NOTE TO FILE

National Volatile Organic Compound Emission

Standards for Aerosol Coatings

COST IMPACTS ANALYSIS-

FINAL RULE

Contract No: EP-D-07-064

SPPD Project No. 25

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

Sector Policies and Programs Division

Research Triangle Park, North Carolina 27711

November 2007

National Volatile Organic Compound Emission

Standards for Aerosol Coatings

	

COST IMPACTS ANALYSIS

Overview 

This report presents EPA’s estimated costs for aerosol coating
manufacturers to comply with the final Aerosol Coatings Reactivity Rule
(ACRR).  This rule was developed by EPA under Section 183(e) of the
Clean Air Act.  The report also includes a discussion of supplemental
information on the price of aerosol coatings, and the types of products
manufactured by small aerosol coating manufacturers.  The supplemental
information was used in the development of the economic analysis,
presented in a separate document.  Information presented in this report
is based on data supplied by the California Air Resources Board (CARB),,
 publicly available information on aerosol coating manufacturers and the
types of products they manufacture, publicly available information on
the prices of aerosol coatings, and information provided by the National
Paint and Coatings Association (NPCA). 

Section I of this report provides the approach used to determine the
overall cost increases per can as a result of this regulation.  Section
II presents the procedure used to identify the affected entities for
this rulemaking.  Section III summarizes some additional information on
the characteristics of the affected entities for this rulemaking that
was been gathered during the development of this rule.  This additional
information was used during the assessment of the economic impacts of
this rule.  

Estimated Costs Per Can 

There are three categories of costs that result from a regulation that
requires product reformulation:  the cost of the raw materials for the
compliant coating; the cost of research and development efforts
necessary to develop compliant formulations; and, recordkeeping and
reporting costs of the final regulation.  

Table 1 summarizes the per-can costs for each of these three cost areas
for each coating category.  For some categories, this rule is expected
to have no cost increase.  These are the categories where the
reformulated product is expected to cost less per can than the
noncompliant product.  These cost savings were sufficient to cover the
costs of reformulation research and compliance costs.  In addition,
several other categories only had costs for the compliance demonstration
requirements of the regulation, since all known products in the category
were compliant with the final limits.  The highest per-can increase as a
result of the final regulation is $0.14 per can.  The approach used for
each of the three cost areas is presented below.

Raw Material Costs-Per-Can

The final ACRR is based on reactivity limits established for 6 general
coating categories and 30 specialty coating categories. (See Table 1.) 
To meet these reactivity limits, aerosol coating manufacturers may need
to reformulate existing coatings with different combinations of solvents
and propellants (i.e., different solvents/propellants or different
ratios of the same solvents/propellants).  In some cases, the cost of
these raw materials may be more expensive for the reformulated (i.e.,
compliant) coating than for the original coating.

To calculate the raw material costs associated with meeting the
reactivity limits in the final ACRR, EPA used survey data generated by
CARB to identify average formulations for each coating category.  This
information was combined with cost data for each compound to assess cost
increases. 

The CARB survey was conducted in 1997, and included information on the
prices of the raw materials used in aerosol coatings by manufacturers.2 
Specifically, data on sales and aerosol coating formulations from
manufacturers selling products in California were generated.  Although
the survey’s primary focus was on companies selling aerosol coating
products in California, the survey also included sales and formulation
data for aerosol coating manufacturers located throughout the country. 
Aerosol coating formulation data generated by CARB’s 1997 survey is
the most comprehensive data on aerosol coating formulations that is
available to EPA.

In estimating the costs associated with the implementation of this final
reactivity-based regulation, EPA will use a typical complying and a
typical non-complying formulation for the 6 general coating categories,
and the 19 specialty coating categories established by CARB.  There were
only 19 specialty categories because some categories were combined into
a single category for this assessment to protect confidential business
information.  EPA determined that the use of these typical formulations
would provide a reasonable assessment of the average cost increases (or
decreases) for a category,  

For this analysis, EPA updated raw material costs from 2000 costs
(available in the CARB report) to 2006 costs.   For some raw materials,
no updated cost information could be found.  The average cost increase
of all other raw materials (i.e., where data were available) was used to
estimate the cost increase from 2000 to 2006 for these compounds.  All
of the raw materials have increased in cost since 2000, with increases
ranging from 1.2 to 2.8 times the 2000 costs.  The raw material cost of
acetone, which has a low reactivity and is expected to be used
extensively in the reformulated coatings, increased the most, by a
factor of 2.8.

Data presented by CARB in its Initial Statement of Reasons2 indicates
that all coatings in 10 of the 19 specialty coating categories were
already complying with the reactivity limits in 1997.  For this
analysis, EPA assumed that these categories had no change in raw
material costs.  One category, polyolefin adhesion promoters, was not
added to CARB’s list of regulated categories until after the 1997
survey was completed.  For this category, EPA used the average increase
in raw material costs for the other specialty coating categories for raw
material cost estimate.

The per-can cost changes for each category are summarized in the second
column of Table 1.  For three categories, the cost of the raw materials
for the complying formulation was less than the cost of the raw
materials for the non-complying formulation, resulting in a cost savings
per can.  Overall, the per-can raw material costs for the categories
ranged from a cost savings of $0.04/can to a cost increase of $0.12/can.

Research and Development Costs

Aerosol coating manufacturers not only have to develop formulations that
meet the reactivity limits in the final rule, but they will want to
ensure that the reformulated coatings have the same performance
characteristics as the coatings that will be replaced.  EPA anticipates
that this may require manufacturers to invest resources in research and
development efforts.  For the purposes of this analysis, EPA assumed
that each company would have to hire at least one additional chemist to
assist in reformulation efforts.

