Economic,
Environmental,
and
Benefits
Analysis
of
the
Final
Metal
Products
&
Machinery
Rule
2
Printed
on
paper
containing
at
least
30%
postconsumer
recovered
fiber.
U.
S.
Environmental
Protection
Agency
Office
of
Water
(
4303T)
1200
Pennsylvania
Avenue,
NW
Washington,
DC
20460
EPA­
821­
B­
03­
002
Economic
and
Environmental
Benefits
Analysis
Document
For
The
Final
Effluent
Limitations
Guidelines
and
Standards
For
The
Metal
Products
&
Machinery
Point
Source
Category
EPA­
821­
B­
03­
002
Christine
Todd
Whitman
Administrator
G.
Tracy
Mehan,
III
Assistant
Administrator,
Office
of
Water
Geoffrey
H.
Grubbs
Director,
Office
of
Science
and
Technology
Sheila
E.
Frace
Director,
Engineering
and
Analysis
Division
Nicolaas
Bouwes
Chief,
Economic
and
Environmental
Assessment
Branch
William
Anderson
Technical
Coordinator
Lynne
Tudor
Economist
James
C.
Covington,
III
Economist
February
2003
U.
S.
Environmental
Protection
Agency
Office
of
Water
Washington,
DC
20460
ACKNOWLEDGMENTS
AND
DISCLAIMER
The
Agency
would
like
to
acknowledge
the
contributions
of
William
Anderson,
James
C.
Covington,
III,
Lynne
Tudor,
Lynn
Zipf,
and
Nicolass
Bouwes
to
development
of
this
Economic
and
Environmental
Benefits
Analysis
document.
In
addition,
EPA
acknowledges
the
contribution
of
Abt
Associates,
Westat,
Eastern
Research
Group,
and
Science
Application
International
Corporation.

Neither
the
United
States
government
nor
any
of
its
employees,
contractors,
subcontractors,
or
other
employees
makes
any
warranty,
expressed
or
implied,
or
assumes
any
legal
liability
or
responsibility
for
any
third
party s
use
of,
or
the
results
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such
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of,
any
information,
apparatus,
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or
process
discussed
in
this
report,
or
represents
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by
such
a
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party
would
not
infringe
on
privately
owned
rights.
References
to
proprietary
technologies
are
not
intended
to
be
an
endorsement
by
the
Agency.

Questions
or
comments
regarding
this
economic
document
should
be
addressed
to:

Mr.
James
C.
Covington,
III.
Economist
Engineering
and
Analysis
Division
(
4303T)
U.
S.
Environmental
Protection
Agency
1200
Pennsylvania
Avenue,
N.
W.
Washington,
DC
20460
(
202)
566
­
1034
covington.
james@
epa.
gov
MP&
M
EEBA
Table
of
Contents
Table
of
Contents
EXECUTIVE
SUMMARY
ES.
1
Overview
of
Facilities
Evaluated
for
Regulation
under
the
MP&
M
Point
Source
Category
and
Its
Effluent
Discharges
...................................................................................
ES­
1
ES.
2
Description
of
the
Final
Rule
....................................................................
ES­
3
ES.
3
Economic
Impacts
and
Social
Costs
of
the
Final
Rule
................................................
ES­
3
ES.
3.1
Economic
Impacts
.......................................................................
ES­
4
ES.
3.2
Social
Costs
............................................................................
ES­
7
ES.
4
National
Benefits
of
the
Final
Rule
...............................................................
ES­
8
ES.
4.1
Reduced
Human
Health
Risk
.............................................................
ES­
10
ES.
4.2
Ecological,
Recreational,
and
Nonuser
Benefits
...............................................
ES­
14
ES.
4.3
POTW
Impacts
........................................................................
ES­
15
ES.
4.4
Total
Estimated
Benefits
of
the
Final
MP&
M
Rule
............................................
ES­
16
ES.
5
NationalBenefits­
Costs
Comparison.............................................................
ES­
16
ES.
6
Ohio
Case
Study
............................................................................
ES­
18
ES.
6.1
Benefits
..............................................................................
ES­
18
ES.
6.2
Social
Costs
...........................................................................
ES­
20
ES.
6.3
Comparing
Monetized
Benefits
and
Costs
...................................................
ES­
20
PART
I:
INTRODUCTION
AND
BACKGROUND
INFORMATION
Chapter
1:
Introduction
1.1
Purpose
......................................................................................
1­
1
1.2
Introduction
...................................................................................
1­
1
1.3
Readers 
Aids..................................................................................
1­
3
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
2.1
Overview
of
Facilities
Evaluated
for
Regulation
under
the
MP&
M
Point
Source
Category
...............
.
.
.....
2­
1
2.2
MP&
M
Discharges
and
the
Need
for
Regulation.......................................................
2­
3
2.2.1
Baseline
MP&
M
Discharges
for
Regulated
Facilities
..............................................
2­
4
2.2.2
Discharges
under
the
MP&
M
Regulation
.......................................................
2­
4
2.3
Addressing
Market
Imperfections
..................................................................
2­
5
2.4
Overlap
with
Other
Effluent
Guidelines..............................................................
2­
6
2.5
Meeting
Legislative
and
Litigation­
Based
Requirements
................................................
2­
9
Glossary
........................................................................................
2­
11
Acronyms
.......................................................................................
2­
13
Chapter
3:
Profile
of
the
MP&
M
Industries
3.1
Data
Sources
..................................................................................
3­
2
3.2
Overview
of
the
MP&
M
Industry
and
Industry
Trends
.................................................
3­
3
3.2.1
Aerospace
...............................................................................
3­
7
3.2.2
Aircraft
.................................................................................
3­
7
3.2.3
Electronic
Equipment
......................................................................
3­
7
3.2.4
Hardware................................................................................
3­
8
3.2.5
Household
Equipment......................................................................
3­
8
3.2.6
Instruments
..............................................................................
3­
9
3.2.7
Iron
and
Steel
............................................................................
3­
9
3.2.8
Job
Shops
...............................................................................
3­
9
3.2.9
Mobile
Industrial
Equipment
................................................................
3­
9
3.2.10
Motor
Vehicle
and
Bus
&
Truck
...........................................................
3­
10
3.2.11
Office
Machine
.........................................................................
3­
10
3.2.12
Ordnance
..............................................................................
3­
10
3.2.13
Precious
Metals
and
Jewelry...............................................................
3­
11
Table
of
Contents­
1
MP&
M
EEBA
Table
of
Contents
3.2.14
Printed
Wiring
Boards
...................................................................
3­
11
3.2.15
Railroad...............................................................................
3­
11
3.2.16
Ships
and
Boats
.........................................................................
3­
11
3.2.17
Stationary
Industrial
Equipment
............................................................
3­
12
3.3
Characteristics
of
MP&
M
Manufacturing
Sectors
....................................................
3­
12
3.3.1
Domestic
Production......................................................................
3­
13
3.3.2
Industry/
Market
Structure
..................................................................
3­
18
3.3.3
Financial
Condition
and
Performance.........................................................
3­
24
3.4
Characteristics
of
MP&
M
Non­
ManufacturingSectors
................................................
3­
25
3.4.1
Domestic
Production......................................................................
3­
25
3.4.2
Industry
Structure
and
Competitiveness
.......................................................
3­
28
3.5
Characteristics
of
All
MP&
M
Sectors..............................................................
3­
30
3.5.1.
Eight­
firm
Concentration
Ratio
.............................................................
3­
30
3.5.2
Risk
Normalized
Return
on
Assets
...........................................................
3­
31
3.6
Characteristics
of
MP&
M
Facilities
...............................................................
3­
32
Glossary
........................................................................................
3­
38
Acronyms
.......................................................................................
3­
40
References
......................................................................................
3­
41
Chapter
4:
Regulatory
Options
4.1
Subcategorization
..............................................................................
4­
1
4.2
Technology
Options
............................................................................
4­
3
4.3
BPT/
BAT
Options
for
Direct
Dischargers
...........................................................
4­
3
4.4
PSES
Options
for
Indirect
Dischargers
..............................................................
4­
3
4.5
NSPS
and
PSNS
Options
for
New
Sources...........................................................
4­
4
4.6
Summary
of
the
Final
Rule
and
Regulatory
Alternatives
................................................
4­
4
Glossary
.........................................................................................
4­
5
Acronyms
........................................................................................
4­
6
PART
II:
COSTS
AND
ECONOMIC
IMPACTS
Chapter
5:
Facility
Impact
Analysis
5.1
Data
Sources
..................................................................................
5­
2
5.2
Methodology
..................................................................................
5­
2
5.2.1
Converting
Engineering
Compliance
Costs
and
Survey
Financial
Data
to
Current
Year
Dollar
Values
........
5­
3
5.2.2
Market­
level
Impacts
and
Cost
Pass­
through
Analysis
.............................................
5­
4
5.2.3
Impact
Measures
for
Private
Facilities
.........................................................
5­
5
5.2.4
Impact
Measures
for
Railroad
Line
Maintenance
Facilities
........................................
5­
12
5.2.5
Impact
Measures
for
Government­
owned
Facilities
..............................................
5­
12
5.3
Results
......................................................................................
5­
14
5.3.1
Baseline
Closures
.......................................................................
5­
14
5.3.2
Price
Increases
..........................................................................
5­
15
5.3.3
Overview
of
Impacts
......................................................................
5­
16
5.3.4
Results
for
Indirect
Dischargers
.............................................................
5­
18
5.3.5
Results
for
Direct
Dischargers
..............................................................
5­
19
5.3.6
Results
for
Private
Facilities
...............................................................
5­
20
5.3.7
Results
for
Government­
Owned
Facilities
.....................................................
5­
21
Glossary
........................................................................................
5­
25
Acronyms
.......................................................................................
5­
26
References
......................................................................................
5­
27
Chapter
6:
Employment
Effects
6.1
Job
Losses
Due
to
Closures.......................................................................
6­
2
6.2
Job
Gains
Due
to
Compliance
Requirements
.........................................................
6­
3
6.3
Net
Effects
on
Employment
......................................................................
6­
5
Glossary
.........................................................................................
6­
7
Table
of
Contents­
2
MP&
M
EEBA
Table
of
Contents
Acronym
........................................................................................
6­
8
References
.......................................................................................
6­
9
Chapter
7:
Government
and
Community
Impact
Analysis
7.1
Impacts
on
Governments.........................................................................
7­
1
7.1.1
Impacts
on
Governments
that
Operate
MP&
M
Facilities
...........................................
7­
1
7.1.2
POTW
Administrative
Costs
.................................................................
7­
2
7.2
Community
Impacts
of
Facility
Closures
............................................................
7­
6
Glossary
.........................................................................................
7­
7
Acronyms
........................................................................................
7­
8
Chapter
8:
Foreign
Trade
Impacts
8.1
Data
sources
..................................................................................
8­
1
8.2
Methodology
..................................................................................
8­
2
8.3
Results.......................................................................................
8­
3
References
.......................................................................................
8­
5
Chapter
9:
Firm
Level,
New
Source
and
Industry
Impacts
9.1
Firm
Level
Impacts
.............................................................................
9­
1
9.1.1
Sources
.................................................................................
9­
1
9.1.2
Methodology
.............................................................................
9­
2
9.1.3
Results..................................................................................
9­
2
9.2
New
Source
Impacts
............................................................................
9­
3
9.2.1
Methodology
.............................................................................
9­
4
9.2.2
Results
..................................................................................
9­
5
9.3
Industry
Level
Impacts
..........................................................................
9­
7
Glossary
.........................................................................................
9­
9
Acronyms
.......................................................................................
9­
10
References
......................................................................................
9­
11
Chapter
10:
Small
Entity
Impact
Analysis
10.1
Defining
Small
Entities
........................................................................
10­
2
10.2
Methodology
................................................................................
10­
4
10.3
Results.....................................................................................
10­
4
10.3.1
Number
of
Affected
Small
Entities..........................................................
10­
4
10.3.2
Impacts
on
Facilities
Owned
by
Small
Entities.................................................
10­
5
10.3.3
Impacts
on
Small
Firms
..................................................................
10­
6
10.4
Consideration
of
Small
Entity
Impacts
in
Developing
the
Final
Rule.....................................
10­
7
Glossary
........................................................................................
10­
8
Acronyms
.......................................................................................
10­
9
References
.....................................................................................
10­
10
Chapter
11:
Social
Costs
11.1
Components
of
Social
Costs
....................................................................
11­
1
11.2
Resource
Costs
of
Compliance
..................................................................
11­
2
11.3
POTW
Administration
Costs
...................................................................
11­
4
11.4
Social
Costs
of
Unemployment
..................................................................
11­
5
11.4.1
Social
Cost
of
Worker
Dislocation
..........................................................
11­
5
11.4.2
Cost
of
Administering
Unemployment
Benefits
Programs
........................................
11­
6
11.4.3
Total
Cost
of
Unemployment
..............................................................
11­
6
11.5
Total
Social
Costs
............................................................................
11­
7
Glossary
........................................................................................
11­
8
References
......................................................................................
11­
9
Table
of
Contents­
3
MP&
M
EEBA
Table
of
Contents
PART
III:
BENEFITS
Chapter
12:
Benefit
Overview
12.1
MP&
M
Pollutants
............................................................................
12­
2
12.1.1
Characteristics
of
MP&
M
Pollutants
........................................................
12­
2
12.1.2
Effects
of
MP&
M
Pollutants
on
Human
Health
................................................
12­
3
12.1.3
Environmental
Effects
of
MP&
M
Pollutants
..................................................
12­
7
12.1.4
Effects
of
MP&
M
Pollutants
on
Economic
Productivity
.........................................
12­
8
12.2
Linking
the
Regulation
to
Beneficial
Outcomes
.....................................................
12­
9
12.3
Qualitative
and
Quantitative
Benefits
Assessment
..................................................
12­
11
12.3.1
Overview
of
Benefit
Categories
...........................................................
12­
11
12.3.2
Human
Health
Benefits
..................................................................
12­
13
12.3.3
Ecological
Benefits
....................................................................
12­
13
12.3.4
Economic
Productivity
Benefits
...........................................................
12­
14
12.3.5
Methods
for
Valuing
Benefit
Events
........................................................
12­
14
Glossary
.......................................................................................
12­
16
Acronyms
......................................................................................
12­
19
References
.....................................................................................
12­
20
Chapter
13:
Human
Health
Benefits
13.1
Methodology
&
Data
Sources
...................................................................
13­
2
13.1.1
Cancer
from
Fish
Consumption.............................................................
13­
3
13.1.2
Cancer
from
Drinking
Water
Consumption
...................................................
13­
8
13.1.3
Exposures
above
Non­
cancer
Health
Thresholds
..............................................
13­
10
13.1.4
Human
Health
AWQC
..................................................................
13­
14
13.2
Results
....................................................................................
13­
17
13.2.1
Fish
Consumption
Cancer
Results..........................................................
13­
17
13.2.2
Drinking
Water
Consumption
Cancer
Results.................................................
13­
19
13.2.3
Non­
cancer
Health
Threshold
Results
.......................................................
13­
19
13.2.4
Human
Health
AWQC
Results
............................................................
13­
21
13.3
Limitations
and
Uncertainties
..................................................................
13­
22
13.3.1
Sample
Design
&
Analysis
of
Benefits
by
Location
of
Occurrence
................................
13­
22
13.3.2
In­
Waterway
Concentrations
of
MP&
M
Pollutants
............................................
13­
23
13.3.3
Joint
Effects
of
Pollutants
................................................................
13­
23
13.3.4
Background
Concentrations
of
MP&
M
Pollutants
.............................................
13­
23
13.3.5
Downstream
Effects
....................................................................
13­
24
13.3.6
Exposed
Fishing
Population
..............................................................
13­
24
13.3.7
Treatment
of
Cancer
Latency
.............................................................
13­
25
13.3.8
Treatment
of
Cessation
Lag
..............................................................
13­
25
13.3.9
Use
of
Mean
Individual
Exposure
Parameters
................................................
13­
26
13.3.10
Cancer
Potency
Factors.................................................................
13­
26
Glossary
.......................................................................................
13­
27
Acronyms
......................................................................................
13­
28
References
.....................................................................................
13­
29
Chapter
14:
Lead­
Related
Benefits
14.1
Overview
of
Lead­
Related
Health
Effects..........................................................
14­
2
14.1.1
Children
Under
Age
One..................................................................
14­
3
14.1.2
Children
Between
the
Ages
of
One
and
Seven
.................................................
14­
3
14.1.3
Adults
................................................................................
14­
4
14.2
Health
Benefits
to
Children.....................................................................
14­
4
14.2.1
PbB
Distribution
of
Exposed
Children
.......................................................
14­
5
14.2.2
Relationship
Between
PbB
Levels
and
IQ
...................................................
14­
12
14.2.3
Value
of
Children's
Intelligence
...........................................................
14­
12
14.2.4
Value
of
Additional
Educational
Resources
..................................................
14­
14
14.2.5
Changes
in
Neonatal
Mortality
............................................................
14­
17
Table
of
Contents­
4
MP&
M
EEBA
Table
of
Contents
14.3
Adult
Health
Benefits
........................................................................
14­
17
14.3.1
Estimating
Changes
in
Adult
PbB
Distribution
Levels
..........................................
14­
20
14.3.2
Male
Health
Benefits
...................................................................
14­
22
14.3.3
Female
Health
Benefits..................................................................
14­
26
14.4
Lead­
Related
Benefit
Results
..................................................................
14­
28
14.4.1
Preschool
Age
Children
Lead­
Related
Benefit
Results..........................................
14­
28
14.4.2
Adult
Lead­
Related
Benefit
Results
........................................................
14­
29
14.5
Limitations
and
Uncertainties
..................................................................
14­
31
14.5.1
Excluding
Older
Children
................................................................
14­
31
14.5.2
Compensatory
Education
Costs
...........................................................
14­
32
14.5.3
Dose­
Response
Relationships
.............................................................
14­
32
14.5.4
Absorption
Function
for
Ingested
Lead
in
Fish
Tissue
..........................................
14­
32
14.5.5
Economic
Valuation
....................................................................
14­
33
Glossary
.......................................................................................
14­
35
Acronyms
......................................................................................
14­
38
References
.....................................................................................
14­
39
Chapter
15:
Recreational
Benefits
15.1
Ecological
Improvements
from
the
MP&
M
Regulation
...............................................
15­
3
15.1.1
Overview
of
Ecological
Improvements.......................................................
15­
3
15.1.2
Quantification
of
Ecological
Improvements
...................................................
15­
3
15.1.3
Benefiting
Reaches
......................................................................
15­
4
15.1.4
Geographic
Characteristics
of
MP&
M
Reaches
................................................
15­
6
15.2
Valuing
Economic
Recreational
Benefits
..........................................................
15­
6
15.2.1
Transferring
Values
from
Surface
Water
ValuationStudies.......................................
15­
6
15.2.2
Recreational
Fishing
.....................................................................
15­
9
15.2.3
Wildlife
Viewing
......................................................................
15­
13
15.2.4
Recreational
Boating....................................................................
15­
17
15.2.5
Nonuse
Benefits
.......................................................................
15­
20
15.3
Summary
of
Recreational
Benefits
..............................................................
15­
20
15.4
Limitations
and
Uncertainties
Associated
with
Estimating
Recreational
Benefits
...............
.
.
.........
15­
22
Glossary
.......................................................................................
15­
26
Acronyms
......................................................................................
15­
28
References
.....................................................................................
15­
29
Chapter
16:
POTW
Benefits
16.1
Reduced
Interference
with
POTW
Operations
......................................................
16­
2
16.2
Assessing
Benefits
from
Reduced
Sludge
Contamination..............................................
16­
2
16.2.1
Data
Sources...........................................................................
16­
2
16.2.2
Sludge
Generation,
Treatment,
and
Disposal
Practices
..........................................
16­
4
16.2.3
Overview
of
Improved
Sludge
Quality
Benefits
................................................
16­
7
16.2.4
Sludge
Use/
Disposal
Costs
and
Practices
.....................................................
16­
8
16.2.5
Quantifying
Sludge
Benefits
..............................................................
16­
10
16.3
Estimated
Savings
in
Sludge
Use/
Disposal
Costs
...................................................
16­
15
16.4
Methodology
Limitations
.....................................................................
16­
16
Glossary
.......................................................................................
16­
18
Acronyms
......................................................................................
16­
19
References
.....................................................................................
16­
20
Chapter
17:
Environmental
Justice
&
Protection
of
Children
17.1
Demographic
Characteristics
of
Populations
Living
in
the
Counties
Near
MP&
M
Facilities
...............
.
.
.
17­
1
17.2
Protection
of
Children
from
Environmental
Health
and
Safety
Risks.....................................
17­
3
Glossary
........................................................................................
17­
4
Reference
.......................................................................................
17­
5
Table
of
Contents­
5
MP&
M
EEBA
Table
of
Contents
PART
IV:
COMPARISON
OF
COSTS
AND
BENEFITS
Chapter
18:
MP&
M
Benefit/
Cost
Comparison
18.1
Estimating
National
Level
Benefits
and
Costs
......................................................
18­
1
18.2
Social
Costs
.................................................................................
18­
2
18.3
Benefits
....................................................................................
18­
2
18.4
Comparing
Monetized
Benefits
and
Costs
.........................................................
18­
2
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
19.1
Estimated
Social
Costs
.........................................................................
19­
1
19.1.1
Compliance
Costs
for
MP&
M
Facilities
......................................................
19­
1
19.1.2
Government
Administrative
Costs
...........................................................
19­
2
19.1.3
Cost
of
Unemployment
...................................................................
19­
2
19.1.4
Total
Social
Costs
.......................................................................
19­
3
19.2
Estimated
Benefits
............................................................................
19­
4
19.2.1
Human
Health
Benefits
...................................................................
19­
4
19.2.2
Recreational
Benefits
.....................................................................
19­
5
19.2.3
Avoided
Sewage
Sludge
Disposal
or
Use
Costs.................................................
19­
6
19.2.4
Total
Monetized
Benefits..................................................................
19­
7
19.3
Comparison
of
Estimated
Benefits
and
Costs........................................................
19­
7
Glossary
.......................................................................................
19­
10
Acronym
.......................................................................................
19­
11
PART
V:
OHIO
CASE
STUDY
Chapter
20:
Baseline
Conditions
in
Ohio
20.1
Overview
of
Ohio s
Geography,
Population,
and
Economy
............................................
20­
2
20.2
Profile
of
MP&
M
Facilities
in
Ohio
..............................................................
20­
3
20.3
Ohio s
Water
Resources
.......................................................................
20­
6
20.3.1
Aquatic
Life
Use
........................................................................
20­
8
20.3.2
Water
Recreation
in
Ohio
................................................................
20­
11
20.3.3
Commercial
Fishing
in
Ohio
..............................................................
20­
12
20.3.4
Surface
Water
Withdrawals
..............................................................
20­
12
20.4
Surface
Water
Quality
in
Ohio
.................................................................
20­
12
20.4.1
Use
Attainment
in
Streams
and
Rivers
in
Ohio
................................................
20­
13
20.4.2
Lake
Erie
and
Other
Lakes
Use
Attainment
..................................................
20­
13
20.4.3
Causes
and
Sources
of
Use
Non­
Attainment
in
Ohio
...........................................
20­
14
20.5
Effects
of
Water
Quality
Impairments
on
WaterResource
Services.....................................
20­
15
20.5.1
Effect
of
Water
Quality
Impairment
on
Life
Support
for
Animals
and
Plants
...............
.
.
.......
20­
15
20.5.2
Effect
of
Water
Quality
Impairment
on
RecreationalServices
....................................
20­
17
20.6
Presence
and
Distribution
of
Endangered
and
Threatened
Species
in
Ohio
...............................
20­
18
20.6.1
E&
T
Fish.............................................................................
20­
19
20.6.2
E&
T
Mollusks.........................................................................
20­
19
20.6.3
Other
Aquatic
E&
T
Species
..............................................................
20­
20
Glossary
.......................................................................................
20­
24
Acronyms
......................................................................................
20­
27
References
.....................................................................................
20­
28
Chapter
21:
Modeling
Recreational
Benefits
in
Ohio
with
a
RUM
Model
RUM
Analysis
21.1
Methodology
...............................................................................
21­
2
21.1.1
Overview
..............................................................................
21­
2
21.1.2
Modeling
the
Site
Choice
Decision..........................................................
21­
3
21.1.3
Modeling
Trip
Participation
...............................................................
21­
6
21.1.4
Calculating
Welfare
Changes
from
Water
Quality
Improvements..................................
21­
9
21.1.5
Extrapolating
Results
to
the
State
Level
.....................................................
21­
10
Table
of
Contents­
6
MP&
M
EEBA
Table
of
Contents
21.2
Data
......................................................................................
21­
10
21.2.1
The
Ohio
Data
........................................................................
21­
11
21.2.2
Estimating
the
Price
of
Visits
to
Sites.......................................................
21­
14
21.2.3
Site
Characteristics
....................................................................
21­
14
21.3
Site
Choice
Model
Estimates
..................................................................
21­
17
21.3.1
Fishing
Model
........................................................................
21­
18
21.3.2
Boating
Model
........................................................................
21­
19
21.3.3
Swimming
Model
......................................................................
21­
20
21.3.4
Viewing
(
Near­
water
Activity)
Model
......................................................
21­
20
21.4
Trip
Participation
Model......................................................................
21­
20
21.5
Estimating
Benefits
from
Reduced
MP&
M
Discharges
in
Ohio
.......................................
21­
23
21.5.1
Benefiting
Reaches
in
Ohio
..............................................................
21­
23
21.5.2
Estimating
Recreational
Benefits
in
Ohio
...................................................
21­
24
21.6
Limitations
and
Uncertainty
...................................................................
21­
25
21.6.1
One­
State
Approach
....................................................................
21­
25
21.6.2
Including
One­
Day
Trips
Only
............................................................
21­
26
21.6.3
Nonuse
Benefits
.......................................................................
21­
26
21.6.4
PotentialSources
of
Survey
Bias
..........................................................
21­
26
Glossary
.......................................................................................
21­
28
Acronyms
......................................................................................
21­
30
References
.....................................................................................
21­
31
Chapter
22:
MP&
M
Benefit­
Cost
Analysis
in
Ohio
22.1
Benefits
of
the
Final
Regulation..................................................................
22­
1
22.1.1
Human
Health
Benefits(
Other
than
Lead).....................................................
22­
2
22.1.2
Lead­
Related
Benefits
....................................................................
22­
3
22.1.3
Economic
Productivity
Benefits
............................................................
22­
4
22.1.4
Total
Monetized
Benefits..................................................................
22­
4
22.2
Social
Costsof
the
FinalRegulation
..............................................................
22­
5
22.2.1
Baseline
and
Post­
Compliance
Closures
......................................................
22­
5
22.2.2
Compliance
Costs
for
MP&
M
Facilities
......................................................
22­
6
22.2.3
Total
Social
Costs
.......................................................................
22­
7
22.3
Comparison
of
Monetized
Benefits
and
Costs
in
Ohio
................................................
22­
7
Glossary
........................................................................................
22­
8
Acronyms
.......................................................................................
22­
9
APPENDICES
Appendix
A:
Detailed
Economic
Impact
Analysis
Information
A.
1
MP&
M
SIC
and
NAICS
Codes
...................................................................
A­
1
A.
1.1SIC
Codes
by
Sector
.......................................................................
A­
1
A.
1.2
Bridge
Between
NAICS
and
SIC
codes
........................................................
A­
7
A.
2
Annual
Establishment
 
