#)
18
18
0
0.00%

Employment*
6,271
6,252
­
18
­
0.29%

*
Baseline
employment
estimates
are
based
total
production
and
employment
of
all
facilities
in
each
market
as
reported
in
the
EPA
facility
database.
Average
production
per
employee
was
calculated
using
the
sum
of
facility­
specific
production
and
employment.
Because
facilities
reported
employment
as
a
range,
they
are
assigned
an
employment
estimate
using
the
mid­
point
of
the
reported
range.
Post­
regulation
employment
was
then
estimated
by
dividing
post­
regulation
production
by
the
baseline
production
per
employee.

4.5.3
Distribution
of
Impacts
The
distribution
of
regulatory
impacts
is
presented
in
Exhibit
4­
4.
This
table
presents
the
same
information
as
in
Exhibit
4­
3,
but
provides
details
on
how
the
rule
impacts
affected
and
unaffected
facilities
differently.

One
important
result
from
the
EIA
model
is
the
projection
of
process
line
closures
that
could
occur
following
promulgation
of
the
NESHAP.
The
model's
estimate
of
process
line
closures
may
be
sensitive
to
the
accuracy
of
the
baseline
characterization
of
the
facilities.
Characteristics
such
as
baseline
production
levels,
revenues
(
as
a
function
of
production
and
price),
the
underlying
supply
function
that
represents
production
costs,
and
the
compliance
cost
estimates
are
all
factors
that
affect
the
distribution
of
the
rule's
impacts.
4­
11
Exhibit
4­
4:
Distribution
of
Industry­
Level
Impacts
of
the
NESHAP:
Affected
and
Unaffected
Producers
Baseline
With
Regulation
Changes
From
Baseline
Absolute
Percent
Softwood
Plywood
Affected
Process
Lines
Revenues
($
million/
yr)
$
2,745.0
$
2,758.5
$
13.5
0.49%

Production
(
M
cubic
meters/
yr)
11,680,778
11,629,258
­
51,520
­
0.44%

Operating
process
lines
(#)
66
65
­
1
­
1.52%

Employment*
24,519
24,411
­
108
­
0.44%

Unaffected
Process
Lines
Revenues
($
million/
yr)
$
1,383.5
$
1,402.4
$
18.9
1.37%

Production
5,887,384
5,912,067
24,683
0.42%

Operating
process
lines
(#)
42
42
0
0.00%

Employment*
12,358
12,410
52
0.42%

Oriented
Strandboard
Affected
Process
Lines
Revenues
($
million/
yr)
$
868.0
$
872.3
$
4.4
0.50%

Production
(
M
cubic
meters/
yr)
4,691,645
4,654,117
­
37,528
­
0.80%

Operating
process
lines
(#)
20
20
0
0.00%

Employment*
3,268
3,242
­
26
­
0.80%

Unaffected
Process
Lines
Revenues
($
million/
yr)
$
906.3
$
922.6
$
16.3
1.80%

Production
4,898,811
4,922,048
23,237
0.47%

Operating
process
lines
(#)
18
18
0
0.00%

Employment*
3,413
3,429
16
0.47%

Particleboard
&
Medium
Density
Fiberboard
Affected
Process
Lines
Revenues
($
million/
yr)
$
1,634.3
$
1,655.6
$
21.2
1.30%

Production
(
M
cubic
meters/
yr)
9,670,639
9,553,510
­
117,129
­
1.21%

Operating
process
lines
(#)
53
53
0
0.00%

Employment*
16,962
16,756
­
205
­
1.21%

Unaffected
Process
Lines
Revenues
($
million/
yr)
$
333.6
$
348.5
$
14.9
4.47%

Production
1,973,884
2,010,967
37,083
1.88%

Operating
process
lines
(#)
30
30
0
0.00%

Employment*
3,462
3,527
65
1.88%
Exhibit
4­
4:
Distribution
of
Industry­
Level
Impacts
of
the
NESHAP:
Affected
and
Unaffected
Producers
Baseline
With
Regulation
Changes
From
Baseline
Absolute
Percent
4­
12
Hardboard
Affected
Process
Lines
Revenues
($
million/
yr)
$
2,338.0
$
2,354.5
$
16.5
0.70%

Production
(
M
cubic
meters/
yr)
1,768,545
1,763,431
­
5,114
­
0.29%

Operating
process
lines
(#)
18
18
0
0.00%

Employment*
6,271
6,252
­
18
­
0.29%

Unaffected
Process
Lines
Revenues
($
million/
yr)
n/
a
n/
a
n/
a
n/
a
Production
n/
a
n/
a
n/
a
n/
a
Operating
process
lines
(#)
n/
a
n/
a
n/
a
n/
a
Employment*
n/
a
n/
a
n/
a
n/
a
Total
Affected
Process
Lines
Revenues
($
million/
yr)
$
7,585.3
$
7,640.9
$
55.6
0.73%

Production
(
M
cubic
meters/
yr)
27,811,607
27,600,316
­
211,291
­
0.76%

Operating
process
lines
(#)
157
156
­
1
­
0.64%

Employment*
51,020
50,662
­
358
­
0.70%

Unaffected
Process
Lines
Revenues
($
million/
yr)
$
2,623.4
$
2,673.4
$
50.1
1.91%

Production
12,760,079
12,845,082
85,003
0.67%

Operating
process
lines
(#)
90
90
0
0.00%

Employment*
19,233
19,366
133
0.69%

All
Process
Lines
(
net)

Revenues
($
million/
yr)
10,209
10,314
$
105.6
1.03%

Production
40,571,686
40,445,398
­
126,288
­
0.31%

Operating
process
lines
(#)
247
246
­
1
­
0.40%

Employment*
70,252
70,028
­
225
­
0.32%

n/
a
=
not
applicable
*
Baseline
employment
estimates
are
based
total
production
and
employment
of
all
facilities
in
each
market
as
reported
in
the
EPA
facility
database.
Average
production
per
employee
was
calculated
using
the
sum
of
facility­
specific
production
and
employment.
Because
facilities
reported
employment
as
a
range,
they
are
assigned
an
employment
estimate
using
the
mid­
point
of
the
reported
range.
Post­
regulation
employment
was
then
estimated
by
dividing
post­
regulation
production
by
the
baseline
production
per
employee.

Exhibit
4­
4
shows
that
one
softwood
plywood
production
line
is
expected
to
prematurely
cease
operations.
The
model
does
not
predict
any
closures
in
all
of
the
other
product
markets.
The
affected
4­
13
entity
that
closes
following
adoption
of
the
regulation
is
a
small
SWPW
producer
that
incurs
higher
control
costs
per
unit
of
production
than
other
SWPW
production
lines.
This
facility,
with
one
process
line,
did
not
respond
to
the
EPA's
ICR
survey.
Therefore,
it
was
necessary
to
estimate
baseline
production
and
compliance
costs
based
on
very
little
facility­
specific
information.
Total
baseline
production
of
SWPW
by
the
facility
that
closes
was
roughly
9,500
M
cubic
meters
per
year,
or
less
than
0.05
percent
of
the
17,568,162
M
cubic
meters
of
SWPW
produced
by
all
SWPW
facilities
during
1997.

As
a
result
of
the
closure
and
reductions
in
production
at
other
affected
facilities,
the
EIA
model
estimates
a
total
net
loss
in
employment
of
225
employees
(
0.3
percent)
attributable
to
the
NESHAP
across
all
four
market
sectors.
Affected
facilities
experience
employment
loss
of
358,
which
is
offset
by
employment
gains
at
unaffected
facilities
of
133.
Overall
the
four
sectors
together
experience
a
1
percent
increase
in
revenues,
and
a
0.3
percent
decrease
in
production.

4.5.4
Social
Costs
of
the
NESHAP
The
social
costs
of
a
regulation
are
measured
according
to
the
impacts
that
it
has
on
both
consumers
and
producers.
The
NESHAP,
because
it
is
expected
to
result
in
changes
in
both
market
price
and
market
quantity,
will
impact
the
consumers
and
producers
of
softwood
plywood
and
composite
wood
products.
Social
costs,
also
called
welfare
impacts,
are
the
measure
of
overall
gains
and
losses
experienced
by
the
two
groups
that
may
result
from
the
imposition
of
costs
associated
with
the
regulatory
requirements.

The
economic
benefits
producers
experience
when
participating
in
a
market
is
called
producer
surplus.
Producers
experience
impacts
when
their
revenues
change
either
because
of
a
new
market
price,
increased
production
costs,
or
both.
These
impacts
change
the
amount
of
producer
surplus
relative
to
the
baseline.
Likewise,
the
economic
benefits
consumers
experience
is
called
consumer
surplus.
Consumer
surplus
changes
when
consumers
experience
impacts
when
the
amount
of
product
they
consume
or
the
product
price
changes.
The
economic
principles
behind
the
measurement
of
social
costs
are
presented
in
detail
in
the
EIA.

The
estimate
of
the
social
cost
of
the
NESHAP,
presented
in
Exhibit
4­
5,
is
the
sum
of
the
change
in
producer
and
consumer
surplus.
The
EIA
model
estimates
the
social
cost
of
the
proposed
NESHAP
as
$
135.1
million
annually
(
1999
dollars).
These
costs
are
distributed
across
both
consumers
and
producers
of
plywood
and
composite
wood
products
according
to
projected
changes
in
market
price
and
quantity
associated
with
the
NESHAP.

Consumer
surplus
is
reduced
by
$
136.1
million
annually
due
to
the
increase
in
prices
and
reductions
in
consumption.
Consumers
of
softwood
plywood
are
worse
off
by
$
38.7
million
annually;
consumers
of
oriented
strandboard
are
worse
off
by
$
23.3
million
annually;
consumers
of
particleboard
and
medium
density
fiberboard
and
of
hardboard
are
worse
off
annually
by
$
49.8
million
and
$
23.3
million,
respectively.

Producers
(
in
aggregate)
are
slightly
better
off
because
of
the
imposition
of
the
NESHAP,
with
an
increase
in
producer
surplus
of
just
under
$
1
million
annually.
Essentially
all
of
this
is
change
associated
with
domestic
producers.
Because
the
market
prices
for
these
products
increase,
certain
individual
domestic
producers
gain
at
the
expense
of
their
competitors.
The
size
of
this
gain
at
any
given
facility
depends
on
how
much
their
production
costs
change
(
as
a
result
of
new
compliance
costs)
relative
to
the
change
in
market
price
and
quantity
that
increases
revenues.
The
benefit
to
foreign
producers
associated
4­
14
with
higher
market
prices
is
quite
small,
under
$
100,000.

Exhibit
4­
5:
Distribution
of
Social
Costs
Associated
with
the
NESHAP
Stakeholder
Change
in
Value
($
million
­
1999
dollars)

Social
Costs
of
Regulation
(
Change
in
consumer
surplus
+
Change
in
producer
surplus)
$­
135.1
Total
Change
in
Consumer
Surplus
$­
136.1
SWPW
Consumers
$­
38.7
OSB
Consumers
$­
23.3
PB/
MDF
Consumers
$­
49.8
HB
Consumers
$­
23.3
Total
Change
in
Producer
Surplus
$
0.9
Softwood
Plywood
Producer
Surplus,
total
$
8.3
Domestic
producers
$
8.3
Affected
Facilities
$­
4.1
Unaffected
Facilities
$
12.4
Foreign
producers
$
0.0
Oriented
Strandboard
Producer
surplus,
total
$­
1.4
Domestic
producers
$­
1.4
Affected
Facilities
$­
12.9
Unaffected
Facilities
$
11.5
Foreign
producers
$
0.0
Particleboard
&
Medium
Density
Fiberboard
Producer
surplus,
total
$­
5.2
Domestic
producers
$­
5.2
Affected
Facilities
$­
13.5
Unaffected
Facilities
$
8.3
Foreign
producers
$
0.0
Hardboard
Producer
surplus,
total
$­
0.8
Domestic
producers
$­
0.8
Affected
Facilities
$­
0.8
Unaffected
Facilities
n/
a
Foreign
producers
$
0.0
2U.
S.
Department
of
Energy,
Energy
Information
Administration.
Annual
Energy
Review,
End­
Use
Energy
Consumption
for
1998.
Located
on
the
Internet
at
http://
www.
eia.
doe.
gov/
emeu/
aer/
enduse.
html.

3
Ibid.

4­
15
4.5.5
Energy
Impact
Analysis
Executive
Order
13211,
"
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use"
(
66
FR
28355,
May
22,
2001),
provides
that
agencies
shall
prepare
and
submit
to
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs,
Office
of
Management
and
Budget,
a
Statement
of
Energy
Effects
for
certain
actions
identified
as
"
significant
energy
actions."
Section
4(
b)
of
Executive
Order
13211
defines
"
significant
energy
actions"
as
"
any
action
by
an
agency
(
normally
published
in
the
Federal
Register)
that
promulgates
or
is
expected
to
lead
to
the
promulgation
of
a
final
rule
or
regulation,
including
notices
of
inquiry,
advance
notices
of
proposed
rulemaking,
and
notices
of
proposed
rulemaking:
(
1)
(
i)
that
is
a
significant
regulatory
action
under
Executive
Order
12866
or
any
successor
order,
and
(
ii)
is
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy;
or
(
2)
that
is
designated
by
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs
as
a
significant
energy
action."
The
rule
is
not
a
"
significant
energy
action"
because
it
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.
The
basis
for
the
determination
is
as
follows.

As
stated
in
Chapter
2,
this
rule
affects
manufacturers
in
the
softwood
veneer
and
plywood
(
NAICS
321212),
reconstituted
wood
products
(
NAICS
321219),
and
engineered
wood
products
(
NAICS
321213)
industries.
There
is
no
crude
oil,
fuel,
or
coal
production
from
these
industries.
Hence,
there
is
no
direct
effect
on
such
energy
production
related
to
implementation
of
this
rule.
In
fact,
as
mentioned
in
section
IV.
D.
of
this
preamble,
there
will
be
an
increase
in
energy
consumption,
and
hence
an
increase
in
energy
production,
resulting
from
installation
of
regenerative
thermal
oxidizers
(
RTOs)
and
wet
electrostatic
precipitators
(
WESPs)
likely
needed
for
sources
to
meet
the
requirements
of
the
rule.
This
increase
in
energy
consumption
is
equal
to
718
million
killowatt­
hours/
year
(
kWh/
yr)
for
electricity
and
45
million
cubic
meters/
year
(
m3/
yr)
for
natural
gas.
These
increases
are
equivalent
to
0.012
percent
of
1998
U.
S
electricity
production
and
0.000001
percent
of
1998
U.
S.
natural
gas
production.
2
It
should
be
noted,
however,
that
the
reduction
in
demand
for
product
output
from
these
industries
may
lead
to
a
negative
indirect
effect
on
such
energy
production,
for
the
output
reduction
will
lead
to
less
energy
use
by
these
industries
and
thus
some
reduction
in
overall
energy
production.

For
fuel
production,
the
result
of
this
indirect
effect
from
reduced
product
output
is
a
reduction
of
only
about
1
barrel
per
day
nationwide,
or
a
0.00001
percent
reduction
nationwide
based
on
1998
U.
S.
fuel
production
data3.
For
coal
production,
the
resulting
indirect
effect
from
reduced
product
output
is
a
reduction
of
only
2,000
tons
per
year
nationwide,
or
only
a
0.00001
percent
reduction
nationwide
based
on
1998
U.
S.
coal
production
data.
For
electricity
production,
the
resulting
indirect
effect
from
reduced
product
output
is
a
reduction
of
42.8
million
Kilowatt­
hours
per
year
(
kWh­
yr),
or
only
a
0.00013
percent
reduction
nationwide
based
on
1998
U.
S.
electricity
production
data.
Given
that
the
estimated
price
increase
for
product
output
from
any
of
the
affected
industries
is
no
more
than
2.5
percent,
there
should
be
no
price
increase
for
any
energy
type
by
more
than
this
amount.
The
cost
of
energy
distribution
should
not
4
U.
S.
Department
of
Energy,
Energy
Information
Administration.
1998
Manufacturing
Energy
Consumption
Survey.
Located
on
the
Internet
at
http://
www.
eia.
doe.
gov/
emeu/
mecs/
mecs98/
datatables/
contents.
html.

5
U.
S.
Environmental
Protection
Agency.
"
Energy
Impact
Analysis
of
the
Proposed
Plywood
and
Composite
Wood
Products
NESHAP."
July
30,
2001.

4­
16
be
affected
by
this
proposal
at
all
since
the
rule
does
not
affect
energy
distribution
facilities.
Finally,
with
changes
in
net
exports
being
a
minimal
percentage
of
domestic
output
(
0.01
percent)
from
the
affected
industries,
there
will
be
only
a
negligible
change
in
international
trade,
and
hence
in
dependence
on
foreign
energy
supplies.
No
other
adverse
outcomes
are
expected
to
occur
with
regards
to
energy
supplies.
Thus,
the
net
effect
of
this
rule
on
energy
production
is
an
increase
in
electricity
output
of
0.012
percent
compared
to
1998
output
data,
and
a
negligible
change
in
output
of
other
energy
types.
All
of
the
results
presented
above
account
for
the
passthrough
of
costs
to
consumers,
as
well
as
the
cost
impact
to
producers.
These
results
also
account
for
how
energy
use
is
related
to
product
output
for
the
affected
industries.
4
More
detailed
information
on
the
estimated
energy
effects
and
the
methodology
employed
to
estimated
them
are
in
the
background
memo5
that
provides
such
details
for
the
proposed
rule.