Although large manufacturers may be responsible for more formulations,
most large companies have already made significant progress in
reformulating their coatings to meet the reactivity limits.5 
Furthermore, CARB’s reactivity limits have been in effect since 2002. 
California is a large market and large companies would have to
reformulate their coatings to meet the CARB limits, or risk losing a
significant market share for their coatings.  Even if the larger
companies are manufacturing two formulations of each coating, they will
have already performed the research and development necessary to develop
compliant formulations.   In addition, many of the large manufacturers
distribute their products through large, national retailers such as
Wal-Mart, Home Depot and Lowe’s.  These companies may require
manufacturers to supply them with coatings that can be distributed
anywhere in the country.  Otherwise, the retailers would have the
additional burden of separating the coatings for shipment to different
areas of the country.

Small companies may have fewer products to reformulate and fewer
in-house resources.  Many small companies have already made progress
towards reformulating their coatings to meet the California limits; 5
however, EPA recognizes that there may be some small regional
manufacturers that do not market their products in California.   To
avoid underestimating the costs of the regulation to small businesses,
this analysis assumes that all of the small manufacturers will have to
hire at least one additional chemist.

In order to be consistent with the analysis of raw material costs,
research and development costs were calculated on a per can basis for
each category, as well.  Based on a 1997 list of aerosol coating
manufacturing companies by coating category, a total of one chemist was
assigned for each coating company.  For instance, if a company
manufactured products in two categories, 0.5 chemists were assigned to
each category.  If a company manufactured products in five categories,
0.2 chemists were assigned to each category.  Four companies, 3 large
companies and one small company, manufactured coatings in more than 10
categories.  Because EPA did not assign less than 0.1 chemists per
category, these companies were assigned more than one chemist.  To
calculate research and development costs by category, the number of
chemists assigned to each category was totaled.

The American Chemical Society’s (ACS) ChemCensus report provided
information on chemists’ salaries that EPA used in developing our
research and development costs.  According to the report, the median
salary for a chemist in 2005 was $83,000/year.  The cost for a company
to hire a chemist not only includes the salary of the employee, but also
the cost of the employee’s benefits.  Therefore, the cost to hire a
chemist is the median salary, multiplied by factor of 1.6, for a total
of $132,800/year.  Following EPA precedents, research and development
costs are annualized over a period of 10 years, at an interest rate of
7.0 percent.  This equates to a capital recovery factory (CRF) of
0.1424.  Multiplying the annual cost for a chemist by the CRF gives the
annualized research and development costs for one chemist for one year
($18,910). By multiplying this value by the total number of chemists
assigned to each category, EPA determined the cost for research and
development for each product category.

As stated previously, to be consistent with the analysis of raw material
costs, the number of cans manufactured in each category was determined,
then research and development costs per can were calculated for each
category.  10,298,000 gallons of concentrate were produced in 2005. 
Based on information supplied by NPCA, this analysis assumes 4 ounces of
concentrate are present in each 10.5 ounce can. Therefore, 329,536,000
10.5 ounce cans were produced in 2005.   The total number of cans was
then distributed among the coating categories based on market share
(i.e., sales for each category divided by the total sales).  Then,
annualized research and development costs for each category were divided
by the total number of cans in that category, giving the research and
development costs per can for each category.

Table 2 presents the total number of chemists hired for each category,
the number of cans for each category, and the annualized research and
development costs per can for each category.  As with the raw material
costs, the analysis assumes no research and development costs for
categories with 100 percent compliant coatings in 1997.  The resulting
per-can costs for Research and Development are also included in Table 1,
which summarizes the overall costs per category.

C.  Recordkeeping and Reporting Costs

Aerosol coating manufacturers will also have costs associated with
meeting the recordkeeping and reporting requirements in the final rule. 
In developing these costs, the following activities were considered: 

Reporting requirements

Reading and understanding the reporting requirements of the rule;

Reading and understanding the compliance demonstration requirements of
the rule (for example, the approach for calculating reactivity values
for each coating);

Gathering information necessary to conduct the reactivity calculations
and prepare the initial notification; 

Preparing the initial notification; and,

Preparing supplemental reports if information contained in the initial
notification changes (e.g., contact information, list of coating
categories).

Responding to requests from the Administrator for detailed formulation
data

Developing triennial reports that include VOC formulation data for each
product, total mass of each VOC used at a company in aerosol products,
and providing discreet label identification (e.g., UPC codes) for each
product.

Recordkeeping requirements

Calculating the reactivity value for each coating formulation for the
initial compliance demonstration (includes setting up for future
calculations); and,

Gathering batch information for each formulation and calculating
reactivity values on an ongoing basis. 

Developing information for triennial reports.

Tables 3A through 3C present a summary of the recordkeeping and
reporting costs for each of the first three years after the compliance
date, including the triennial reporting in Year 3.  The Initial
Notification burden is included in Year 1 costs, even though it is
required before the compliance date, to ensure that the industry burden
is not underestimated.  The average of total burden was then calculated
for the first three years, as shown at the bottom of Table 3C.  Since
the Year 1 costs include items that only occur one time, this average
may overestimate the average yearly burden.  Using the total number of
cans, these costs were then converted to an average cost per can.  The
costs may also over-estimate the burden on small facilities, as EPA
assumed each company would have the same number of formulations.  After
the first year, the recordkeeping requirements discussed above will
continue.  In addition, an affected entity would also be required to
submit a supplemental notification if information contained in the
initial notification changes.  A new facility would likely have the same
or fewer costs in their first year, depending upon the number of
formulations manufactured in the first year.  Beginning in Year 3, a
company will also be required to submit a triennial report, as discussed
above.  The first report would be for Year 2 after the regulation, but
the burden for producing the report will be in Year 3.