Births 
and
 
Deaths 
in
MP&
M
Industries
......................................
A­
26
A.
3
Description
of
MP&
M
Surveys
..................................................................
A­
28
A.
3.1
Screener
Surveys
........................................................................
A­
28
A.
3.2
Ohio
Screener
Surveys
....................................................................
A­
28
A.
3.3
Detailed
MP&
M
Industry
Surveys...........................................................
A­
28
A.
3.4
Iron
and
Steel
Survey.....................................................................
A­
29
A.
3.5
Municipality
Survey......................................................................
A­
29
A.
3.6
Federal
Facility
Survey
...................................................................
A­
29
A.
3.7
POTW
Survey
..........................................................................
A­
29
References
......................................................................................
A­
31
Appendix
B:
Cost
Pass­
Through
Analysis
B.
1
The
Choice
of
Sector­
Specific
CPT
Coefficients......................................................
B­
1
B.
2
Econometric
Analysis...........................................................................
B­
2
Table
of
Contents­
7
MP&
M
EEBA
Table
of
Contents
B.
2.1
Framework
..............................................................................
B­
3
B.
2.2
Data
Used
to
Estimate
the
Regression
Equation..................................................
B­
4
B.
2.3
Regression
Results
........................................................................
B­
6
B.
3
Market
Structure
Analysis
.......................................................................
B­
9
B.
3.1
Measures
Descriptions
.....................................................................
B­
9
B.
3.2
Results
................................................................................
B­
13
B.
4
Validation
of
Econometrically­
Estimated
CPT
Coefficients
............................................
B­
16
B.
4.1
Other
Metal
Products
.....................................................................
B­
17
B.
4.2
Job
Shops
..............................................................................
B­
17
B..
3
Motor
Vehicle
...........................................................................
B­
18
B.
4.4
Aircraft
...............................................................................
B­
18
B.
4.5
Mobile
Industrial
Equipment
..............................................................
B­
18
B.
4.6
Aerospace
..............................................................................
B­
18
B.
5
Adjusting
Estimates
of
Compliance
CPT
Potential
...................................................
B­
18
Attachment
B.
A:
Selected
Review
of
CPT
Literature
.....................................................
B­
20
B.
A.
1
Ashenfelter
et
al.
(
1998),
 
Identifying
the
Firm­
Specific
Cost
Pass­
Through
Rate. 
................
.
...
B­
20
B.
A.
2
Exchange
Rate
Pass­
Through
..............................................................
B­
20
B.
A.
3
Tax
Pass­
Through
.......................................................................
B­
20
B.
A.
4
Studies
Cited
...........................................................................
B­
20
Acronyms
.......................................................................................
B­
22
Appendix
C:
Summary
of
Moderate
Impact
Thresholds
by
Sector
C.
1
Developing
Threshold
Values
for
Pre­
Tax
Return
on
Assets
(
PTRA)
......................................
C­
1
C.
2
Developing
Threshold
Values
for
Interest
CoverageRatio
(
ICR)
..........................................
C­
2
C.
3
Summary
of
Results
.............................................................................
C­
4
References
.......................................................................................
C­
5
Appendix
D:
Estimating
Capital
Outlays
for
MP&
M
Discounted
Cash
Flow
Analyses
D.
1
Analytic
Concepts
Underlying
Analysis
of
Capital
Outlays
.............................................
D­
2
D.
2
Specifying
Variables
for
the
Analysis
.............................................................
D­
4
D.
3
Selecting
the
Regression
Analysis
Dataset
..........................................................
D­
7
D.
4
Specification
of
Models
to
be
Tested
..............................................................
D­
8
D.
4.1
LinearModel
Specification
................................................................
D­
9
D.
4.2
Log­
LinearModel
Specification
...........................................................
D­
10
D.
4.3
Sensitivity
Analysis
.....................................................................
D­
12
D.
5
Model
Validation
............................................................................
D­
12
Attachment
D.
A:
Bibliography
of
Literature
Reviewed
for
this
Analysis
.....................................
D­
17
Attachment
D.
B:
Historical
Variables
Contained
in
the
Value
Line
Investment
Survey
Dataset
...............
.
.
..
D­
18
Appendix
E:
Calculation
of
Capital
Cost
Components
E.
1
Calculation
of
One­
Time
Capital
Cost
Components
....................................................
E­
1
Appendix
F:
Administrative
Costs
F.
1
Effluent
Guidelines
Permitting
Requirements
.........................................................
F­
1
F.
1.1
NPDES
Basic
IndustrialPermit
Program
.......................................................
F­
1
F.
1.2
Pretreatment
Program
......................................................................
F­
2
F.
2
POTW
Administrative
Cost
Methodology
...........................................................
F­
2
F.
2.1
Data
Sources.............................................................................
F­
2
F.
2.2
Overview
of
Methodology
..................................................................
F­
3
F.
3
Unit
Costs
of
Permitting
Activities
.................................................................
F­
4
F.
3.1
Permit
Application
and
Issuance..............................................................
F­
4
F.
3.2
Inspection
...............................................................................
F­
7
F.
3.3
Monitoring
..............................................................................
F­
7
F.
3.4
Enforcement
.............................................................................
F­
9
F.
3.5
Repermitting
............................................................................
F­
10
F.
4
POTW
Administrative
Costs
by
Option
............................................................
F­
10
Appendix
F
Exhibits...............................................................................
F­
12
Table
of
Contents­
8
MP&
M
EEBA
Table
of
Contents
References
......................................................................................
F­
25
Appendix
G:
Extrapolation
Methods
G.
1
Using
Raking
to
Adjust
MP&
M
Facility
Sample
Weights...............................................
G­
2
G.
1.1
Data
Sources
............................................................................
G­
2
G.
1.2
Raking
Adjustment........................................................................
G­
3
G.
2
Methodology
for
Developing
Sample­
Weighted
Estimates
for
Sites
with
More
Than
One
MP&
M
Facility
........
G­
7
G.
3
Methodology
for
Extrapolation
of
Ohio
Case
Study
Results
to
the
National
Level
................
.
..........
G­
13
G.
3.1
Change
in
Pollutant
Loads
.................................................................
G­
14
G.
3.2
Level
of
Recreational
Activities
on
Reaches
Affected
by
MP&
M
Discharges
...............
.
.
........
G­
14
G.
3.3
Differences
in
Household
Income
...........................................................
G­
14
G.
4
Results
.....................................................................................
G­
15
Glossary
........................................................................................
G­
17
Appendix
H:
Fate
and
Transport
Model
for
DW
and
Ohio
Analyses
H.
1
Model
Equations
..............................................................................
H­
1
H.
2
Model
Assumptions
............................................................................
H­
3
H.
2.1
Steady
Flow
Conditions
Exist
Within
the
Stream
or
River
Reach
...................................
H­
3
H.
2.2
Longitudinal
Dispersion
of
the
Pollutant
Is
Negligible
............................................
H­
3
H.
2.3
Flow
Geometry,
Suspension
of
Solids,
and
Reaction
Rates
Are
Constant
Within
a
River
Reach
............
H­
4
H.
3
Hydrologic
Linkages
...........................................................................
H­
4
H.
4
Associating
Risk
with
Exposed
Populations
.........................................................
H­
4
H.
5
Data
Sources
.................................................................................
H­
4
H.
5.1
Pollutant
Loading
Data
Used
in
the
Drinking
Water
Risk
Analysis...................................
H­
4
H.
5.2
Pollutant
Loading
Data
Used
in
the
Ohio
Case
Study
Analysis......................................
H­
4
Glossary
.........................................................................................
H­
8
Acronyms
........................................................................................
H­
9
References
......................................................................................
H­
10
Appendix
I:
Environmental
Assessment
I.
1
MP&
M
PollutantCharacterization
.................................................................
I­
4
I.
1.1
Identifying
MP&
M
Pollutants
................................................................
I­
4
I.
1.2
Physical­
Chemical
Characteristics
and
Toxicity
Data
of
MP&
M
Pollutants
...............
.
.
............
I­
9
I.
1.3
Grouping
MP&
M
Pollutants
Based
on
Risk
to
Aquatic
Receptors
...................................
I­
21
I.
1.4
Assumptions
and
Limitations
...............................................................
I­
23
I.
2.
Methodology
.................................................................................
I­
23
I.
2.1
Sample
Set
Data
Analysis
and
National
Extrapolation
............................................
I­
23
I.
2.2
Water
Quality
Modeling
...................................................................
I­
23
I.
2.3
Impact
of
Indirect
Discharging
Facilities
on
POTW
Operations.....................................
I­
25
I.
2.4
Assumptions
and
Limitations
...............................................................
I­
27
I.
3
Data
Sources
.................................................................................
I­
28
I.
3.1
Facility­
Specific
Data
.....................................................................
I­
28
I.
3.2
Water
Body­
Specific
Data..................................................................
I­
28
I.
3.3
Information
Used
to
Evaluate
POTW
Operations
................................................
I­
29
I.
4
Results
......................................................................................
I­
33
I.
4.1
Human
Health
Impacts
....................................................................
I­
34
I.
4.2
Aquatic
Life
Effects.......................................................................
I­
37
I.
4.3
POTW
Effects
...........................................................................
I­
41
Glossary
........................................................................................
I­
44
Acronyms
.......................................................................................
I­
48
References
......................................................................................
I­
49
Appendix
J:
Spacial
Distribution
of
MP&
M
Facilities
and
Recreational
User
Populations
Table
J.
1
Distribution
of
MP&
M
Facilities
and
Participants
of
Water
Based
Recreation
by
State
................
.
..
J­
2
Figure
J.
1
Cumulative
Distribution
of
Facilities
and
Participants...................................................
J­
4
Table
of
Contents­
9
MP&
M
EEBA
Table
of
Contents
Appendix
K:
Selecting
WPT
Values
for
Benefits
Transfer
K.
1
Desvousges
et
al.,
1987.
Option
Price
Estimates
for
Water
Quality
Improvements:
A
Contingent
Valuation
Study
for
the
Monongahela
River
....................................................................
K­
2
K.
2
Farber
and
Griner,
2000.
Valuing
Watershed
Quality
Improvements
Using
Conjoint
Analysis
.................
K­
3
K.
3
Jakus
et
al.,
1997.
Do
Sportfish
Consumption
Advisories
Affect
Reservoir
Anglers 
Site
Choice?
..............
K­
5
K.
4
Lant
and
Roberts,
1990.
Greenbelts
in
the
Cornbelt:
Riparian
Wetlands,
Intrinsic
Values,
and
Market
Failure
....
K­
6
K.
5
Audrey
Lyke,
1993.
Discrete
Choice
Models
to
Value
Changes
in
Environmental
Quality:
A
Great
Lakes
Case
Study
......................................................................................
K­
7
K.
6
Montgomery
and
Needelman,
1997.
The
Welfare
Effects
of
Toxic
Contamination
in
Freshwater
Fish
...........
K­
8
K.
7
Phaneuf
et
al.,
1998.
Valuing
Water
Quality
Improvements
Using
Revealed
Preference
Methods
When
Corner
Solutions
are
Present
..........................................................................
K­
8
Glossary
.......................................................................................
K­
10
Acronyms
......................................................................................
K­
11
References
.....................................................................................
K­
12
Appendix
L:
Parameters
Used
in
the
IEUBK
Model
Table
B­
1:
Description
of
Parameters
Used
in
the
IEUBK
Lead
Model
.......................................
L­
1
Appendix
M:
Sensitivity
Analysis
of
Lead­
Related
Benefits
M.
1
Values
for
Quantified
Lead­
Related
Health
Effects...................................................
M­
1
M.
2
Lead­
Related
Benefit
Results....................................................................
M­
2
M.
2.1
Preschool
Age
Children
Lead­
Related
Benefits
................................................
M­
2
M.
2.2
Adult
Lead­
Related
Benefits
...............................................................
M­
3
Appendix
N:
Analysis
of
the
National
Demand
for
Water­
Based
Recreation
Survey
N.
1
Background
Information........................................................................
N­
1
N.
2
Data
Analysis
................................................................................
N­
2
N.
3
Participation
in
Water­
Based
Recreation
by
Activity
Type
.............................................
N­
2
N.
4
Allocation
of
Trips
by
Water
Body
Type..........................................................
N­
11
N.
5
One­
Way
Travel
Distance
.....................................................................
N­
16
N.
6
Individual
Expenditures
per
Trip
................................................................
N­
19
N.
7
Distribution
of
Direct
Costs
for
Single­
day
Trips....................................................
N­
22
N.
8
Profile
of
Boating
Trips
.......................................................................
N­
27
N.
9
Profile
of
Fishing
Trips
.......................................................................
N­
30
Table
of
Contents­
10
MP&
M
EEBA
Executive
Summary
Executive
Summary
INTRODUCTION
EPA
is
promulgating
effluent
limitations
guidelines
and
standards
for
the
Metal
Products
and
Machinery
(
MP&
M)

industry.
This
document
presents
EPA s
economic
and
environmental
analyses
supporting
the
final
rule.
The
Executive
Summary
provides
an
overview
of
the
costs
and
benefits
of
the
regulation.

