July 14, 2008

MEMORANDUM

SUBJECT:	Economic Impact Analysis for National Emission Standards for
Hazardous Air Pollutants for Chemical Manufacturing Area Sources

FROM:	Tom Walton

Economist

ABCG (C439-02)

TO:		Randy McDonald

                        Engineer

CCG (E143-01)

This document addresses   SEQ CHAPTER \h \r 1  the economic impacts of
the proposed national emissions standards for hazardous air pollutants
for nine area source categories in the chemical manufacturing sector: 
Agricultural Chemicals and Pesticides Manufacturing, Cyclic Crude and
Intermediate Production, Industrial Inorganic Chemical Manufacturing,
Industrial Organic Chemical Manufacturing, Inorganic Pigments
Manufacturing, Miscellaneous Organic Chemical Manufacturing, Plastic
Materials and Resins Manufacturing, Pharmaceutical Production, and
Synthetic Rubber Manufacturing.  

Both the magnitude of control 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 less than six
million dollars.  About 450 facilities are projected to incur costs that
range from $300 to $90,000 because of the proposed rule.

Because sales information was not available at the facility level, 2002
Economic Census Industry Series Reports were used to develop average
value of shipments estimates for all facilities and for a small size
facility with 50 to 99 employees.  The Small Business Administration
definition for these manufacturing sectors ranges from 500 to 1000
employees so an average sales for firms in the 50 to 99 range is
representative of smaller small businesses.  The larger facilities may
be expected to be more likely to incur costs due to the regulation. 
Census information is available at the 6 – digit NAICS (North American
Industry Classification System) for various employment levels but the
cost information was mostly available at the 5 - digit NAICS level to
averages for the five digit level were developed from the 6 – digit
NAICS information and compared to both the average cost for each 5 –
digit level and the maximum facility cost for that level.  See 

the table below.  All costs and sales are in 2007 dollars.

Table I	NAICS	Ave cost/Ave Sales	Max Cost/ Average sales	Ave cost /
Small Sales







Other basic organic chemical manufacturing	32519	0.011%	0.085%	0.014%

Other basic inorganic chemical manufacturing	32518	0.067%	0.175%	0.052%

Resin and synthetic rubber manufacturing	32521	0.016%	0.122%	0.023%

Inorganic dye and pigment manufacturing 	325131	0.058%	0.105%	0.139%

Pesticide & other agric. chemical manufacturing	32532	0.039%	0.125%
0.033%

Pharmaceutical and medicine manufacturing 	32541	0.005%	0.060%	0.015%



The average costs are all projected to be less than seven hundredths of
a per cent of average sales.  The maximum cost for each industry is
projected to be less than two tenths of a per cent of average sales. 
The average costs are all projected to be less than two tenths of a per
cent of average sales for small facilities within the respective
industry with 50 to 99 employees. The costs are so small that the impact
is not expected to be significant.  Therefore, there is no 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. 

