February 12, 2009

MEMORANDUM

SUBJECT:	Economic Impact Analysis for National Emission Standards for
Paint and Allied Products Manufacturing Area Sources

FROM:	Tom Walton

ABCG (C439-02)

TO:		Melissa Payne

RDPAG (C404-05)

This document addresses   SEQ CHAPTER \h \r 1  the economic impacts of
Paint and Allied Products Manufacturing Area Sources rule.  The economic
impact analysis focuses on changes in market prices and output levels. 
If changes in market prices and output levels in the primary markets are
significant enough, impacts on other markets are also examined.

Both the magnitude of costs needed to comply with the rule and the
distribution of these costs among affected facilities can have a role in
determining how the market will change in response to rule.  Total
annualized costs for the rule are estimated to be $3,100,000.  460
facilities are projected to incur costs because of the proposed rule
(almost eight tenths of the 2,190 facilities are projected to incur no
costs because they already meet the control requirements). 

Particulate HAP







	Employment Size	Total Number of Facilities	Total Number of Facilities
with Additional Control Required	Gallons of Product Per Facility	Cost
per year	Cost/sales with $3.50 / Gallon price	Cost/sales with $12.18 /
Gallon price	Cost/sales with $19.91 / Gallon price

Small Model Plant (1 to 19 employees)	1,572	330	166,486	$6,362	1.09%
0.31%	0.19%

Large Model Plant (20 to 99 employees)	618	130	1,047,090	$7,463	0.20%
0.06%	0.04%

Cost to sales ratios are estimated to assess the impact on the affected
facilities.  Two sizes were used for the facilities and high, average,
and low prices were used for the product.  The tables below address the
requirements for particulate HAP and the requirements for

volatile HAP first individually and then together.  The particulate HAP
costs are by far the larger.

Volatile HAP







	Employment Size	Total Number of Facilities	Total Number of Facilities
with Additional Control Required	Gallons of Product Per Facility	Cost
per year	Cost/sales with $3.50 / Gallon price	Cost/sales with $12.18 /
Gallon price	Cost/sales with $19.91 / Gallon price

Small Model Plant (1 to 19 employees)	1,572	79	166,486	$17	0.00%	0.00%
0.0005%

Large Model Plant (20 to 99 employees)	618	31	1,047,090	$132	0.00%	0.00%
0.0006%



Both Particulate and Volatile HAP







	Employment Size	Total Number of Facilities	Total Number of Facilities
with Additional Control Required	Gallons of Product Per Facility	Cost
per year	Cost/sales with $3.50 / Gallon price	Cost/sales with $12.18 /
Gallon price	Cost/sales with $19.91 / Gallon price

Small Model Plant (1 to 19 employees)	1,572	79	166,486	$6,379	1.09%
0.31%	0.1925%

Large Model Plant (20 to 99 employees)	618	31	1,047,090	$7,595	0.21%
0.06%	0.0364%

 

Cost to sales ratios range from 0.19% for the small model plant with the
lowest ($3.50 per gallon price) and both types of control to 0.001 for
the large model plant with the highest price ($19.91 per gallon) for
volatile HAP control.  Thus all of the 2,190 facilities are projected to
have a cost to sales ratio below  1.0%.  The average cost to sales ratio
is expected to be around 0.13%.  Thus this regulation is not expected to
have significant impact on a substantial number of small entities. These
small costs are not expected to result in a significant market impact
whether they are passed on to the purchaser or absorbed. 