In addition to the costs associated with the activities listed above, a
facility could take an estimated 24 hours to gather information and
develop a request for a variance or for a compliance extension available
to facilities that have not previously produced coatings that comply
with the California reactivity based regulations.  For the purpose of
this analysis, an estimated 10 percent maximum of the facilities would
need to make such a request.  EPA believes that 10 percent represents a
worst case, as only a single variance was requested in California when
the reactivity rules were implemented and less than 20 percent of
aerosol coating products were not complying with the California limits. 
The EPA also assumed that a report required of a small quantity
generator would take roughly the same amount of time as other Initial
Notifications.

The average recordkeeping and reporting costs for this regulation over
the first three years are estimated to be $811,000 per year, which
translates to cost per can of $0.002.  This cost would apply to all
coating categories, because specialty coating categories with 100
percent complying coatings will also have associated recordkeeping and
reporting costs.  This cost is also included for each category in Table
1, which summarizes the total costs as a result of this rulemaking.

Identifying Aerosol Coating Affected Entities

In order to ensure the aerosol coatings industry was accurately
characterized, three sources of information were used to compile a list
of potentially regulated entities.  First, NPCA provided us with a list
of potential aerosol coating manufacturers that included both NPCA
members and non-members.  The final two sources of information were
provided by CARB in the form of two lists - a master list of survey
respondents, and a list of manufacturers by coating category.  

To further refine the list of potentially regulated entities, an
internet search was conducted of all the companies on the aforementioned
three lists.  Based on the results of this search, 60 aerosol coating
companies were identified.  Some of the companies that were identified
by CARB and NPCA manufactured aerosol products such as lubricants and
degreasers, which are not considered aerosol coatings under this
regulation.  For a few companies that were on both lists, EPA could not
confirm that they manufactured, processed, or distributed aerosol
products based on information provided on their websites.  To be
conservative, these companies were included in EPA’s final list.

In the development of the list of aerosol coating companies, small
businesses were also identified.  The Small Business Administration has
determined that a small business in this industry category has fewer
than 500 employees. The CARB list of companies identified those
companies with more than 500 employees. The list of small businesses was
further refined using the internet. The internet search results showed
that some of the companies identified on CARB’s survey as having fewer
than 500 employees were actually subsidiaries of companies with more
than 500 employees.  Companies with more than 500 total employees were
redesignated a large businesses.  Results show that 40 of the 60
companies are small businesses.  Of the 40 small businesses, two
companies are subsidiaries of other companies.  EPA has been unable to
verify the total number of employees of the parent companies for the two
subsidiaries identified; therefore, these two small businesses have been
included on our final list of aerosol coating companies. 

In summary, the list of 60 companies may not represent the universe of
aerosol coating manufacturers.  There may be companies on the list that
do not manufacture aerosol coatings at all, and there may be some
aerosol coating manufacturers not on the list.  However, the list is
representative of the industry, as it includes companies of all sizes
and categories of aerosol coatings.  Therefore, this list, which is
presented in Table 4, has been used to develop the cost and economic
analyses for the industry.

Supplemental Information for the Economic Analysis

In collecting information for the cost analysis, EPA also collected
additional information that will be used in the development of the
economic analysis.  Although the economic analysis will be presented in
a separate document, EPA has included a summary of this information in
this report, it overlaps with some of the data collected for the cost
analysis.

Price Data for Aerosol Coatings

The basis of our economic analysis, which is discussed in more detail in
a separate memorandum, is the ratio of the increased cost of an aerosol
coating can in each category to the price of a can (i.e., revenue
generated by sale of the can) in each category.  To develop a database
of price information for the different coating categories, EPA conducted
an internet search.  Based on the results of this search, EPA was able
to develop average prices for each category of coatings except for the
following seven categories:

Aviation Propeller Coatings

Photographic Coatings

Pleasure Craft Primers

Pleasure Craft Topcoats

Polyolefin Adhesion Promoters

Slip-Resistant Coatings

Weld-Through Primers

For these seven categories, EPA used the average price for the other 23
specialty     categories.

The raw material cost estimates (presented in this report) are based on
a 10.5 ounce can for all categories.  To ensure our costs and prices
were based on the same size product, EPA had to adjust the prices for
each category to account for the average size of cans in that category. 
For most categories, the average size for a can ranges from
approximately 11 ounces to 14 ounces.  The exceptions are for hobby
coatings, which average less than 4 ounces, and ground/traffic/marking
coatings, which average more than 17 ounces.  

Because the price of an aerosol product includes not only the price of
the coating but also the non-coating components such as the can, the
valve, and the spray tip, EPA had to account for the cost of these
components in these calculations.  Based on information supplied by
NPCA, the cost of these components ranges from $0.30/can to more than
$0.80 per can.  This represents approximately 10 percent of the price of
most aerosol coatings.  Therefore, in adjusting the price data, EPA
assumed that 10 percent of the price was from these components.  EPA
then subtracted this 10 percent from the average price of coatings in
the category, calculated the ratio of the average size can in the
category to 10.5 ounces, and multiplied this ratio by the price of the
coating minus 10 percent.  EPA then added the 10 percent back into this
adjusted price to develop an average price for a 10.5 ounce can for each
category.  EPA recognizes that this approach does not account for the
possibility that a can holding 10.5 ounces of product may cost more than
a can holding 4 ounces of product or that there may be some economy of
scale in going from a 4 ounce product to a 10.5 ounce product.  However,
there are only two specialty categories, hobby and
ground/traffic/marking coatings, where EPA believe these factors would
make a significant difference (i.e., since these categories have average
sizes that differ the most from the 10.5 ounce average used). 
Manufacturers of hobby coatings have an incentive to package their
products in small cans as the definition of hobby coatings is restricted
to products in cans less than 6 ounces in size and these products have a
less stringent limit than comparable products that are packaged in
larger containers.

Table 5 presents average prices per can for each category and the number
of data points EPA used for each category in calculating the average. 
As shown in the table, average prices range from $3.46 per can for flat
coatings to $21.39 for exact match automotive coatings.