Therefore,
we
conclude
that
the
rule
when
implemented
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.

4.6
Analysis
of
Economic
Impacts
on
Engineered
Wood
Products
Sector
4.6.1
Overview
The
engineered
wood
products
(
EWP)
sector
is
much
different
than
the
other
four
sectors
examined
in
this
analysis.
Due
to
both
the
nature
of
the
products
and
their
markets
as
mentioned
in
Section
4.6.4
below,
and
the
limited
availability
of
data,
a
quantitative
analysis
was
not
performed.

EWP
products
are
characterized
by
differentiated
structural
beam
products,
although
some
can
also
be
used
as
columns.
EWPs
are
produced
by
firms
using
differentiated
production
systems.
There
are
a
number
of
large
firms
with
market
power,
allowing
them
to
set
prices.
Although
many
of
the
products
in
this
market
sector
can
be
substituted
for
one
another
to
an
extent,
each
product's
design
usually
provides
it
with
an
advantage
over
others
in
the
design
of
final
structures.
Product
differentiation
allows
each
product
to
dominate
particular
market
niches,
but
also
makes
many
of
the
products
complements
as
well
as
substitutes.
Even
when
substitution
is
possible,
some
large
firms
use
their
market
power
to
influence
purchase
decisions
and
persuade
consumers
to
purchase
their
products.
Consequently,
these
products
are
not
standard
commodities
as
are
products
in
the
other
plywood
and
composite
wood
sectors.
Therefore,
commodity
prices
and
other
standard
information
that
is
characteristic
of
competitive
markets
are
not
available.
These
factors
limit
the
ability
of
EPA
to
quantify
the
impact
of
the
NESHAP
on
this
sector
using
the
same
quantitative
method
applied
to
the
other
sectors.

Three
of
the
fifty­
three
EWP
facilities
in
the
U.
S.
will
have
compliance
costs
are
a
result
of
the
NESHAP.
This
includes
the
country's
two
LSL
plants,
and
one
of
the
country's
two
PSL
plants.
Weyerhaeuser,
Inc.
purchased
these
four
plants
when
they
acquired
Trus
Joist
MacMillan.
(
Weyerhaeuser­
Trus
Joist
MacMillan
will
be
referred
to
as
W/
TJM
for
the
remainder
of
this
report.)
W/
TJM
is
currently
6
LSL
bending
strength
=
1700psi;
stiffness
(
modulus
of
elasticity
or
MOE)
=
1.3­
1.5E.

4­
17
the
only
manufacturer
of
LSL
and
PSL
in
the
world.

4.6.2
Characteristics
of
EWP
Products
EWPs
include
laminated
veneer
lumber
(
LVL),
laminated
strand
lumber
(
LSL),
parallel
strand
lumber
(
PSL),
wood
I­
joists
(
I­
J),
and
glue
laminated
timber
(
GL).
These
are
value
added
lumber
products
designed
to
be
used
in
applications
that
are
not
suitable
for
ordinary
framing
lumber.
The
design
and
composition
of
each
of
these
products
differ,
providing
them
with
different
strength,
stiffness,
cost,
and
dimensional
properties.
Strength
properties
allow
products
to
carry
heavier
loads
without
breaking.
Strength
is
particularly
important
for
uses
such
as
carrying
beams
in
floors
or
bridge
girders,
which
are
used
to
support
structures.
Stiffness
prevents
materials
from
shaking
as
objects
are
moved
over
them.
This
is
particularly
important
in
floors
and
bridge
decks
where
structure
shakes
or
squeaks
are
uncomfortable
or
dangerous.
Each
product's
strength
and
stiffness
is
partially
a
function
of
its
dimensional
characteristics.
For
example,
I­
J
are
strong,
stiff
and
typically
less
expensive
than
the
other
products.
However,
their
structural
integrity
does
not
hold
beyond
certain
lengths.

Laminated­
Strand
Lumber
W/
TJM
introduced
LSL
in
1992.
Its
dimensional
characteristics
match
nominal
2x4
and
4x4
framing
lumber,
but
it
provides
greater
and
more
uniform
strength
and
stiffness
properties.
6
Unlike
many
of
the
other
EWPs,
one
of
the
primary
uses
of
LSL
is
in
vertical
applications,
as
a
stud
or
column.
PSL
is
also
used
in
vertical
applications,
but
its
primary
uses
are
in
horizontal
applications,
as
a
beam.
The
uses
of
LSL
are
summarized
in
Exhibit
4­
6.

Exhibit
4­
6:
Primary
Uses
and
Substitutes
for
LSL
Application
Uses
Substitutes
Columns
or
studs
Wall,
window,
and
door
framing
Framing
lumber,
PSL,
solid
sawn
lumber,
steel
Headers
Garage
door,
other
wide
span
doors
and
windows
Framing
lumber,
GL,
LVL,
PSL,
steel
Beams
Light
applications,
low
load
bearing
Solid
sawn
lumber,
GL,
LVL,
PSL,
I­
J
Rim
Board
Floor
systems,
nailing
surface
for
sheathing,
decks
and
siding
Plywood
Source:
http://
www.
trusjoist.
com
Because
W/
TJM
is
the
sole
producer
of
LSL,
very
little
information
is
available
about
their
costs
or
profits.
Exhibit
4­
7
below
identifies
the
production
information
that
is
known.
Note
that
neither
plant
operates
near
full
capacity.
The
two
plants
combined
operate
at
less
than
50
percent
of
their
combined
capacity
(
EWP
survey).
This
may
be
due
to
a
decline
in
demand
or
an
immature
market.
7
PSL
bending
strength
=
2900psi;
stiffness
=
2.0E.

8
GL
bending
strength
=
2400­
3000psi;
stiffness
=
1.8
­
2.1E
4­
18
Exhibit
4­
7:
Characteristics
of
LSL
Plants
Location
Item
Deerwood,
MN
Capacity
Production
Capacity
Employees
Plant
Age
7,900,000
ft3/
yr
4,900,000
ft3/
yr
62%
100­
249
1992
(
estimate)

Chavies,
KY
Capacity
Production
Capacity
Employees
Plant
Age
14,900,000
ft3/
yr
5,400,000
ft3/
yr
36%
250­
499
1992
(
estimate)

Source:
EPA
facility
survey,
1998.

Parallel­
Strand
Lumber
PSL
is
a
slightly
older
technology
than
LSL.
It
was
introduced
to
the
market
in
the
mid­
1980'
s
by
W/
TJM.
PSL
is
a
high
performance
beam
and
header
product
that
can
also
be
used
as
a
column.
It
is
designed
with
exceptional
strength,
stiffness
characteristics
that
is
capable
of
spanning
much
longer
distances
than
most
other
EWPs.
7
Only
GL
can
match
or
beat
PSL's
ability
to
carry
heavy
loads
over
long
spans.
8
Furthermore,
PSL
is
a
balanced
beam,
which
means
it
has
no
top
or
bottom.
This
property
is
particularly
desirable
to
the
residential
framing
industry.
Balanced
beams
save
on
labor
costs
due
to
lower
skill
required
to
install
the
product,
providing
PSL
with
an
edge
over
GL
for
a
number
of
years.
However,
Anthony
Forest
Products
recently
developed
a
line
of
balanced
GL
beams
with
comparable
strength
and
stiffness
properties
to
PSL,
and
a
number
of
other
GL
manufacturers
have
since
done
the
same.
This
has
lead
to
a
competitive
more
environment.
However,
PSL
still
maintains
a
share
of
the
residential
market.
Exhibit
4­
8
summarizes
the
uses
of
PSL.

Exhibit
4­
8:
Primary
Uses
and
Substitutes
for
PSL
Application
Uses
Substitutes
Columns
or
studs
Wall
framing,
street
lights
Steel,
solid
sawn
lumber,
steel
Headers
Garage
door,
other
wide
span
doors
and
windows
GL,
LVL,
steel
Beams
Heavy
applications,
high
load
bearing
GL,
steel,
solid
sawn
lumber,
LVL
Because
W/
TJM
has
been
the
only
producer
of
this
product,
very
little
is
known
about
their
production
costs
and
profits.
Exhibit
4­
9
below
identifies
the
production
information
that
is
known
about
the
two
U.
S.
PSL
production
facilities.
4­
19
Exhibit
4­
9:
Characteristics
of
PSL
Plants
Location
Item
Colbert,
GA
(
affected
by
rule)
Capacity
Production
Capacity
Factor
Employees
Plant
Age
3,000,000ft3/
yr
2,770,000ft3/
yr
92%
250­
499
mid­
1980s
(
estimate)

Buckhannon,
WV
(
not
affected
by
rule)
Capacity
Production
Capacity
Factor
Employees
Plant
Age
2,500,000ft3/
yr
1,929,000ft3/
yr
77%
250­
499
mid­
1980s
(
estimate)

source:
EPA
facility
survey,
1998.

Since
PSL
does
compete
directly
with
GL
in
some
applications,
there
is
slightly
more
information
available
on
it
than
on
LSL.
There
is
one
published
source
of
EWP
prices
that
includes
some
retail
PSL
delivered
prices:
Engineered
Lumber
Trends
produced
by
The
Irland
Group
in
Winsor,
ME.
Exhibit
4­
10
presents
a
comparison
of
retail
prices
for
PSL
and
GL.
However,
it
is
not
possible
to
estimate
firm
revenue
using
these
prices
because
they
are
retail
prices
and
there
is
considerable
markup
from
the
producer
to
retail
level.
The
prices
listed
in
the
table
below
show
that
PSL
is
more
expensive
than
GL.

Exhibit
4­
10:
Retail
Prices
of
GL
and
PSL
Beams
Delivered
to
Los
Angeles
Beam*
Width
(
inches)
Depth
(
inches)
Price
per
linear
foot
PSL
(
strength
=
2900psi
stiffness
=
2.0E)
3­
1/
2
11­
7/
8
$
8.16
GL
(
strength
=
2400psi
stiffness
=
1.8E)
3­
1/
8
12
$
5.90
GL
**
(
strength
=
3000psi
stiffness
=
2.1E)
3­
1/
8
12
$
7.08
Source:
Engineered
Lumber
Trends
(
December
1999)
*
Beam
bending
strength
measured
in
pounds
per
square
inch
and
stiffness
the
beams
modulus
of
elasticity
or
E
**
Price
of
the
3000­
psi
GL
is
estimated
by
marking
up
the
2400psi
GL
by
20%
based
on
conversations
with
GL
manufacturers
W/
TJM
has
stated
that
PSL
could
be
manufactured
using
waste
material
from
plywood
and
LVL.
Other
industry
members
dispute
this
due
to
the
high
quality
material
required
for
the
product.
They
feel
that
there
is
actually
considerable
wasted
material
in
the
production
process
in
order
to
acquire
the
high­
4­
20
quality
wood
fiber.
Consequently,
there
are
two
conflicting
arguments
why
PSL
is
able
to
sell
their
product
at
the
higher
price.

°
Consumers
view
it
as
a
superior
product
despite
the
availability
of
substitutes,
providing
it
with
a
higher
profit
margin.
°
W/
TJM
has
used
strategic
behavior
to
maintain
the
price
it
requires
to
provide
its
product
on
the
market.

4.6.3
Comparison
to
Other
EWP
Products
Substitution
among
EWPs
is
a
complicated
dynamic.
While
the
products
can
be
viewed
as
distinct
commodities,
they
are
integral
components
in
the
engineering
design
of
a
structure.
Therefore,
it
is
possible
for
two
EWP
products
to
be
both
substitutes
and
complements.
This
is
particularly
true
for
W/
TJM's
products
because
they
sell
both
the
individual
products
and
entire
framing
systems
that
include
either
LSL
or
PSL,
or
both.

LSL
is
more
comparable
to
framing
lumber
and
solid
sawn
lumber
than
most
other
engineered
wood
products.
As
a
header
it
competes
with
LVL,
GL,
and
PSL.
However,
as
a
column
or
stud,
it
is
fairly
unique.
It
is
also
a
very
new
technology,
which
may
partially
explain
why
competing
firms
have
not
developed
comparable
products
to
date.
Furthermore,
LSL
is
marketed
as
a
complementary
product
to
W/
TJM's
other
engineered
wood
products
(
I­
J,
LVL,
PSL)
in
various
structures
they
design.

As
an
individual
product,
PSL
has
more
direct
substitutes
than
LSL.
In
shorter
spanning
applications
(
such
as
headers
or
floor
joists)
LVL,
I­
J,
GL,
or
LSL
can
be
substituted
for
each
other
depending
on
the
application.
In
longer
spanning
applications,
PSL
competes
with
GL
and
steel.
W/
TJM
also
designed
PSL
to
complement
their
other
products
in
pre­
designed
framing
systems.
If
an
architect
or
engineer
purchases
the
pre­
designed
framing
system,
PSL
will
be
specified
in
the
system.
This
eliminates
the
possibility
of
substitutes
in
these
applications.
These
characteristics
are
discussed
in
greater
detail
below.

4.6.4
Market
Characterization
The
EWP
sector
is
characterized
by
imperfect
competition
among
firms,
particularly.
In
the
case
of
LSL
and
PSL,
W/
TJM
is
a
monopoly
producer
because
it
operates
all
four
facilities
that
produce
products
affected
by
the
rule.
Although
a
number
of
other
products
can
be
substituted
for
both
LSL
and
PSL
at
the
commodity
level,
W/
TJM
has
a
monopoly
on
these
two
products.
In
addition,
they
have
some
ability
to
control
material
choice
within
the
residential
framing
market
because
they
produce
Computer
Automated
Design
(
CAD)
programs
used
by
architects,
engineers,
and
lumber
product
distribution
companies
to
design
structures.
The
individual
using
the
program
is
actually
purchasing
a
complete
architectural
design,
which
competes
with
other
architectural
designs
on
the
basis
of
total
design
cost.
Other
EWP
companies
have
not
developed
such
programs
to
the
same
extent
that
W/
TJM
has.

By
pre­
specifying
its
products
as
material
inputs
in
these
design
packages,
W/
TJM
assures
that
they
are
used
in
the
structure.
Moreover,
the
individual
product
prices
are
less
important
to
W/
TJM
because
the
price
the
buyer
using
the
program
is
concerned
with
is
the
price
of
the
whole
structure.
Further,
because
W/
TJM
makes
all
the
products
used
in
the
design,
they
can
sell
any
one
of
the
components
at
a
loss
provided
the
loss
is
made
up
by
profits
on
the
whole
structure.
In
addition,
W/
TJM
4­
21
also
sells
pre­
designed
floor,
roof,
and
wall
systems
that
incorporate
its
EWP
products.

Therefore,
W/
TJM
is
a
price
setter
in
both
these
markets.
The
high
price
of
PSL
allows
producers
of
comparable
GL
a
substantial
markup
over
its
costs.
However,
GL
manufacturers
offered
the
opinion
that
PSL
could
not
raise
its
price
without
suffering
a
loss
in
demand
.
Those
same
producers
believe
that
PSL
is
already
selling
at
a
loss
to
promote
the
sale
of
its
other
products,
although
this
information
cannot
be
confirmed.
Another
complicating
factor
is
the
purchase
of
TJM
by
Weyerhaeuser,
Inc.
Even
if
TJM
had
been
selling
PSL
at
a
loss,
Weyerhaeuser
may
not
be
willing
to
do
this,
particularly
if
costs
increase
due
to
the
NESHAP.

4.6.5
Appropriateness
of
Partial
Equilibrium
Economic
Analysis
for
the
EWP
Market
It
is
not
appropriate
to
use
a
partial
equilibrium
analysis
to
quantify
the
impact
of
the
rule
on
the
EWP
sector.
The
EWP
facilities
that
will
have
compliance
costs
due
to
the
rule
are
not
part
of
a
competitive
market.
W/
TJM
has
a
monopoly
on
both
PSL
and
LSL
because
they
are
the
only
company
in
the
world
producing
both
these
products.
Although
the
products
compete
to
an
extent
with
other
EWPs,
W/
TJM
is
able
to
use
its
market
power
to
influence
consumer
purchasing
decisions
and
prices.
Also,
W/
TJM
may
be
able
to
absorb
cost
increases
on
one
product
with
profits
from
another.

4.6.6
Analysis
The
estimated
total
annual
compliance
costs
for
the
three
impacted
EWP
facilities
are
$
3.2
million,
which
is
only
2.4
percent
of
the
overall
compliance
cost
of
the
rule
of
$
142
million
per
year.
Moreover,
the
costs
are
incurred
by
one
of
the
largest
wood
products
companies
in
the
world.
The
costs
incurred
by
W/
TJM
are
less
than
1
percent
the
corporation's
total
annual
revenues,
which
now
include
revenues
from
the
facilities
purchased
from
TJM.
Although
the
specific
impact
on
W/
TJM's
profitability
cannot
be
determined,
it
is
likely
that
W/
TJM
can
afford
the
costs
at
the
corporate
level.