Overall,
EPA
finds
that
the
final
rule
has
modest
economic
impacts
and
benefits.
The
estimated
social
cost
of
the
final
rule
is
$
13.8
million
annually
(
2001$).
The
total
benefits
that
can
be
valued
in
dollar
terms
in
the
categories
traditionally
analyzed
for
effluent
guidelines
range
from
around
$
1.0
to
$
1.5
million
annually
(
2001$),
based
on
alternative
extrapolation
methods.

EPA
recognizes
that
estimates
of
both
costs
and
benefits
are
uncertain.
To
supplement
the
national
level
analysis
performed
for
the
final
MP&
M
regulation,
EPA
conducted
a
more
detailed
case
study
of
the
expected
State­
level
costs
and
benefits
of
the
MP
&
M
rule
in
Ohio.
In
contrast
to
the
national­
level
analysis,
the
more
detailed
case
study
analysis
finds
that
the
final
regulation
would
achieve
benefits
substantially
exceeding
estimated
social
costs.
Comparing
the
midpoint
estimate
of
social
costs
($
62,232)
with
the
midpoint
EXECUTIVE
SUMMARY
CONTENTS
ES.
1
Overview
of
Facilities
Evaluated
for
Regulation
under
the
MP&
M
Point
Source
Category
and
Its
Effluent
Discharges
......
ES­
1
ES.
2
Description
of
the
Final
Rule
...............
ES­
3
ES.
3
Economic
Impacts
and
Social
Costs
of
the
Final
Rule
.................
..........
ES­
3
ES.
3.1
Economic
Impacts
.................
ES­
4
ES.
3.2
Social
Costs
.................
.....
ES­
7
ES.
4
National
Benefits
of
the
Final
Rule
..........
ES­
8
ES.
4.1
Reduced
Human
Health
Risk
........
ES­
10
ES.
4.2
Ecological,
Recreational,
and
Nonuser
Benefits
.................
...
ES­
14
ES.
4.3
Reduced
POTW
Impacts
...........
ES­
15
ES.
4.4
Total
Estimated
Benefits
of
the
Final
MP&
M
Rule
.................
..
ES­
16
ES.
5
National
Benefit­
Costs
Comparison
.........
ES­
16
ES.
6
Ohio
Case
Study
.................
.......
ES­
18
ES.
6.1
Benefits
.................
........
ES­
18
ES.
6.2
Social
Costs
.................
....
ES­
20
ES.
6.3
Comparing
Monetized
Benefits
and
Costs
.................
.........
ES­
20
estimate
of
monetizable
benefits
($
930,408)
for
Ohio,
EPA
estimates
a
net
benefit
of
the
final
MP&
M
rule
for
Ohio
is
$
868,178
(
2001$).

EPA
notes
that
effluent
limitations
guidelines
for
the
MP&
M
industry
are
technology­
based.
EPA
is
neither
required
to
demonstrate
environmental
benefits
of
its
technology­
based
rules,
nor
is
it
required
to
consider
receiving
water
quality
in
setting
technology­
based
effluent
limitations
guidelines
and
standards.
EPA
considers
benefits
as
one
of
the
factors
that
the
Agency
evaluates.

Detailed
descriptions
of
the
analytic
methodologies
and
results
are
presented
in
the
Economic,
Environmental,
and
Benefits
Assessment
for
the
Final
Metal
Products
and
Machinery
Rule
(
EEBA).
In
addition,
the
EEBA
presents
costs,
benefits,
and
economic
impacts
for
alternatives
to
the
final
rule
that
were
considered
by
EPA.

ES.
1
OVERVIEW
OF
FACILITIES
EVALUATED
FOR
REGULATION
UNDER
THE
MP&
M
POINT
SOURCE
CATEGORY
AND
ITS
EFFLUENT
DISCHARGES
The
MP&
M
Point
Source
Category
regulates
oily
operations
process
wastewater
discharges
to
surface
waters
from
existing
or
new
industrial
facilities
(
including
facilities
owned
and
operated
by
federal,
state,
or
local
governments)
engaged
in
manufacturing,
rebuilding,
or
maintenance
of
metal
parts,
products,
or
machines
for
use
in
the
sixteen
Metal
Product
&

Machinery
(
MP&
M)
industrial
sectors.
Please
note
the
underlined
language
in
the
previous
sentence
as
a
facility
may
be
subject
to
the
MP&
M
effluent
guidelines
even
if
it
is
not
in
one
of
the
MP&
M
industrial
sectors.
For
example,
EPA
considers
a
facility
performing
machining
part
of
the
 
Bus
&
Truck 
MP&
M
industrial
sector
if
it
manufactures
metal
parts
for
truck
trailers.
Process
wastewater
means
wastewater
as
defined
at
40
CFR
parts
122
and
401,
and
includes
wastewater
from
air
pollution
control
devices
(
see
40
CFR
438.2(
g)).
Oily
operations
are
listed
at
40
CFR
438.2(
g)
and
defined
in
Appendix
B
to
Part
438
(
see
also
Section
4
of
the
TDD
).

ES­
1
MP&
M
EEBA
Executive
Summary
According
to
Statistics
of
U.
S.
Business,
1996,
approximately
638,696
establishments
operate
in
the
MP&
M
industry
sectors.

Based
on
information
in
the
MP&
M
survey
database,
approximately
44,000
facilities
meet
the
definition
of
an
MP&
M
facility.
These
44,000
facilities
include
approximately
41,000
indirect
dischargers
(
i.
e.,
facilities
discharging
effluent
to
a
publicly­
owned
sewage
treatment
works
or
POTWs)
and
3,000
direct
dischargers
(
i.
e.,
facilities
discharging
effluent
directly
to
a
waterway
under
a
NPDES
permit).

Table
ES.
1
reports
the
estimated
number
of
MP&
M
facilities
and
total
discharge
flow
(
before
final
rule
implementation)
by
type
of
facility.
The
largest
number
of
sites,
approximately
22,000,
perform
 
rebuilding/
maintenance
only 
and
account
for
approximately
6
percent
of
the
total
estimated
discharge
flow
for
the
industry.
 
Manufacturing
only 
contains
the
next
largest
number
of
facilities
(
15,400)
and
accounts,
by
far,
for
the
largest
percentage
of
the
total
estimated
discharge
flow
for
the
industry
(
82
percent).

Table
ES.
1:
Number
of
MP&
M
Facilities
and
Total
Discharge
Flow
by
Type
of
Facility
Type
of
Facility
Number
of
Facilities
Total
Estimated
Discharge
Flow
(
million
gal/
yr)
Percent
of
Facilities
Percent
of
Total
Discharge
Flow
Manufacturing
&

Rebuilding/
Maintenance
6,600
9,400
15.0%
12.0%

Manufacturing
only
15,400
64,100
35.0%
82.0%

Rebuilding/
Maintenance
only
22,000
4,700
50.0%
6.0%

Total
44,000
78,200
100.0%
100.0%

Source:
U.
S.
EPA
analysis.
See
Section
4
of
the
Technical
Development
Document
for
the
final
rule.

Of
the
43,858
water
discharging
facilities,
3,593
are
predicted
to
close
in
the
baseline,
leaving
40,265
existing
MP&
M
facilities
that
EPA
estimates
could
be
regulated.
1
After
accounting
for
subcategory
and
discharger
class
exclusions,
EPA
estimates
that
the
final
rule
will
regulate
2,382
of
these
facilities,
all
of
which
are
direct
dischargers.
These
regulated
facilities
represent
5.9
percent
of
the
40,265
facilities
that
could
be
potentially
regulated.

Table
ES.
2
summarizes
information
on
the
total
number
of
MP&
M
facilities
that
were
evaluated
for
the
final
rule,
the
number
operating
in
the
baseline,
and
the
number
and
percent
of
facilities
that
will
be
regulated
under
the
final
rule.
As
reported
in
Table
ES.
2,
no
indirect
dischargers
are
subject
to
the
final
regulation.
The
rule
will
regulate
2,382
direct
dischargers
in
the
Oily
Wastes
subcategory.

Table
ES.
2:
Number
of
MP&
M
Facilities
Evaluated
for
the
Final
Rule
and
Regulated
under
the
Final
Rule
Discharge
Status
MP&
M
Facilities
Operating
in
the
Baseline
Regulated
under
the
Final
Rule
Percent
of
Facilities
Operating
in
the
Baseline
that
are
Regulated
Direct
dischargers
2,739
2,641
2,382
90%

Indirect
dischargers
41,162
37,652
0
0%

All
dischargers
43,858
40,265
2,382
6%

Source:
U.
S.
EPA
analysis.

1
These
are
facilities
that
are
predicted
to
close
due
to
weak
financial
performance
under
baseline
conditions,
i.
e.,
in
the
absence
of
the
final
rule.
EPA
does
not
attribute
the
costs
or
the
reduced
discharges
resulting
from
these
baseline
closures
to
the
final
rule,
and
therefore
excludes
these
facilities
from
its
analyses
of
the
rule s
impacts.
Baseline
closures
account
for
differences
between
the
universe
of
facilities
discussed
in
this
report
and
the
universe
discussed
in
the
Technical
Development
Document.

ES­
2
MP&
M
EEBA
Executive
Summary
Several
aspects
of
the
MP&
M
industries
as
a
whole
and
part
of
those
industries
evaluated
for
regulation
under
the
final
rule
are
important
in
understanding
the
need
for
the
regulation,
the
likely
distribution
and
occurrence
of
benefits,
and
the
framework
of
the
economic
analysis
for
the
regulation.

Facilities
in
the
relevant
MP&
M
industries
are
located
in
every
state,
with
a
particular
concentration
in
the
heavy
industrial
regions
along
the
Gulf
Coast,
both
East
and
West
Coasts
and
the
Great
Lakes
Region.
Moreover,
MP&
M
facilities
are
frequently
located
in
highly
populated
regions.
Based
on
an
analysis
of
in­
scope
sample
facilities,
around
35%
of
these
facilities
discharge
to
reaches
located
adjacent
to
counties
with
populations
of
at
least
500
thousand
people.
2
Discharges
of
these
pollutants
to
surface
waters
and
POTW
s
have
a
number
of
adverse
effects,
including
degradation
of
aquatic
habitats,
reduced
survivability
and
diversity
of
native
aquatic
life,
and
increased
human
health
risk
through
the
consumption
of
contaminated
fish
and
water.

Many
MP&
M
facilities
evaluated
for
the
final
regulation
produce
goods
and
services
that
serve
multiple
market
sectors.
It
is
not
possible
to
associate
regulatory
costs
and
benefits
to
particular
sectors,
because
EPA
is
not
able
to
link
regulated
processes
to
specific
sectors
for
facilities
operating
in
multiple
sectors.
As
a
result,
EPA s
cost
and
economic
impact
analyses
are
disaggregated
by
type
of
facility
but
not
by
sector.

ES.
2
DESCRIPTION
OF
THE
FINAL
RULE
In
order
to
address
variations
between
products,
raw
materials
processed,
and
other
factors
that
result
in
distinctly
different
effluent
characteristics,
EPA
proposed
eight
groupings
called
 
subcategories 
for
the
January
2001
proposal
and
June
2002
Notice
of
Data
Availability
(
NODA).
EPA
retained
this
subcategory
structure
for
evaluating
options
for
the
final
rule.

Regulation
of
a
category
using
subcategories
allows
each
subcategory
to
have
a
uniform
set
of
effluent
limitations
that
take
into
account
technological
achievability
and
economic
impacts
unique
to
that
subcategory
(
see
Section
6
of
the
TDD).
For
the
final
rule,
EPA
is
establishing
limitations
and
standards
only
for
direct
dischargers
in
the
Oily
Wastes
subcategory.
The
other
seven
subcategories
(
General
Metals,
Metal
Finishing
Job
Shops,
Non
Chromium
Anodizing,
Printed
Wiring
Board,

Railroad
Line
Maintenance,
Shipbuilding
Dry
Docks,
and
Steel
Forming
&
Finishing)
were
considered
for
regulation
at
proposal
and
for
some
of
the
alternative
regulatory
options,
but
are
not
further
regulated
under
the
final
rule.

EPA
is
establishing
BPT
pH
limitations
and
daily
maximum
limitations
for
two
pollutants,
oil
and
grease
as
hexane
extractable
material
(
O&
G
(
as
HEM))
and
total
suspended
solids
(
TSS),
for
direct
dischargers
in
the
Oily
Wastes
subcategory
based
on
the
proposed
technology
option
(
Option
6).
The
technology
requirements
include
the
following
treatment
measures:

(
1)
in­
process
flow
control
and
pollution
prevention;
and
(
2)
oil­
water
separation
by
chemical
emulsion
breaking
and
skimming
(
see
Section
9
of
the
TDD).
This
technology
is
available
technology
readily
applicable
to
all
facilities
in
the
Oily
Wastes
subcategory.
Approximately
42%
of
the
direct
discharging
facilities
in
the
Oily
Wastes
subcategory
currently
employ
this
technology
already.

EPA
is
promulgating
BCT
equivalent
to
BPT
for
facilities
in
the
Oily
Wastes
subcategory
and
has
decided
not
to
establish
BAT
limitations.
EPA
is
promulgating
NSPS
for
new
direct
dischargers
in
the
Oily
Wastes
subcategory
at
the
BPT
and
BCT
levels.

ES.
3
ECONOMIC
IMPACTS
AND
SOCIAL
COSTS
OF
THE
FINAL
RULE
EPA
assessed
the
economic
impacts
and
social
costs
of
the
final
rule
using
detailed
financial
and
technical
data
from
the
MP
&
M
surveys
(
see
Section
3
of
the
TDD
).
Engineering
analyses
of
these
facilities
identified
the
pollution
prevention
and
treatment
systems
needed
to
comply
with
the
final
rule
and
other
regulatory
alternatives.
The
estimated
capital
and
annual
operating
and
maintenance
costs
of
these
systems,
incremental
to
the
costs
of
systems
already
in
place,
represent
the
2
EPA
is
not
able
to
characterize
the
location
characteristics
of
all
potentially­
regulated
MP&
M
facilities
at
the
national
level
precisely,
because
the
MP&
M
survey
design
was
not
intended
to
provide
national
results
by
location
characteristics.

ES­
3
MP&
M
EEBA
Executive
Summary
compliance
costs
of
the
rule.
3
EPA
analyzed
the
financial
performance
of
the
facilities
evaluated
for
regulation
under
pre­

regulation
conditions
(
the
baseline)
and
as
subject
to
regulatory
requirements.
The
Agency
used
a
variety
of
measures
to
assess
the
economic
impacts
resulting
from
the
final
rule,
both
for
the
regulated
MP&
M
facilities
and
for
the
firms
and
governments
that
own
the
facilities.
The
economic
impact
analysis
also
considered
impacts
for
small
entities
in
particular,

and
impacts
on
employment,
foreign
trade
and
communities.
The
results
of
the
analyses
for
sample
facilities
were
extrapolated
using
survey
sample
weights
for
each
facility,
to
provide
national­
level
results.

ES.
3.1
Economic
Impacts
Overall,
EPA
found
the
econom
ic
impact
of
the
final
rule
to
be
modest.
The
following
are
EPA s
findings
for
different
categories
of
impacts.

a.
Facility
impacts
The
facility
impact
analysis
assesses
how
facilities
will
be
affected
financially
by
the
final
rule.
Key
outputs
of
the
facility
impact
analysis
include
expected
facility
closures
in
the
MP&
M
industries,
associated
losses
in
employment,
and
the
number
of
facilities
experiencing
financial
stress
short
of
closure
( 
moderate
impacts ).
EPA
performed
economic
impact
analyses
for
three
categories
of
facilities,
using
different
methodologies
to
evaluate
each
of
the
groups.
The
three
groups
are:

 
Private
MP&
M
Facilities.
This
group
includes
privately­
owned
facilities
that
do
not
perform
railroad
line
maintenance
and
are
not
owned
by
governments.
This
major
category
includes
private
businesses
in
a
wide
range
of
sectors
or
industries,
including
facilities
that
manufacture
and
rebuild
railroad
equipment.
Only
facilities
that
repair
railroad
track
and
equipment
along
the
railroad
line
are
not
included.

 
Railroad
line
maintenance
facilities
maintain
and
repair
railroad
track,
equipment
and
vehicles.

 
Government­
owned
facilities
include
MP&
M
facilities
operated
by
municipalities,
State
agencies
and
other
public
sector
entities
such
as
State
universities.
Many
of
these
facilities
repair,
rebuild,
and
maintain
buses,
trucks,
cars,

utility
vehicles
(
e.
g.,
snow
plows
and
street
cleaners),
and
light
machinery.

The
specific
methodology
used
to
assess
impacts
differed
for
each
of
the
three
types
of
MP&
M
facilities.
For
private
MP&
M
facilities,
EPA
established
thresholds
for
measures
of
financial
performance
and
compared
the
facilities 
performance
before
and
after
compliance
with
each
regulatory
option
with
these
thresholds.
Impacts
were
measured
at
the
operating
company
level
for
railroad
line
maintenance
facilities,
since
firms
are
unlikely
to
keep
track
of
financial
performance
at
the
facility
level
for
these
sites.
For
governments,
EPA
compared
compliance
costs
with
facilities 
baseline
costs
of
service,
and
assessed
the
impact
of
the
compliance
costs
on
the
government s
taxpayers
and
on
its
ability
to
finance
compliance
costs
by
issuing
debt.

EPA
identified
facilities
that
are
financially
weak
and
might
be
expected
to
close
under
baseline
conditions.
Of
the
estimated
43,858
discharging
facilities,
8.2
percent
or
3,593
facilities
were
assessed
as
baseline
closures.
The
3,593
baseline
closures
include
3,511
indirect
dischargers,
or
8.5
percent
of
indirect
dischargers,
and
98
direct
dischargers,
or
3.6
percent
of
direct
dischargers.
These
facilities
were
excluded
from
the
post­
compliance
analysis
of
regulatory
impacts.