Additional Revenue Sources for Aerosol Coating Manufacturers

The lack of detailed revenue data by product category (i.e., revenue
from aerosol coatings and revenue for other products) for each aerosol
coating manufacturer impacts EPA’s ability to conduct a more detailed
economic analysis. For example, if EPA knew that half of the revenue for
a small business was from a non-aerosol coating product, EPA could
adjust the cost/revenue ratio by increasing the revenue in the
denominator by a factor of 2.   Although EPA cannot replace these
quantitative data, EPA determined that a qualitative evaluation would
provide with some additional information on the potential impact of the
regulation on the industry.  Therefore, EPA conducted an internet search
to identify additional information on the types of non aerosol coating
products manufactured by aerosol coating manufacturers, processors, and
distributors.  As EPA is particularly concerned about the impact of the
regulation on small businesses, EPA focused the search on the 40
companies that EPA identified as small businesses.

EPA was able to identify websites for 38 of the 40 small businesses on
the list.  All 38 of these companies manufacture products other than
aerosol coatings.  Some also manufacture non-aerosol coatings.  In
addition to manufacturing aerosol coatings, some companies also
manufacture aerosol products such as lubricants, degreasers and
adhesives that are not considered aerosol coatings under this
regulation.  Others manufacture products ranging from coating
application equipment to battery accessories to flower food to kayaks. 
Table 6 presents a list of the small businesses and the types of
products they manufacture other than aerosol coatings.

The two companies that EPA could not find websites for are Tru Test
Manufacturing and Burbank Paint Company.  EPA did find an EPA website
indicating that Tru Test Manufacturing does manufacture paints and
coatings, but was unable to determine if they only manufactured these
products or if they manufactured these products in both aerosol and
non-aerosol form.  EPA found a listing for a Burbank Paint Company that
appears to be a paint and hardware retailer.  EPA does not know if this
is the same company included on CARB’s list.  In any case, the address
for the company on CARB’s list is in California.  If this company is
an aerosol coatings manufacturer, it will already be manufacturing
compliant coatings and the EPA rule should have minimal impact on it. 

In summary, it is clear from the results of our analysis that aerosol
coatings are not the only revenue source for at least the majority of,
if not all, small aerosol coating manufacturers.  The cost increases
resulting from the implementation of EPA’s national rule will impact
only a portion of these companies’ revenue streams.  

Nationwide Costs of the Regulation

Using the total costs per can for each category and the total number of
cans in each category, EPA calculated the annual nationwide costs of the
regulation as $20,360,500.  These costs assume that all cans will have
to be reformulated except for those categories with a 100 percent
complying market share in 1997.  EPA recognizes that this value
significantly overestimates the nationwide costs as most of the coating
categories already had a significant percentage of complying coatings in
1997.  In 1997, the general category of flat coatings had an 11 percent
complying market share and the specialty category corrosion resistant
coatings had no complying coatings.  All of the other categories had a
minimum complying market share of 20 percent.  Overall, 75 percent of
the specialty coatings were already meeting the reactivity limits in
1997 and approximately 50 percent of all of the coatings were already
meeting the limits in 1997. 

Table 1.  Total Costs Per Can

Coating Category	Raw Material Costs

(per can)	R&D Costs

(per can)	R&R Costs

(per can)	Total Cost(s)

(per can)

Clear Coatings	0.03	0.008	0.002	0.040

Flat Coatings	0.05	0.003	0.002	0.055

Fluorescent Coatings	0.01	0.009	0.002	0.021

Metallic Coatings	0.01	0.004	0.002	0.016

Non-Flat Coatings	0.07	0.001	0.002	0.073

Primers	0.05	0.003	0.002	0.055

Ground/Traffic/Marking	0.07	0.002	0.002	0.074

Art Fixatives or Sealants	0.1	0.006	0.002	0.108

Auto Body Primers	0.02	0.006	0.002	0.028

Automotive Bumper & Trim	0.12	0.019	0.002	0.141.

Aviation or Marine Primers	0	0	0.002	0.002

Aviation Propellor Coatings	0	0	0.002	0.002

Corrosion Resistant Brass Coatings	0.07	0.011	0.002	0.083

Exact Match Finish – Engine	0.05	0.003	0.002	0.055

Exact Match Finish – Automotive	0.05	0.003	0.002	0.055

Exact Match Finish – Industrial	0.05	0.078	0.002	0.130

Floral Sprays	0.08	0.001	0.002	0.083

Glass Coatings	0.07	0.023	0.002	0.095

High Temperature Coatings	0.03	0.009	0.002	0.041

Hobby/Craft, Enamel 	-0.04	0.022	0.002	0

Hobby/Craft, Lacquer	-0.03	0.057	0.002	0.029

Hobby/Craft, Clear or Metallic	0.08	0.014	0.002	0.096

Marine Spar Varnishes	0	0	0.002	0.002

Photographic Coatings	-0.04	0.011	0.002	0

Pleasure Craft Primers, Surfacers, or Undercoaters	0	0	0.002	0.002

Pleasure Craft Topcoats	0	0	0.002	0.002

Polyolefin Adhesion Promoters	0.03	0.077	0.002	0.109

Shellac Sealers, Clear	0	0	0.002	0.002

Shellac Sealers, Pigmented	0	0	0.002	0.002

Slip-Resistant Coatings	0	0	0.002	0.002

Spatter/Multicolor Coatings	0.05	0.004	0.002	0.056

Vinyl/Fabric/Leather/Polycarbonate Coatings	0.03	0.015	0.002	0.047

Webbng/Veiling Coatings	0	0	0.002	0.002

Weld-Through Primers	0.01	0.109	0.002	0.121

Wood Stains	0	0	0.002	0.002

Wood Touch-up, Repair, or Restoration Coatings	0.07	0.04	0.002	0.112









Table 2.  Research and Development Costs

Coating Category	Chemists	Annualized

R&D Costs ($)	# of Cans	Annualized

R&D Costs ($/10.5 oz Can)