The
Agency
cannot
be
certain
of
the
impact
that
these
cost
increases
will
have
on
the
markets
for
LSL
and
PSL.
W/
TJM
could
decide
use
their
price
setting
power
to
increase
the
price
of
PSL
and/
or
LSL.
This
could
lead
to
a
decrease
in
consumer
surplus.
However,
it
is
important
to
note
the
distributional
impact
of
this
potential
price
increase.
EWPs
are
often
used
in
high
end
residential
and
commercial
construction.
They
typically
provide
luxury
features,
such
as
squeak
proof
floors,
large
open
rooms
with
high
ceilings
and
no
support
columns.

Alternatively,
W/
TJM
may
choose
not
to
raise
the
prices
of
PSL
and
LSL.
For
example,
PSL
is
already
more
expensive
than
GL,
a
substitute
product.
A
rise
in
PSL
prices
could
lead
to
a
loss
in
market
share.
Furthermore,
production
data
showed
that
the
PSL
market
is
functioning
at
about
50
percent
of
its
full
capacity.
These
factors
indicate
that
a
PSL
price
increase
may
not
be
favorable
to
W/
TJM.
W/
TJM
could
choose
to
absorb
the
cost
increase
with
profits
from
its
other
products
in
the
short
run.
In
the
long
run
they
could
abandon
production
of
these
products.
In
order
to
meet
the
demand
for
their
pre­
designed
structural
systems,
they
could
either
produce
or
buy
a
substitute
product
to
use
in
the
structural
systems.

If
W/
TJM
chooses
to
shut
down
these
plants,
there
may
be
a
number
of
unfavorable
short
run
impacts.
First,
the
closures
could
mean
the
loss
of
600­
1250
jobs,
spread
over
three
communities.
EPA
expects
that
the
reduction
in
employment
at
these
facilities
would
be
offset
by
an
increase
in
employment
at
4­
22
a
competing
firm,
but
the
community
impacts
may
remain.

The
impact
of
the
NESHAP
on
both
consumers
and
the
individual
facilities
and
firms
will
depend
upon
corporate
strategy.
Given
the
acquisition
of
Trus
Joist
MacMillan
by
Weyerhaeuser,
corporate
decisions
and
long
term
strategy
are
more
influential
than
what
could
be
represented
in
a
model.

4.6.7
Conclusions
Although
the
specific
impacts
to
the
EWPs
sector
cannot
be
determined,
it
is
unlikely
that
substantial
economic
losses
will
result.
The
cost
burden
of
this
sector
is
minimal
in
comparison
to
the
other
sectors.
Furthermore,
the
affected
facilities
are
all
owned
by
W/
TJM,
which
has
sufficient
resources
to
handle
the
compliance
costs.
Even
if
W/
TJM
passes
this
cost
on
to
consumers,
the
price
increase
is
likely
to
be
minimal
as
substitute
products
are
available.
4­
23
4.7
References
Abt
Associates
Inc.
1999.
Profile
of
the
Plywood
and
Wood
Composite
Industries.
Prepared
for
Larry
Sorrels,
Innovative
Strategies
and
Economic
Group,
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.
December
Abt
Associates
Inc.
2000.
Economic
Analysis
Methodology
for
the
Plywood
and
Wood
Composite
Industries.
Prepared
for
Larry
Sorrels,
Innovative
Strategies
and
Economic
Group,
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.
March.

U.
S.
Environmental
Protection
Agency.
1998.
Industry
Specific
Information
Collection
Request
(
ICR)
for
the
Development
of
Plywood
and
Particleboard
Maximum
Achievable
Control
Technology
(
MACT)
Standards.
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.

U.
S.
Environmental
Protection
Agency.
1999a.
OAQPS
Economic
Analysis
Resource
Document.
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.

U.
S.
Environmental
Protection
Agency.
1999b.
Economic
Impact
Analysis
for
the
Polymers
&
Resins
III
NESHAP.
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.
5­
1
5
SMALL
BUSINESS
IMPACTS
Under
the
requirements
of
the
Regulatory
Flexibility
Act
(
RFA)
of
1980,
Federal
regulatory
agencies
must
give
special
consideration
to
small
entities
that
are
affected
by
regulatory
actions.
In
1996,
amendments
to
the
RFA
under
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
added
certain
requirements
associated
with
analyses
and
procedures
associated
with
determining
whether
a
regulatory
action
will
have
a
significant
impact
on
a
substantial
number
of
small
entities
(
U.
S.
EPA,
1999a,
1999b).

5.1
Results
in
Brief
The
screening
analysis
of
small
business
impacts
presented
in
this
EIA
chapter
indicates
that
17
of
the
83
businesses
affected
by
this
rule
are
small.
Of
these
17
small
firms,
ten
have
annual
compliance
costs
of
1
percent
or
greater
of
their
sales.
Of
these
10
firms,
three
have
annual
compliance
costs
of
3
percent
or
greater
of
their
sales.
Of
the
32
facilities
owned
by
these
17
small
firms,
only
one
facility
is
predicted
to
close
in
order
to
avoid
incurring
costs
associated
with
compliance
with
the
rule.
This
analysis
supports
a
certification
of
no
significant
impact
on
a
substantial
number
of
small
entities
(
SISNOSE)
for
this
rule
because,
while
a
few
small
firms
may
experience
significant
impacts,
there
will
not
be
a
substantial
number
incurring
such
a
burden.

The
small
business
impacts
depending
on
the
eligibility
of
sources
to
become
part
of
a
delisted
lowrisk
subcategory
can
be
found
in
Appendix
A
of
this
RIA.

5.2
Introduction
The
NESHAP
for
the
plywood
and
composite
wood
industries
will
affect
the
owners
of
the
facilities
that
will
incur
compliance
costs
to
control
their
HAP
emissions.
The
owners,
either
firms
or
individuals,
are
the
entities
that
will
bear
the
financial
impacts
associated
with
these
additional
operating
costs.
The
rule
has
the
potential
to
impact
all
firms
owning
affected
facilities,
both
large
and
small.
This
section
presents
the
results
of
EPA's
small
business
impact
analysis
of
the
impact
the
NESHAP
for
the
Plywood
and
Composite
Wood
Industries
on
small
businesses.
The
analysis
was
performed
in
two
stages:
a
screening­
level
analysis,
and
an
examination
of
impacts
on
small
businesses
developed
using
the
models
described
in
Chapter
4.

The
screening
analysis
provides
EPA
with
a
preliminary
estimate
of
the
magnitude
of
impacts
the
NESHAP
may
have
on
the
ultimate
domestic
parent
companies
that
own
facilities
EPA
expects
to
be
impacted
by
the
standard.
The
analysis
focused
on
small
firms
because
they
may
have
more
difficulty
complying
with
a
new
regulation
or
affording
the
costs
associated
with
meeting
the
new
standard.
This
section
first
describes
the
data
sources
used
in
the
screening
analysis,
the
methodology
we
applied
to
develop
estimates
of
impacts,
the
results
of
the
analysis,
and
conclusions
about
the
results.
The
results
of
5­
2
the
impact
assessment
specific
to
small
businesses
that
own
affected
facilities
follows.
Detailed
documentation
of
the
screening
analysis
presented
in
this
section
is
contained
in
the
economic
impact
analysis
(
EIA).

5.3
Screening
Analysis
Data
Sources
The
screening
analysis
was
based
on
the
following
information:

°
Industry
Specific
Information
Request
(
ICR)
for
the
Development
of
Plywood
and
Particleboard
MACT
Standards
(
U.
S.
EPA,
1998).
°
Profile
of
the
Plywood
and
Composite
Wood
Products
Industries
(
Abt
Associates,
January
2000).
°
Estimated
Nationwide
Costs
of
Control:
Plywood
and
Composite
Wood
Products
(
MRI,
April
14,
2000).
°
Dun
&
Bradstreet,
Ward's
Business
Directory,
and
Internet
research
on
facility
and
firm
employment
and
sales.

5.4
Screening
Analysis
Methodology
Cost
Analysis
After
summing
annual
compliance
costs
for
each
affected
facility
associated
with
a
given
parent
firm,
EPA
developed
ratios
of
firm­
level
compliance
costs
to
firm­
level
sales.
The
preparation
of
cost
to
sales
ratios
is
a
typical
part
of
screening
analyses
such
as
this
one.
The
analysis
incorporated
firm
level
compliance
costs
from
the
most
recent
facility
compliance
cost
estimates
for
all
affected
facilities.
The
firm
sales
data
for
the
majority
of
the
firms
with
affected
facilities
was
obtained
through
a
search
of
the
Dun
&
Bradstreet
(
D&
B)
company
database.
The
information
obtained
from
D&
B
was
supplemented
with
data
from
firm
web
sites
and
several
other
business
databases
available
through
the
Internet
(
e.
g.,
Zapdata,
Hoover's
Online,
Thomas'
Register,
and
Lycos
Companies
Online).

Profitability
Analysis
For
the
second
step
in
the
screening
analysis,
EPA
reviewed
the
profitability
of
only
those
firms
with
affected
facilities
with
a
cost
to
sales
ratio
(
C/
S)
greater
than
1
percent.
Specifically,
EPA
examined
a
measure
of
profitability
called
the
net
profit
margin,
also
known
as
the
return
on
sales
ratio
(
R/
S),
calculated
by
dividing
net
profit
after
taxes
by
annual
net
sales.
Profitability
data
is
not
publicly
available
for
those
affected
firms
with
cost
/
sales
ratios
greater
than
1
percent
because
they
are
all
privately
held
firms.
EPA
estimated
profitability
according
to
industry­
wide
average
profitability
measures
available
5­
3
from
public
sources.
Exhibit
5­
1
presents
the
profitability
measure
of
R/
S
by
product
category.

Exhibit
5­
1:
Net
Profit
Margins
by
Product
Type
Product
Category
1997
Return
on
Sales
Ratio
Softwood,
Plywood,
and
Veneer
1.7
Oriental
Strandboard
3.5
Other
Wood
Composites
3.5
Engineered
Wood
Products*
5.0
Multiple
Processes**
2.6
Notes:
Source:
Dun
&
Bradstreet
(
1999).
Indicator
values
are
based
on
median
values
of
the
industrial
sample.
*
Includes
1998
data
for
Structural
Wood
Members,
the
only
data
reported
for
this
sector.
**
Firms
with
multiple
product
lines
were
assigned
an
R/
S
ratio
based
on
the
average
of
the
R/
S
ratios
for
firms
with
Softwood
Plywood
and
Other
Wood
Composite
product
lines.

5.5
Screening
Analysis
Assumptions
Because
there
were
certain
gaps
in
the
data,
EPA
had
to
make
assumptions
regarding
some
affected
firms'
employment
and
sales
data
as
follows.

°
For
those
affected
facilities
for
which
no
parent
company
data
were
available,
EPA
assumed
that
the
facility
represents
the
ultimate
parent.
EPA
then
assumed
that
the
employees
or
the
sales
associated
with
the
facility
were
the
same
for
the
parent
firm.
°
For
8
affected
firms
for
which
Dun
&
Bradstreet,
Ward's,
or
Internet
sales
data
was
not
available
at
the
firm
or
facility
level,
EPA
applied
a
sales
estimate
based
on
the
average
sales
for
firms
in
the
same
product
and
employee
size
category.
°
For
one
affected
firm,
EPA
obtained
employment
information
for
all
three
of
its
identified
facilities
and
sales
information
for
two
of
the
three.
EPA
extrapolated
the
sales
data
on
a
dollar
per
employee
basis
from
the
two
facilities
with
complete
data
to
the
facility
with
only
employment
data
and
added
those
sales
to
estimate
the
firm's
total
sales.

5.6
Screening
Analysis
Results
Cost
Analysis
Based
on
the
results
of
the
C/
S
ratio
test,
EPA
developed
the
following
summary
information.

°
The
total
number
and
percent
of
affected
firms
with
C/
S
ratios
greater
than
3
percent.
°
The
total
number
and
percent
of
affected
small
firms
with
C/
S
ratios
greater
than
3
percent.
°
The
total
number
and
percent
of
affected
firms
with
C/
S
ratios
greater
than
1
percent.
9Medium
density
fiberboard,
hardboard,
conventional
particle
board
and
molded
particleboard.

10Firms
categorized
according
to
the
process
types
associated
with
the
affected
facilities.
Firms
owing
facilities
with
more
than
one
process
type
were
assigned
to
the
"
Multiple
Processes"
category.

5­
4
°
The
total
number
and
percent
of
affected
small
firms
with
C/
S
ratios
greater
than
1
percent.
°
The
median
and
mean
C/
S
ratios
for
the
following
groups
of
firms:
°
All
firms.
°
Small
firms.
°
Firms
owning
affected
softwood
plywood
and
veneer
facilities.
°
Firms
owning
affected
oriented
strand
board
facilities.
°
Firms
owning
affected
other
wood
composite
products
facilities.
9
°
Firms
owning
affected
engineered
wood
product
facilities.
°
Firms
owning
affected
facilities
that
make
multiple
products.

The
screening
analysis
showed
that
of
the
52
firms
that
own
facilities
incurring
both
capital
and
monitoring,
recordkeeping
,
and
reporting
(
MRR
costs),
17
of
them
(
33
percent)
are
small
firms
according
to
the
U.
S.
Small
Business
Administration's
"
Small
Business
Size
Standards
Matched
to
NAICS
Codes"
(
U.
S.
SBA,
2000).
Small
firms
with
affected
facilities
had
a
median
C/
S
of
1.22
percent.
The
remaining
35
firms
(
67
percent)
are
large,
with
a
median
C/
S
ratio
of
0.33
percent.
Overall,
the
weighted
median
C/
S
ratio
for
all
firms
is
0.62
percent.
Exhibit
5­
2
summarizes
this
information,
along
with
the
mean,
maximum
and
minimum
C/
S
by
firm
size
category.

Exhibit
5­
2:
Affected
Firms
by
Size
Firm
Size1
Number
of
Affected
Firms2
Percent
of
Total
Affected
Firms
Median
C/
S
Ratio
Mean
C/
S
Ratio
Maximum
C/
S
Ratio
Minimum
C/
S
Ratio
Small
17
33.0%
1.2%
2.3%
8.3%
0.53%

Large
35
67.0%
0.3%
0.6%
5.1%
0.01%

Total/
Weighted
Average
52
100.0%
0.6%
1.2%
8.3%
0.01%

Notes:
1For
those
firms
for
which
firm
size
information
was
not
available,
EPA
assumed
a
typical
firm
size
within
the
product
type
category.
2Based
on
affected
facilities
only.
Includes
the
firm
that
has
capital
costs
but
no
annual
costs.

When
screened
by
process
type,
10
EPA
found
that
the
affected
softwood
plywood
and
veneer
firms
(
40
percent
of
all
firms),
other
composite
wood
firms
(
25
percent
of
all
firms)
and
firms
with
multiple
5­
5
processes
(
29
percent
of
all
firms)
make
up
the
majority
of
affected
firms.
The
firms
owning
facilities
that
produce
softwood
plywood
have
the
highest
median
C/
S
ratio,
0.82
percent,
followed
by
the
owners
of
other
composite
wood
facilities,
with
a
mean
C/
S
ratio
of
0.41
percent.
See
Exhibit
5­
3
for
a
summary
of
the
data
by
process
type,
including
mean,
maximum
and
minimum
C/
S
ratios.

Exhibit
5­
3:
Affected
Firms
by
Process
Type
Process
Type1
Number
of
Affected
Firms3
Percent
of
Total
Affected
Firms
Median
C/
S
Ratio
Mean
C/
S
Ratio
Maximum
C/
S
Ratio
Minimum
C/
S
Ratio
Softwood
Plywood/
Veneer
21
40.4%
0.8%
1.1%
8.3%
0.01%

Oriented
Strand
Board
3
5.8%
0.2%
0.7%
1.9%
0.01%

Other
Wood
Composites2
13
25.0%
0.4%
2.1%
8.2%
0.03%

Engineered
Wood
Products
0
0.0%
n/
a
n/
a
n/
a
n/
a
Multiple
Processes
15
28.8%
0.4%
0.6%
2.0%
0.01%

Total/
Weighted
Average3
52
100.0%
0.6%
1.2%
8.3%
0.01%

Notes:
1Firms
categorized
according
to
the
process
types
associated
with
the
affected
facilities.
Firms
owing
facilities
with
more
than
one
process
type
were
assigned
to
the
"
Multiple
Processes"
category.
2Includes
Medium
Density
Fiberboard,
Hardboard,
and
Particleboard
(
conventional
and
molded).
3Based
on
affected
facilities
only
(
facilities
incurring
capital
and
MRR
costs).
Includes
one
firm
that
has
capital
costs
but
no
annual
costs.