Table
ES.
3
summarizes
the
facility­
level
economic
impact
of
the
final
rule.
EPA
estimates
that
the
final
rule
will
cause
no
facilities
to
close
or
to
incur
moderate
financial
stress
short
of
closure.
The
final
rule
excludes
all
indirect
discharging
facilities
and
two
percent
of
the
direct
discharging
facilities
from
requirements.

3
The
annual
equivalent
of
capital
and
other
one­
time
costs
is
calculated
by
annualizing
costs
at
a
seven
percent
discount
rate
over
an
estimated
15
year
equipment
life.
Annual
compliance
costs
are
annualized
capital
costs
plus
annual
operating
and
maintenance
(
O&
M)

costs.

ES­
4
MP&
M
EEBA
Executive
Summary
Table
ES.
3:
Regulatory
Impacts
for
All
Facilities,
Final
Rule,
National
Estimates
Totala
Direct
Indirect
Number
of
facilities
operating
in
the
baseline:
total
40,265
2,641
37,652
private
MP&
M
and
railroad
line
maintenance
36,480
2,183
34,325
government­
owned
3,785
458
3,327
Number
of
facilities
with
subcategory
exclusions
37,883
259
37,652
Percent
of
facilities
operating
in
the
baseline
excluded
or
below
cutoffs
94.1%
9.8%
100.0%

Number
of
facilities
operating
subject
to
regulatory
requirements
2,382
2,382
0
Number
of
regulatory
closures
0
0
0
Percent
of
facilities
operating
in
the
baseline
that
are
regulatory
closures
0.0%
0.0%
0.0%

Number
of
facilities
experiencing
moderate
impacts
0
0
0
Percent
of
facilities
operating
in
the
baseline
that
experience
moderate
impacts
0.0%
0.0%
0.0%

a
The
total
number
of
facilities
does
not
sum
to
the
number
of
facilities
by
subcategory
because
some
facilities
have
an
indirect
and
direct
discharging
operation
within
the
same
facility.

Source:
U.
S.
EPA
analysis.

Table
ES.
4
summarizes
impacts
for
government­
owned
facilities
in
particular.
Under
the
final
rule,
88
percent
of
the
government­
owned
facilities
are
excluded
from
requirements
by
subcategory
exclusions.
The
compliance
costs
of
the
final
rule
do
not
result
in
significant
budgetary
impacts
for
any
of
the
governments
that
operate
MP&
M
facilities.

Table
ES.
4:
Regulatory
Impacts
for
Government­
Owned
Facilities,
Final
Rule,
National
Estimates
Number
of
government­
owned
facilities
operating
in
the
baseline
3,785
Number
of
facilities
with
subcategory
exclusions
3,327
Percent
of
facilities
operating
in
the
baseline
excluded
88%

Number
of
facilities
operating
subject
to
regulatory
requirements
458
Number
of
facilities
experiencing
significant
budgetary
impactsa
0
Percent
of
facilities
operating
in
the
baseline
that
experience
significant
budgetary
impacts
0%

a
A
government
is
judged
to
experience
major
budgetary
impacts
if
(
1)
any
of
its
MP&
M
facilities
incur
compliance
costs
exceeding
1%
of
baseline
cost
of
service
and
(
2)
the
government
fails
both
the
taxpayer
impact
and
debt
impact
tests.

Source:
U.
S.
EPA
analysis.

b.
Firm­
level
impacts
EPA
examined
the
impacts
of
the
final
rule
on
firms
that
own
MP&
M
facilities,
as
well
as
on
the
financial
condition
of
the
facilities
themselves.
A
firm
that
owns
multiple
MP&
M
facilities
could
experience
adverse
financial
impacts
at
the
firm
level
if
its
facilities
are
among
those
that
incur
significant
impacts
at
the
facility
level.
The
firm­
level
analysis
is
also
used
to
assess
impacts
on
small
firms,
as
required
by
the
Regulatory
Flexibility
Act.

EPA
compared
compliance
costs
with
revenue
at
the
firm
level
as
a
measure
of
the
relative
burden
of
compliance
costs.
EPA
applied
this
analysis
only
to
MP&
M
facilities
owned
by
private
entities.
EPA
estimated
firm­
level
compliance
costs
by
summing
costs
for
all
facilities
owned
by
the
same
firm
that
responded
to
the
survey
plus
estimated
compliance
costs
for
ES­
5
MP&
M
EEBA
Executive
Summary
additional
facilities
for
which
respondents
submitted
voluntary
information.
The
Agency
was
not
able
to
estimate
the
national
numbers
of
firms
that
own
MP
&
M
facilities
precisely,
because
the
sample
weights
based
on
the
survey
design
represent
numbers
of
facilities
rather
than
firms.
Most
MP&
M
facilities
(
26,472
of
36,480,
or
73
percent)
are
single­
facility
firms,

however.
These
firms
can
be
analyzed
using
the
survey
weights.
In
addition,
from
survey
responses,
EPA
identified
389
sample
facilities
that
are
owned
by
276
multi­
facility
firms.
It
is
not
known
how
many
multi­
facility
firms
exist
at
the
national
level,
so
EPA
included
these
276
firms
in
the
firm­
level
analysis
without
extrapolation
to
the
national
level.

Table
ES.
5
shows
the
results
of
the
firm­
level
analysis.
The
results
represent
a
total
of
26,748
MP&
M
firms
(
26,472
+
276),

owning
26,861
facilities
(
26,472
owned
by
single­
facility
firms
+
389
owned
by
multi­
facility
firms).

Table
ES.
5:
Firm
Level
Before­
Tax
Annual
Compliance
Costs
as
a
Percent
of
Annual
Revenues
Number
of
Firms
in
the
Analysis
a
Number
and
Percent
with
Before­
Tax
Annual
Compliance
Costs/
Annual
Revenues
Equal
to:

0%
>
0%
and
<
1%
Over
1%

Number
%
Number
%
Number
%

26,748
25,722
96.2%
1,027
3.8%
0
0%

a
Firms
whose
only
MP&
M
facilities
close
in
the
baseline
are
excluded.

Source:
U.
S.
EPA
analysis.

None
of
the
firms
in
the
analysis
incur
after­
tax
costs
of
greater
than
1
percent
of
their
annual
revenues.
Of
the
1,027
firms
that
incur
any
costs
at
all,
none
own
facilities
that
close
or
experience
moderate
impacts
as
a
results
of
the
final
rule.

This
analysis
is
likely
to
overstate
costs
at
the
firm
level
because
it
does
not
consider
the
actions
a
multi­
facility
firm
might
take
to
reduce
its
compliance
costs
under
the
final
rule,
such
as
transferring
functions
among
facilities
to
consolidate
wet
processes
and
to
take
advantage
of
scale
economies
in
wastewater
treatment.

c.
Employment
effects
Potential
changes
in
employment
from
the
rule
include:
(
1)
job
losses
that
occur
when
facilities
close
and
(
2)
job
gains
resulting
from
facilities 
compliance
activities.
EPA
estimates
that
the
final
rule
will
cause
no
facilities
to
close
and
therefore
the
final
rule
will
cause
no
job
losses.
EPA
estimates
that
the
regulation
will
increase
employment,
with
the
manufacture
and
installation
of
compliance
equipment
causing
a
short­
term
gain
in
direct
employment
of
20
FTEs.
In
addition,
EPA
estimates
that
operation
and
maintenance
of
compliance
equipment
will
cause
a
continuing
direct
requirement
for
2
FTEs
per
year.
The
net
effect
on
direct
employment
of
the
regulation
is
an
estimated
increase
in
47
FTE­
years,
a
measure
that
reflects
both
the
number
and
duration
of
jobs
gained.
Over
the
15
year
analysis
period,
the
employment
gain
averages
3
FTEs
per
year.

d.
Community
impacts
EPA
also
considered
the
potential
impacts
of
changes
in
employment
due
to
the
regulation
on
the
communities
where
MP&
M
facilities
are
located.
Given
that
no
closures
are
predicted
due
to
the
final
rule,
EPA
does
not
expect
the
rule
to
have
significant
impacts
at
the
community
level.

e.
Foreign
trade
impacts
The
foreign
trade
impacts
analysis
allocates
the
value
of
changes
in
output
for
each
facility
that
is
projected
to
close
to
exports,
imports,
or
domestic
sales,
based
on
the
dominant
source
of
competition
in
each
market
as
reported
in
the
surveys.

EPA
does
not
expect
any
foreign
trade
impacts
as
a
result
of
the
final
rule
because
no
facility
closures
are
expected.

f.
Impacts
on
new
facilities
The
new
facility
analysis
assessed
whether
revised
or
new
discharge
limits
for
newly
constructed
sources
would
create
a
barrier
to
entry
by
new
businesses
and
new
facilities.
To
assess
the
potential
for
barrier
to
entry,
EPA
compared,
by
subcategory
and
discharger
status,
the
estimated
annual
incremental
costs
of
meeting
revised
new
source
limits
with
the
estimated
annual
revenue
of
new
facilities.
EPA
based
the
estimates
of
annual
revenue
and
incremental
costs
of
meeting
revised
new
source
limits
on
information
from
the
existing
facility
database.
EPA
used
the
findings
from
this
analysis,
in
ES­
6
MP&
M
EEBA
Executive
Summary
terms
of
the
estimated
percentages
of
new
facilities
that
would
incur
costs
exceeding
specified
revenue
thresholds,
to
decide
whether
to
issue
revised
new
source
limits
for
the
various
industry
subcategories
and
discharger
classes.
From
this
analysis,

EPA
concluded
that
the
promulgation
of
revised
new
source
limits
for
the
Oily
Wastes
direct
discharger
subcategory
would
not
create
a
barrier
to
entry
and
this
information,
in
part,
underlies
EPA s
decision
to
promulgate
new
source
limits
for
this
subcategory
as
part
of
the
final
regulation.

g.
Impacts
on
small
entities
Table
ES.
6
shows
the
total
number
of
facilities
operating
in
the
baseline
and
the
number
owned
by
small
entities.
Overall,

approximately
73
percent
of
all
MP&
M
facilities
are
owned
by
small
entities.
However,
subcategory
exclusions
in
the
final
rule
will
exclude
approximately
95
percent
of
the
facilities
owned
by
small
entities.

Table
ES.
6:
Number
and
Percent
of
MP&
M
Facilities
Owned
by
Small
Entities
Type
of
Facility
Number
of
Facilities
of
all
Sizes
Operating
in
the
Baseline
Number
of
Facilities
Owned
by
Small
Entities
Percent
of
Facilities
Owned
by
Small
Entities
Private
MP&
Ma
36,480
27,418
75%

Government­
owned
3,785
1,962
52%

Totala
40,265
29,380
73%

a
Excludes
baseline
closures
Source:
U.
S.
EPA
analysis.

EPA
assessed
impacts
on
small
entities
by
comparing
compliance
costs
to
revenues
for
the
small
entities
at
the
firm
level
and
by
analyzing
the
facility
impact
analysis
results
for
facilities
owned
by
small
firms.
These
analyses
indicate
that
no
facilities
will
incur
costs
exceeding
1%
of
revenues,
and
only
1,019
facilities
owned
by
small
firms
will
incur
any
costs
at
all.
None
of
these
facilities
incur
moderate
impacts
or
close
as
a
result
of
the
final
rule.

EPA
estimates
that
1,962
facilities
are
owned
by
small
governments
(
those
with
populations
less
than
50,000).
The
subcategory
exclusions
in
the
final
rule
exclude
1,682
of
these
small
government­
owned
MP&
M
facilities.
Thus,
the
final
rule
covers
280
small
government­
owned
facilities.
Of
these
facilities,
only
140
incur
costs,
and
the
average
annual
cost
per
facility
is
less
than
$
30,000.
All
of
the
140
facilities
have
costs
less
than
3
percent
of
baseline
cost
of
service.
EPA
estimated
no
significant
impacts
for
any
of
these
facilities
or
the
governments
that
own
them,
based
on
the
analysis
of
change
in
site
cost
of
service,
impact
on
taxpayers,
and
impact
on
government
debt
levels.
The
total
compliance
cost
for
all
the
small
government­
owned
facilities
incurring
costs
under
the
final
rule
is
$
3.5
million.

ES.
3.2
Social
Costs
The
social
costs
of
the
final
rule
represent
the
value
of
society s
resources
used
to
comply
with
and
administer
the
rule.
EPA
estimated
three
categories
of
social
cost
for
the
final
regulation:

 
the
cost
of
society s
economic
resources
used
to
comply
with
the
final
regulation,

 
the
cost
to
governments
of
administering
the
final
regulation,
and
 
the
social
costs
of
unemployment
resulting
from
the
regulation.

Resource
costs
of
compliance
are
the
value
of
society s
productive
resources
including
labor,
equipment,
and
materials
expended
to
achieve
the
reductions
in
effluent
discharges
required
by
the
final
rule.
The
social
costs
of
these
resources
are
generally
higher
than
the
cost
burden
to
facilities
because
facilities
are
able
to
deduct
the
costs
from
their
taxable
income
and
may
offset
some
of
the
costs
through
increased
prices
to
customers.
The
costs
to
society,
however,
are
the
full
value
of
the
resources
used,
whether
they
are
paid
for
by
the
regulated
facilities,
by
all
taxpayers
in
the
form
of
lost
tax
revenues,
or
passed
on
to
customers
through
increased
prices.

ES­
7
MP&
M
EEBA
Executive
Summary
The
main
cost
to
government
from
administering
the
regulation
is
the
cost
to
POTWs
for
writing
permits,
and
for
compliance
monitoring
and
enforcement
activities.
POTWs
could
incur
costs
in
writing
new
permits
for
previously
unpermitted
facilities,

and
writing
revised
permits
for
some
facilities
earlier
than
would
otherwise
be
required.
Because
the
final
regulation
excludes
all
indirect
dischargers
from
coverage,
EPA
expects
that
the
final
rule
will
not
increase
POTW
administrative
costs.

The
loss
of
jobs
from
facility
closures
would
represent
a
social
cost
of
the
regulation.
From
its
facility
impact
analysis,
EPA
estimates
that
no
facilities
will
close
as
a
result
of
the
regulation.
Accordingly,
EPA
estimates
a
zero
cost
of
unemployment
for
the
final
rule.
EPA
did
not
recognize
possible
savings
in
unemployment­
related
costs
from
jobs
created
by
the
rule
as
a
negative
cost
(
benefit)
of
the
regulation.

From
this
analysis
EPA
estimated
a
total
annual
social
cost
of
$
13.8
million
annually
(
2001$)
for
the
final
rule
(
see
Table
ES.
7).
All
of
this
cost
results
from
the
estimated
resource
cost
of
compliance.

Table
ES.
7:
Total
Social
Cost:
Final
Rule
(
millions,
2001$)

Social
Cost
Categories
Final
Rule
Resource
cost
of
compliance
expenditures
$
13.8
Costs
to
POTWs
of
administering
the
rule
$
0.0
Social
costs
of
unemployment
$
0.0
Total
Social
Cost
$
13.8
Source:
U.
S.
EPA
analysis.

ES.
4
NATIONAL
BENEFITS
OF
THE
FINAL
RULE
The
final
regulation
will
reduce
MP&
M
industry
pollutant
discharges
to
the
nation s
surface
waters
with
a
number
of
consequent
benefits
to
society,
including:

 
improved
quality
of
freshwater,
estuarine,
and
marine
ecosystems;

 
increased
survivability
and
diversity
of
aquatic
and
terrestrial
wildlife;
and
 
reduced
risks
to
human
health
through
consumption
of
fish
or
water
taken
from
affected
waterways.

Table
ES.
8
shows
EPA
estimates
for
reduction
in
pollutant
discharges
to
U.
S.
waters
under
the
final
rule.
Loadings
are
shown
both
in
pounds
of
pollutant
and
in
toxic­
weighted
pound
equivalents.
The
latter
measure
reflects
the
relative
toxicity
of
the
various
toxic
pollutants.
The
regulation
would
result
in
a
80
percent
reduction
in
total
toxic­
weighted
pollutant
lbs.

equivalent
per
year.
The
estimated
toxic
weighted
pollutant
reductions
range
from
87
percent
for
priority
metal
pollutants
to
1
percent
for
arsenic.
Reductions
in
pounds
of
pollutants
(
not
toxic­
weighted)
range
from
93
percent
for
oil
and
grease
(
O&
G)

to
5
percent
for
arsenic.
As
shown
in
Table
ES.
8,
the
final
rule
achieves
modest
reductions
for
arsenic,
organics,
biological
oxygen
demand
(
BOD),
and
chemical
oxygen
demand
(
COD),
and
significant
reductions
for
toxic
metals,
other
inorganics,

bulk
pollutants,
and
oil
and
grease.

ES­
8
MP&
M
EEBA
Executive
Summary
Table
ES.
8:
Summary
of
Discharges
by
Pollutant
Type
for
Regulated
MP&
M
Facilitiesa
Pollutant
Category
Current
Releases
Releases
under
the
Final
Rule
Percent
Reduction
Due
to
the
Final
Rule
Pounds
Pounds
Eq.
Pounds
Pounds
Eq.
Pounds
Pounds
Eq.

Priority
Pollutants
Metals
794
2,756
153
351
80.7%
87.3%

Organics
336
58
268
45
20.2%
22.4%

Arse
nic
22
75
21
74
4.5%
1.3%

Cyanide
(
CN)
0
0
­­

Nonconventional
Pollutants
Metals
25,863
417
16,428
158
36.5%
62.1%

Organics
2,159
45
1,038
39
51.9%
13.3%

Other
inorganics
2,334
0.2
1,301
0.1
44.3%
50.0%

Bulk
pollutants
335,679
167,295
50.2%

Conventional
Pollutants
BOD
263,419
165,567
37.1%

COD
523,440
488,697
6.6%

O&
G
428,137
28,955
93.2%

TSS
160,695
73,769
54.1%

Total
3,351
667
80.1%
0
0
a
Includes
only
direct
discharging
facilities
in
the
Oily
Wastes
subcategory
that
continue
to
operate
in
the
baseline
and
that
are
subject
to
the
final
rule.

Source:
U.
S.
EPA
analysis.

EPA
assessed
the
benefits
from
the
expected
pollutant
reductions
in
three
broad
classes:
human
health,
ecological,
and
productivity
benefits.
4
EPA
was
able
to
assess
benefits
within
these
three
classes
with
varying
degrees
of
completeness
and
rigor.
Where
possible,
EPA
quantified
the
expected
effects
and
estimated
monetary
values.
Some
benefit
categories
could
not
be
monetized
because
of
data
limitations
and
a
limited
understanding
of
how
society
values
certain
water
quality
changes.

EPA
used
sample
facility
data
to
estimate
national
benefits
from
the
regulation.
The
Agency
extrapolated
findings
from
the
sample
facility
analyses
to
the
national
level
using
two
extrapolation
methods:
(
1)
traditional
extrapolation
and
(
2)

post­
stratification
extrapolation.
EPA
traditionally
uses
a
standard
linear
weighting
technique
(
i.
e.,
traditional
extrapolation)

to
estimate
national
compliance
costs,
changes
in
pollutant
removals,
and
national­
level
benefits
of
environmental
regulations.