Clear Coatings	6.7	126,702	15,158,656	0.008

Flat Coatings	4.5	85,098	29,328,704	0.003

Fluorescent Coatings	1.8	34,039	3,624,896	0.009

Metallic Coatings	5.3	100,227	22,408,448	0.004

Non-Flat Coatings	4.9	92,663	145,325,376	0.001

Primers	5.7	107,791	34,271,744	0.003

Ground/Traffic/Marking	2.4	46,142	30,646,848	0.002

Art Fixatives/Sealants	1.1	20,802	3,295,360	0.006

Auto Body Primers	1.7	31,203	4,943,040	0.006

Automotive Bumper & Trim Coatings	3.3	62,405	3,295,360	0.019

Aviation/Marine Primers	0	0	329,536	0.000

Aviation Propellor	0	0	329,536	0.000

Corrosion Resistant	0.2	3,782	329,536	0.011

Exact Match-Engine	0.6	12,103	3,624,896	0.003

Exact Match-Auto	1	18,911	6,920,256	0.003

Exact Match-Industrial	5.4	102,874	1,318,144	0.078

Floral Sprays	0.2	3,782	5,272,576	0.001

Glass Coatings	0.4	7,564	329,536	0.023

High Temperature	3.1	59,380	6,590,720	0.009

Hobby, Enamel	1.5	28,366	1,318,144	0.022

Hobby, Lacquer	0.3	5,673	98,861	0.057

Hobby, Clear or Metallic	1	18,911	1,318,144	0.014

Marine Spar Varnishes	0	0	329,536	0.000

Photographic	0.2	3,782	329,536	0.011

Pleasure Craft Primers	0	0	329,536	0.000

Pleasure Craft Topcoats	0	0	329,536	0.000

Polyolefin Adhesion Promoters	1.4	25,529	329,536	0.077

Shellac Sealers, Clear	0	0	329,536	0.000

Shellac Sealers, Pigmented	0	0	329,536	0.000

Slip-Resistant Coatings	0	0	98,861	0.000

Spatter/Multicolor	0.4	7,564	1,977,216	0.004

Vinyl/Fabric/Leather	2.7	51,059	3,295,360	0.015

Webbing/Veiling	0	0	329,536	0.000

Weld-Through Primers	1.9	35,930	329,536	0.109

Wood Stains	0	0	329,536	0.000

Wood Touchup/Repair	0.7	13,238	329,536	0.040

    

Table 3A. Industry Recordkeeping and Reporting Costs Year 1

Year 1











 	 	 	 	 	 	 	 	 	 	 

 	(A)	 	(B)	 	(C)	 	 	(D)	(E)	 

 	 	 	 	 	 	 	 	 	 	 

Burden Item	Person Hours per Occurrence	NOTES	Number of Occurrences per
Respondent per Year	NOTES	Person Hours per Respondent per Year	Dollars
per Hour	NOTES	Respondents per	Total Hours per Year	Total

 	 	 	 	 	(C=AxB)	 	 	Year	(E=CxD)	Cost in Year 1 ($)

Reporting	 	 	 	 	 	 	 	 	 	 

  Read instructions	4	a	1	 	4	83	b	60	240	19,920

  Gather information	4	c	1	 	4	64	 	60	240	15,360

  Initial report (incl. small quantity manufacturers)	25.25	c	1	 	25.25
64	 	60	1515	96,960

  Supplemental report 	4	h	1	 	4	64	 	60	240	15,360

  Variance or compliance extension application	24	d	1	 	24	83	 	      
6       d	144	11,952

  Responding to EPA request for data	60	i	1	 	60	83	 	9	540	44,820

 	 	 	 	 	 	 	 	 	 	 

Recordkeeping

 

 

	 



	  Read instructions	(above)	 	 	 	 	 	 	 	 	 

  Plan activities	16	 	1	 	16	83	 	60	960	79,680

  Initial calculation of reactivity	0.5	e	37	f	18.5	64	 	60	1110	71,040

  Maintenance of batch information	0.25	g	481	 	120	64	 	60	7200
460,800

 	 	 	 	 	 	 	 	 	 	 

Total Industry Burden- complying with rule	 	 	 	 	 	 	 	 	12045
 $       803,940 

Additional Burden- variance	 	 	 	 	 	 	 	 	 	 $         11,952


TOTAL INDUSTRY BURDEN- Year 1	 	 	 	 	 	 	 	 	12189	 $      
815,892 

NOTES







 	203.15

	a-  Hour estimate includes reading and understanding compliance
requirements of rule







 



b-  Managerial $/hr used since this is first national reactivity based
rule- provides for conservatively high burden estimate	$13,598.20 

c-  Includes hours to gather results of reactivity calculations and
other data needed to complete the initial report. Assumes that each
company has one event per year that requires them to submit a
supplemental report.



d-  Hours to prepare variance request or request for compliance
extension (for facilities who hae not previously met CA limits). 
Assumes that 10 percent of facilities will request a variance.  This is
far higher than the experience in California, where only one vaiance was
requested.  The burden to gather information on coatings is still
included in this estimate since those activities may still be conducted
before the decision is made.

e-  Assumed one-half hour average for each formulation.  First few may
take more than a half hour hour, but significantly less time is expected
for subsequent calculations since a spreadsheet would likely be
developed.	 



f-  2238 total formulations divided by 60 known manufacturers for an
average of 34 formulations per manufacturer.  Small businesses are
likely to have fewer formulations.