Of
the
four
firms
with
C/
S
ratios
of
3
percent
or
greater,
three
are
small.
Ten
small
firms
have
C/
S
ratios
of
one
percent
or
greater
out
of
16
in
this
category.
One
large
firm
has
a
C/
S
ratio
of
3
percent
or
greater
and
six
of
them
have
C/
S
ratios
of
one
percent
or
greater.
The
other
wood
composite
category
has
the
most
firms
with
C/
S
ratios
of
3
percent
or
greater
(
three
out
of
the
four).
The
softwood
plywood
has
seven
firms
followed
by
other
wood
composites
with
five
firms
with
C/
S
ratios
of
one
percent
or
greater
(
out
of
16).
The
C/
S
screening
results
are
presented
in
Exhibits
4
and
5,
below.
These
tables
also
compare
the
number
of
affected
firms
(
i.
e.,
firms
with
facilities
incurring
only
MRR
costs
as
well
as
those
incurring
capital
and
MRR
costs)
to
the
estimated
total
number
of
firms
nationally.
5­
6
Exhibit
5­
4:
Affected
Firms
with
C/
S
Ratios
of
3
Percent
or
Greater
Category
Number
of
Firms
Nationwide*
Number
of
Affected
Firms
Firms
as
a
Percent
of
National
Firms
Firms
as
a
Percent
of
Affected
Firms
Firm
Size
Small
38
3
7.9%
17.6%

Large
42
1
2.4%
2.9%

Undetermined
3
n/
a
n/
a
n/
a
Total/
Weighted
Average
83
4
4.8%
7.7%

Process
Type
Softwood
Plywood/
Veneer
30
1
3.3%
??

Oriented
Strand
Board
2
0
0.0%
??

Other
Wood
Composites
19
3
15.8%
??

Engineered
Wood
Products
11
n/
a
n/
a
n/
a
Multiple
Processes
21
0
0.0%
??

Total/
Weighted
Average
83
4
4.8%
7.7%

Notes:
See
notes
to
Exhibits
5­
2
and
5­
3
above.
*
Estimate.
11
That
is,
firms
with
C/
S
ratios
greater
than
one
percent.

5­
7
Exhibit
5­
5:
Affected
Firms
with
C/
S
Ratios
of
1
Percent
or
Greater
Category
Number
of
Firms
Nationwide*
Number
of
Firms
Firms
as
a
Percent
of
National
Firms
Firms
as
a
Percent
of
Affected
Firms
by
Category
Firm
Size
Small
38
10
26.3%
58.8%

Large
42
6
14.3%
17.1%

Undetermined
3
n/
a
n/
a
n/
a
Total/
Weighted
Average
83
16
19.3%
30.8%

Process
Type
Softwood
Plywood/
Veneer
30
7
23.3%
??

Oriented
Strand
Board
2
1
50.0%
??

Other
Wood
Composites
19
5
26.3%
??

Engineered
Wood
Products
11
0
0.0%
n/
a
Multiple
Processes
21
3
14.3%
??

Total/
Weighted
Average
83
16
19.3%
??

Notes:
See
notes
to
Exhibits
5­
2
and
5­
3
above.
*
Estimate.
In
a
few
cases,
a
firm's
process
type
changed
when
all
facilities
were
taken
into
account.

Profitability
Analysis
Based
on
the
results
of
the
profitability
analysis
performed
as
described
above,
EPA
developed
the
following
information.

°
The
total
number
and
percent
of
affected
firms11
whose
C/
S
ratio:
1)
exceeds
their
profitability
ratio
by
50
percent
or
more;
2)
is
between
zero
and
50
percent;
or
3)
is
less
than
or
equal
to
their
profitability
ratio.
°
The
total
number
and
percent
of
affected
small
firms
whose
C/
S
ratio:
1)
exceeds
their
profitability
ratio
by
50
percent
or
more;
2)
is
between
zero
and
50
percent;
or
3)
is
less
than
or
equal
to
their
profitability
ratio.

When
EPA
compared
the
C/
S
ratio
to
the
R/
S
ratio
for
those
firms
with
C/
S
ratios
greater
than
one
percent,
EPA
found
that
in
14
of
the
16
cases,
the
C/
S
ratio
exceeded
the
R/
S
by
over
50
percent.
Two
firms'
C/
S
ratio
exceeded
their
R/
S
ratio
by
between
zero
and
50
percent.
Exhibit
5­
6
presents
these
12Research
indicates
that
one
of
the
small
firms
with
particularly
high
impacts,
Dominance
Industries
(
d.
b.
a.
Pan
Pacific
Products)
is
a
single
location
private
corporation
owned
Philip
Ling.
However,
Dr.
Ling
is
also
the
owner
of
a
group
of
companies
around
the
world
and
is
the
chairman
of
Malaysian­
based
Pan
Pacific
Asia
Berhad,
an
investment
holding
company
that
also
provides
management
services.
Pan
Pacific
Asia's
1998
sales
were
$
88
million
(
U.
S.).
The
group
manufactures
and
distributes
timber
logs
and
timber
moldings.
Other
activities
of
the
company
are
stockbroking
and
investment
holding.
While
this
information
is
not
necessarily
applicable
to
the
ultimate
domestic
parent
of
Dominance
Industries'
affected
facility,
is
indicates
that
the
facility's
owner
has
access
to
financial
capital
beyond
what
the
sales
from
the
facility
generate.

5­
8
results
in
tabular
form.

Exhibit
5­
6:
C/
S
to
R/
S
comparison
for
firms
with
C/
S
of
one
percent
or
greater
C/
S
exceeds
R/
S
by
over
50
percent
C/
S
exceeds
R/
S
by
between
0
and
50
percent
C/
S
is
less
than
or
equal
to
R/
S
Firm
Size
Number
of
Firms
Percent
of
Total
Firms
with
Costs
Number
of
Firms
Percent
of
Total
Firms
with
Costs
Number
of
Firms
Percent
of
Total
Firms
with
Costs
Small
10
??
1
??
0
n/
a
Large
4
??
1
??
0
n/
a
Total/
Weighted
Average
14
??
2
??
0
n/
a
Notes:
See
notes
to
Exhibits
5­
2
and
5­
3
above.

EPA
focused
its
review
of
the
results
for
the
16
firms
with
C/
S
ratios
greater
than
one
percent.
For
4
of
the
10
small
firms
in
this
category,
no
sales
data
were
available.
EPA
developed
sales
estimates
for
these
firms
according
to
the
average
sales
for
firms
with
the
same
number
of
employees
in
the
same
product
category.
It
is
possible
that
in
reality,
these
firms
have
parent­
level
sales
that
differ
from
those
assumed
in
the
current
analysis.
However,
based
on
extensive
research
into
domestic
parent­
level
employment
and
sales
data,
EPA
expects
that
this
information
is
not
publicly
available
for
these
firms.
12
For
the
remaining
6
small
firms
with
C/
S
ratios
greater
than
one
percent,
EPA
assumed
that
the
domestic
parent
firm
sales
information
obtained
from
D&
B,
Wards,
or
the
other
Internet
sources
are
reliable
for
the
purpose
of
this
analysis.

EPA
assumed
that
the
firm
size
and
sales
data
are
reliable
for
5
of
the
6
large
firms
with
C/
S
ratios
greater
than
1
percent.
One
firm,
Sierra
Pine
(
a
California
Limited
Partnership),
should
be
regarded
as
a
special
case.
Sierra
Pine
recently
purchased
three
affected
facilities
from
Weyerhaeuser,
greatly
increasing
the
total
costs
associated
with
Sierra
Pine.
However,
Sierra
Pine's
sales
data
is
from
a
query
of
D&
B
data
performed
in
late
1999.
As
a
result,
the
sales
associated
with
recent
acquisition
of
the
three
plants
are
not
reflected
in
Sierra
Pine's
sales
data.
If,
for
instance,
Sierra
Pine's
total
compliance
costs
were
prorated
to
exclude
the
costs
attributed
to
the
plants
previously
owned
by
Weyerhaeuser,
Sierra
Pine's
C/
S
would
5­
9
change
from
4.9
percent
to
1.7
percent.

EPA
also
tested
the
sales
estimates
applied
to
large
firms.
The
one
large
firm
for
which
EPA
assumed
sales
had
a
C/
S
ratio
well
below
one
percent.
In
this
case,
the
firm's
actual
sales
would
have
to
be
approximately
half
of
the
assumed
sales
in
order
for
the
firm's
C/
S
ratio
to
exceed
one
percent.
EPA
believes
that
while
the
assumed
sales
are
potentially
higher
than
the
actual
sales
of
this
firm,
it
is
less
likely
that
the
firm
has
actual
sales
that
would
result
in
a
C/
S
ratio
over
one
percent.

EPA
used
industry­
wide
measures
of
profitability
because
such
information
is
not
available
for
privately
held
firms.
Because
all
the
affected
firms
with
C/
S
ratios
above
one
percent
are
privately
held,
firm­
specific
information
regarding
R/
S
is
not
publicly
available.
If
firm
specific
profitability
measures
were
available,
it
is
likely
that
a
comparison
of
firms'
C/
S
ratio
to
their
R/
S
ratio
would
produce
significantly
different
results.
It
should
be
noted
that
while
overall
industry
return
on
sales
may
be
low,
it
is
not
necessarily
the
case
for
any
given
firm.

All
ten
small
firms
with
C/
S
ratios
of
one
percent
or
greater
had
a
C/
S
ratio
that
exceeded
the
industry
profitability
measure
of
return
on
sales.
For
the
three
small
firms
whose
C/
S
ratios
were
three
percent
or
greater,
the
comparison
of
compliance
costs
and
profitability
measures
showed
that
their
C/
S
ratios
exceeded
the
industry
R/
S
by
over
100
percent.
This
divergence
between
the
C/
S
ratios
for
these
firms
and
the
industry
R/
S
is
an
indicator
that
these
three
firms
may
experience
high
impacts
as
a
result
of
incurring
the
costs
of
compliance
associated
with
the
rule.
However,
the
results
of
the
economic
impact
analysis
show
that
the
affected
facilities
owned
by
these
firms
will
continue
to
operate
after
controls
have
been
applied
to
comply
with
the
rule.
Therefore,
the
impact
on
these
firms,
while
relatively
high,
are
not
enough
to
lead
them
to
cease
operations
at
these
facilities.

5.7
Screening
Analysis
Conclusions
The
Regulatory
Flexibility
Act
(
RFA)
generally
requires
an
agency
to
prepare
a
regulatory
flexibility
analysis
of
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
agency
certifies
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Small
entities
include
small
businesses,
small
organizations,
and
small
governmental
jurisdictions.

For
purposes
of
assessing
the
impacts
of
today's
rule
on
small
entities,
small
entity
is
defined
as:
(
1)
a
small
business
according
to
Small
Business
Administration
size
standards
by
5­
digit
NAICS
code
of
the
domestic
parent
owning
entity
(
in
this
case,
500
employees);
(
2)
a
small
governmental
jurisdiction
that
is
a
government
of
a
city,
county,
town,
school
district
or
special
district
with
a
population
of
less
than
50,000;
and
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
which
is
independently
owned
and
operated
and
is
not
dominant
in
its
field.

After
considering
the
economic
impact
of
today's
rule
on
small
entities,
we
certify
that
this
action
5­
10
will
not
have
a
significant
impact
on
a
substantial
number
of
small
entities.
In
accordance
with
the
RFA,
we
conducted
an
assessment
of
the
standard
on
small
businesses
in
the
industries
affected
by
the
rule.
Based
on
SBA
size
definitions
for
the
affected
industries
and
reported
sales
and
employment
data,
the
Agency
identified
17
of
the
52
companies,
or
32
percent,
owning
affected
facilities
as
small
businesses.
These
facilities
incur
capital
and
MRR
costs
associated
with
the
rule.
There
31
other
firms
that
only
incur
MRR
costs;
and
all
of
these
firms
are
small.
Although
small
businesses
represent
32
percent
of
the
affected
companies
within
the
source
category,
they
are
expected
to
incur
only
6
percent
of
the
total
industry
compliance
costs
of
$
143
million.
There
are
only
three
small
firms
with
compliance
costs
equal
to
or
greater
than
3
percent
of
their
sales.
In
addition,
there
are
seven
small
firms
with
cost­
to­
sales
ratios
between
1
and
3
percent.

We
performed
an
economic
impact
analysis
to
estimate
the
changes
in
product
price
and
production
quantities
for
the
firms
affected
by
this
rule.
The
analysis
shows
that
of
the
32
facilities
owned
by
affected
small
firms,
only
one
would
be
expected
to
shut
down
rather
than
incur
the
cost
of
compliance
with
the
rule.
Although
any
facility
closure
is
cause
for
concern,
it
should
be
noted
that
the
baseline
economic
condition
of
the
facilities
predicted
to
close
affects
the
closure
estimate
provided
by
the
economic
model.
Facilities
which
are
already
experiencing
adverse
economic
conditions
for
reasons
unconnected
to
this
rule
are
more
vulnerable
to
the
impact
of
any
new
costs
than
those
that
are
not.

This
analysis
indicates
that
therule
should
not
generate
a
significant
impact
on
a
substantial
number
of
small
entities
for
the
coatings
manufacturing
source
category
for
the
following
reasons.
First,
of
the
10
small
firms
that
have
compliance
costs
greater
than
1
percent
of
sales,
only
3
have
compliance
costs
of
greater
than
3
percent
of
sales.
Second,
the
results
of
the
economic
impact
analysis
show
that
only
1
facility
owned
by
a
small
firm
out
of
the
32
facilities
owned
by
affected
small
firms
may
close
due
to
the
implementation
of
this
rule.
The
facility
that
may
close
rather
than
incur
the
cost
of
compliance
appear
to
have
low
profitability
levels
currently.
It
also
should
be
noted
that
the
estimate
of
compliance
costs
for
this
facility
is
likely
to
be
an
overestimate
due
to
the
lack
of
facility­
specific
data
available
to
assign
a
precise
control
cost
in
this
case.
In
sum,
this
analysis
supports
today's
certification
under
the
RFA
because,
while
a
few
small
firms
may
experience
significant
impacts,
there
will
not
be
a
substantial
number
incurring
such
a
burden.

Although
this
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities,
we
minimized
the
impact
of
this
rule
on
small
entities
in
several
ways.
First,
we
considered
subcategorization
based
on
production
and
throughput
level
to
determine
whether
smaller
process
units
would
have
a
different
MACT
floor
than
larger
process
units.
Our
data
show
that
subcategorization
based
on
size
would
not
result
in
a
less
stringent
level
of
control
for
the
smaller
process
units.
Second,
in
light
of
cost
considerations,
we
chose
to
set
the
emission
limitation
at
the
MACT
floor
control
level
and
not
at
a
control
level
more
stringent
than
the
MACT
floor
control
level.
Thus,
the
control
level
specified
in
the
PCWP
rule
is
the
least
stringent
allowed
by
the
CAA.
Third,
the
rule
contains
multiple
compliance
options
to
provide
facilities
with
the
flexibility
to
comply
in
the
least
costly
manner
while
maintaining
a
workable
and
enforceable
rule.
The
compliance
options
include
emissions
averaging
and
production­
based
emission
limits
which
allow
inherently
low­
emitting
process
units
to
comply
without
installing
add­
on
control
devices
and
facilities
to
use
innovative
technology
and
pollution
prevention
methods.
Fourth,
the
rule
includes
5­
11
multiple
test
method
options
for
measuring
methanol,
formaldehyde,
and
total
HAP.

5.8
Economic
Impact
Analysis
Results
for
Small
Businesses
Exhibit
5­
7
provides
a
summary
of
the
economic
impact
on
small
businesses
associated
with
the
estimated
market
adjustments
due
to
compliance
with
the
NESHAP.
As
shown,
the
Agency's
economic
analysis
indicates
that
the
17
small
businesses
that
own
18
affected
process
lines
will
be
affected
as
follows:

Exhibit
5­
7:
Economic
Impacts
on
Small
Businesses
Associated
with
Projected
Market
Adjustments*

Changes
from
Baseline
Baseline
With
Regulation
Absolute
Percent
Revenues
($
thousands/
yr)**
394,393
387,229
7,164
­
1.82
Production
(
million
m3/
yr)
1,791,408
1,737,969
53,439
­
2.98
Compliance
Costs
($
thousands/
yr)
0
9,194
9,194
n/
a
Operating
Process
Lines
18
17
1
­
5.56
Employment
loss
(
FTEs)
3,621
3,513
108
­
2.98
Notes:
*
Does
not
include
small
businesses
that
own
facilities
with
MRR
costs
only.
**
Estimated
using
production
and
price
data
in
economic
impact
model
FTEs
=
full­
time
equivalents
The
one
process
line
closure
predicted
by
the
economic
impact
model
is
owned
by
a
small
business.
This
results
in
a
5.6
percent
decrease
in
the
number
of
process
lines
owned
by
small
business.
Overall,
the
small
businesses'
revenues
decrease
by
just
under
2
percent,
their
production
decreases
by
just
under
3
percent,
and
their
total
employment
decreases
by
just
under
3
percent,
or
108
FTEs.
The
estimate
of
employment
loss
assumes
that
the
production
per
employee
at
the
affected
facilities
owned
by
small
firms
is
the
same
as
the
industry
average.
5­
12
5.9
References
Abt
Associates
Inc.
2000a.
Small
Business
Screening
Analysis
for
the
Plywood
and
Wood
Composite
Industries:
Revised
Draft.
Prepared
for
Larry
Sorrels,
Innovative
Strategies
and
Economic
Group,
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.
June.

