Document ID: EPA-HQ-OAR-2018-0417-0025
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2019-02-04T05:00Z

MEMORANDUM

TO:	EPA Docket No. EPA-HQ-OAR-2018-0417

FROM:	Larry Sorrels, Economist 
            U.S. EPA/OAQPS/HEID/AEG (C439-02)
Date:		July 24, 2018
Subject:	Economic and Small Business Impact Analysis for the Proposed HCl Production Risk and Technology Review (RTR) NESHAP Proposal
      
	This report is the economic impact analysis for the proposed hydrochloric acid (HCl) production risk and technology review (RTR) rule.  This rule is intended as a review of the existing Maximum Achievable Control Technology (MACT) standard promulgated in 2004.  This rule is under a court-ordered schedule for promulgation by March 13, 2020.  The hazardous air pollutant (HAP) risk assessment for this proposal determined that the residual risk from this industry was adequate, thus no additional control is necessary to reduce risk.  The technology review determined that no new control technologies had become available for HAP reductions since the promulgation of the MACT in 2004. Thus, no new technologies are available to apply for additional HAP control for this proposed RTR. 

	This proposal is estimated to yield $16,569 (2016 dollars) in cost savings annually due to a reduction in monitoring, recordkeeping, and reporting requirements.   These cost savings are, in present value (PV) terms, equal to $84,514 at a discount rate of 3% and $62,136 at a discount rate of 7%, discounted to 2016.   The equivalent annualized value, which is consistent with the PV estimate, is equal to $22,736 at a discount rate of 3% and $18,344 at a discount rate of 7% (2016 dollars).  

	Given the cost savings that are expected with this proposal, no adverse economic impact to the industry is expected.  No small businesses will be impacted, so there is no adverse impact to small businesses.  

	Below is a brief profile of the HCl production industry. This industry profile describes the hydrochloric acid production industry, the processes included in production of this chemical and a list of HCl production facilities affected by this proposal. The ultimate parent company for each facility is listed, along with revenues and employment for each company.  
       
1. Hydrochloric Acid Production Industry

1.1 Product and Manufacturing Overview 
	
	Hydrochloric acid is produced largely as an intermediate chemical used in the manufacturing of other chemicals. A gaseous stream enters an absorption tower in which the HCl is absorbed into water or dilute HCl to produce concentrated HCl. Concentrated aqueous HCl is then used on-site for other processes or transported off-site. 

2.0 Hydrochloric Acid Production Manufacturing Process

2.1 Overview of Process

	The HCl production process involves the absorption of gaseous HCl into water or aqueous HCl, associated material transfer and loading operations, HCl storage tanks, and other equipment to move the HCl between these points in the process. The process covered by the HCl production NESHAP begins at the point that gaseous HCl enters and absorber and ends at the point where the liquid HCl product produced in the HCl production unit is loaded into a tank truck, rail car, ship, or barge, at the point the HCl product enters another process on the plant site, or at the point the HCl product leaves the plant site via pipeline. 

2.2 Process Description: This section describes each of the principal processing steps in the hydrochloric acid production process.

2.2.1 HCl Absorber. The source category begins at the point that a gaseous HCl stream enters an absorber. There are numerous types of processes that produce a gaseous stream containing HCl that is the starting point for an HCl facility (including fume silica production). However, the NESHAP is blind to the type of process that generates the HCl, as the HCl production facility begins at the point where the stream containing HCl enters the absorber. The gaseous HCl stream enters the absorption tower and is absorbed into water or aqueous HCl. The gaseous stream leaving the absorption column contains HCl that was not absorbed into the liquid in the tower and any Cl2 present in the inlet stream. This outlet stream may be routed (or recycled) to another process, in which case it is no longer part of the HCl production affected source. However, if the outlet stream is directly discharged to the atmosphere or if it is routed through other recovery/control devices before being discharged to the atmosphere, it is considered an HCl process vent from an HCl production facility.  

2.2.2 HCl Storage, Transfer, and Loading. If the liquid HCl leaving the absorption tower is routed to an HCl storage tank, there is the potential for HCl emissions from the tank. There is also the potential for emissions when HCl is loaded from a storage tank to a tank truck, rail car, ship, or barge. Plants often reduce HCl emissions from HCl storage tanks and HCl transfer operations by using a scrubber.