 

g-  While maintenance of limited batch information is required by the
rule, all information is expected to be maintained in the absense of
this rule.  Assume that there is an average of one batch per week of
each formulation and that 25% of the time, the facility must recalculate
to verify that they remain below limits. Since these are recalculations
of existing formulations, assume that it takes only 15 minutes per
calculation to complete.

h- Assumes each facility will need to submit an average of one "notice
of change" report per year, on the average, due to change in products
produced or contact information.  Includes time to prepare report and
obtain signature of responsible official



	i- Assumes 10 percent of facilities receive request.  Includes hours to
gather required records (already maintained), assemble information,
gather any missing data, develop any desired summary and/or
correspondence.



	

Table 3B.Industry Recordkeeping & Reporting Costs Year 2 

Year 2











	 	 	 	 	 	 	 	 	 	 	 	 

 	(A)	 	(B)	 	(C)	 	 	(D)	 	(E)	 

 	 	 	 	 	 	 	 	 	 	 	 

Burden Item	Person Hours per Occurrence	NOTES	Number of Occurrences per
Respondent per Year	NOTES	Person Hours per Respondent per Year	Dollars
per Hour	NOTES	Respondents per	NOTES	Total Hours per Year	Total

 	 	 	 	 	(C=AxB)	 	 	Year	 	(E=CxD)	Cost in Year 1 ($)

Reporting	 	 	 	 	 	 	 	 	 	 	 

  Read instructions	4	 	1	 	4	83	 	1	a	4	332

  Gather information	4	 	1	 	4	64	 	1	a	4	256

  Initial report (incl. small quantity manufacturers)	25.25	 	1	 
25.25	64	 	1	b	25.25	1,616

  Supplemental report 	4	 	1	 	4	64	 	61	 	244	15,616

  Variance or compliance extension application	24	 	1	 	24	83	 	0.1	a
2.4	199

  Responding to EPA request for data	60	 	1	 	60	85	 	9	 	540	45,900

 	 	 	 	 	 	 	 	 	 	 	 

Recordkeeping

 

 

	 

 



  Read instructions	(above)	 	 	 	 	 	 	 	 	 	 

  Plan activities	16	 	1	 	16	83	 	1	a	16	1,328

  Calculation of reactivity	0.5	c	37	d	18.5	64	 	11	b	203.5	13,024

  Maintenance of batch information	0.250	e	481	 	120	64	 	61	f	7320
468,480

 	 	 	 	 	 	 	 	 	 	 	 

Total Industry Burden- complying with rule	 	 	 	 	 	 	 	 	 
8356.75	 $       546,552 

Additional Burden- variance	 	 	 	 	 	 	 	 	 	 	 $            
199 

TOTAL INDUSTRY BURDEN- Year 2 	 	 	 	 	 	 	 	 	 	8359.15	 $    
  546,751 

NOTES:





Average for second year of existing manufacturer	125

	 a- Assumes up to 1 new aerosol coating manufacturers each year.  Same
10% requesting variance	Average in Year 2 for new manufacturer (same as
Year 1 for existing)	192

	 b- Assumes 10 manufacturers add new coating category each year

 

Average cost per respondent	134.8	$8,963.13 

 c- Same average time for calculating formulations for new category.

 





	 d- Uses average of all existing manufacturers.  Likely to be an
overestimate for both new manufacturers and for existing manufacturers
adding a new coating category	 





	 e- Same estimate as Year 1 for existing manufacturers.

	 





	 f- 60 existing manufacturers plus 1 new 



	 





	

Table 3C.  Respondent Cost in Year 3 and Average for First 3 Years

Year 3



	 	 	 	 	 	 	 	 	 	 	 	 

 	(A)	 	(B)	 	(C)	 	 	(D)	 	(E)	 

 	 	 	 	 	 	 	 	 	 	 	 

Burden Item	Person Hours per Occurrence	NOTES	Number of Occurrences per
Respondent per Year	NOTES	Person Hours per Respondent per Year	Dollars
per Hour	NOTES	Respondents per	NOTES	Total Hours per Year	Total

 	 	 	 	 	(C=AxB)	 	 	Year	 	(E=CxD)	Cost in Year 1 ($)

Reporting	 	 	 	 	 	 	 	 	 	 	 

  Read instructions	4	 	1	 	4	83	 	1	a	4	332

  Gather information	4	 	1	 	4	64	 	1	a	4	256

  Initial report (incl. small quantity manufacturers)	25.25	 	1	 
25.25	64	 	1	b	25.25	1,616

  Supplemental report 	4	 	1	 	4	64	 	62	 	248	15,872

  Variance or compliance extension application	24	 	1	 	24	83	 	0.1	a
2.4	199

  Responding to EPA request for data	60	 	1	 	60	83	 	9	 	540	44,820

For triennial report	 	 	 	 	 	 	 	 	 	 	0

  Establish account for NEI	2	 	1	 	2	64	 	62	 	124	7,936

  Enter general information into database	0.5	 	1	 	0.5	64	 	62	 	31
1,984

  Enter product formulations into database	0.25	 	37	 	9.25	64	 	62
 	573.5	36,704

  Enter company wide volumes of coating constituents into database	2	 
1	 	2	64	 	62	 	124	7,936

 	 	 	 	 	 	 	 	 	 	 	 

 

 

 

	 

 



Recordkeeping

 

 

	 

 



  Read instructions	(above)	 	 	 	 	 	 	 	 	 	 

  Plan activities	16	 	1	 	16	83	 	2	a	32	2,656

  Calculation of reactivity	0.5	c	37	d	18.5	64	 	12	b	222	14,208

  Maintenance of batch information	0.250	e	481	 	120	64	 	62	f	7440
476,160

For triennial report	 	 	 	 	 	 	 	 	 	 	 

  Calculate company wide volume usage of coating constituents	56	g	1	 
56	64	 	62	f	3472	222,208