Abt
Associates
Inc.
2000b.
Corporate
employment
and
sales
data
collected
through
Internet
business
information
resources,
including
Dun
&
Bradstreet,
Hoover's
On­
line,
Lycos
Companies
On­
line,
Thomas'
Register,
Ward's
Business
Directory,
and
Zapdata.
com.

Abt
Associates
Inc.
1999.
Profile
of
the
Plywood
and
Wood
Composite
Industries.
Prepared
for
Larry
Sorrels,
Innovative
Strategies
and
Economic
Group,
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.
December.

Midwest
Research
Institute.
1999.
Memorandum
from
Becky
Nicholson
and
Melissa
Icenhour
to
Mary
Tom
Kissell
and
Larry
Sorrels,
U.
S.
EPA:
"
Preliminary
facility­
specific
cost
estimates
for
implementation
of
the
plywood
and
composite
wood
products
NESHAP."
October
20.

Midwest
Research
Institute.
2000.
"
Estimated
Nationwide
Costs
of
Control:
Plywood
and
Wood
Composite
Products."
April
14.

U.
S.
Environmental
Protection
Agency.
1998.
Industry
Specific
Information
Collection
Request
(
ICR)
for
the
Development
of
Plywood
and
Particleboard
Maximum
Achievable
Control
Technology
(
MACT)
Standards.
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.

U.
S.
Environmental
Protection
Agency.
1999a.
OAQPS
Economic
Analysis
Resource
Document.
Air
Quality
Strategies
and
Standards
Division,
Office
of
Air
Quality
Planning
and
Standards,
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC.

U.
S.
Small
Business
Administration.
2000.
"
Small
Business
Size
Standards
Matched
to
NAICS
Codes."
5­
13
6­
14
6
QUALITATIVE
ASSESSMENT
OF
BENEFITS
OF
EMISSION
REDUCTIONS
The
emission
reductions
achieved
by
this
environmental
regulation
will
provide
benefits
to
society
by
improving
environmental
quality.
This
chapter
provides
information
on
the
types
and
levels
of
social
benefits
anticipated
from
the
plywood
and
composite
wood
products
(
PCWP)
NESHAP,
including
the
health
and
welfare
effects
associated
with
the
HAPs
and
other
pollutants
emitted
by
affected
sources.

In
general,
the
reduction
of
HAP
emissions
resulting
from
the
regulation
will
reduce
human
and
environmental
exposure
to
these
pollutants
and
thus,
reduce
potential
adverse
health
and
welfare
effects.
This
chapter
provides
a
general
discussion
of
the
various
components
of
total
benefits
that
may
be
gained
from
a
reduction
in
HAPs
through
this
NESHAP.
The
rule
will
also
achieve
reductions
of
coarse
particulate
matter
(
PM10),
volatile
organic
compounds
(
VOC),
and
carbon
monoxide
(
CO).
There
will
also
be
emissions
increases
in
nitrogen
oxides
(
NOx)
and
sulfur
dioxide
(
SO2)
associated
with
the
use
of
incineration­
based
controls.
The
benefits
and
disbenefits
of
the
PM,
NOx,
and
SO2
emissions
reductions
and
increases
are
presented
separately
from
the
benefits
associated
with
HAPs
and
CO.
The
benefits
and
disbenefits
associated
with
PM,
NOx,
and
SO2,
along
with
the
benefits
associated
with
HAPs
and
CO
are
presented
in
this
chapter.

6.1
Identification
Of
Potential
Benefit
Categories
The
benefit
categories
associated
with
the
emission
reductions
predicted
for
this
regulation
can
be
broadly
categorized
as
those
benefits
which
are
attributable
to
reduced
exposure
to
HAPs,
which
are
also
VOCs,
and
those
attributable
to
reduced
exposure
to
other
pollutants.
Some
of
the
HAPs
associated
with
this
regulation
have
been
classified
as
probable
or
possible
human
carcinogens.
As
a
result,
one
of
the
benefits
of
the
regulation
is
a
reduction
in
the
risk
of
cancer.
Other
benefit
categories
include:
reduced
incidence
of
neurological
effects
and
irritants
associated
with
exposure
to
noncarcinogenic
HAPs,
reduced
incidence
of
cardiovascular
and
central
nervous
system
problems
associated
with
CO.
In
addition
to
6­
15
health
impacts
occurring
as
a
result
of
reductions
in
HAP
and
CO
emissions,
there
are
welfare
impacts
which
can
also
be
identified.
In
general,
welfare
impacts
include
effects
on
crops
and
other
plant
life,
materials
damage,
soiling,
and
acidification
of
estuaries.
Each
category
is
discussed
separately
in
the
following
section.

6.2
Qualitative
Description
Of
Air
Related
Benefits
­
HAPs
and
CO
The
operation
of
plywood
and
composite
wood
product
sources
produces
emissions
of
acetaldehyde,
acrolein,
benzene,
formaldehyde,
manganese,
methanol,
methylene
chloride,
and
phenol.
The
qualitative
health
and
welfare
benefits
of
these
HAPs,
and
CO
reductions
are
summarized
separately
in
the
discussions
below.

6.2.1
Benefits
of
Reducing
HAP
Emissions
According
to
emission
estimates,
the
regulation
will
reduce
approximately
11,000
tons
of
emissions
of
HAPs
such
as
acetaldehyde,
acrolein,
benzene,
formaldehyde,
manganese,
methanol,
methylene
chloride,
and
phenol
at
all
affected
plywood
and
composite
wood
products
sources.

Human
exposure
to
these
HAPs
may
occur
directly
through
inhalation
or
indirectly
through
ingestion
of
food
or
water
contaminated
by
HAPs
or
through
dermal
exposure.
HAPs
may
also
enter
terrestrial
and
aquatic
ecosystems
through
atmospheric
deposition.
HAPs
can
be
deposited
on
vegetation
and
soil
through
wet
or
dry
deposition.
HAPs
may
also
enter
the
aquatic
environment
from
the
atmosphere
via
gas
exchange
between
surface
water
and
the
ambient
air,
wet
or
dry
deposition
of
particulate
HAPs
and
particles
to
which
HAPs
adsorb,
and
wet
or
dry
deposition
to
watersheds
with
subsequent
leaching
or
runoff
to
bodies
of
water.
1
This
analysis
is
focused
only
on
the
air
quality
benefits
of
HAP
reduction.

6.2.1.1
Health
Benefits
of
Reduction
in
HAP
Emissions.

The
HAP
emission
reductions
achieved
by
this
rule
are
expected
to
reduce
exposure
to
ambient
concentrations
of
acetaldehyde,
acrolein,
benzene,
formaldehyde,
manganese,
methanol,
methylene
chloride,
and
phenol,
which
will
reduce
a
variety
of
adverse
health
effects
considering
both
cancer
and
noncancer
endpoints.
Acrolein
is
classified
as
a
possible
human
carcinogen,
according
to
the
Integrated
Risk
Information
System
(
IRIS)
2,
an
EPA
system
for
classifying
chemicals
by
cancer
risk.
This
means
that
there
is
some
evidence
to
indicate
that
exposure
to
this
chemical
could
cause
an
increased
risk
of
cancer
in
humans.
Acrolein
may
also
cause
general
respiratory
congestion
and
upper
respiratory
tract
irritation.
Formaldehyde
and
acetaldehyde
are
classified
as
probable
human
carcinogens,
according
to
IRIS.
Therefore,
a
reduction
in
human
exposure
to
acrolein,
formaldehyde,
and
acetaldehyde
could
lead
to
a
decrease
in
cancer
risk
and
ultimately
to
a
decrease
in
cancer
mortality.

The
remaining
HAP
emitted
by
plywood
and
composite
wood
products
sources,
phenol
and
methanol,
have
not
been
shown
to
cause
cancer.
However,
exposure
to
these
pollutants
may
still
result
in
adverse
health
impacts
to
human
and
non­
human
populations.
In
particular,
methanol
has
been
shown
to
be
an
irritant
causing
dizziness,
headaches,
and
slight
visual
impairment.

For
the
HAPs
covered
by
the
NESHAP,
evidence
on
the
potential
toxicity
of
the
pollutants
varies.
6­
1
However,
given
sufficient
exposure
conditions,
each
of
these
HAPs
has
the
potential
to
elicit
adverse
health
or
environmental
effects
in
the
exposed
populations.
It
can
be
expected
that
emission
reductions
achieved
through
the
NESHAP
will
decrease
the
incidence
of
these
adverse
health
effects.

6.2.1.2
Welfare
Benefits
of
Reduction
in
HAP
Emissions.

The
welfare
effects
of
exposure
to
HAPs
have
received
less
attention
from
analysts
than
the
health
effects.
However,
this
situation
is
changing,
especially
with
respect
to
the
effects
of
toxic
substances
on
ecosystems.
Over
the
past
ten
years,
ecotoxicologists
have
started
to
build
models
of
ecological
systems
which
focus
on
interrelationships
in
function,
the
dynamics
of
stress,
and
the
adaptive
potential
for
recovery.
This
is
consistent
with
the
observation
that
chronic
sub­
lethal
exposures
may
affect
the
normal
functioning
of
individual
species
in
ways
that
make
it
less
than
competitive
and
therefore
more
susceptible
to
a
variety
of
factors
including
disease,
insect
attack,
and
decreases
in
habitat
quality.
3
All
of
these
factors
may
contribute
to
an
overall
change
in
the
structure
(
i.
e.,
composition)
and
function
of
the
ecosystem.

The
adverse,
non­
human
biological
effects
of
HAP
emissions
include
ecosystem
and
recreational
and
commercial
fishery
impacts.
Atmospheric
deposition
of
HAPs
directly
to
land
may
affect
terrestrial
ecosystems.
Atmospheric
deposition
of
HAPs
also
contributes
to
adverse
aquatic
ecosystem
effects.
This
not
only
has
adverse
implications
for
individual
wildlife
species
and
ecosystems
as
a
whole,
but
also
the
humans
who
may
ingest
contaminated
fish
and
waterfowl.
In
general,
HAP
emission
reductions
achieved
through
the
NESHAP
should
reduce
the
associated
adverse
environmental
impacts.

6.2.2
Benefits
of
Reduced
CO
Emissions
Due
to
HAP
Controls
As
is
mentioned
above,
controls
that
will
be
required
on
plywood
and
composite
wood
products
sources
to
reduce
HAPs
will
also
reduce
emissions
of
CO.
The
EPA
Staff
Paper
for
CO
provides
a
summary
of
the
health
effects
information
pertinent
to
the
NAAQS
for
CO4.
This
information
is
a
summary
of
information
from
the
CO
Criteria
Document
(
CD)
5,
which
provides
a
critical
review
of
a
wide
variety
of
health
effects
studies,
including
a
limited
number
of
newer
health
effects
studies,
as
well
as
older
studies.
Some
were
conducted
at
extremely
high
levels
of
CO
(
i.
e.
much
higher
than
typically
found
in
ambient
air);
however,
the
focus
of
this
Staff
Paper
is
on
those
key
controlled­
exposure
laboratory
studies
and
newer
epidemiology
studies,
which
were
conducted
with
human
subjects
at
COHb
levels
that
are
most
relevant
to
regulatory
decision
making.

Based
on
the
CD,
staff
concludes
that
human
health
effects
associated
with
exposure
to
CO
include
cardiovascular
system
and
central
nervous
system
(
CNS)
effects.
In
addition,
consideration
is
given
in
the
CD
to
combined
exposure
to
CO,
other
pollutants,
drugs,
and
the
influence
of
environmental
factors.
Cardiovascular
effects
of
CO
are
directly
related
to
reduced
oxygen
content
of
blood
caused
by
combination
of
CO
with
Hb
to
form
COHb,
resulting
in
tissue
hypoxia.
Most
healthy
individuals
have
mechanisms
(
e.
g.
increased
blood
flow,
blood
vessel
dilation)
which
compensate
for
this
reduction
in
tissue
O2,
although
the
effect
of
reduced
maximal
exercise
capacity
has
been
reported
in
healthy
persons
at
low
COHb
levels.
Several
other
medical
conditions
such
as
occlusive
vascular
disease,
chronic
obstructive
lung
disease,
and
anemia
can
increase
susceptibility
to
potential
adverse
effects
of
CO
during
exercise.

Effects
of
CO
on
the
CNS
involve
both
behavioral
and
physiological
changes.
These
include
modification
of
visual
perception,
hearing,
motor
and
sensorimotor
performance,
vigilance,
and
cognitive
ability.
Developmental
toxicity
effects
of
low­
level
ambient
CO
exposures,
though
not
well
studied
in
6­
2
humans,
may
pose
a
threat
to
the
fetus.
Finally,
environmental
factors
(
e.
g.
altitude,
temperature),
drug
interaction,
and
pollutant
interaction
also
can
play
a
role
in
the
public
health
impact
of
ambient
CO
exposure.
There
is
little
new
information
on
these
effects.

Exhibit
6­
1
is
a
summary
of
key
health
effects
and
studies
which
have
been
identified
as
being
most
pertinent
to
a
regulatory
decision
on
the
NAAQS
for
CO6.
Each
of
the
key
studies
is
considered
in
light
of
limitations
discussed
in
the
CD
and
the
Staff
Paper.
For
example,
epidemiological
studies
are
limited
by
factors
such
as
exposure
uncertainties
and
confounding
variables,
and
many
of
the
controlled
exposure
studies
of
CO
health
effects
have
been
hampered
by
uncertainties
regarding
COHb
measurements,
relatively
small
sample
sizes,
and
lack
of
"
real
world"
exposure
conditions.
6­
3
Exhibit
6­
1.
Key
Health
Effects
Of
Exposure
To
Ambient
Carbon
Monoxide
Target
Organ
Health
Effectsa,
b
Tested
Populationc
References
Lungs
Reduced
maximal
exercise
duration
with
1­
h
peak
CO
exposures
resulting
in

2.3%
COHb
(
GC)
Healthy
individuals
Drinkwater
et
al.
(
1974)
Raven
et
al.
(
1974b)
Horvath
et
al.
(
1975)

Heart
Reduced
time
to
ST
segment
change
of
the
ECG
(
earlier
onset
of
myocardial
ischemia)
with
peak
CO
exposures
resulting
in

2.4%
COHb
(
GC)
Individuals
with
coronary
artery
disease
Allred
et
al.
(
1989a,
b;
1991)

Heart
Reduced
exercise
duration
because
of
increased
chest
pain
(
angina)
with
peak
CO
exposures
resulting
in

3%
COHb
(
CO­
Ox)
Individuals
with
coronary
artery
disease
Anderson
et
al.
(
1973)
Sheps
et
al.
(
1987)
Adams
et
al.
(
1988)
Kleinman
et
al.
(
1989,
1998*)
Allred
et
al.
(
1989a,
b;
1991)

Heart
Increased
number
and
complexity
of
arrhythmia
(
abnormal
heart
rhythm)
with
peak
CO
exposures
resulting
in

6%
COHb
(
CO­
Ox)
Individuals
with
coronary
artery
disease
and
high
baseline
ectopy
(
chronic
arrhythmia)
Sheps
et
al.
(
1990)

Heart
Increased
hospital
admissions
associated
with
ambient
pollutant
exposures
Individuals
>
65
years
old
with
cardiovascular
disease
Schwartz
and
Morris
(
1995*)
Morris
et
al.
(
1995*)
Schwartz
(
1997*)
Burnett
et
al.
(
1997*)

Brain
Central
nervous
system
effects,
such
as
decrements
in
hand­
eye
coordination
(
driving
or
tracking)
and
in
attention
or
vigilance
(
detection
of
infrequent
events),
with
1­
h
peak
CO
exposures
(

5
to
20%
COHb)
Healthy
individuals
Horvath
et
al.
(
1971)
Fodor
and
Winneke
(
1972)
Putz
et
al.
(
1976,
1979)
Benignus
et
al.
(
1987)

aThe
EPA
has
set
significant
harm
levels
of
50
ppm
(
8­
h
average),
75
ppm
(
4­
h
average),
and
125
ppm
(
1­
h
average).
Exposure
under
these
conditions
could
result
in
COHb
levels
of
5
to
10%
and
cause
significant
health
effects
in
sensitive
individuals.
bMeasured
blood
COHb
level
after
CO
exposure.
cFetuses,
infants,
pregnant
women,
elderly
people,
and
people
with
anemia
or
with
a
history
of
cardiac
or
respiratory
disease
may
be
particularly
sensitive
to
CO.
dThis
table
is
a
reproduction
of
Table
6­
7
of
the
CD
(
p.
6­
36,
U.
S.
EPA,
1999a).