3.0 Economic Profile of the Hydrochloric Acid Production Industry

      The HCl acid production industry is found in NAICS 325180 (Other Basis Inorganic Chemical Manufacturing) and NAICS 325199 (All Other Basic Organic Chemical Manufacturing).   Most of the affected facilities are in NAICS 325199, which was determined to be unconcentrated with regards to firm concentration as calculated by the Herfindahl-Hirschmann Index (HHI) in a 2013 EPA memo.  The HCl acid production source category includes 19 facilities, a substantial decline since the 2004 final rule was promulgated. At that time, there were over sixty facilities in the source category. These 19 facilities are owned by 14 different ultimate parent companies, with one facility operating as a joint venture between two parent companies.  No growth in the number of HCl acid production facilities is expected in the next several years.  The EPA collected facility and emissions data for this rulemaking from EPA databases such as the 2014 National Emissions Inventory (NEI), Enforcement and Compliance History Online (ECHO), and state title V permit databases.  Thus, the facility names are consistent with the facility identifications in these EPA databases.  The EPA collected ultimate parent company data from a variety of sources, with the companies' annual reports being the most common.  Most of the affected companies are large, U.S.-owned firms that operate globally.  All revenue and employment data is for 2016.  
   
                  Table 1: HCl Production Facility List

Facility Name
Address
Ultimate Parent Company
Revenues (2016 dollars)
Employment (2016)
Arkema Inc.
4444 Industrial Pkwy, Calvert City, KY 42029
Arkema Inc.
$8,314,000,000
19,637
BASF Corp.
2525 S. Kensington Rd., Kankakee, IL 60901
BASF
67,770,550,000
113,830
BASF Corp.  -  Geismar Site
8404 River Rd. (Highway 75), Geismar, LA 70734
BASF

BASF Corporation
1379 Ciba Road, Mcintosh, AL, 36553
BASF

Cabot Corp
700 E. US Highway 36, Tuscola, IL, 61953
Cabot
2,411,000,000
4,500
Dow Chemical Company
901 Loveridge Road, Pittsburg, CA, 94565
DowDuPont
62,484,000,000
98,000
Dow Texas Operations Freeport
2301 N. Brazosport Blvd., Clute, TX 77541
DowDuPont

Blue Cube Operations LLC
21255 Hwy 1, Plaquemine, LA 70765
Olin Corp.
5,550,600,000
6,400
The Dow Chemical Company U.S.A., Midland
1790 Building, Midland, MI 48674
DowDuPont

Dupont Washington Works
Route 892, Washington, WV 26181
Chemours
5,400,000,000
7,000
E.I. du Pont de Nemours & Co.
4200 Camp Ground Rd., Louisville, KY 40216
Chemours

Evonik Corporation
4201 Evonik Road, Theodore, AL 36582
Evonik Industries AG
14,133,000,000
34,351
Hexion Inc.  -  Norco Facility
16122 River Rd. Lot 3, Norco, LA 70079
Hexion Inc. (controlled by Apollo Global Management, LLC)
3,400,000,000
4,300
Honeywell International Inc.  -  Baton Rouge Plant
Lupine & Ontario, Baton Rouge, LA 70821
Honeywell Inc.
39,302,000,000
131,000
Honeywell International Inc.  -  Geismar Plant
5525 Hwy 3115, Geismar, LA 70734
Honeywell Inc. 

Momentive Performance Materials
260 Hudson River Rd., Waterford, NY 12188
MPM Holdings, Inc.
2,200,000,000
4,900
Polymer Additives Inc.
US Rt 130 South, Bridgeport, NJ 08014
Metals and Additives Group

PPG  -  South Plant
PPG Industries, Inc., Barberton, OH 44203
PPG
14,751,000,000
47,000
Rubicon LLC  -  Geismar Plant
9156 Hwy 75, Geismar, LA 70734
Joint venture between Huntsman and Laxness

	None of the ultimate parent companies affected by this proposed RTR is small according to the Small Business Administration (SBA) size standards applicable to companies in this industry.  The relevant small business size standards are listed in Table 2 below. The vast majority of affected ultimate parent companies are in NAICS 325199.  

	Table 2.  Small Business Size Standards for Companies in HCl Production Industry*

            NAICS Code
NAICS Code Definition
Small Business Size Standards (employees or gross annual revenues)
325180
Other Basic Inorganic Chemical Manufacturing
1,000
325199
All Other Basic Organic Chemical Manufacturing
1,250
*Small Business Size Standards are found at Table of Small Business Size Standards, U.S. SBA, updated October 1, 2017.   Available at https://www.sba.gov/sites/default/files/files/Size_Standards_Table_2017.pdf.  