However,
using
sample
weights
that
are
based
only
on
facility­
specific
(
e.
g.,
engineering)
characteristics
without
including
non­
facility
factors
can
lead
to
a
conditional
bias
in
the
estimation
of
national­
level
benefits.
In
particular,
this
approach
omits
consideration
of
important
non­
facility
factors
that
influence
the
occurrence
and
size
of
benefits.
Non­
facility
factors
that
are
likely
to
affect
the
occurrence
and
size
of
benefits
from
reduced
sample
facility
discharges
and
that
are
not
reflected
in
the
standard
stratification
and
sample­
weighting
approach
include
the
receiving
water
body
type
and
size
and
the
size
of
population
residing
in
the
vicinity
of
a
sample
facility.
To
address
omission
of
these
important
non­
facility
factors
(
i.
e.,
water
body
type
and
size,
affected
population,
and
co­
occurrence
MP&
M
discharges)
in
designing
the
MP&
M
facilities
sample,

EPA
adjusted
sampling
weights
through
post­
stratification
using
two
variables:
(
1)
receiving
water
body
type
and
size
and
(
2)
the
size
of
the
population
residing
in
the
vicinity
of
the
sample
facility.
The
Agency
used
a
commonly
used
post­

4
EPA
evaluated
two
productivity
measures:
(
1)
the
reduction
in
pollutant
interference
at
POTWs,
and
(
2)
pass­
through
of
pollutants
into
the
sludge,
which
limits
options
for
POTW
disposal
of
sewage
sludge.
Because
the
final
rule
only
regulates
direct
discharges
and
thus
does
not
affect
POTW
operations,
productivity
benefits
were
evaluated
for
alternative
options
only.

ES­
9
MP&
M
EEBA
Executive
Summary
stratification
method
called
 
raking 
to
adjust
original
sample
weights
to
reflect
these
benefits
characteristics.
Appendix
G
of
this
report
provides
detail
on
extrapolation
methods
used
in
this
analysis.

To
supplement
the
national­
level
analysis
performed
for
the
final
MP&
M
regulation,
EPA
also
conducted
a
detailed
case
study
of
the
expected
state­
level
costs
and
benefits
of
the
MP&
M
rule
in
Ohio.
For
several
reasons,
EPA
judges
that
the
Ohio
case
study
is
more
robust
than
the
national
benefit
analyses
that
EPA
undertakes
in
support
of
effluent
guideline
development.

These
reasons
include:
(
1)
use
of
more
detailed
data
on
MP&
M
facilities
than
is
possible
at
the
national
level;
(
2)
use
of
more
detailed
and
accurate
water
quality
data
than
are
usually
available;
(
3)
more
accurate
accounting
for
the
presence
and
effect
of
multiple
discharges
to
the
same
reach;
(
4)
inclusion
of
data
on
non­
MP&
M
discharges
in
the
baseline
and
post
compliance;

(
5)
use
of
a
first­
order
decay
model
to
estimate
in­
stream
concentrations
in
downstream
water
bodies;
and
(
6)
inclusion
of
an
additional
recreational
benefit
category
(
swimming)
in
the
analysis.
The
Ohio
case
study
analysis
is
presented
in
Chapters
20,

21,
and
22
of
this
report.

ES.
4.1
Reduced
Human
Health
Risk
EPA
estimates
that
the
final
rule
will
prevent
discharge
of
18
pounds
per
year
of
carcinogens
and
119
pounds
per
year
of
lead.

Also,
the
final
rule
will
prevent
discharge
of
an
additional
6,900
pounds
of
76
pollutants
of
concern
that
are
known
to
cause
adverse
human
health
effects.
These
reduced
pollutant
discharges
from
MP&
M
facilities
are
expected
to
result
in
reduced
risk
of
illness
from
consumption
of
contaminated
fish,
shellfish,
and
water.

EPA
analyzed
the
following
measures
of
health­
related
benefits:
reduced
cancer
risk
from
fish
and
water
consumption;

reduced
risk
of
non­
cancer
toxic
effects
from
fish
and
water
consumption;
lead­
related
health
effects
to
children
and
adults;

and
reduced
occurrence
of
in­
waterway
pollutant
concentrations
in
excess
of
levels
of
concern.
The
levels
of
concern
include
human
health­
based
ambient
water
quality
criteria
(
AWQC)
or
documented
toxic
effect
levels
for
those
chemicals
not
covered
by
water
quality
criteria.
Although
some
health
effects
are
relatively
well
understood
and
can
be
quantified
and
monetized
in
a
benefits
analysis
(
e.
g.,
cancer),
others
are
less
well
understood,
and
may
not
be
assessed
with
the
same
rigor
or
at
all
(
e.
g.,

systemic
health
effects).
The
Agency
therefore
monetized
only
two
of
these
health
benefits:
(
1)
changes
in
the
incidence
of
cancer
from
fish
and
water
consumption,
and
(
2)
changes
in
adverse
health
effects
in
children
and
adults
from
reduced
lead
exposure.

The
national­
level
analysis
of
human
health
benefits
finds
negligible
monetized
benefits
from
the
final
rule.
However,
because
of
significant
simplifications
in
the
national
level
analysis,
this
finding
should
be
recognized
as
potentially
having
substantial
error
and
should
therefore
be
interpreted
with
caution.
In
particular,
the
national­
level
analysis:
(
1)
is
based
only
on
limited
information
on
MP&
M
facilities
at
the
national
level;
(
2)
accounts
in
only
a
very
limited
way
for
the
presence
and
effect
of
joint
discharges
on
the
same
reach;
(
3)
omits
data
on
non­
MP&
M
discharges
in
the
baseline
and
post
compliance;
and
(
4)

omits
consideration
of
the
downstream
effects
of
pollutant
discharges.

In
contrast
to
the
national­
level
analysis,
the
methods
and
data
used
for
the
Ohio
case
study
address
a
number
of
these
analytic
weaknesses.
This
more
rigorous
analysis
finds
that
the
final
regulation
would
achieve
$
0.5
million
(
2001$)
in
health­
related
benefits
in
the
state
of
Ohio
alone.
EPA
estimates
that
this
analysis
provides
a
more
accurate,
albeit
lower­
bound,
estimate
of
health­
related
benefits
than
indicated
by
the
simpler
national­
level
analysis.
Moreover,
given
(
1)
that
Ohio
represents
only
about
6
percent
of
the
total
MP&
M
facility
population
and
(
2)
that
a
substantial
share
of
the
total
MP&
M
facility
population
is
located
in
other
states
with
similar
water
body
and
population
characteristics
(
e.
g.,
the
states
of
Illinois,
Indiana,
Michigan,

Pennsylvania),
it
is
reasonable
to
expect
that
additional
human
health
benefits
would
be
estimated
for
the
remainder
of
the
country
if
EPA
were
able
to
apply
this
more
rigorous
approach
at
the
national
level.
Accordingly,
EPA
judges
that
the
final
rule's
human
health
benefits
are
higher
than
its
social
costs.

a.
Benefits
from
reduced
incidence
of
cancer
cases
EPA
assessed
changes
in
the
incidence
of
cancer
cases
from
consumption
of
M
P&
M
pollutants
in
fish
tissue
and
drinking
water.
The
methodology
for
assessing
human
health
benefits
from
reduced
cancer
incidence
is
presented
in
Chapter
13
of
this
report.
The
Agency
valued
changes
in
incidence
of
cancer
cases
using
a
willingness­
to­
pay
(
WTP)
of
$
6.5
million
(
2001$)

for
avoiding
premature
mortality.
This
estimate
of
the
value
of
a
statistical
life
saved
is
recommended
in
EPA's
Guidelines
for
Preparing
Economic
Analysis.
This
estimate
does
not
include
estimates
of
WTP
to
avoid
morbidity
prior
to
death.

EPA
estimated
aggregate
cancer
risk
from
contaminated
drinking
water
for
populations
served
by
drinking
water
intakes
on
water
bodies
to
which
MP&
M
facilities
discharge.
EPA
based
this
analysis
on
six
carcinogenic
pollutants
for
which
drinking
ES­
10
MP&
M
EEBA
Executive
Summary
water
criteria
have
not
been
published.
5
This
analysis
excludes
seven
carcinogens
for
which
drinking
water
criteria
have
been
published.
EPA
assumed
that
public
drinking
water
treatment
systems
will
remove
these
pollutants
from
the
public
water
supply.
To
the
extent
that
treatment
for
these
seven
pollutants
may
cause
incidental
removals
of
the
chemicals
without
criteria,

the
analysis
may
overstate
cancer­
related
benefits.

Calculated
in­
stream
concentrations
provide
the
basis
for
estimating
changes
in
cancer
risk
for
populations
served
by
affected
drinking
water
intakes.
EPA
estimates
that
baseline
MP&
M
discharges
from
in­
scope
facilities
are
associated
with
virtually
zero
annual
cancer
cases.
The
national­
level
analysis
finds
that
the
final
regulation
would
lead
to
a
marginal
reduction
in
these
cancer
cases
resulting
from
consumption
of
contaminated
drinking
water;
correspondingly,
monetary
benefits
estimated
from
reduced
consumption
of
contaminated
drinking
water
are
essentially
zero.

EPA
also
estimated
cancer
risk
from
the
consumption
of
contaminated
fish
for
recreational
and
subsistence
anglers
and
their
families.
EPA
based
this
analysis
on
thirteen
carcinogenic
pollutants
found
in
MP&
M
effluent
discharges.
Estimated
contaminant
concentrations
in
fish
tissue
are
a
function
of
predicted
in­
stream
pollutant
concentrations
and
pollutant
bioconcentration
factors.
EPA
used
data
on
numbers
of
licensed
fishermen
by
state
and
county,
presence
of
fish
consumption
advisories,
number
of
fishing
trips
per
person
per
year,
and
average
household
size
to
estimate
the
affected
population
of
recreational
and
subsistence
anglers
and
their
families.
The
analysis
uses
different
fish
consumption
rates
for
recreational
and
subsistence
anglers
to
estimate
the
change
in
cancer
risk
among
these
populations.

EPA
estimated
that
baseline
MP&
M
discharges
from
in­
scope
facilities
are
associated
with
0.03
annual
cancer
cases.
The
national­
level
analysis
shows
that
the
final
option
would
lead
to
a
marginal
reduction
in
cancer
cases
among
recreational
and
subsistence
angler
populations.
The
monetary
benefits
estimated
from
consumption
of
less
contaminated
fish
by
these
populations
are
essentially
negligible.

The
findings
from
the
national
analysis
of
changes
in
cancer
risk
for
the
final
rule
differ
from
the
Ohio
case
study
results.

Based
on
the
Ohio
case
study,
the
final
option
is
expected
to
eliminate
0.01
cancer
cases
annually
in
the
State
of
Ohio
alone.

This
reduction
translates
into
$
14,500
(
2001$)
in
annual
benefits
due
to
reduced
cancer
risk
from
consumption
of
contaminated
fish
tissue
and
drinking
water
(
see
Chapter
22
of
this
report
for
detail).

The
difference
in
the
findings
of
the
national
and
Ohio
analyses
results
primarily
from
more
comprehensive
information
on
MP&
M
and
non­
MP&
M
facility
discharges
used
in
the
Ohio
case
study
analysis.
The
national­
level
analysis
accounts
only
for
the
pollutant
exposures
from
MP&
M
sample
facilities.
In
contrast,
the
Ohio
case
study
approach
accounts
for
a
broader
baseline
of
pollutant
exposure,
including
more
thorough
and
detailed
coverage
of
discharges
from
MP&
M
facilities
and
also
estimated
exposures
from
non­
MP&
M
sources.
As
a
result,
the
Ohio
case
study
analysis
more
accurately
reflects
baseline
health
risk
conditions.

b.
Reductions
in
systemic
health
effects
The
final
rule
can
potentially
achieve
a
wide
range
of
non­
cancer
human
health
benefits
(
e.
g.,
systemic
effects,
reproductive
toxicity,
and
developmental
toxicity)
from
reduced
contamination
of
fish
tissue
and
drinking
water
sources.
The
common
approach
for
assessing
the
risk
of
non­
cancer
health
effects
from
the
ingestion
of
a
pollutant
is
to
calculate
a
hazard
quotient
by
dividing
an
individual's
oral
exposure
to
the
pollutant,
expressed
as
a
pollutant
dose
in
milligrams
per
kilogram
body
weight
per
day
(
mg/
kg­
day),
by
the
pollutant's
oral
reference
dose
(
RfD).
An
RfD
is
defined
as
an
estimate
(
with
uncertainty
spanning
perhaps
an
order
of
magnitude)
of
a
daily
oral
exposure
that
likely
would
not
result
in
the
occurrence
of
adverse
health
effects
in
humans,
including
sensitive
individuals,
during
a
lifetime.
A
hazard
quotient
less
than
one
means
that
the
pollutant
dose
to
which
an
individual
is
exposed
is
less
than
the
RfD,
and,
therefore,
presumed
to
be
without
appreciable
risk
of
adverse
human
health
effects.
EPA
guidance
for
assessing
exposures
to
mixtures
of
pollutants
recommends
calculating
a
hazard
index
(
HI)
by
summing
the
individual
hazard
quotients
for
those
pollutants
in
the
mixture
that
affect
the
same
target
organ
or
system
(
e.
g.,
the
kidneys,
the
respiratory
system).
HI
values
are
interpreted
similarly
to
hazard
quotients;
values
below
one
are
generally
considered
to
suggest
that
exposures
are
not
likely
to
result
in
appreciable
risk
of
adverse
health
effects
during
a
lifetime,
and
values
above
one
are
generally
cause
for
concern,
although
an
HI
greater
than
one
does
not
necessarily
suggest
a
likelihood
of
adverse
effects.
Chapter
13
of
this
report
provides
a
detailed
discussion
of
the
methodology
for
assessing
changes
in
systemic
health
effects
associated
with
this
rule.

5
EPA
included
n­
nitrosodimethylamine
(
NDMA)
in
its
assessment
of
the
baseline
incidence
of
cancer
cases.
However,
the
Agency
did
not
consider
NDMA
pollutant
reductions
in
its
benefits
analysis
due
to
limited
wastewater
sampling
for
that
pollutant.

ES­
11
MP&
M
EEBA
Executive
Summary
To
evaluate
the
potential
benefits
of
reducing
the
in­
stream
concentrations
of
76
pollutants
that
cause
non­
cancer
health
effects,
EPA
estimated
target
organ­
specific
HIs
for
drinking
water
and
fish
ingestion
exposures
in
both
the
baseline
and
post­
compliance
scenarios.
Specifically,
EPA
calculated
target­
organ
specific
HIs
for
pollutants
predicted
in
each
MP&
M
discharge
reach;
as
a
result,
a
separate
HI
was
calculated
for
each
target
organ/
exposure
pathway
(
fish
consumption
and
drinking
water)/
reach
combination.
EPA
then
combined
estimates
of
the
numbers
of
individuals
in
the
exposed
populations
with
the
HIs
for
the
populations
to
determine
how
many
individuals
might
be
expected
to
realize
reduced
risk
of
non­
cancer
health
effects
in
the
post­
compliance
scenario.

The
results
of
EPA's
analysis
suggest
that
hazard
indices
for
individuals
in
the
exposed
populations
may
decrease
after
facilities
comply
with
today's
rule.
Increases
in
the
percentage
of
exposed
populations
that
would
be
exposed
to
no
risk
of
non­
cancer
adverse
human
health
effects
due
to
the
MP&
M
discharges
occur
in
both
the
fish
and
drinking
water
analyses.
The
shift
to
lower
hazard
indices
should
be
considered
in
conjunction
with
the
finding
that
the
hazard
indices
for
incremental
exposures
to
pollutants
discharged
by
MP&
M
facilities
(
for
which
reference
doses
are
available)
are
less
than
one
in
the
baseline
analysis
for
the
entire
population
associated
with
sample
facilities.
Whether
the
incremental
shifts
in
hazard
indices
are
significant
in
reducing
absolute
risks
of
non­
cancer
adverse
human
health
effects
is
uncertain
and
will
depend
on
the
magnitude
of
contaminant
exposures
for
a
given
population
from
risk
sources
not
accounted
for
in
this
analysis.

c.
Benefits
from
reduced
exposure
to
lead
EPA
performed
a
separate
analysis
of
benefits
from
reduced
exposure
to
lead.
This
analysis
differs
from
the
analysis
of
non­
cancer
adverse
human
health
effects
from
exposure
to
other
MP&
M
pollutants
because
it
is
based
on
dose­
response
functions
tied
to
specific
health
endpoints
to
which
monetary
values
can
be
applied.
Chapter
14
of
this
report
presents
the
methodology
for
assessing
benefits
from
reduced
exposure
to
lead.

Many
lead­
related
adverse
health
effects
are
relatively
common
and
are
chronic
in
nature.
These
effects
include,
but
are
not
limited
to,
hypertension,
coronary
heart
disease,
and
impaired
cognitive
function.
Lead
is
harmful
to
individuals
of
all
ages,

but
the
effects
of
lead
on
children
are
of
particular
concern.
Children's
rapid
rate
of
development
makes
them
more
susceptible
to
neurobehavioral
effects
from
lead
exposure.
The
neurobehavioral
effects
on
children
from
lead
exposure
include
hyperactivity,
behavioral
and
attention
difficulties,
delayed
mental
development,
and
motor
and
perceptual
skill
deficits.

This
analysis
assessed
benefits
of
reduced
lead
exposure
from
consumption
of
contaminated
fish
tissue
to
three
sensitive
populations:
(
1)
preschool
age
children;
(
2)
pregnant
women;
and
(
3)
adult
men
and
women.
This
analysis
uses
blood­
lead
levels
as
a
biomarker
of
lead
exposure.
EPA
estimated
baseline
and
post­
compliance
blood
lead
levels
in
the
exposed
populations
and
then
used
changes
in
these
levels
to
estimate
benefits
in
the
form
of
avoided
health
damages.

EPA
assessed
neurobehavioral
effects
on
children
based
on
a
dose
response
relationship
for
IQ
decrements.
Avoided
neurological
and
cognitive
damages
are
expressed
as
changes
in
overall
IQ
levels,
including
reduced
incidence
of
extremely
low
IQ
scores
(<
70,
or
two
standard
deviations
below
the
mean)
and
reduced
incidence
of
blood­
lead
levels
above
20
mg/
dL.

The
analysis
uses
the
value
of
compensatory
education
that
an
individual
would
otherwise
need
and
the
impact
of
an
additional
IQ
point
on
individuals'
future
earnings
to
value
the
avoided
neurological
and
cognitive
damages.
The
national­
level
analyses
shows
that
implementation
of
the
final
option
would
not
result
in
any
changes
in
IQ
loss
across
all
exposed
children.
The
final
option
does
not
reduce
occurrences
of
extremely
low
IQ
scores
(<
70)
or
incidences
of
blood­
lead
levels
above
20
mg/
dL.

Prenatal
exposure
to
lead
is
an
important
route
of
exposure.
Fetal
exposure
to
lead
in
utero
due
to
maternal
blood­
lead
levels
may
result
in
several
adverse
health
effects,
including
decreased
gestational
age,
reduced
birth
weight,
late
fetal
death,

neurobehavioral
deficits
in
infants,
and
increased
infant
mortality.
To
assess
benefits
to
pregnant
women,
EPA
estimated
changes
in
the
risk
of
infant
mortality
due
to
changes
in
maternal
blood­
lead
levels
during
pregnancy.
The
national­
level
analysis
shows
that
the
final
option
does
not
result
in
changes
in
maternal
blood
lead
levels
during
pregnancy
and
as
a
result
does
not
reduce
neonatal
mortality.