*
Newer
studies,
published
since
completion
of
the
last
CO
NAAQS
review.
6­
4
Although
acute
poisoning
induced
by
CO
can
be
lethal
and
is
probably
the
best
known
health
endpoint
of
CO,
this
only
occurs
at
very
high
concentrations
of
CO
(
greater
than
100
ppm,
hourly
average),
which
are
not
pertinent
to
the
setting
of
the
NAAQS.
In
the
ambient
air,
exposures
to
lowerlevels
of
CO
predominate.
Very
little
data
are
available
demonstrating
human
health
effects
in
healthy
individuals
caused
by
or
associated
with
exposures
to
low
CO
concentrations.
Decrements
in
maximal
exercise
duration
and
performance
in
healthy
individuals
have
been
reported
at
COHb
levels
of
>
2.3%
an
d
>
4.3%
(
GC),
respectively;
however,
these
decrements
are
small
and
likely
to
affect
only
athletes
in
competition.
No
effects
were
seen
in
healthy
individuals
during
submaximal
exercise,
representing
more
typical
daily
activities,
at
levels
as
high
as
15
to
20
%
COHb7.
Most
recent
evidence
of
CNS
effects
induced
by
exposure
to
CO
indicates
that
behavioral
impairments
in
healthy
individuals
should
not
be
expected
until
COHb
levels
exceed
20%
(
CO­
Ox),
well
above
what
would
be
caused
by
typical
ambient
air
levels
of
CO8.
Evidence
of
CO­
induced
fetal
toxicity
or
of
interactions
with
high
altitudes,
drugs,
other
pollutants,
or
other
environmental
stresses
remains
uncertain
or
suggests
that
effects
of
concern
will
occur
in
healthy
individuals
only
with
exposure
to
much
higher
levels
of
CO
than
are
likely
for
offsite
receptors
for
these
facilities
9.

6.3
Qualitative
Description
of
Effects
from
Reductions
and
Increases
in
Emissions
from
Other
Pollutants
Due
to
HAP
Controls
As
is
mentioned
above,
controls
that
will
be
required
on
PCWP
sources
to
reduce
HAPs
will
also
reduce
emissions
of
other
pollutants,
namely:
PM10,
PM2.5,
and
increase
NOx
and
SO2
emissions.
For
more
information
on
these
non­
HAP
emissions
and
emission
reductions,
please
refer
to
Chapter
3
of
this
RIA,
the
preamble
for
this
rule,
and
the
docket.
The
effects
associated
with
exposure
to
PM
(
both
coarse
and
fine),
NOx,
and
SO2
emissions
are
presented
below.

6.3.1
Effects
of
NOx
and
Ozone
Emissions.

Emissions
of
NOx
produce
a
wide
variety
of
health
and
welfare
effects.
Nitrogen
dioxide
can
irritate
the
lungs
at
high
occupational
levels
and
may
lower
resistance
to
respiratory
infection,
although
the
research
has
been
equivocal.
NOx
emissions
are
an
important
precursor
to
acid
rain
and
may
affect
both
terrestrial
and
aquatic
ecosystems.
Atmospheric
deposition
of
nitrogen
leads
to
excess
nutrient
enrichment
problems
("
eutrophication")
in
the
Chesapeake
Bay
and
several
nationally
important
estuaries
along
the
East
and
Gulf
Coasts.
Eutrophication
can
produce
multiple
adverse
effects
on
water
quality
and
the
aquatic
environment,
including
increased
algal
blooms,
excessive
phytoplankton
growth,
and
low
or
no
dissolved
oxygen
in
bottom
waters.
Eutrophication
also
reduces
sunlight,
causing
losses
in
submerged
aquatic
vegetation
critical
for
healthy
estuarine
ecosystems.
Deposition
of
nitrogen­
containing
compounds
also
affects
terrestrial
ecosystems.
Nitrogen
fertilization
can
alter
growth
patterns
and
change
the
balance
of
species
in
an
ecosystem.

Nitrogen
dioxide
and
airborne
nitrate
also
contribute
to
pollutant
haze
(
often
brown
in
color),
which
impairs
visibility
and
can
reduce
residential
property
values
and
the
value
placed
on
scenic
views.

NOx
in
combination
with
volatile
organic
compounds
(
VOC)
also
serves
as
a
precursor
to
ozone.
6­
5
Based
on
a
large
number
of
recent
studies,
EPA
has
identified
several
key
health
effects
that
may
be
associated
with
exposure
to
elevated
levels
of
ozone.
Exposures
to
ambient
ozone
concentrations
have
been
linked
to
increased
hospital
admissions
and
emergency
room
visits
for
respiratory
problems.
Repeated
exposure
to
ozone
may
increase
susceptibility
to
respiratory
infection
and
lung
inflammation
and
can
aggravate
preexisting
respiratory
disease,
such
as
asthma.
Repeated
prolonged
exposures
(
i.
e.,
6
to
8
hours)
to
ozone
at
levels
between
0.08
and
0.12
ppb,
over
months
to
years
may
lead
to
repeated
inflammation
of
the
lung,
impairment
of
lung
defense
mechanisms,
and
irreversible
changes
in
lung
structure,
which
could
in
turn
lead
to
premature
aging
of
the
lungs
and/
or
chronic
respiratory
illnesses
such
as
emphysema,
chronic
bronchitis,
and
asthma.

Those
who
work
,
play,
or
otherwise
are
active
outdoors
have
the
highest
ozone
exposures.
Children
who
are
active
playing
outdoors
during
the
summer
have
particularly
high
exposures.
Further,
children
are
more
at
risk
than
adults
from
the
effects
of
ozone
exposure
because
their
respiratory
systems
are
still
developing.
Adults
who
are
outdoors
and
moderately
active
during
the
summer
months,
such
as
construction
workers
and
other
outdoor
workers,
also
are
among
those
with
the
highest
exposures.
These
individuals,
as
well
as
people
with
respiratory
illnesses
such
as
asthma,
especially
children
with
asthma,
may
experience
reduced
lung
function
and
increased
respiratory
symptoms,
such
as
chest
pain
and
cough,
when
exposed
to
relatively
low
ozone
levels
during
periods
of
moderate
exertion.
In
addition
to
human
health
effects,
ozone
adversely
affects
crop
yield,
vegetation
and
forest
growth,
and
the
durability
of
materials.
Ozone
causes
noticeable
foliar
damage
in
many
crops,
trees,
and
ornamental
plants
(
i.
e.,
grass,
flowers,
shrubs,
and
trees)
and
causes
reduced
growth
in
plants.

Particulate
matter
(
PM)
can
also
be
formed
from
NOx
emissions.
Secondary
PM
is
formed
in
the
atmosphere
through
a
number
of
physical
and
chemical
processes
that
transform
gases
such
as
NOx,
SO2,
and
VOC
into
particles.
A
discussion
of
the
effects
of
PM
on
human
health
and
the
environment
are
discussed
further
below.
Overall,
emissions
of
NOx
from
PCWP
sources
can
lead
to
some
of
the
effects
discussed
in
this
section
­
either
those
directly
related
to
NOx
emissions,
or
the
effects
of
ozone
and
PM
resulting
from
the
combination
of
NOx
with
other
pollutants.

6.3.2
Benefits
of
PM
Reductions.

Scientific
studies
have
linked
PM
(
alone
or
in
combination
with
other
air
pollutants)
with
a
series
of
health
effects
10.
Fine
particles
(
PM2.5)
can
penetrate
deep
into
the
lungs
to
contribute
to
a
number
of
the
health
effects.
These
health
effects
include
decreased
lung
function
and
alterations
in
lung
tissue
and
structure
and
in
respiratory
tract
defense
mechanisms
which
may
be
manifest
in
increased
respiratory
symptoms
and
disease
or
in
more
severe
cases,
increased
hospital
admissions
and
emergency
room
visits
or
premature
death.
Children,
the
elderly,
and
people
with
cardiopulmonary
disease,
such
as
asthma,
are
most
at
risk
from
these
health
effects.

PM
also
causes
a
number
of
adverse
effects
on
the
environment.
Fine
PM
is
the
major
cause
of
reduced
visibility
in
parts
of
the
U.
S.,
including
many
of
our
national
parks
and
wilderness
areas.
Other
environmental
impacts
occur
when
particles
deposit
onto
soil,
plants,
water,
or
materials.
For
example,
particles
containing
nitrogen
and
sulfur
that
deposit
onto
land
or
water
bodies
may
change
the
nutrient
balance
and
acidity
of
those
environments,
leading
to
changes
in
species
composition
and
buffering
capacity.
Particles
that
are
deposited
directly
onto
leaves
of
plants
can,
depending
on
their
chemical
6­
6
composition,
corrode
leaf
surfaces
or
interfere
with
plant
metabolism.
Finally,
PM
causes
soiling
and
erosion
damage
to
materials.

Thus,
reducing
the
emissions
of
PM
and
PM
precursors
from
PCWP
sources
can
help
to
improve
some
of
the
effects
mentioned
above
­
either
those
related
to
primary
PM
emissions,
or
the
effects
of
secondary
PM
generated
by
the
combination
of
NOx
or
SO2
with
other
pollutants
in
the
atmosphere.

6.3.3
Effects
of
SO2
Emissions.

Very
high
concentrations
of
sulfur
dioxide
(
SO2)
affect
breathing
and
ambient
levels
have
been
hypothesized
to
aggravate
existing
respiratory
and
cardiovascular
disease.
Potentially
sensitive
populations
include
asthmatics,
individuals
with
bronchitis
or
emphysema,
children
and
the
elderly.
SO2
is
also
a
primary
contributor
to
acid
deposition,
or
acid
rain,
which
causes
acidification
of
lakes
and
streams
and
can
damage
trees,
crops,
historic
buildings
and
statues.
In
addition,
sulfur
compounds
in
the
air
contribute
to
visibility
impairment
in
large
parts
of
the
country.
This
is
especially
noticeable
in
national
parks.

PM
can
also
be
formed
from
SO2
emissions.
Secondary
PM
is
formed
in
the
atmosphere
through
a
number
of
physical
and
chemical
processes
that
transform
gases,
such
as
SO2,
into
particles.
Overall,
emissions
of
SO2
can
lead
to
some
of
the
effects
discussed
in
this
section
­
either
those
directly
related
to
SO2
emissions,
or
the
effects
of
ozone
and
PM
resulting
from
the
combination
of
SO2
with
other
pollutants.

6.4
Lack
Of
Approved
Methods
To
Quantify
HAP
Benefits
The
most
significant
effect
associated
with
the
HAPs
that
are
controlled
with
the
rule
is
the
potential
incidence
of
cancer.
In
previous
analyses
of
the
benefits
of
reductions
in
HAPs,
EPA
has
quantified
and
monetized
the
benefits
of
potential
reductions
in
the
incidences
of
cancer
11,12.
In
some
cases,
EPA
has
also
quantified
(
but
not
monetized)
reductions
in
the
number
of
people
exposed
to
noncancer
HAP
risks
above
no­
effect
levels13
.

Monetization
of
the
benefits
of
reductions
in
cancer
incidences
requires
several
important
inputs,
including
central
estimates
of
cancer
risks,
estimates
of
exposure
to
carcinogenic
HAPs,
and
estimates
of
the
value
of
an
avoided
case
of
cancer
(
fatal
and
non­
fatal).
In
the
above
referenced
analyses,
EPA
relied
on
unit
risk
factors
(
URF)
developed
through
risk
assessment
procedures.
The
unit
risk
factor
is
a
quantitative
estimate
of
the
carcinogenic
potency
of
a
pollutant,
often
expressed
as
the
probability
of
contracting
cancer
from
a
70
year
lifetime
continuous
exposure
to
a
concentration
of
one
µ
g/
m3
of
a
pollutant.
These
URFs
are
designed
to
be
conservative,
and
as
such,
are
more
likely
to
represent
the
high
end
of
the
distribution
of
risk
rather
than
a
best
or
most
likely
estimate
of
risk.

In
a
typical
analysis
of
the
expected
health
benefits
of
a
regulation
(
e.
g.,
the
Interstate
Air
Quality
Rule
benefit
analysis),
health
effects
are
estimated
by
applying
changes
in
pollutant
concentrations
to
best
estimates
of
risk
obtained
from
epidemiological
studies.
As
the
purpose
of
a
benefit
analysis
is
to
describe
the
benefits
most
likely
to
occur
from
a
reduction
in
pollution,
use
of
high­
end,
conservative
risk
estimates
will
over­
estimate
of
the
expected
benefits
of
the
regulation.
For
this
reason,
we
will
not
attempt
to
quantify
the
health
benefits
of
reductions
in
HAPs
unless
best
estimates
of
risks
are
available.
While
we
6­
7
used
high­
end
risk
estimates
in
past
analyses,
recent
advice
from
the
EPA
Science
Advisory
Board
(
SAB)
and
internal
methods
reviews
have
suggested
that
we
avoid
using
high­
end
estimates
in
current
analyses.
EPA
is
working
with
the
SAB
to
develop
better
methods
for
analyzing
the
benefits
of
reductions
in
HAPs.

While
not
appropriate
for
inclusion
in
our
primary
quantified
benefits
analysis,
to
estimate
the
potential
baseline
risks
posed
by
the
PCWP
source
category
and
the
potential
impact
of
applicability
cutoffs,
EPA
performed
for
the
proposal
a
"
rough"
risk
assessment
for
185
of
the
223
facilities
in
the
PCWP
source
category.
There
are
large
uncertainties
regarding
all
components
of
the
risk
quantification
step,
including
location
of
emission
reductions,
emission
estimates,
air
concentrations,
exposure
levels
and
dose­
response
relationships.
However,
if
these
uncertainties
are
properly
identified
and
characterized,
it
is
possible
to
provide
upper
bound
estimates
of
the
potential
reduction
in
inhalation
cancer
incidence
associated
with
this
rule.
It
is
important
to
keep
in
mind
that
these
estimates
will
not
cover
non­
inhalation
based
cancer
risks
and
non­
cancer
health
effects.

The
HAP
included
in
this
"
rough"
risk
assessment
at
the
proposal
were
acetaldehyde,
acrolein,
benzene,
formaldehyde,
manganese,
methanol,
methylene
chloride,
and
phenol.
Of
these
HAP,
four
are
presently
not
considered
to
have
thresholds:
acetaldehyde,
benzene,
formaldehyde,
and
methylene
chloride.

Of
the
185
facilities
assessed,
148
facilities
were
found
to
pose
cancer
risks
equal
to
or
greater
than
1
in
1,000,000
to
their
surrounding
population.
Forty­
six
facilities
were
predicted
to
pose
cancer
risks
of
1
in
100,000
or
greater,
and
two
PCWP
facilities
were
found
to
pose
cancer
risks
equal
to
or
greater
than
1
in
10,000.

If
this
rule
is
implemented
at
all
PCWP
facilities,
annual
cancer
incidence
would
be
reduced
from
about
0.09
cases/
year
to
about
0.02
cases/
year,
while
the
number
of
people
at
or
above
a
cancer
risk
level
of
1
in
a
million
would
be
reduced
from
about
900,000
to
150,000.
In
addition,
the
number
of
people
exposed
to
hazard
index
(
HI)
values
equal
to
or
greater
than
1
was
estimated
to
be
reduced
from
about
270,000
to
about
30,000,
and
the
number
of
people
exposed
to
HI
values
of
0.2
or
greater
was
predicted
to
decrease
from
about
1,500,000
to
about
250,000.
(
Details
of
these
analyses
are
available
in
the
docket).

EPA
has
prepared
a
more
refined
risk
assessment
for
the
final
rule
as
part
of
evaluating
the
development
of
a
low­
risk
subcategory
of
sources
which
could
be
delisted
and
thus
not
have
to
put
on
controls
associated
with
the
rule
14.
This
more
refined
assessment
included
26
HAPs,
and
these
HAPs
include
those
that
were
in
the
"
rough"
risk
assessment
plus:
antimony,
arsenic,
beryllium,
cadmium,
chromium,
cobalt,
cumene,
ethylbenzene,
lead,
mercury,
methyl
ethyl
ketone
(
MEK),
methyl
isobutyl
ketone
(
MIBK),
methylene
diphenyl
diisocyanate,
nickel,
selenium,
styrene,
toluene,
and
xylene.

There
were
181
facilities
included
in
this
more
refined
risk
assessment.
Twenty­
four
facilities
were
found
to
pose
cancer
risks
equal
to
or
greater
than
1
in
1,000,000
to
their
surrounding
population.
No
facilities
were
predicted
to
pose
cancer
risks
of
1
in
100,000
or
greater.
The
reduction
in
annual
cancer
incidence
and
the
number
of
people
to
particular
HI
levels
were
not
estimated
in
among
affected
populations,
and
these
reductions
were
not
estimated
since
the
focus
of
the
more
refined
assessment
was
on
affected
PCWP
sources.

EPA
has
not
tried
to
monetize
this
reduced
incidence
of
inhalation
cancer
for
several
important
technical
reasons.
The
primary
reasons
include
the
lack
of
information
on
the
latency
period
for
the
onset
of
the
disease
and
the
fact
that
we
have
no
information
on
the
proportion
of
fatal
versus
nonfatal
cancers
6­
8
which
may
occur.
These
factors
prevent
us
from
providing
monetized
estimates.

For
non­
cancer
health
effects,
previous
analyses
have
estimated
changes
in
populations
exposed
above
the
reference
concentration
level
(
RfC).
However,
this
requires
estimates
of
populations
exposed
to
HAPs
from
controlled
sources.
Due
to
data
limitations,
we
do
not
have
sufficient
information
on
emissions
from
specific
sources
and
thus
are
unable
to
model
changes
in
population
exposures
to
ambient
concentrations
of
HAPs
above
the
RfC.
As
a
result,
we
are
unable
to
place
a
monetary
value
of
the
HAP
related
benefits
associated
with
this
rule.