  QA/QC and review	40	h	1	 	40	83	 	62	f	2480	205,840

  Read instructions/take training for reporting- support	4	 	1	 	4	64
 	62	f	248	15,872

  Read instructions/take training for reporting- management	4	 	1	 	4
64	 	62	f	248	15,872

 	 	 	 	 	 	It 	 	 

	 

 	 	 	 	 	 	 	 	 

	 

 	 	 	 	 	 	 	 	 

	 

Total Industry Burden- complying with rule	 	 	 	 	 	 	 	 	 
15815.75	 $           1,070,272 

Additional Burden- variance	 	 	 	 	 	 	 	 	 	 	 $          
199 

TOTAL INDUSTRY BURDEN- Year 3 	 	 	 	 	 	 	 	 	 	15818.15	$
1,070,471.20 

NOTES:





 



 a- Assumes up to 2 new aerosol coating manufacturers in first 2 years
(added both in Year 2). Same 10% requesting variance	Average cost per
respondent	255.1	$17,265.66 

 b- Assumes 10 manufacturers add new coating category each year

	Average cost for triennial report per respondent



 c- Same average time for calculating formulations for new category.



117.75	8296

 d- Uses average of all existing manufacturers.  Likely to be an
overestimate for both new manufacurers and for existing manufacturers
adding a new coating category	 





	 e- Same estimate as Year 1 for existing manufacturers.

	 



	Total Year Costs

 f- 60 existing manufacturers plus 1 new 



	 

Average Cost for Year 1	203.2	$13,598.20 	 $          815,892.00 

 g- Assumes 2 days to gather information and 2.0 hours to sum all
information for each constituent- assumes an average of 20 different
constituents used by facility	 

Average Cost for Year 2	134.8	$8,963.13 	 $          546,751.20 

 h- assumes review of all information by senior official of company

	 

Average Cost for Year 3	255.1	$17,265.66 	 $       1,070,471.20 

 



















	Average of first 3 years	197.7	 $      13,275.67 	 $         
811,038.13 





                    Table 4.   Aerosol Coating Manufacturers

Company Name	City	State	#Employees

Advanced Ceramics



	Aervoe Pacific	Gardnerville	NV

	Amteco	Pacific	MO

	BAF Industries

CA

	BrynDana	Havertown	PA

	Burbank Paint Company	Burbank	CA

	Burke Industrial Coatings



	California Shake Corporation

CA

	Chase Products Company	Maywood	IL

	Chemical Packaging Corporation	Fort Lauderdale	FL

	Crest Industries



	Custom Finishes	Brighton	TN

	Custom-Pak Products	Germantown	WI

	Deft

CA

	Ellis Paint Company

CA

	Floralife



	Forrest Paint Company	Eugene	OR

	Fox Valley Systems	Cary	IL

	Gare Incorporated



	ITW Devcon



	LPS Laboratories	Tucker	GA

	Masterchem Industries	Barnhart	MO

	Nautilus International



	The Noco Company



	Orb Industries	Upland	PA

	Parker Paint Manufacturing	Tacoma	WA

	PDI, Inc



	Products/Techniques

CA

	Raabe Corporation	Menomonee Falls	MN

	Rudd Company	Seattle	WA

	SEM Products	Charlotte	NC

	Seymour of Sycamore	Sycamore	IL

	Specialty Chemical Resources	Macedonia	OH

	S&R Fastener Company



	Tempo Products	Medina	OH

	Testor Corporation	Rockford	IL

	Tru Test Manufacturing	Cary	IL

	William Zinsser & Co.	Somerset	NJ

	XIM Products	Westlake	OH

	Yenkin Majestic Paint Mfg. Co	Columbus	OH

	3M	St Paul	MN	>500

Behr

CA	>500

Bondo (an RPM Company)	Cincinnati	OH	>500

CCL Custom Manufacturing	Woodstock	IL	>500

CCL Industries

	>500

Chugoku Marine Paint	Belle Chase	LA	>500

DAP	Baltimore	MD	>500

Frazee Industires

CA	>500

ICI Paints

	>500

Kop-Coat

CA	>500

Lilly Industries	Grand Rapids	MI	>500

Loctite Corporation

	>500

NCH Corp., Westmont Products	Irving	TX	>500

Plasti-kote	Medina	OH	>500

Premier Farnell

	>500

Rustoleum	Vernon Hills	IL	>500

Sara Lee Corporation

	>500

Sherwin-Williams	Solon	OH	>500

Thompson Minwax Company	Upper Saddle River	NJ	>500

Valspar Corporation	Grand Prairie	TX	>500



Table 5.  Average Aerosol Coating Prices by Category

Coating Category	Number of Data Points	Average Price – 10.5 Ounce Can

Clear Coatings	13	6.28

Flat Coatings	35	3.46

Fluorescent Coatings	12	8.25

Metallic Coatings	21	6.09

Non-Flat Coatings	58	3.88

Primers	31	3.54

Ground/Traffic/Marking	27	4.57

Art Fixatives or Sealants	15	8.85

Auto Body Primers	10	5.87

Automotive Bumper & Trim	7	6.19

Aviation or Marine Primers	4	8.77

Aviation Propellor Coatings(1)	0	8.82

Corrosion Resistant Coatings	1	12.42

Exact Match Finish – Engine Enamel	6	4.36

Exact Match Finish – Automotive	3	21.39

Exact Match Finish – Industrial	19	4.80

Floral Sprays	4	5.67

Glass Coatings	1	5.29

High Temperature Coatings	9	5.78

Hobby, Enamel(2)	24	9.93

Hobby, Lacquer(2)	24	9.93

Hobby, Metallic or Clear(2)	24	9.93

Marine Spar Varnishes(1)	0	8.82

Photographic Coatings(1)	0	8.82

Pleasure Craft Primers(1)	0	8.82

Pleasure Craft Topcoats(1)	0	8.82

Polyolefin Adhesion Promoters(1)	0	8.82

Shellac Sealers, Clear(1)	0	8.82

Shellac Sealers, Pigmented(1)	0	8.82

Slip-Resistant Coatings(1)	0	8.82

Spatter/Multicolor Coatings	4	16.79

Vinyl/Fabric/Leather Coatings	3	5.89

Webbing/Veiling Coatings	3	12.45

Weld-Through Primers(1)	0	8.82

Wood Stains(3)	3	9.59

Wood Touch-up/Repair(3)	3	9.59

(1)Price is based on the average price of the other specialty coating
categories.