The
national­
level
analysis
finds
no
benefits
to
children
from
reduced
exposure
to
lead.
However,
as
for
the
cancer
risk
analysis
previously
discussed,
these
findings
differ
from
the
more
comprehensive
analysis
used
in
the
Ohio
case
study.
Using
the
more
rigorous
case
study
approach,
EPA
estimates
that
the
final
regulation
will
yield
annual
lead­
related
benefits
for
children
in
Ohio
of
$
422,113
(
2001$).
This
benefit
value
includes
three
components.
First,
reduced
lead
exposure
is
estimated
to
reduce
neonatal
mortality
by
0.024
cases
annually
with
an
annual
value
of
$
162,094
(
2001$).
Second,
reduced
lead
exposure
will
avoid
the
loss
of
an
estimated
26.96
IQ
points
among
preschool
children
in
Ohio,
which
translates
into
ES­
12
MP&
M
EEBA
Executive
Summary
$
253,934
(
2001$)
per
year
in
benefits.
Third,
the
annually
avoided
costs
of
compensatory
education
from
incidence
of
IQ
below
70
and
blood­
lead
levels
above
20
g/
dL
among
children
amounts
to
approximately
$
5,345
(
2001$).

Lead
exposure
has
been
shown
to
have
adverse
effects
on
the
health
of
adults
as
well
as
children.
The
health
effects
in
adults
that
EPA
quantified
all
derive
from
lead's
effects
on
blood
pressure.
Quantified
health
effects
include
increased
incidence
of
hypertension
(
estimated
for
males
only),
initial
coronary
heart
disease
(
CHD),
strokes
(
initial
cerebrovascular
accidents
and
atherothrombotic
brain
infarctions),
and
premature
mortality.
This
analysis
does
not
include
other
health
effects
associated
with
elevated
blood
pressure
and
other
adult
health
effects
of
lead,
including
nervous
system
disorders,
anemia,
and
possible
cancer
effects.
EPA
used
cost
of
illness
estimates
(
i.
e.,
medical
costs
and
lost
work
time)
to
estimate
monetary
value
of
reduced
incidence
of
hypertension,
initial
CHD
,
and
strokes.
EPA
then
used
the
value
of
a
statistical
life
saved
to
value
changes
in
risk
of
premature
mortality.
The
national­
level
analysis
finds
that
the
final
rule
will
achieve
no
lead­
related
health
benefits
among
adults.

Again,
the
national
analysis
results
differ
from
the
Ohio
case
study
results.
Using
the
case
study
approach,
EPA
estimates
that
the
final
regulation
will
achieve
total
lead­
related
benefits
among
Ohio
adults
of
$
117,393
(
2001$).
This
value
includes
benefits
from
reduced
hypertension
among
adult
males:
a
reduction
of
an
estimated
9.4
cases
annually,
with
benefits
of
approximately
$
10,670
(
2001$).
In
addition,
reducing
the
incidence
of
initial
CHD,
strokes,
and
premature
mortality
among
adult
males
and
females
in
Ohio
would
result
in
estimated
benefits
of
$
963,
$
2,115,
and
$
103,645,
respectively
(
see
Chapter
22
of
this
report
for
detail).

Based
on
the
national­
level
benefits
analysis,
EPA
found
that
total
benefits
from
reduced
exposure
to
lead,
for
both
children
and
adults,
are
negligible
under
the
final
rule.
However,
based
on
the
Ohio
case
study
findings,
benefits
for
children
and
adults
from
reduced
lead­
related
health
effects
of
the
final
rule
are
estimated
to
total
approximately
$
0.5
million
(
2001$)

annually
in
the
state
of
Ohio
alone
(
see
Section
H
of
today's
final
rule
for
detail).
As
in
the
cancer
risk
analysis,
the
difference
in
the
national
and
Ohio­
based
findings
stems
primarily
from
more
comprehensive
information
on
MP&
M
and
non­
MP&
M
facility
discharges
used
in
Ohio.

d.
Exceedances
of
human
health­
based
AWQC
EPA
also
estimated
the
effect
of
MP&
M
facility
discharges
on
the
occurrence
of
pollutant
concentrations
in
affected
waterways
that
exceed
human
health­
based
AWQCs.
In
a
conceptual
sense,
this
analysis
and
its
findings
are
not
additive
to
the
preceding
analyses
of
change
in
cancer
or
lead­
related
health
risks
but
are
another
way
of
quantitatively
characterizing
the
same
possible
benefit
categories.
This
analysis
compares
the
estimated
baseline
and
post­
compliance
in­
stream
pollutant
concentrations
in
affected
waterways
to
ambient
water
criteria
for
protection
of
human
health.
The
comparison
included
AW
QC
for
protection
of
human
health
through
consumption
of
organisms
and
consumption
of
water
and
organisms.
Pollutant
concentrations
in
excess
of
these
values
indicate
potential
risks
to
human
health.

EPA
estimates
that
in­
stream
concentrations
of
4
pollutants
(
i.
e.,
arsenic,
iron,
manganese,
and
n­
nitrosodimethylamine)
will
exceed
human
health
criteria
for
consumption
of
water
and
organisms
in
78
receiving
reaches
nationwide
as
the
result
of
baseline
MP&
M
pollutant
discharges.
EPA
estimates
that
23%
of
human
health
AWQC
exceedances
are
caused
by
n­
nitrosodimethylamine
(
NDMA).
EPA
did
not
consider
NDMA
pollutant
reductions
in
its
benefits
analyses
due
to
limited
wastewater
sampling
data
for
that
pollutant.
EPA
estimates
that
the
final
rule
will
not
eliminate
the
occurrence
of
concentrations
in
excess
of
human
health
criteria
for
consumption
of
water
and
organisms
and
for
consumption
of
organisms
on
any
of
the
reaches
on
which
baseline
discharges
are
estimated
to
cause
concentrations
in
excess
of
AWQC
values.

ES­
13
MP&
M
EEBA
Executive
Summary
ES.
4.2
Ecological,
Recreational,
and
Nonuser
Benefits
EPA
expects
the
MP&
M
rule
to
improve
aquatic
species
habitats
by
reducing
concentrations
of
toxic
contaminants
such
as
aluminum,
cadmium,
copper,
lead,
mercury,
silver,
and
zinc
in
water.
These
improvements
should
enhance
the
quality
and
value
of
water­
based
recreation,
such
as
fishing,
swimming,
wildlife
viewing,
camping,
waterfowl
hunting,
and
boating.
The
benefits
from
improved
water­
based
recreation
would
be
seen
as
increases
in
the
increased
value
participants
derive
from
a
day
of
recreation
and
the
increased
number
of
days
that
consumers
of
water­
based
recreation
choose
to
visit
the
cleaner
waterways.
This
analysis
measures
the
economic
benefit
to
society
from
water
quality
improvements
based
on
the
increased
monetary
value
of
recreational
opportunities
resulting
from
those
improvements
a.
Reduced
aquatic
life
impacts
EPA
quantified
the
ecological
improvements
of
the
final
regulation
by
comparing
estimates
of
in­
waterway
concentrations
of
pollutants
discharged
by
MP&
M
facilites
with
AWQC
values
for
protection
of
aquatic
species.
Pollutant
concentrations
in
excess
of
acute
and/
or
chronic
AWQC
limits
for
protection
of
aquatic
life
indicate
potential
adverse
impacts
to
aquatic
species.
EPA
estimates
that
baseline
in­
stream
concentrations
of
9
pollutants
(
i.
e.,
aluminum,
cadmium,
copper,
lead,

manganese,
mercury,
nickel,
silver,
and
zinc)
will
exceed
the
acute
and
chronic
criterion
for
aquatic
life
in
353
reaches
nationwide.
The
final
rule
eliminates
concentrations
in
excess
of
aquatic
life
AWQCs
on
nine
of
these
reaches.
EPA s
analysis
shows
that
none
of
the
receiving
reaches
exceeding
chronic
or
acute
aquatic
life
AW
QC
at
the
baseline
discharge
level
will
experience
partial
water
quality
improvements
from
reduced
occurrence
of
AWQC
exceedances
for
some
pollutants.

b.
Recreational
benefits
EPA
assessed
the
recreational
benefits
from
reduced
occurrence
of
pollutant
concentrations
exceeding
aquatic
life
and/
or
human
health
AWQC
values.
Combining
its
findings
from
both
the
aquatic
life
and
human
health
AWQC
exceedance
analyses,
EPA
found
that
394
stream
reaches
exceed
chronic
or
acute
aquatic
life
AWQC
and/
or
human
health
AWQC
values
at
baseline
discharge
levels.
The
Agency
estimates
that
the
final
rule
will
eliminate
exceedances
on
nine
of
these
discharge
reaches,
leaving
384
reaches
with
concentrations
of
one
or
more
pollutants
exceeding
AWQ
C
limits.
None
of
these
384
reaches
will
experience
partial
water
quality
improvements
from
reduced
occurrence
of
some
pollutant
concentrations
in
excess
of
AW
QC
limits.

EPA
attached
a
monetary
value
to
reduced
exceedances
based
on
increased
values
for
three
water­
based
recreation
activities
(
fishing,
wildlife
viewing,
and
boating)
and
on
nonuser
values.
EPA
applied
a
benefits
transfer
approach
to
estimate
the
total
WTP,
including
both
use
and
nonuse
values,
for
improvements
in
surface
water
quality.
This
approach
builds
upon
a
review
and
analysis
of
the
surface
water
valuation
literature.

EPA
first
estimated
the
baseline
value
of
water­
based
recreation
for
benefiting
reaches,
based
on
per­
reach
estimates
of:

 
annual
person­
days
of
water­
based
recreation,
and
 
per­
day
values
of
water­
based
recreation.

The
baseline
per­
day
values
of
water­
based
recreation
are
based
on
studies
by
Walsh
et.
al
(
1992)
and
Bergstrom
and
Cordell
(
1991).
The
studies
provide
values
per
recreation
day
for
a
wide
range
of
water­
based
activities,
including
fishing,
boating,

wildlife
viewing,
waterfowl
hunting,
camping,
and
picnicking.
The
mean
values
per
recreational
fishing,
boating,
and
wildlife
viewing
day
used
in
this
analysis
are
$
42.12,
$
48.30
and
$
26.28
(
2001$),
respectively.
Applying
facility
weights
and
summing
over
all
benefiting
reaches
provides
a
total
baseline
value
for
a
given
recreational
activity
for
MP&
M
reaches
expected
to
benefit
from
the
elimination
of
pollutant
concentrations
in
excess
of
AWQC
limits.

EPA
then
applied
the
percentage
change
in
the
recreational
value
of
water
resources
implied
by
surface
water
valuation
studies
to
estimate
changes
in
values
for
all
MP&
M
reaches
in
which
the
regulation
eliminates
AWQC
exceedances
by
one
or
more
MP&
M
pollutants.
The
Agency
selected
eight
of
the
most
comparable
studies
and
calculated
the
changes
in
recreation
values
from
water
quality
improvements
(
as
percentage
of
the
baseline)
implied
by
those
studies.
Sources
of
estimates
included
Lyke
(
1993),
Jakus
et
al.
(
1997),
Montgomery
and
Needleman
(
1997),
Paneuf
et
al.
(
1998),
Desvousges
et
al.

(
1987),
Lant
and
Roberts
(
1990),
Farber
and
Griner
(
2000),
and
Tudor
et
al.
(
2002).
EPA's
reasoning
for
selecting
each
study
is
discussed
in
detail
in
Chapter
15
of
this
report.
EPA
took
a
simple
mean
of
point
estimates
from
all
applicable
studies
to
derive
a
central
tendency
value
for
percentage
change
in
the
water
resource
values
due
to
water
quality
improvements.
These
studies
yielded
estimates
of
increased
recreational
value
from
water
quality
improvements
expected
from
reduced
MP&
M
ES­
14
MP&
M
EEBA
Executive
Summary
discharges
of
12,
9,
and
18
percent
for
fishing,
boating,
and
wildlife
viewing
respectively.
Using
all
possible
applicable
valuation
studies
in
developing
a
benefits
transfer
approach
to
valuing
changes
in
the
recreational
value
of
water
resources
from
reduced
MP&
M
discharges,
makes
unit
values
more
likely
to
be
nationally
representative,
and
avoids
the
potential
bias
inherent
in
using
a
single
study
to
make
estimates
at
the
national
level.

Table
ES.
9
presents
the
estimated
national
recreational
benefits
of
the
final
rule
(
2001$).
The
estimated
increased
value
of
recreational
activities
to
users
of
water­
based
recreation
is
$
537,197,
$
202,691,
and
$
259,949
annually
for
fishing,
boating,

and
wildlife
viewing,
respectively.
The
recreational
activities
considered
in
this
analysis
are
stochastically
independent;
EPA
calculated
the
total
user
value
of
enhanced
water­
based
recreation
opportunities
by
summing
over
the
three
recreation
categories.
The
estimated
increase
in
the
total
user
value
is
$
999,838
annually.

EPA
also
estimated
non­
market
nonuser
benefits.
These
non­
market
nonuser
benefits
are
not
associated
with
current
use
of
the
affected
ecosystem
or
habitat;
instead,
they
arise
from
the
value
society
places
on
improved
water
quality
independent
of
planned
uses
or
based
on
expected
future
use.
Past
studies
have
shown
that
nonuser
values
are
a
sizable
component
of
the
total
economic
value
of
water
resources.
EPA
estimated
average
changes
in
nonuser
value
to
equal
one­
half
of
the
recreational
use
benefits
based
on
study
by
A.
Fisher
and
R.
Raucher
(
1984).
The
estimated
increase
in
nonuse
value
is
$
499,919
(
2001$).

A
recent
literature
review
finds
that
nonuse
benefits
are,
on
average,
1.9
to
2.5
times
all
use
values,
rather
than
0.5
times
recreational
benefits
alone
as
EPA
has
traditionally
assumed
for
its
nonuse
benefit
estimates
(
T.
Brown,
1993).
EPA's
method
for
estimating
nonuse
benefits
from
water
quality
improvements
resulting
from
reduced
MP&
M
discharges
is
therefore
likely
to
understate
the
true
value
of
nonuse
benefits.

Table
ES.
9:
Estimated
Recreational
Benefits
from
Reduced
MP&
M
Discharges
(
thousands,
2001$)

Recreational
Activity
Traditional
Extrapolation
Post­
Stratification
Extrapolation
Recreational
fishing
$
537
$
350
Recreational
boating
$
203
$
132
Wildlife
viewing
and
near­
water
recreation
$
260
$
169
Total
recreational
use
benefits
(
fishing
+
boating
+
wildlife
viewing)
$
1,000
$
651
Nonuser
benefits
(
½
of
total
recreational
use)
$
500
$
326
Total
Recreational
Benefits
(
2001$)
$
1,500
$
977
Source:
U.
S.
EPA
analysis.

The
recreational
trips
corresponding
to
the
three
activities
considered
in
this
analysis
are
stochastically
independent;
EPA
calculated
the
total
value
of
enhanced
water­
based
recreation
opportunities
by
summing
the
three
recreation
categories
and
nonuser
value.
The
resulting
increase
in
the
value
of
water
resources
to
consumers
of
water­
based
recreation
and
nonusers
is
$
1,500
thousand
(
2001$)
annually
under
the
traditional
extrapolation
method
and
$
977
thousand
(
2001$)
annually
under
the
post­
stratification
extrapolation
method.

ES.
4.3
POTW
Impacts
The
final
rule
only
regulates
direct
dischargers.
Therefore,
the
selected
option
does
not
affect
POTW
operation.
For
the
alternative
policy
options
that
consider
both
direct
and
indirect
dischargers,
EPA
evaluated
two
productivity
measures
associated
with
MP&
M
pollutants.
The
first
measure
is
the
reduction
in
pollutant
interference
at
publicly­
owned
treatment
works
(
POTW
s).
The
second
measure
is
pass­
through
of
pollutants
into
the
sludge,
which
limits
options
for
POTW
disposal
of
sewage
sludge.
These
analyses
are
presented
in
Chapter
16
of
this
report.

ES­
15
MP&
M
EEBA
Executive
Summary
ES.
4.4
Total
Estimated
Benefits
of
the
Final
MP&
M
Rule
Using
the
traditional
extrapolation
method,
EPA
estimates
total
benefits
for
the
five
monetized
categories
of
approximately
$
1,500,000
(
2001$)
annually.
This
value
understates
the
total
benefits
of
the
rule
because
the
benefits
analysis
omits
significant
sources
of
benefits
to
society.
Examples
of
benefit
categories
not
reflected
in
this
estimate
include
non­
cancer
health
benefits
other
than
benefits
from
reduced
exposure
to
lead;
other
water­
dependent
recreational
benefits,
such
as
swimming
and
waterskiing
benefits
to
recreational
users
from
reduced
concentration
of
conventional
pollutants
and
nonconventional
pollutants
such
as
TKN;
and
reduced
cost
of
drinking
water
treatment
for
the
pollutants
with
drinking
water
criteria.
In
addition,
as
noted
in
the
prior
discussion,
although
the
national­
level
benefits
analysis
finds
negligible
benefits
from
reduced
health
risk,
the
more
rigorous
analytic
approach
used
for
the
Ohio
case
study
found
material
health­
related
benefits
approximately
$
0.5
million
in
the
state
of
Ohio
alone.

ES.
5
NATIONAL
BENEFITS­
COSTS
COMPARISON
The
comparison
of
benefits
and
for
the
final
rule
is
inevitably
incomplete
because
EPA
cannot
value
all
of
the
benefits
resulting
from
the
final
rule
in
dollar
terms.
A
comparison
of
benefits
and
costs
is
thus
limited
by
the
lack
of
a
comprehensive
benefits
valuation
and
also
by
uncertainties
in
the
estimates.
Bearing
these
limitations
in
mind,
EPA
presents
a
summary
comparison
of
benefits
and
costs
for
the
final
rule
in
Table
ES.
10.
The
estimated
social
cost
of
the
final
rule
is
$
13.8
million
annually
(
2001$).
The
total
benefits
that
can
be
valued
in
dollar
terms
in
the
categories
traditionally
analyzed
for
effluent
guidelines
range
from
$
977,000
to
$
1,500,000
annually
(
2001$),
based
on
the
alternative
extrapolation
methods.

As
previously
noted,
EPA
used
more
detailed
information
and
a
more
comprehensive
analytic
method
to
estimate
expected
benefits
of
the
final
rule
for
the
state
of
Ohio.
This
more
rigorous
analysis
was
undertaken
to
address
certain
issues
in
the
national­
level
analysis
and
to
supplement
the
national­
level
analysis
performed
for
the
final
rule.
The
following
section
presents
this
analysis.
The
Ohio
case
study
showed
that
the
more
rigorous
analytic
approach
leads
to
a
different
conclusion
from
that
found
in
the
simpler,
national­
level
analysis
approach
in
particular,
that
the
estimated
state­
level
benefits
exceed
the
estimated
state­
level
cost.
As
previously
discussed,
given
(
1)
that
Ohio
accounts
for
only
about
6
percent
of
total
MP&
M
facilities,
and
(
2)
that
other
states
with
substantial
numbers
of
MP&
M
facilities
have
similar
population
and
water
body
characteristics
to
Ohio,
EPA
estimates
that
use
of
the
more
rigorous
approach
nationally
would
yield
a
higher
estimate
of
national
benefits.
On
this
basis,
the
Agency
estimates
that
national
benefits
from
the
final
rule
may
be
comparable
to
its
social
costs.