	The references for the data in Table 1 is available in the spreadsheet, "HClRTREconomicData.xls."  This spreadsheet is in the docket for this rulemaking.  

4.0 Impact Results

	
	With annualized cost savings of $16,569 for most years of compliance.  no business will be adversely affected by this proposed rule.  With no small businesses impacted, there are no adverse impacts to small businesses.  There will also be no adverse impacts to consumers of HCl as an intermediate or end-use chemical, as well.  

      In implementing Executive Order 13771, the U.S. Office of Management and Budget has requested agencies calculate the present value (PV) in 2016 of the costs or cost savings of an action using both 7 percent and 3 percent end-of-period discount rates for those actions, including those not economically significant according to Executive Order 12866, subject to the Exec. Order such as this one.  OMB directs this PV be calculated over the full duration of the expected effects of the action, and also that the PV be calculated discounted to 2016.
      For this proposed rule, an eight-year time period was selected as section 112 of the Clean Air Act requires standards such as this one be reviewed every 8 years.   Given a compliance period of three years from promulgation, compliance costs are calculated with the expectation that costs will be incurred (or savings experienced) beginning in 2020 as this rule is expected to be finalized under court-order by March 13, 2020.  With a 2020 compliance date, the 8 years over which these calculations are made cover the years 2020-2027.  
      Table 3 below shows the undiscounted stream of costs and costs savings per year, as well as their present values discounted to 2016.  All costs are in 2016 dollars. Costs with a negative sign are cost savings.  As seen below, the PV for 2016 at a discount rate of 3% is -$84,514 and -$62,136 at a discount rate of 7%.   Thus, the PV of costs for this proposal is negative under each discount rate.  The proposal yields a cost savings under a present value calculation. 
      The cost estimate for this proposal include changes due to the removal of startup, shutdown, and maintenance (SSM) recordkeeping and reporting requirements, introduction of electronic reporting, and a one-time initial cost from review of the proposal requirements by staff at affected facilities.  The impact of these changes is a cost savings each year except for the first year of compliance. 
Table 3. Undiscounted Costs, Discounted Costs, and Present Value Analysis for the Proposed HCl Production RTR. (2016$)
Year

Undiscounted  (Annual) Cost
Total Discounted Costs 

                                   Capital 
                                   O&M 
                                      3%      
                                      7% 
2020 
                                    $5,670
                                    -$4,540
                                    $1,130
                                    $1,130
2021
                                      $0
                                    -$9,381
                                    -$9,108
                                    -$8,767
2022
                                      $0
                                   -$16,569
                                   -$15,618
                                   -$14,472
2023
                                       0
                                   -$16,569
                                   -$15,163
                                   -$13,525
2024
                                       0
                                   -$16,569
                                   -$14,721
                                   -$12,640
2025
                                       0
                                   -$16,569
                                   -$14,293
                                   -$11,813
2026
                                       0
                                   -$16,569
                                   -$13,876
                                   -$11,041
2027
                                       0
                                   -$16,569
                                   -$13,472
                                   -$10,318
2016 Present Value 
                                       
                                       
                                   -$84,514
                                   -$62,136

      Table 4 summarizes the present value of the costs in 2016, accounting for the additional compliance costs to industry, as well as the equivalent annualized values (EAV) over the chosen 8-year time frame. The EAV is the annualized present value of the costs, and is estimated consistent with the estimate for the PV discounted to 2016. As seen below, the EAV at a discount rate of 3% is -$22,736 and -$18,344 at a discount rate of 7%.   Thus, the EAV of costs for this proposal is negative under each discount rate, and the annualized cost calculated in this way show cost savings. 
      All calculations of PV and EAV are documented in the spreadsheet "HClproductionproposalRTRPV_EAVestimates.xls."   This spreadsheet is found in the docket for this rulemaking. 
      
Table 4.  2016 Present Value of Costs and Equivalent Annualized Values for the Proposed HCl Production RTR. (2016$)

2016 Present Value of 
 Costs
Equivalent Annualized Value of 
 Costs
7% Discount Rate
                                   -$62,136
                                   -$18,344
3% Discount Rate
                                   -$84,514
                                   -$22,736