6.5
Summary
The
HAPs
that
are
reduced
as
a
result
of
implementing
the
plywood
and
composite
wood
products
NESHAP
will
produce
a
variety
of
benefits,
some
of
which
include:
a
possible
reduction
in
the
incidence
of
cancer
to
exposed
populations,
neurotoxicity,
irritation,
and
crop
or
plant
damage.
The
rule
will
also
produce
benefits
associated
with
reductions
in
CO.
Human
health
effects
associated
with
exposure
to
CO
include
cardiovascular
system
and
central
nervous
system
(
CNS)
effects.
Although
we
are
unable
to
place
a
monetary
value
on
these
benefits,
the
information
on
the
variety
of
effects
associated
with
these
pollutants
and
the
level
of
reductions
anticipated
from
the
NESHAP
indicate
that
the
benefits
of
the
rule
will
be
substantial.
6­
9
6.6
REFERENCES
1.
U.
S.
Environmental
Protection
Agency.
Regulatory
Impact
Analysis
for
the
National
Emissions
Standards
for
Hazardous
Air
Pollutants
for
Source
Categories:
Organic
Hazardous
Air
Pollutants
from
the
Synthetic
Organic
Chemical
Manufacturing
Industry
and
Seven
Other
Processes.
Draft
Report.
Office
of
Air
Quality
Planning
and
Standards.
Research
Triangle
Park,
NC.
EPA­
450/
3­
92­
009.
December
1992.

2.
U.
S.
Environmental
Protection
Agency.
Integrated
Risk
Information
System;
website
access
available
at
www.
epa.
gov/
ngispgm3/
iris.

3.
Reference
1.
p.
3­
5.

4.
U.
S.
Environmental
Protection
Agency.
Ecological
Exposure
and
Effects
of
Airborne
Toxic
Chemicals:
An
Overview.
EPA/
6003­
91/
001.
Environmental
Research
Laboratory.
Corvallis,
OR.
1991.

5.
U.
S.
Environmental
Protection
Agency;
Staff
Paper
for
the
Carbon
Monoxide
NAAQS;
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
N.
C.;
2000.

6.
U.
S.
Environmental
Protection
Agency;
Criteria
Document
for
Carbon
Monoxide;
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
N.
C.;
1999.

7.
Reference
6..

8.
Reference
6.

9.
Reference
6.

10.
US
Environmental
Protection
Agency,
1996.
Review
of
the
National
Ambient
Air
Quality
Standards
for
Particulate
Matter:
Assessment
of
Scientific
and
Technical
Information.
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
NC
EPA
report
no.
EPA/
4521R­
96­
013.

11.
Reference
10.

12.
U.
S.
Environmental
Protection
Agency.
1992.
Draft
Regulatory
Impact
Analysis
of
National
Emissions
Standards
for
Hazardous
Air
Pollutants
for
By
Product
Coke
Oven
Charging,
Door
Leaks,
and
Topside
Leaks.
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
NC.

13.
U.
S.
Environmental
Protection
Agency.
1995.
Regulatory
Impact
Analysis
for
the
Petroleum
Refinery
NESHAP.
Revised
Draft
for
Promulgation.
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
NC.
6­
10
14.
U.
S.
Environmental
Protection
Agency.
2004.
Risk
Assessment
for
the
Final
Maximum
Achievable
Control
Technology
(
MACT)
Rule
for
the
Plywood
and
Composite
Wood
Products
(
PCWP)
Source
Category.
Office
of
Air
Quality
Planning
and
Standards,
Research
Triangle
Park,
NC.
A­
1
Appendix
A:
Summary
of
Impacts
Associated
with
the
Delisted
Low­
Risk
Subcategory
Background
One
of
the
compliance
alternatives
to
the
final
rule
is
allowing
PCWP
sources
to
demonstrate
that
their
HAP
emissions
are
sufficiently
low­
risk
to
avoid
being
subject
to
the
MACT
compliance
requirements.
Such
sources
would
then
be
part
of
a
low­
risk
subcategory
and
can
be
delisted.

For
your
affected
source
to
be
part
of
the
delisted
low­
risk
subcategory,
you
must
have
a
low­
risk
demonstration
approved
by
EPA,
and
you
must
then
have
federally­
enforceable
conditions
reflecting
the
parameters
used
in
your
EPA­
approved
demonstration
incorporated
into
your
title
V
permit
to
ensure
that
your
affected
source
remains
low­
risk.
Low­
risk
demonstrations
for
eight
facilities
were
conducted
by
EPA
and
no
further
demonstration
is
required
for
them,
and
they
will
now
need
to
obtain
title
V
permit
terms
reflecting
their
status.
(
We
will
provide
these
sources
and
their
title
V
permitting
authorities
with
the
necessary
parameters
for
establishing
corresponding
permit
terms
and
conditions.)
These
facilities
are
listed
in
the
preamble.
Other
facilities
may
demonstrate
they
are
low
risk
to
EPA
by
using
the
look­
up
tables
in
appendix
B
to
subpart
DDDD
or
conducting
a
site­
specific
risk
assessment
as
specified
in
appendix
B
to
subpart
DDDD.
Appendix
B
to
subpart
DDDD
also
specifies
which
process
units
and
pollutants
must
be
included
in
your
low­
risk
demonstration,
emissions
testing
methods,
the
criteria
for
determining
if
a
affected
source
is
low
risk,
risk
assessment
methodology
(
look­
up
table
analysis
or
sitespecific
risk
analysis),
contents
of
the
low­
risk
demonstration,
schedule
for
submitting
and
obtaining
approval
of
your
low­
risk
demonstration,
and
methods
for
ensuring
that
your
affected
source
remains
in
the
low­
risk
subcategory.
If
you
demonstrate
that
your
affected
source
is
part
of
the
delisted
low­
risk
subcategory
of
PCWP
manufacturing
facilities,
then
your
affected
source
is
not
subject
to
the
MACT
compliance
options,
operating
requirements,
and
work
practice
requirements
in
the
final
PCWP
rule
(
subpart
DDDD).

Low­
risk
Criteria
We
may
approve
your
affected
source
as
eligible
for
membership
in
the
delisted
low­
risk
subcategory
of
PCWP
sources
if
we
determine
that
it
is
low
risk
for
both
carcinogenic
and
noncarcinogenic
effects.
To
be
considered
low
risk,
the
PCWP
affected
source
must
meet
the
following
criteria:
(
1)
the
maximum
off­
site
individual
lifetime
cancer
risk
at
a
location
where
people
live
is
less
than
one
in
one
million
for
carcinogenic
chronic
inhalation
effects;
(
2)
every
maximum
off­
site
target­
organ
specific
hazard
index
(
TOSHI)
at
a
location
where
people
live
is
less
than
or
equal
to
1.0
for
non­
carcinogenic
chronic
inhalation
effects;
and
(
3)
the
maximum
off­
site
acute
hazard
quotients
for
acrolein
and
formaldehyde
are
less
than
or
equal
to
1.0
for
noncarcinogenic
acute
inhalation
effects.
These
criteria
are
built
into
the
lookup
tables
included
in
appendix
B
to
subpart
DDDD.
Facilities
conducting
site­
specific
risk
assessments
must
explicitly
demonstrate
that
they
meet
these
criteria.
Facilities
need
not
perform
site­
specific
multipathway
human
health
risk
assessments
or
ecological
risk
assessments
since
EPA
performed
a
source
category­
wide
screening
assessment
which
demonstrates
that
these
risks
are
insignificant
for
all
sources.
A­
2
More
details
on
the
delisted
low­
risk
subcategory
can
be
found
in
the
preamble.

Number
of
Affected
Facilities
Facilities
with
estimated
potential
to
emit
25
tons
or
more
of
total
HAP
or
10
or
more
tons
of
an
individual
HAP
are
major
sources
of
HAP
and
are
subject
to
the
final
rule.
Approximately
223
PCWP
major
source
facilities
nationwide
are
expected
to
meet
the
applicability
criteria
defined
in
today's
final
rule.
These
major
source
facilities
generally
manufacture
one
or
more
of
the
following
products:
softwood
plywood,
softwood
veneer,
medium
density
fiberboard
(
MDF),
oriented
strandboard
(
OSB),
particleboard,
hardboard,
laminated
strand
lumber,
and
laminated
veneer
lumber.
However,
only
212
of
these
facilities
have
equipment
that
is
subject
to
the
control
requirements
of
the
final
rule.
In
addition,
there
are
approximately
34
major
source
sawmill
facilities
that
produce
kiln­
dried
lumber;
although
these
major
source
sawmill
facilities
meet
the
applicability
criteria
in
the
final
rule,
there
are
no
control
requirements
for
any
of
the
equipment
located
at
the
sawmills.

The
number
of
impacted
facilities
was
determined
based
on
the
estimated
potential
to
emit
(
i.
e.,
uncontrolled
HAP
emissions)
from
each
facility,
whether
each
facility
has
any
process
units
subject
to
the
compliance
options,
whether
or
not
the
facility
already
operates
control
systems
necessary
to
meet
the
final
rule,
and
whether
or
not
the
facility
is
currently
eligible
(
or
may
later
demonstrate
eligibility)
for
inclusion
in
the
delisted
low
risk
subcategory.
Of
the
223
major
source
facilities,
an
estimated
162
are
expected
to
install
add­
on
control
systems
to
reduce
emissions.
The
remaining
facilities
already
have
installed
add­
on
controls,
do
not
have
any
process
units
subject
to
the
compliance
options,
are
expected
to
comply
with
work
practice
requirements
only,
or
are
one
of
the
eight
facilities
currently
eligible
for
inclusion
in
the
delisted
low­
risk
subcategory.
We
estimate
that
eventually
as
many
as
147
of
the
223
major
source
PCWP
facilities
may
demonstrate
eligibility
for
the
low­
risk
subcategory,
leaving
58
facilities
expected
to
install
add­
on
control
systems
to
reduce
emissions.
Some
of
the
147
facilities
expected
to
eventually
be
included
the
low­
risk
subcategory
were
not
expected
to
install
controls
to
meet
MACT
because
they
either
already
have
the
necessary
controls
or
do
not
have
process
units
subject
to
the
compliance
options
in
today's
final
rule.

The
impacts
presented
in
this
appendix
to
the
RIA
represent
the
estimated
impacts
for
the
range
of
facilities,
from
58
facilities
estimated
to
be
impacted
following
completion
of
eligibility
demonstrations
for
the
low­
risk
subcategory,
to
162
facilities
estimated
to
be
impacted
today.
The
impact
estimates
were
based
on
the
use
of
RTO
(
or
in
some
cases
a
combination
WESP
and
RTO)
because
RTO
are
the
most
prevalent
HAP
emissions
control
technology
used
in
the
PCWP
industry.
However,
technologies
other
than
RTO
could
be
used
to
comply
with
today's
final
rule.
For
a
facility
that
we
feel
already
achieves
the
emissions
reductions
required
by
today's
final
rule,
only
testing,
monitoring,
reporting
and
recordkeeping
cost
impacts
were
estimated.

Emission
Reductions
We
estimate
nationwide
baseline
HAP
emissions
from
the
PCWP
source
category
to
be
17,000
Mg/
yr
(
19,000
tons/
yr)
at
the
current
level
of
control.
We
estimate
that
today's
final
rule
will
reduce
total
HAP
emissions
from
the
PCWP
source
category
by
about
9,900
Mg/
yr
(
11,000
tons/
yr).
In
addition,
we
estimate
that
today's
final
rule
will
reduce
VOC
emissions
(
approximated
as
THC)
by
about
A­
3
25,000
Mg/
yr
(
27,000
tons/
yr)
from
a
baseline
level
of
45,000
Mg/
yr
(
50,000
tons/
yr).
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
these
emission
reductions
could
change
to
5,900
Mg/
yr
(
6,600
tons/
yr)
for
HAP
or
13,000
Mg/
yr
(
14,000
tons/
yr)
for
VOC.

In
addition
to
reducing
emissions
of
HAP
and
VOC,
today's
final
rule
will
also
reduce
emissions
of
criteria
pollutants,
such
as
carbon
monoxide
(
CO)
from
direct­
fired
emission
sources
and
particulate
matter
less
than
10
microns
in
diameter
(
PM10).
We
estimate
that
today's
final
rule
will
reduce
CO
emissions
by
about
9,500
Mg/
yr
(
10,000
tons/
yr).
We
also
estimate
that
the
final
rule
will
reduce
PM10
emissions
by
about
11,000
Mg/
yr
(
12,000
tons/
yr).
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
these
emission
reductions
could
change
to
7,600
Mg/
yr
(
8,400
tons/
yr)
for
CO
and
5,300
Mg/
yr
(
5,900
tons/
yr)
for
PM10.

Combustion
of
exhaust
gases
in
an
RTO
generates
some
emissions
of
nitrogen
oxides
(
NOX).
We
estimate
that
the
nationwide
increase
in
NOX
emissions
due
to
the
use
of
RTO
will
be
about
2,100
Mg/
yr
(
2,400
tons/
yr).
This
estimated
increase
in
NOX
emissions
may
be
an
overestimate
because
some
plants
may
select
control
technologies
other
than
RTO
to
comply
with
today's
final
rule.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
estimated
NOX
emission
increase
could
fall
to
1,100
Mg/
yr
(
1,200
tons/
yr).

Secondary
air
impacts
of
today's
final
rule
would
result
from
increased
electricity
usage
associated
with
operation
of
control
devices.
The
secondary
air
emissions
of
NOX,
CO,
PM10,
sulfur
dioxide
(
SO2)
depend
on
the
fuel
used
to
generate
electricity.
Assuming
as
a
worst­
case
that
PCWP
plants
will
purchase
electricity
from
a
coal­
fired
utility
plant,
we
estimate
that
the
final
rule
may
increase
secondary
emissions
of
PM10
by
99
Mg/
yr
(
110
tons/
yr),
SO2
by
4,000
Mg/
yr
(
4,500
tons/
yr),
NOX
by
2,000
Mg/
yr
(
2,200
tons/
yr),
and
CO
by
66
Mg/
yr
(
72
tons/
yr).
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
these
emission
increases
could
fall
to
52
Mg/
yr
(
57
tons/
yr)
for
PM10,
2,200
Mg/
yr
(
2,400
tons/
yr)
for
SO2,
1,000
Mg/
yr
(
1,100
tons/
yr)
for
NOX,
and
35
Mg/
yr
(
39
tons/
yr)
for
CO.
However,
The
EPA
believes
SO2
emissions
may
not
increase
from
electric
generation
since
that
the
requirements
of
the
Acid
Rain
trading
program
will
keep
power
plants
from
increasing
their
SO2
emissions.
Furthermore,
we
believe
that
NOx
emissions
increases
from
power
plants
may
be
limited.
The
EPA
expects
the
emissions
trading
program
that
is
part
of
the
NOx
SIP
call
will
likely
keep
NOx
emissions
in
the
eastern
United
States
from
increasing
as
result
of
additional
power
generation
to
operate
RTOs.

Wastewater
impacts
Wastewater
is
produced
from
WESP
blowdown,
washing
out
of
RTO,
and
biofilters.
We
based
all
of
our
impact
estimates
on
the
use
of
RTO
(
with
or
without
a
WESP
upstream
depending
on
the
process
unit).
We
estimate
that
the
wastewater
generated
from
WESP
blowdown
and
RTO
washouts
will
increase
by
about
100,000
cubic
meters
per
year
(
m3/
yr)
(
27
million
gallons
per
year
(
gal/
yr))
as
a
result
of
today's
final
rule.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
wastewater
impacts
could
fall
to
89,000
cubic
meters
per
year
(
m3/
yr)
(
24
million
gallons
per
year
(
gal/
yr)).
According
to
the
data
in
our
MACT
survey,
this
nationwide
increase
in
wastewater
flow
is
within
the
range
of
water
flow
rates
handled
by
individual
facilities.
Facilities
would
likely
dispose
of
A­
4
this
wastewater
by
sending
it
to
a
municipal
treatment
facility,
reusing
it
onsite
(
e.
g.,
in
log
vats
or
resin
mix),
or
hauling
it
offsite
for
spray
irrigation.
In
addition,
we
are
amending
the
effluent
limitations,
guidelines
for
the
timber
products
processing
point
source
category
to
allow
facilities
(
on
a
case­
by­
case
basis)
to
obtain
a
permit
to
discharge
wastewaters
from
APCD
installed
to
comply
with
today's
final
rule.

Impacts
on
Solid
Waste
Solid
waste
is
produced
in
the
form
of
solids
from
WESP
and
by
RTO
or
RCO
media
replacement.
We
estimate
that
4,500
Mg/
yr
(
5,000
tons/
yr)
of
solid
waste
will
be
generated
as
a
result
of
today's
final
rule.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
solid
waste
increase
could
change
to
2,800
Mg/
yr
(
3,000
tons/
yr).
Some
PCWP
facilities
have
been
able
to
use
RTO
or
RCO
media
as
aggregate
in
onsite
roadbeds.
Some
facilities
have
also
been
able
to
identify
a
beneficial
reuse
for
wet
control
device
solids
(
such
as
giving
them
away
to
local
farmers
for
soil
amendment).