ES­
16
MP&
M
EEBA
Executive
Summary
Table
ES.
10:
Comparison
of
National
Annual
Monetizable
Benefits
to
Social
Costs
(
thousands,
2001$)

Benefit
and
Cost
Categories
Traditional
Extrapolation
Post­
Stratification
Extrapolation
Benefit
Categories
Reduced
Cancer
Risk
from
Fish
Consumption
$
0
$
0
Reduced
Cancer
Risk
from
Water
Consumption
$
0
$
0
Reduced
Risk
from
Exposure
to
Lead
$
0
$
0
Enhanced
Water­
Based
Recreation
$
1,000
$
651
Nonuse
Benefits
$
500
$
326
Total
Monetized
Benefits
$
1,500
$
977
Cost
Categories
Resource
Costs
of
Compliance
$
13,825
$
13,825
Costs
of
Administering
the
Final
Regulation
$
0
$
0
Social
Costs
of
Unemployment
$
0
$
0
Total
Monetized
Costs
$
13,825
$
13,825
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
($
12,325)
($
12,847)

Source:
U.
S.
EPA
analysis.

ES­
17
MP&
M
EEBA
Executive
Summary
ES.
6
OHIO
CASE
STUDY
Part
V
of
this
report
presents
a
detailed
case
study
of
the
expected
state­
level
costs
and
benefits
of
the
MP&
M
rule
in
Ohio.

The
case
study
assesses
the
costs
and
benefits
of
the
final
rule
for
facilities
and
water
bodies
located
in
Ohio.
Ohio
is
among
the
ten
states
with
the
largest
numbers
of
MP
&
M
facilities.
The
state
has
a
diverse
water
resource
base
and
a
more
extensive
water
quality
ecological
database
than
many
other
states.
EPA
gathered
data
on
MP&
M
facilities
and
on
Ohio's
baseline
water
quality
conditions
and
water­
based
recreation
activities
to
support
the
case
study
analysis.
These
data
characterize
current
water
quality
conditions,
water
quality
changes
expected
from
the
regulation,
and
the
expected
welfare
changes
from
water
quality
improvements
at
water
bodies
affected
by
MP&
M
discharges.
The
case
study
also
estimates
the
social
costs
of
the
final
rule
for
facilities
in
Ohio
and
compares
estimated
social
costs
and
benefits
for
the
state.

The
case
study
analysis
supplements
the
national­
level
analysis
performed
for
the
final
MP&
M
regulation
in
two
important
ways.
First,
the
analysis
used
improved
data
and
methods
to
determine
MP&
M
pollutant
discharges
from
both
MP&
M
facilities
and
other
sources.
In
particular,
EPA
administered
1,600
screener
questionnaires
to
augment
information
on
the
Ohio's
MP&
M
facilities.
The
Agency
also
used
information
from
the
sampled
M
P&
M
facilities
to
estimate
discharge
characteristics
of
non­
sampled
MP&
M
facilities,
as
described
in
Appendix
H
of
the
EEBA
report.
The
Agency
assigned
discharge
characteristics
to
all
non­
MP&
M
industrial
direct
discharges
based
on
the
information
provided
in
the
EPA s
Permit
Compliance
System
(
PCS)
database.
Second,
the
analysis
used
an
original
travel
cost
study
to
value
four
recreational
uses
of
water
resources
affected
by
the
regulation:
swimming,
fishing,
boating,
and
near­
water
activities.
The
added
detail
provides
a
more
complete
and
reliable
analysis
of
water
quality
changes
from
reduced
MP&
M
discharges.
The
study
provides
more
complete
estimates
of
changes
in
human
welfare
resulting
from
reduced
health
risk,
enhanced
recreational
opportunities,

and
improved
economic
productivity.

EPA
estimated
human
health
benefits
from
reduced
MP&
M
dischargers
in
Ohio
using
similar
methodologies
to
those
used
for
the
national­
level
analysis.
These
methodologies
are
presented
in
Chapter
13
and
14
of
the
EEBA
report.

The
case
study
analysis
of
recreational
benefits
combines
water
quality
modeling
with
a
random
utility
model
(
RUM)
to
assess
how
changes
in
water
quality
from
the
regulation
will
affect
consumers'
valuation
of
water
resources.
The
RUM
analysis
addresses
a
wide
range
of
pollutant
types
and
effects,
including
water
quality
measures
not
often
addressed
in
past
recreational
benefits
studies.
In
particular,
the
model
supports
a
more
complete
analysis
of
recreational
benefits
from
reductions
in
nutrients
and
toxic
pollutants
(
i.
e.,
priority
pollutants
and
nonconventional
pollutants
with
toxic
effects).

EPA
subjected
this
study
to
a
formal
peer
review
by
experts
in
the
natural
resource
valuation
field.
The
peer
review
concluded
that
EPA
had
done
a
competent
job,
especially
given
the
available
data.
As
requested
by
the
Agency,
peer
reviewers
provided
suggestions
for
further
improvements
in
the
analysis.
Since
the
proposed
rule
analysis,
the
Agency
made
changes
to
the
Ohio
model
and
conducted
additional
sensitivity
analyses
suggested
by
the
reviewers.
The
peer
review
report
and
EPA's
response
to
peer
reviewers'
comments,
along
with
the
revised
model,
are
in
the
docket
for
the
rule.

ES.
6.1
Benefits
The
use
of
an
original
RUM
in
this
case
study
allows
the
Agency
to
address
limitations
inherent
in
benefits
transfer
used
in
the
analysis
of
recreational
benefits
at
the
national
level.
The
use
of
benefits
transfer
often
requires
additional
assumptions
because
water
quality
changes
evaluated
in
the
available
recreation
demand
studies
are
only
roughly
comparable
with
the
water
quality
measures
evaluated
for
a
particular
rule.
The
RUM
model
estimates
the
effects
of
the
specific
water
quality
characteristics
analyzed
for
the
final
MP&
M
regulation,
such
as
presence
of
AWQC
exceedances
and
concentrations
of
the
nonconventional
pollutant
Total
Kjeldahl
Nitrogen
(
TKN).
EPA
estimates
that
this
direct
link
between
the
water
quality
characteristics
analyzed
for
the
rule
and
the
characteristics
valued
in
the
RUM
analysis
reduces
uncertainty
in
benefit
estimates
and
makes
the
analysis
of
recreational
benefits
more
robust.

The
final
MP&
M
regulation
affects
a
broad
range
of
pollutants,
some
of
which
are
toxic
to
human
and
aquatic
life
but
are
not
directly
observable
(
i.
e.,
priority
and
nonconventional
pollutants).
These
unobservable
toxic
pollutants
degrade
aquatic
habitats,
decrease
the
size
and
abundance
of
fish
and
other
aquatic
species,
increase
fish
deformities,
and
change
watershed
species
composition.
Changes
in
toxic
pollutant
concentrations
may
therefore
affect
recreationists'
valuation
of
water
resources,
even
if
consumers
are
unaware
of
changes
in
ambient
pollutant
concentrations.

The
study
used
data
from
the
National
Demand
Survey
for
Water­
Based
Recreation
(
NDS),
conducted
by
U.
S.
EPA
and
the
ES­
18
MP&
M
EEBA
Executive
Summary
National
Forest
Service,
to
examine
the
effects
of
in­
stream
pollutant
concentrations
on
consumers'
decisions
to
visit
a
particular
water
body.
The
analysis
estimated
baseline
and
post­
compliance
water
quality
at
recreation
sites
actually
visited
by
the
surveyed
consumers
and
at
all
other
sites
within
the
consumers'
choice
set,
visited
or
not.
The
RUM
analysis
of
consumer
behavior
then
estimated
the
effect
of
ambient
water
quality
and
other
site
characteristics
on
the
total
number
of
trips
taken
for
different
water­
based
recreation
activities
and
the
allocation
of
these
trips
among
particular
recreational
sites.
The
RUM
analysis
is
a
travel
cost
model,
in
which
the
cost
to
travel
to
a
particular
recreational
site
represents
the
"
price"
of
a
visit.

EPA
modeled
two
consumer
decisions:
(
1)
how
many
water­
based
recreational
trips
to
take
during
the
recreational
season
(
the
trip
participation
model);
and
(
2)
which
recreation
site
to
choose
(
the
site
choice
model).
Combining
the
trip
participation
model's
prediction
of
trips
under
the
baseline
and
post­
compliance
scenarios
and
the
site
choice
model's
per­
trip
welfare
measure
provides
a
measure
of
total
welfare.
EPA
calculated
each
individual's
seasonal
welfare
gain
for
each
recreation
activity
from
post­
compliance
water
quality
changes,
and
then
used
Census
data
to
aggregate
the
estimated
welfare
change
to
the
State
level.
The
sum
of
estimated
welfare
changes
over
the
four
recreation
activities
yielded
estimates
of
total
welfare
gain.

EPA
estimated
other
components
of
benefits
in
Ohio
using
similar
methodologies
to
those
used
for
the
national­
level
analysis.

In
addition
to
the
RUM
study
of
recreational
benefits,
other
analytical
improvements
included
the
following:
(
1)
use
of
more
detailed
data
on
MP&
M
facilities,
obtained
from
the
1,600
additional
surveys;
(
2)
use
of
data
on
non­
MP&
M
discharges
to
estimate
current
baseline
conditions
in
the
state,
and
(
3)
use
of
a
first­
order
decay
model
to
estimate
in­
stream
concentrations
in
the
Ohio
water
bodies
in
the
baseline
and
post­
compliance.

Appendix
H
of
this
report
describes
the
water
quality
model
used
in
this
analysis
and
the
approach
and
data
sources
used
to
estimate
total
pollutant
loadings
from
all
industrial
and
municipal
sources
to
Ohio's
water
bodies.
The
Agency
has
concluded
that
the
added
level
of
detail
results
in
more
robust
benefit
estimates.

Summing
the
monetary
values
over
all
benefit
categories
yields
total
monetized
benefits
of
$
930,408
(
2001$)
annually
for
the
final
rule,
as
shown
in
Table
ES.
11.
Although
more
comprehensive
than
the
national
benefits
analysis,
the
case
study
benefit
estimates
still
omit
important
mechanisms
by
which
society
is
likely
to
benefit
from
the
final
rule.
Examples
of
benefit
categories
not
reflected
in
the
monetized
benefits
include
non­
cancer
health
benefits
(
other
than
lead­
related
benefits)
and
reduced
costs
of
drinking
water
treatment.

Table
ES.
11:
Annual
Benefits
from
Reduced
MP&
M
Discharges
in
Ohio
(
thousands,
2001$)

Benefit
Category
Mean
Annual
Benefits
1.
d
cancer
risk:

Fish
consumption
Water
consumption
$
15
$
0
2.
isk
from
exposure
to
lead:

Children
Adults
$
422
$
117
3.
ishing
$
153
4.
wimming
$
10
5.
Enhanced
boating
$
0
4.
ildlife
viewing
$
88
5.
Nonuse
benefits
(
½
recreational
use
benefits)
$
125
Total
Monetized
Benefits
$
930
Reduce
Reduced
r
Enhanced
f
Enhanced
s
Enhanced
w
Source:
U.
S.
EPA
analysis.

ES­
19
MP&
M
EEBA
Executive
Summary
ES.
6.2
Social
Costs
EPA
also
estimated
the
social
costs
of
the
final
rule
for
MP&
M
facilities
in
Ohio.
EPA
developed
engineering
estimates
of
compliance
costs
for
each
Ohio
facility,
and
annualized
costs
using
a
seven
percent
discount
rate
over
a
15­
year
period.

Estimating
the
frequency
of
baseline
closures
is
necessary
to
assess
the
costs
of
regulation.
Facilities
assessed
as
baseline
closures
are
not
expected
to
incur
compliance
costs
under
the
final
MP&
M
regulation.
The
screener
data
collected
for
Ohio
facilities
did
not
provide
financial
data
to
perform
an
after­
tax
cash
flow
or
net
present
value
test,
as
done
in
the
national
analysis.
EPA
therefore
used
data
from
the
national
analysis
to
estimate
the
percentage
of
facilities
assessed
as
baseline
closures.
EPA
assumed
that
the
frequency
of
baseline
closures
among
Ohio
facilities
would
be
the
same
as
that
estimated
in
the
national
analysis
for
facilities
with
the
same
discharge
status,
subcategory,
and
flow
category.
For
example,
two
percent
of
direct
Oily
Wastes
facilities
discharging
less
than
one
million
gallons
per
year
close
in
the
baseline
in
the
national
data
set;

this
same
percentage
is
assumed
for
Ohio
screener
indirect
dischargers
in
that
flow
and
size
category.
EPA
reduced
the
total
estimated
costs
for
screener
facilities,
by
analysis
category,
based
on
the
fraction
of
facilities
assessed
as
baseline
closures.

EPA
used
the
same
methods
as
used
in
the
national
social
cost
analysis
to
estimate
other
components
of
social
costs
for
the
Ohio
case
study.
Table
ES.
12
shows
the
total
estimated
social
costs
of
the
final
rule
for
Ohio
facilities.

Table
ES.
12:
Annual
Social
Costs
for
Ohio
Facilities:
Final
Option
(
thousands,
2001$,
costs
annualized
at
7%)

Component
of
Social
Costs
Final
Rule
Resource
value
of
compliance
costs
$
62
Government
administrative
costs
$
0
Social
cost
of
unemployment
$
0
Total
Social
Cost
$
62
Source:
U.
S.
EPA
analysis.

ES.
6.3
Comparing
Monetized
Benefits
and
Costs
The
Ohio
case
study
shows
substantial
net
positive
benefits
associated
with
the
MP&
M
regulation.
EPA
estimates
the
social
cost
in
Ohio
of
the
final
regulation
to
be
$
62
thousand
annually
($
2001).
The
sum
total
of
benefits
that
can
be
valued
in
dollar
terms
is
$
930
thousand
annually
($
2001).
Comparing
the
midpoint
estimate
of
social
costs
($
62
thousand)
with
the
midpoint
estimate
of
monetizable
benefits
($
930
thousand)
results
in
a
net
social
benefit
of
$
868
thousand.
This
represents
a
partial
cost­
benefit
comparison
because
not
all
of
the
benefits
resulting
from
the
regulation
can
be
valued
in
dollar
terms
(
e.
g.,

changes
in
systemic
health
risk).

For
the
reasons
previously
discussed,
EPA
judges
that
the
analytic
approach
and
detailed
data
used
for
the
Ohio
case
study
provide
a
more
robust
and
accurate
benefits
estimate
than
the
data
and
approach
used
for
the
national­
level
analysis.

ES­
20
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
1:
Introduction
Chapter
1:
Introduction
INTRODUCTION
The
U.
S.
Environmental
Protection
Agency
(
EPA)
is
promulgating
effluent
limitations
guidelines
and
standards
for
the
Metal
Products
and
Machinery
(
MP&
M)
Point
Source
Category,
under
Sections
301,
304,
306,
307
and
501
of
the
Clean
Water
Act.
EPA
has
determined
that
the
final
rule
is
not
likely
to
result
in
aggregate
costs
to
the
economy
that
exceed
$
100
million
annually.
The
Agency
therefore
found
that
the
final
regulation
is
not
a
 
significant
regulatory
action 
as
defined
by
Executive
Order
12866
(
58
FR
51735,
October
4,
1993).
CHAPTER
CONTENTS
1.1
Purpose
.................
.................
.
1­
1
1.2
Organization
.................
..............
1­
1
1.3
Readers 
Aids
.................
.............
1­
3
1.1
PURPOSE
This
Economic,
Environmental,
and
Benefits
Analysis
report
(
EEBA)
presents
EPA s
economic
and
benefits
analyses
for
the
final
MP&
M
regulation.
These
analyses
supported
EPA
in
developing
the
final
regulation
and
in
meeting
the
requirements
of
the
following
statutes
and
executive
orders:

 
Executive
Order
12866
 
Regulatory
Planning
and
Review ,
which
requires
analysis
of
costs,
benefits,
and
economic
impacts
of
the
final
rule
and
regulatory
alternatives;

 
Unfunded
Mandates
Reform
Act
(
UMRA),
which
requires
evaluation
of
impacts
on
governments,
among
other
requirements;

 
Regulatory
Flexibility
Act
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
RFA/
SBREFA),
which
requires
consideration
of
the
rule s
impact
on
small
firms
and
governments;

 
Executive
Order
12898
 
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­

Income
Populations ;
and
 
Executive
Order
13084
 
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks .

1.2
ORGANIZATION
This
report
is
organized
in
five
major
parts,
22
chapters,
and
14
appendices,
as
follows:

Part
I
 
Introduction
and
Background
Information 
(
Chapters
1
though
4)
describes
the
need
for
the
regulation,
provides
a
profile
of
the
MP&
M
industry,
and
describes
regulatory
options
evaluated
and
selected
by
the
Agency
for
the
final
rule.

Part
II
 
Costs
and
Economic
Impacts 
(
Chapters
5
through
11)
presents
EPA s
analysis
of
the
economic
impacts
and
social
costs
of
the
final
rule.
Chapter
5
presents
the
analysis
of
costs
and
impacts
at
the
facility
level.
Chapters
6
through
9
present
analyses
of
other
types
of
economic
impacts
that
derive
from
the
facility­
level
analysis,
including
impacts
on
employment,

governments
(
for
EPA s
analyses
under
UMRA),
communities,
foreign
trade,
firms,
and
new
facilities.
Chapter
10
provides
an
analysis
of
impacts
on
small
firms
and
governments,
as
required
by
RFA/
SBREFA.
Finally,
Chapter
11
presents
the
social
costs
of
the
final
rule.

Part
III
 
Benefits 
(
Chapters
12
through
17)
provides
EPA s
analysis
of
the
environmental
impacts
and
benefits
of
the
final
rule.
Chapter
12
provides
an
overview
of
the
benefits
expected
from
the
rule.
Chapters
13
through
16
present
EPA s
analyses
of
different
components
of
the
benefits
analysis.
These
include
human
health
benefits
(
except
for
lead­
related)

(
Chapter
13),
lead­
related
benefits
(
Chapter
14),
recreational
benefits
(
Chapter
15),
and
benefits
to
POTWs
(
Chapter
16).

Chapter
17
presents
an
analysis
of
the
environmental
justice
effects
of
the
final
rule,
as
required
by
Executive
Order
12898.

1­
1
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
1:
Introduction
Part
IV
 
Comparison
of
Costs
and
Benefits 
(
Chapters
18
and
19)
compares
the
social
costs
and
benefits
for
the
final
rule
(
Chapter
18)
and
for
other
regulatory
alternatives
evaluated
by
the
Agency
for
the
final
rule
(
Chapter
19).

Part
V
 
Ohio
Case
Study 
(
Chapters
20
through
22)
provides
a
detailed
case
study
of
the
final
rule s
costs
and
benefits
for
the
State
of
Ohio.
This
case
study
includes
a
more
detailed
and
complete
analysis
of
benefits,
based
on
more
complete
information
on
the
number
and
location
of
MP&
M
facilities
and
the
characteristics
of
affected
waters
than
was
available
for
the
national
analyses.
The
case
study
also
includes
an
original
travel
cost
study
to
value
recreational
uses
affected
by
the
final
rule.
EPA
believes
that
the
case
study
provides
more
robust
results
because
it
avoids
the
uncertainties
that
result
from
the
need
to
extrapolate
sample
facility
results
to
the
national
level.
The
results
of
the
case
study
generally
confirm
the
overall
results
of
the
national
analysis.