(2)All hobby coatings were combined. Price is the average for the three
hobby categories.

(3)Two categories were combined.  Price is the average for coatings in
both categories.

Table 6.  Other Products Manufactured by Small Aerosol Coating
Manufacturers

Company	Other Products Manufactured

Aervoe-Pacific	Non-aerosol coatings, marking products, mold release
agents, 

delivery systems, lubricants, adhesives

Fox Valley Systems	Striping equipment, marking equipment, stencil kits,
utility flags

Seymour of Sycamore	Cleaners, degreasers, adhesives, paint equipment

Chase Products	Lubricants, cleaners, disinfectants, adhesives, hair
spray, insecticides

Deft(1)	Non-aerosol paints

Gare(1)	Ceramic products, brushes and tools, pottery glazes, dinnerware,
bowls, mugs

Products/Techniques	Non-aerosol coatings in sizes ranging from pint to
55 gallon drums, lubricants, greasers

Specialty Chemical Resources	Cleaners, gasket components, lubricants,
waxes, adhesives, degreasers, polishes

Tempo Products	Marine products including fuel tanks, fuel lines, fuel
gauges, kayaks

The Noco Company	Battery accessories including battery cables, battery
storage, booster cables, terminals

Yenkin-Majestic(1)	Non-aerosol paints

Advanced Ceramics(1)	Boron nitrite coatings, graphite coatings, heaters,
evaporators

Forrest Paint Company	Cooking kits, log home preservatives, glass
cleaners, non-aerosol coatings

Parker Paint 	Non-aerosol paints

Rudd Company	Non-aerosol paints

Chemical Packaging Corporation	Contract packaging, lubricants,
degreaser, mold releases, firearm accessories

ITW-Devcon(1)	Non-aerosol coatings, Adhesives, putty, repair epoxies

LPS Laboratories	Degreasers, lubricants, electrical cleaners, greases

Amteco(1)	Non-aerosol coatings, wood preservatives

BAF	Waxes, polishes, tire coatings, degreasers, deodorants

Masterchem Industries	Non-aerosol coatings

PDI, Inc	Flexible rubber coatings, adhesives, non-aerosol coatings,
brush-on insulation

William Zinsser	Adhesives, non-aerosol coatings, wallpaper strippers

Xim Products	Non-aerosol coatings

SEM Products	Truckbed liner, adhesives, non-aerosol coatings

Crest Industries	Solvents, adhesives, bulbs, fuses, molding tape

S&R Fastener	Screws, bolts, fasteners, adhesives

Nautilus International(1)	Remote control systems for material handling
equipment and railways

Ellis Paint Company	Non-aerosol coatings, spray equipment, waste
recycling systems, solvents

Burbank Paint Company	Possibly retailer or distributor?

Burke Industrial Coatings	Non-aerosol coatings

California Shake Corporation(1)	Shingles, roof tiles, roof covering

Raabe (2)	Filler, non-aerosol coatings

Advanced Ceramics(1)	Non-aerosol coatings, evaporators, heaters

Floralife	Flower foods, foam shapes, adhesives, storage solutions,
hydration solutions, disinfectants

Testor	Model kits, brushes & accessories, games, adhesives, solvents,
tools

BrynDana	Waxes, tire black

Custom Finishes	Non-aerosol coatings, contract packaging

Custom Pak Products	Non-aerosol coatings, lubricants, adhesives,
degreasers

Orb Industries	Packager, cleaners, degreaser, lubricants, fuel
additives, de-icers, starting fluid

Tru Test Manufacturing	No information available.  Could not locate
website

(1)No reference to aerosol coatings made when check of these
companies’ websites.  However, they are identified on the CARB
reference list of aerosol coatings companies.  

(2)Raabe is owned by Quest Chemicals.   

 Summary Table - Aerosol Coatings Companies by Coatings Category based
on information provided by CARB; See EPA Docket: EPA-HQ-OAR-2006-0971.

 “Initial Statement of Reasons for the Proposed Amendments to the
Regulation for Reducing Volatile Organic Compound Emissions from Aerosol
Coating Products,” May 5, 2000.

 Aerosol Coatings Manufacturers List; See EPA Docket:
EPA-HQ-OAR-2006-0971.

 Aerosol Coating Prices per Category; See EPA Docket:
EPA-HQ-OAR-2006-0971.

 National Paint and Coatings Association, Conference Call, July 21,
2006; See EPA Docket: EPA-HQ-OAR-2006-0971.

 Chemical Marketing Reporter, August 2006.

 American Chemical Society, ChemCensus Report; See EPA Docket:
EPA-HQ-OAR-2006-0971.

 U.S. Census Bureau, Paint and Allied Products, June 2006, p.2; See EPA
Docket: EPA-HQ-OAR-2006-0971.

 NPCA Management Information Committee, Oct.  2005, p. 612; See EPA
Docket: EPA-HQ-OAR-2006-0971.

 E-mail from NPCA/Heidi McAuliffe, January 17, 2007; See EPA Docket:
EPA-HQ-OAR-2006-0971.

 PAGE   

 PAGE   1 

U.S. EPA Docket EPA-HQ-OAR-2006-0971

“National VOC Emission Standards for Aerosol Coatings”

Cost Impacts Analysis