Additional
Energy
Use
from
Control
Equipment
Applications
The
overall
energy
demand
(
i.
e.,
electricity
and
natural
gas)
is
expected
to
increase
by
about
4.3
million
gigajoules
per
year
(
GJ/
yr)
(
4.1
trillion
British
thermal
units
per
year
(
Btu/
yr))
nationwide
under
today's
final
rule.
The
estimated
increase
in
the
energy
demand
is
based
on
the
electricity
requirements
associated
with
RTO
and
WESP
and
the
fuel
requirements
associated
with
RTO.
Electricity
requirements
are
expected
to
increase
by
about
711
gigawatt
hours
per
year
(
GWh/
yr)
under
today's
final
rule.
Natural
gas
requirements
are
expected
to
increase
by
about
of
44
million
m3/
yr
(
1.5
billion
cubic
feet
per
year
(
ft3/
yr))
under
the
final
rule.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
these
energy
estimates
could
fall
to
2.3
million
GJ/
yr
(
2.2
trillion
Btu/
yr)
for
overall
energy
demand,
378
GWh/
yr
for
the
increase
in
electricity
requirements,
and
23
million
m3/
yr
(
0.8
billion
ft3/
yr)
for
the
increase
in
natural
gas
requirements.

Compliance
Cost
Estimates
The
cost
impacts
estimated
for
today's
final
rule
represent
a
high­
end
estimate
of
costs.
Although
the
use
of
RTO
technology
to
reduce
HAP
emissions
represents
the
most
expensive
compliance
option,
we
based
our
nationwide
cost
estimates
on
the
use
of
RTO
technology
at
all
of
the
impacted
facilities
because:
(
1)
RTO
technology
can
be
used
to
reduce
emissions
from
all
types
of
PCWP
process
units;
and
(
2)
we
could
not
accurately
predict
which
facilities
would
use
emissions
averaging
or
PBCO
or
install
add­
on
control
devices
that
are
less
costly
to
operate,
such
as
RCO
and
biofilters.
Therefore,
our
cost
estimates
are
likely
to
be
overstated
as
we
anticipate
that
owners
and
operators
of
impacted
sources
will
take
advantage
of
available
cost
saving
opportunities.

The
high­
end
estimated
total
capital
costs
of
today's
final
rule
are
$
471
million.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
capital
costs
could
fall
to
$
240
million.
These
capital
costs
apply
to
existing
sources
and
include
the
costs
to
purchase
and
install
both
the
RTO
equipment
(
and
in
some
cases,
a
WESP
upstream
of
the
RTO)
and
the
monitoring
A­
5
equipment,
and
the
costs
of
performance
tests.
Wood
products
enclosure
costs
are
also
included
for
reconstituted
wood
products
presses.

The
high­
end
estimated
annualized
costs
of
the
final
standards
are
$
140
million.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
annualized
costs
could
fall
to
$
74
million.
The
annualized
costs
account
for
the
annualized
capital
costs
of
the
control
and
monitoring
equipment,
operation
and
maintenance
expenses,
and
recordkeeping
and
reporting
costs.
Potential
control
device
cost
savings
and
increased
recordkeeping
and
reporting
costs
associated
with
the
emissions
averaging
provisions
in
today's
final
rule
are
not
accounted
for
in
either
the
capital
or
annualized
cost
estimates.

Economic
Impacts
The
economic
impact
analysis
shows
that
the
expected
price
increases
for
affected
output
would
range
from
only
0.4
to
1.3
percent
as
a
result
of
the
NESHAP
for
PCWP
manufacturers.
The
expected
change
in
production
of
affected
output
is
a
reduction
of
0.06
to
0.4
percent
for
PCWP
manufacturers
as
a
result
of
today's
final
rule.
No
plant
closures
are
expected
out
of
the
223
facilities
affected
by
the
final
rule.
Therefore,
it
is
likely
that
there
is
no
adverse
impact
expected
to
occur
for
those
industries
that
produce
output
affected
by
the
final
rule,
such
as
hardboard,
softwood
plywood
and
veneer,
engineered
wood
products,
and
other
composite
wood
products.

The
economic
impact
analysis
for
the
final
rule
estimates
effects
upon
employment
and
foreign
trade
for
the
industries
affected
by
the
rule.
The
total
reduction
in
employment
for
the
affected
industries
is
0.3
percent
of
the
current
employment
level
(
or
225
employees).
This
estimate
includes
the
increase
in
employment
among
firms
in
these
industries
that
do
not
incur
any
cost
associated
with
the
final
rule.
There
is
also
minimal
change
in
the
foreign
trade
behavior
for
the
firms
in
these
industries
since
the
level
of
imports
of
affected
composite
wood
products
only
increases
by
less
than
0.1
percent.
There
will
be
reductions
in
effects
on
the
national
economy
associated
with
eligibility
of
sources
for
the
delisted
low­
risk
subcategory.
The
employment
level
will
now
be
reduced
by
126
employees,
which
is
99
fewer
than
the
reduction
estimated
for
the
final
rule.
The
increase
in
the
level
of
imports
is
half
as
large
as
that
for
the
final
rule.

Social
Costs
and
Benefits
Our
assessment
of
costs
and
benefits
of
today's
final
rule
is
detailed
in
the
"
Regulatory
Impact
Analysis
for
the
Plywood
and
Composite
Wood
Products
MACT."
The
Regulatory
Impact
Analysis
(
RIA)
is
located
in
Docket
number
A­
98­
44
and
Docket
number
OAR­
2003­
0048.

It
is
estimated
that
3
years
after
implementation
of
the
final
rule
requirements,
reductions
of
formaldehyde,
acetaldehyde,
acrolein,
methanol,
phenol
and
several
other
HAP
from
existing
PCWP
emission
sources
would
be
5,900
Mg/
yr
(
6,600
tons/
yr)
to
9,900
Mg/
yr
(
11,000
tons/
yr),
depending
on
how
many
affected
sources
are
in
the
low­
risk
subcategory.
The
health
effects
associated
with
these
HAP
are
discussed
earlier
in
this
preamble.
A­
6
As
for
social
costs,
the
high­
end
estimated
annualized
social
costs
of
the
final
standards
are
$
135.1
million.
Depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory,
the
annualized
social
costs
could
fall
to
$
75
million.

At
this
time,
we
are
unable
to
provide
a
comprehensive
quantification
and
monetization
of
the
HAP­
related
benefits
of
the
final
rule.
Nevertheless,
it
is
possible
to
derive
rough
estimates
for
one
of
the
more
important
benefit
categories,
i.
e.,
the
potential
number
of
cancer
cases
avoided
and
cancer
risk
reduced
as
a
result
of
the
imposition
of
the
MACT
level
of
control
on
this
source
category.
Our
analysis
suggests
that
imposition
of
the
MACT
level
of
control
would
reduce
cancer
cases
by
less
than
one
case
per
year,
on
average,
starting
some
years
after
implementation
of
the
standards.
We
present
these
results
in
the
RIA.
This
risk
reduction
estimate
is
uncertain
and
should
be
regarded
as
an
extremely
rough
estimate
and
should
be
viewed
in
the
context
of
the
full
spectrum
of
unquantified
noncancer
effects
associated
with
the
HAP
reductions.
The
risk
reduction
estimate
will
be
somewhat
less
depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory.

The
control
technologies
used
to
reduce
the
level
of
HAP
emitted
from
PCWP
sources
are
also
expected
to
reduce
emissions
of
CO,
PM10,
and
VOC.
Human
health
effects
associated
with
exposure
to
CO
include
cardiovascular
system
and
CNS
effects,
which
are
directly
related
to
reduced
oxygen
content
of
blood
and
which
can
result
in
modification
of
visual
perception,
hearing,
motor
and
sensorimotor
performance,
vigilance,
and
cognitive
ability.
The
VOC
emissions
reductions
may
lead
to
some
reduction
in
ozone
concentrations
in
areas
in
which
the
affected
sources
are
located.
There
are
both
human
health
and
welfare
effects
that
result
from
exposure
to
ozone,
and
these
effects
are
listed
earlier
in
the
RIA
and
in
the
preamble..

At
the
present
time,
we
cannot
provide
a
monetary
estimate
for
the
benefits
associated
with
the
reductions
in
CO.
We
also
did
not
provide
a
monetary
estimate
for
the
benefits
associated
with
the
changes
in
ozone
concentrations
that
result
from
the
VOC
emissions
reductions
since
we
are
unable
to
do
the
necessary
air
quality
modeling
to
estimate
the
ozone
concentration
changes.
For
PM10,
we
did
not
provide
a
monetary
estimate
for
the
benefits
associated
with
the
reduction
of
the
emissions,
although
these
reductions
are
likely
to
have
significant
health
benefits
to
populations
living
in
the
vicinity
of
affected
sources.

There
may
be
increases
in
NOX
emissions
associated
with
today's
final
rule
as
a
result
of
increased
use
of
incineration­
based
controls.
These
NOX
emission
increases
by
themselves
could
cause
some
increase
in
ozone
and
particulate
matter
(
PM)
concentrations,
which
could
lead
to
impacts
on
human
health
and
welfare
as
listed
in
Table
3
of
this
preamble.
The
potential
impacts
associated
with
increases
in
ambient
PM
and
ozone
due
to
these
emission
increases
are
discussed
in
the
RIA.
In
addition
to
potential
NOX
increases
at
affected
sources,
today's
final
rule
may
also
result
in
additional
electricity
use
at
affected
sources
due
to
application
of
controls.
These
potential
increases
in
electricity
use
may
increase
emissions
of
SO2
and
NOX
from
electricity
generating
utilities.
As
such,
the
final
rule
may
result
in
additional
health
impacts
from
increased
ambient
PM
and
ozone
from
these
increased
utility
emissions.
However,
it
is
possible
that
the
Acid
Rain
trading
program
will
serve
to
keep
SO
2
emissions
from
increasing,
and
the
NOx
SIP
call
may
serve
to
mitigate
increases
of
NOX.
We
did
not
quantify
or
monetize
these
health
impacts.
All
of
these
impacts
will
be
reduced
In
determining
the
overall
economic
consequences
of
the
final
rule,
it
is
essential
to
consider
not
only
the
costs
and
benefits
expressed
in
dollar
terms
but
also
those
benefits
and
costs
that
we
could
not
5
Ibid.

A­
7
quantify.
A
full
listing
of
the
benefit
categories
that
could
not
be
quantified
or
monetized
in
our
analysis
is
provided
in
Chapter
6
of
the
RIA.
All
of
these
benefits
and
effects
will
be
mitigated
depending
on
the
number
of
facilities
eventually
demonstrating
eligibility
for
the
low­
risk
subcategory.

Small
Business
Analysis
As
discussed
in
earlier
sections
of
this
preamble,
we
present
the
impacts
of
the
rule
associated
with
allowing
PCWP
facilities
to
demonstrate
eligibility
for
the
delisted
low­
risk
subcategory
and
thereby
avoid
MACT
altogether.
The
number
of
small
businesses
impacted
is
reduced
to
seven
from
the
original
17,
and
the
total
number
of
businesses
impacted
is
reduced
to
42,
down
from
the
original
52.
Small
businesses
represent
17
percent
of
the
companies
within
the
source
category,
which
is
down
from
the
32
percent
estimate
for
the
final
rule.
These
small
businesses
are
expected
to
incur
4
percent
of
the
total
industry
compliance
costs
of
$
75
million
(
the
costs
considering
inclusion
of
the
delisted
low­
risk
subcategory).
There
are
no
small
firms
with
compliance
costs
equal
to
or
greater
than
3
percent
of
their
sales
as
compared
to
three
for
the
final
rule.
In
addition,
there
are
four
small
firms
with
cost­
to­
sales
ratios
between
1
and
3
percent,
which
is
down
from
seven
for
the
final
rule.

Energy
Impact
Analysis
The
impacts
from
consideration
of
a
low­
risk
subcategory
are
a
reduction
in
all
of
the
energy
impacts
listed
above.
For
fuel
production,
the
result
of
this
indirect
effect
from
reduced
product
output
is
a
reduction
of
only
about
0.6
barrel
per
day
nationwide,
or
a
0.000007
percent
reduction
nationwide
based
on
1998
U.
S.
fuel
production
data.
5
This
is
a
0.4
barrel
smaller
reduction
than
that
estimated
for
the
final
rule.
For
coal
production,
the
resulting
indirect
effect
from
reduced
product
output
is
a
reduction
of
only
950
tons
per
year
nationwide,
or
only
a
0.0000044
percent
reduction
nationwide
based
on
1998
U.
S.
coal
production
data.
This
is
a
smaller
reduction
than
that
estimated
for
the
final
rule
by
1,050
tons
per
year.
For
electricity
production,
the
resulting
indirect
effect
from
reduced
product
output
is
a
reduction
of
20.7
million
kWh/
yr,
or
only
a
0.00006
percent
reduction
nationwide
based
on
1998
U.
S.
electricity
production
data.
This
is
a
smaller
output
reduction
than
that
estimated
for
the
final
rule
by
22.1
million
kWh/
yr.
Given
that
the
estimated
price
increase
for
product
output
from
any
of
the
affected
industries
is
no
more
than
2.5
percent,
there
should
be
no
price
increase
for
any
energy
type
by
more
than
this
amount.
The
cost
of
energy
distribution
should
not
be
affected
by
the
final
rule
at
all
since
the
rule
does
not
affect
energy
distribution
facilities.
Finally,
with
changes
in
net
exports
being
a
minimal
percentage
of
domestic
output
(
0.006
percent,
or
practically
the
same
as
that
for
the
final
rule)
from
the
affected
industries,
there
will
be
only
a
negligible
change
in
international
trade,
and
hence
in
dependence
on
foreign
energy
supplies.
No
other
adverse
outcomes
are
expected
to
occur
with
regards
to
energy
supplies.
Thus,
the
net
effect
on
energy
production
if
facilities
are
eligible
for
the
low­
risk
source
category
is
an
increase
in
electricity
output
of
0.008
percent
compared
to
1998
output
data,
and
a
negligible
change
in
output
of
other
energy
types.
This
is
a
0.004
percent
smaller
increase
in
electricity
output
compared
to
the
impact
of
the
final
rule.
All
of
the
results
presented
above
account
for
the
passthrough
of
costs
to
consumers,
as
well
as
the
cost
impact
to
producers.
These
results
also
account
for
how
energy
use
is
related
to
product
output
for
6U.
S.
Department
of
Energy,
Energy
Information
Administration.
1998
Manufacturing
Energy
Consumption
Survey.
Located
on
the
Internet
at
http://
www.
eia.
doe.
gov/
emeu/
mecs/
mecs98/
datatables/
contents.
html.

A­
8
the
affected
industries.
6
TECHNICAL
REPORT
DATA
(
Please
read
Instructions
on
reverse
before
completing)

1.
REPORT
NO.

EPA­
452/
R­
04­
005
2.
3.
RECIPIENT'S
ACCESSION
NO.

4.
TITLE
AND
SUBTITLE
Regulatory
Impact
Analysis
for
the
Plywood
and
Composite
Wood
Products
NESHAP
5.
REPORT
DATE
February
2004
6.
PERFORMING
ORGANIZATION
CODE
7.
AUTHOR(
S)
8.
PERFORMING
ORGANIZATION
REPORT
NO.

9.
PERFORMING
ORGANIZATION
NAME
AND
ADDRESS
Air
Quality
Strategies
and
Standards
Division
Innovative
Strategies
and
Economics
Group
10.
PROGRAM
ELEMENT
NO.

11.
CONTRACT/
GRANT
NO.

12.
SPONSORING
AGENCY
NAME
AND
ADDRESS
Office
of
Air
Quality
Planning
and
Standards
U.
S.
Environmental
Protection
Agency
Research
Triangle
Park,
NC
27711
13.
TYPE
OF
REPORT
AND
PERIOD
COVERED
14.
SPONSORING
AGENCY
CODE
EPA/
200/
04
15.
SUPPLEMENTARY
NOTES
16.
ABSTRACT
This
report
contains
costs,
economic
impacts,
and
benefits
information
for
the
final
Plywood
and
Composite
Wood
Products
NESHAP.
This
MACT
standard
has
annualized
social
costs
of
$
135
million.
No
significant
small
business
impacts
are
expected.

17.
KEY
WORDS
AND
DOCUMENT
ANALYSIS
a.
DESCRIPTORS
b.
IDENTIFIERS/
OPEN
ENDED
TERMS
c.
COSATI
Field/
Group
Air
Pollution
control,
Economic
Impacts,
Small
Business
Impacts,
Benefits
18.
DISTRIBUTION
STATEMENT
Release
Unlimited
19.
SECURITY
CLASS
(
Report)

Unclassified
21.
NO.
OF
PAGES
180
20.
SECURITY
CLASS
(
Page)

Unclassified
22.
PRICE
EPA
Form
2220­
1
(
Rev.
4­
77)
PREVIOUS
EDITION
IS
OBSOLETE