Appendices
to
this
report
provide
additional
material
in
support
of
the
analyses
described
in
the
chapters,
including
the
following:

 
Appendix
A:
supporting
material
for
the
profile
of
the
MP&
M
industries
in
Chapter
3;

 
Appendix
B:
description
of
the
cost
pass­
through
analysis;

 
Appendix
C:
description
of
the
moderate
impact
analysis;

 
Appendix
D:
description
of
the
methodology
used
to
estimate
capital
outlays
as
part
of
the
facility
impact
analysis;

 
Appendix
E:
description
of
the
calculation
of
capital
cost
components;

 
Appendix
F:
description
of
the
methodology
used
to
estimate
POTW
administrative
costs;

 
Appendix
G:
summary
of
the
method
used
to
extrapolate
sample
facility
results
to
the
national
level;

 
Appendix
H:
description
of
fate
and
transport
model
for
drinking
water
and
Ohio
analyses;

 
Appendix
I:
discussion
of
methodologies
and
results
of
the
environmental
assessment
analysis;

 
Appendix
J:
analyses
of
spatial
distribution
of
MP&
M
facility
location
and
benefiting
population;

 
Appendix
K:
description
of
the
surface
water
valuation
studies
and
specific
values
selected
for
assessing
recreational
benefits
from
the
final
regulation;

 
Appendix
L:
description
of
parameters
in
the
IEUBK
lead
model;

 
Appendix
M:
sensitivity
analysis
of
lead
related
benefits;
and
 
Appendix
N:
analysis
of
the
national
demand
for
water­
based
recreation
survey
(
NDS).

The
docket
for
the
final
rule,
located
at
U.
S.
EPA
Headquarters,
provides
additional
supporting
documentation,
including:

 
copies
of
the
literature
cited
in
the
report;

 
documentation
of
the
financial
and
economic
portions
of
the
MP&
M
Section
308
surveys;

 
memorandums
documenting
supplementary
analyses
undertaken
in
support
of
regulation
development,
but
that
are
not
included
in
the
EEBA;
and
 
datasets,
spreadsheets,
and
programs
used
to
perform
the
analyses.

1­
2
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
1:
Introduction
1.3
READERS AIDS
Each
chapter
includes
a
chapter­
specific
table
of
contents.
A
list
of
references
is
provided
at
the
end
of
each
chapter.

Glossaries
and
lists
of
acronyms
are
also
provided
at
the
end
of
the
chapters,
and
the
first
usage
of
items
listed
in
them
are
denoted
in
the
text
with
the
following
formats:

 
Glossary
indicates
that
a
term
is
defined
in
the
chapter
glossary,
and
 
Acronym
indicates
that
the
acronym
is
included
in
the
chapter
list
of
acronyms.

1­
3
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
1:
Introduction
THIS
PAGE
INTENTIONALLY
LEFT
BLANK
1­
4
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
INTRODUCTION
The
Metal
Products
and
Machinery
(
MP&
M)
effluent
guidelines
establish
limitations
and
standards
only
for
direct
dischargers
in
the
Oily
Wastes
subcategory
(
40
CFR
438,

Subpart
A).
EPA
establishes
industrial
subcategories
based
on
a
number
of
considerations
(
see
Chapter
4
and
Section
6
of
the
TDD).
EPA
evaluated
seven
other
subcategories
for
the
final
rule:
general
metals,
metal
finishing
job
shops,
non
chromium
anodizing,
printed
wiring
board,
railroad
line
maintenance,
shipbuilding
dry
docks,
and
steel
forming
and
finishing.
EPA
evaluated
a
number
of
options
for
these
seven
subcategories.
Based
on
these
analyses,
EPA
did
not
establish
or
revise
limitations
or
standards
for
facilities
in
these
seven
subcategories.
CHAPTER
CONTENTS
2.1
Overview
of
Facilities
Evaluated
for
Regulation
under
the
MP&
M
Point
Source
Category
..............
2­
1
2.2
MP&
M
Discharges
and
the
Need
For
Regulation
.
.
2­
3
2.2.1
Baseline
MP&
M
Discharges
for
Regulated
Facilities
.................
.........
2­
4
2.2.2
Discharges
under
the
MP&
M
Regulation
.
2­
4
2.3
Addressing
Market
Imperfections
..............
2­
5
2.4
Overlap
with
Other
Effluent
Guidelines
..........
2­
6
2.5
Meeting
Legislative
and
Litigation­
Based
Requirements
.................
.............
2­
9
Glossary
.................
.................
...
2­
11
Acronyms
.................
.................
..
2­
13
The
facilities
regulated
under
this
rule
produce,
manufacture,
rebuild,
or
maintain
metal
parts,
products,
or
machines
for
use
in
sixteen
different
industrial
sectors.
These
industrial
sectors
include:
hardware,
aircraft,
aerospace,
ordnance,
electronic
equipment,
stationary
industrial
equipment,
mobile
industrial
equipment,
buses
and
trucks,
motor
vehicles,
household
equipment,
instruments,
office
machines,
railroads,
ships
and
boats,
precious
metals
and
jewelry,
and
miscellaneous
metal
products.
Most
of
the
subcategories
above
serve
multiple
markets.
EPA
evaluated
options
that
would
have
covered
facilities
in
three
additional
industrial
sectors:
printed
wiring
boards,
metal
finishing
job
shops,
and
iron
and
steel.
The
final
regulation
does
not
cover
facilities
in
these
sectors.

This
chapter
provides
an
overview
of
the
MP&
M
industry
evaluated
for
the
final
rule
and
presents
the
pollutant
discharges
from
MP&
M
facilities
subject
to
the
final
regulation.
The
chapter
also
reviews
the
reasons
why
EPA
is
regulating
the
industry s
effluent
discharges
including
the
need
to
reduce
pollutant
discharges
from
the
MP&
M
industry,
the
issue
of
addressing
market
imperfections,
other
effluent
guidelines
that
may
overlap
in
coverage
of
the
MP&
M
industry
sectors
evaluated
for
the
final
rule,
and
requirements
that
stem
from
the
Clean
Water
Act
(
CWA)
and
litigation.

2.1
OVERVIEW
OF
FACILITIES
EVALUATED
FOR
REGULATION
UNDER
THE
MP&
M
POINT
SOURCE
CATEGORY
The
MP&
M
Point
Source
Category
regulates
oily
operations
process
wastewater
discharges
to
surface
waters
from
existing
or
new
industrial
facilities
(
including
facilities
owned
and
operated
by
Federal,
State,
or
local
governments)
engaged
in
manufacturing,
rebuilding,
or
maintenance
of
metal
parts,
products,
or
machines
for
use
in
the
sixteen
Metal
Product
&

Machinery
(
MP&
M)
industrial
sectors
listed
above.
Please
note
the
underlined
language
in
the
previous
sentence
as
a
facility
may
be
subject
to
the
MP&
M
effluent
guidelines
even
if
it
is
not
in
one
of
the
MP&
M
industry
sectors.
For
example,
EPA
considers
a
facility
performing
machining
part
of
the
 
Bus
&
Truck 
MP&
M
industry
sector
if
it
manufactures
metal
parts
for
truck
trailers.
Process
wastewater
means
wastewater
as
defined
at
40
CFR
parts
122
and
401,
and
includes
wastewater
from
air
pollution
control
devices
(
see
40
CFR
438.2(
g)).
Oily
operations
are
listed
at
40
CFR
438.2(
g)
and
defined
in
Appendix
B
to
Part
438
(
see
also
Section
4
of
the
TDD).

As
defined
for
this
document,
MP&
M
facilities:
(
1)
produce
metal
parts,
products,
or
machines
for
use
in
one
of
the
19
industry
sectors
evaluated
for
coverage
in
the
MP&
M
point
source
category;
(
2)
use
operations
in
one
of
the
eight
regulatory
subcategories
evaluated
for
coverage
in
the
MP&
M
point
source
category;
and
(
3)
discharge
process
wastewater,
either
2­
1
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
directly
or
indirectly,
to
surface
waters.
MP&
M
facilities
frequently
produce
products
for
multiple
sectors
and
subcategories.

As
referred
to
in
this
document,
MP&
M
facilities
represent
only
a
portion
of
all
facilities
in
the
industry
sectors,
since
some
facilities
may
perform
operations
that
are
not
covered
by
one
of
the
subcategories
(
i.
e.,
part
assembly
or
plastic
molding),
and
some
may
not
generate
or
discharge
process
wastewater.

According
to
Statistics
of
U.
S.
Business,
1996,
approximately
638,696
establishments
operate
in
the
MP&
M
industry
sectors.

Based
on
information
in
the
MP&
M
survey
database,
approximately
44,000
facilities
meet
the
definition
of
an
MP&
M
facility.
These
44,000
facilities
include
approximately
41,000
indirect
dischargers
(
i.
e.,
facilities
discharging
effluent
to
a
publicly­
owned
sewage
treatment
works
or
POTWs)
that
would
be
subject
to
Pretreatment
Standards
for
Existing
Sources
(
PSES)
.
The
remaining
3,000
direct
dischargers
(
i.
e.,
they
discharge
effluent
directly
to
a
waterway
under
a
National
Pollutant
Discharge
Elimination
System
(
NPDES)
permit)
and
would
thus
be
subject
to
Best
Available
Technology
Economically
Achievable
(
BAT)
and
Best
Practicable
Control
Technology
Currently
Available
(
BPT)
requirements.

Table
2.1
reports
the
estimated
number
of
MP&
M
facilities
and
total
discharge
flow
(
before
final
rule
implementation)
by
type
of
facility.
The
largest
number
of
sites,
approximately
22,000,
perform
 
rebuilding/
maintenance
only 
and
account
for
approximately
6
percent
of
the
total
estimated
discharge
flow
for
the
industry.
 
Manufacturing
only 
contains
the
next
largest
number
of
facilities
(
15,400)
and
accounts,
by
far,
for
the
largest
percentage
of
the
total
estimated
discharge
flow
for
the
industry
(
82
percent).

Table
2.1:
Number
of
MP&
M
Facilities
and
Total
Discharge
Flow
by
Type
of
Facility
Type
of
Facility
Number
of
Facilities
Total
Estimated
Discharge
Flow
(
million
gal/
yr)
Percent
of
Facilities
Percent
of
Total
Discharge
Flow
Manufacturing
&

Rebuilding/
Maintenance
6,600
9,400
15.0%
12.0%

Manufacturing
Only
15,400
64,100
35.0%
82.0%

Rebuilding/
Maintenance
Only
22,000
4,700
50.0%
6.0%

Total
44,000
78,200
100.0%
100.0%

Source:
U.
S.
EPA
analysis.
See
Section
4
of
the
Technical
Development
Document
for
the
final
rule.

Of
the
43,858
water
discharging
facilities,
3,593
are
predicted
to
close
in
the
baseline,
leaving
40,265
existing
MP&
M
facilities
that
EPA
estimates
could
be
regulated.
1
After
accounting
for
subcategory
and
discharger
class
exclusions,
EPA
estimates
that
the
final
rule
will
regulate
2,382
of
these
facilities,
all
of
which
are
direct
dischargers.
These
regulated
facilities
represent
5.9
percent
of
the
40,265
facilities
that
could
be
potentially
regulated.

Table
2.2
summarizes
information
on
the
total
number
of
MP&
M
facilities
that
were
evaluated
for
the
final
rule,
and
the
number
that
will
be
regulated
under
the
final
rule.
As
reported
in
Table
2.2,
no
indirect
dischargers
are
subject
to
the
final
regulation.
The
rule
will
regulate
2,382
direct
dischargers
in
the
Oily
Wastes
subcategory.
The
rule
excludes
direct
dischargers
in
the
General
Metals,
Metal
Finishing
Job
Shops,
Non
­
Chromium
Anodizing,
Printed
Wiring
Board,
Railroad
Line
Maintenance,
Shipbuilding
Dry
Docks,
and
Steel
Forming
and
Finishing
subcategories
(
214
facilities,
12
facilities,
0
facilities,
8
facilities,
6
facilities,
6
facilities,
and
13
facilities,
respectively)
2
.

1
These
are
facilities
that
are
predicted
to
close
due
to
weak
financial
performance
under
baseline
conditions,
i.
e.,
in
the
absence
of
the
final
rule.
EPA
does
not
attribute
the
costs
or
the
reduced
discharges
resulting
from
these
baseline
closures
to
the
final
rule,
and
therefore
excludes
these
facilities
from
its
analyses
of
the
rule s
impacts.
Baseline
closures
account
for
differences
between
the
universe
of
facilities
discussed
in
this
report
and
the
universe
discussed
in
the
Technical
Development
Document.

2
EPA
excluded
3,511
indirect
and
98
direct
dischargers
predicted
to
close
in
the
baseline.

2­
2
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
Table
2.2:
MP&
M
Facilities
by
Subcategory
and
Discharger
Class,
and
Facilities
Regulated
Under
the
Final
Rulea
Subcategory
Indirect
Dischargers
Direct
Dischargers
Evaluated
for
Regulation
(#
of
facilities)
Regulated
under
Final
Rule
(#
of
facilities)
Evaluated
for
Regulation
(#
of
facilities)
Regulated
under
Final
Rule
(#
of
facilities)

General
Metals
10,244
0
214
0
Metal
Finishing
Job
Shop
1,479
0
12
0
Non­
Chromium
Anodizing
93
0
0
0
Printed
Wiring
Board
600
0
8
0
Steel
Forming
&
Finishing
12
0
13
0
Oily
Waste
24,394
0
2,382
2,382
Railroad
Line
Maintenance
820
0
6
0
Shipbuilding
Dry
Dock
9
0
6
0
All
Categories
37,652
0
2,641
2,382
a
Excludes
facilities
that
close
in
the
baseline.

Source:
U.
S.
EPA
analysis.

2.2
MP&
M
DISCHARGES
AND
THE
NEED
FOR
REGULATION
EPA
is
regulating
the
MP&
M
industry
because
the
industry
releases
substantial
quantities
of
pollutants,
including
toxic
pollutant
compounds
(
priority
and
nonconventional
metals
and
organics)
and
conventional
pollutants
such
as
total
suspended
solids
(
TSS)
and
oil
and
grease
(
O&
G).
These
MP&
M
industry
pollutants
are
generally
controlled
by
straightforward
and
widely­
used
treatment
system
technologies
such
as
chemical
precipitation
and
clarification
(
frequently
referred
to
as
the
 
lime
and
settle 
process).
3
Discharges
of
these
pollutants
to
surface
waters
and
POTWs
have
a
number
of
adverse
effects,
including
degradation
of
aquatic
habitats,
reduced
survivability
and
diversity
of
native
aquatic
life,
and
increased
human
health
risk
through
the
consumption
of
contaminated
fish
and
water.
In
addition,
many
of
these
pollutants
volatilize
into
the
air,
disrupt
biological
wastewater
treatment
systems,
and
contaminate
sewage
sludge.

Metal
constituents
are
of
particular
concern
because
of
the
large
amounts
present
in
MP&
M
effluents.
Unlike
some
organic
compounds
and
other
wastes
that
are
metabolized
in
activated
sludge
systems
to
relatively
innocuous
constituents,
metals
are
chemical
elements
and
cannot
be
eliminated.
Moreover,
in
solution,
some
metals
have
a
high
affinity
for
biological
uptake.

Depending
on
site­
specific
conditions,
metals
form
insoluble
inorganic
and
organic
complexes
that
partition
to
sewage
sludge
at
POTW
s
or
underlying
sediment
in
aquatic
ecosystems.
The
accumulated
metal
constituents
can
return
to
a
bioavailable
form
upon
land
application
of
sewage
sludge;
dredging
and
resuspension
of
sediment;
or
as
a
result
of
seasonal,
natural,
or
induced
alteration
of
sediment
chemistry.

Benefits
of
reducing
metal
and
other
pollutant
loads
to
the
environment
from
MP&
M
facilities
include
reduced
risk
of
cancer
and
systemic
human
health
risks,
improved
recreation
opportunities
(
e.
g.,
fishing
,
swimming,
boating,
and
other
near­
water
recreational
activities),
improved
aquatic
and
benthic
habitats,
and
less
costly
sewage
sludge
disposal
and
increased
beneficial
use
of
the
sludge.
4
3
See
Chapter
12
and
Appendix
I
for
more
detailed
information
on
the
pollutants
of
concern
in
the
MP&
M
industry.

4
Sewage
sludge
is
also
called
biosolids.

2­
3
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
The
goal
of
the
MP
&
M
regulation
is
to
reduce
pollutant
discharges
and
to
eliminate
or
reduce
the
level
of
risk
and
harm
caused
by
them.
These
pollutant
discharges
and
their
harmful
consequences
are
the
externalities
that
the
MP&
M
regulation
addresses,
as
discussed
in
Section
2.3.

2.2.1
Baseline
MP&
M
Discharges
for
Regulated
Facilities
Table
2.3
provides
an
overview
of
the
discharges
from
MP&
M
facilities
that
are
regulated
under
the
final
rule.
Loadings
are
defined
as
toxic­
weighted
loadings.
This
measure
weights
quantities
of
different
pollutants
by
a
measure
of
their
relative
toxicity.
Toxic­
weighted
loadings
measures
the
relative
toxic
effects
of
discharges
containing
different
mixtures
of
pollutants.

MP&
M
discharges
also
contain
conventional
pollutants
with
little
or
no
toxic
effects
but
that
can
have
substantial
adverse
environmental
impacts,
such
as
O&
G
and
some
components
of
TSS.

Table
2.3:
Toxic­
Weighted
Discharges
for
Direct
Discharging
Facilities
in
the
Oily
Wastes
Subcategory
a
#
of
Regulated
Facilities
2,382
Baseline
Discharges
3,351
Average
Baseline
Loadings
per
Facility
1.41
Remaining
Discharges
Under
Final
Rule
668
Average
Discharges
Under
Final
Rule
per
Facility
0.28
Discharge
Reductions
Achieved
by
Final
Rule
2,683
(
Pounds
Equivalent)

a
Discharges
discussed
in
this
table
are
total
discharges
from
the
facility,
and
do
not
reflect
POTW
pollutant
removals.
EPA
believes
it
is
appropriate
to
analyze
wastewater
discharges
disregarding
POTW
removals
because
indirect
discharges
present
environmental
risks
that
are
not
fully
addressed
by
POTW
treatment.
The
MP&
M
industry
releases
89
pollutants
that
cause
inhibition
problems
at
POTWs
and
an
additional
35
pollutants
that
volatilize
to
form
hazardous
air
pollutants
(
HAPs)
that
may
present
a
threat
to
human
health
or
the
environment.

Other
MP&
M
pollutants
are
found
in
POTW
sludge.
Only
eight
of
these
pollutants
have
land
application
pollutant
criteria
that
limit
the
uses
of
sludge.

b
Excludes
discharges
from
facilities
that
are
projected
to
close
in
the
baseline
(
327
lbs­
equiv.,
or
an
average
of
4.4
lbs­
equiv.
per
closing
facility).

Source:
U.
S.
EPA
analysis.

As
reported
in
Table
2.3,
direct
dischargers
in
the
Oily
Wastes
subcategory
currently
release
a
total
of
3,351
toxic
weighted
pounds
per
year,
an
average
of
1.41
toxic
weighted
pounds
per
facility.
After
implementation
of
the
final
rule,
EPA
estimates
that
Oily
Wastes
direct
dischargers
will
release
only
668
toxic
weighted
pounds
per
year,
an
average
of
0.28
toxic
pounds
per
facility.
EPA
estimates
that
the
final
rule
will
reduce
pollutant
discharges
by
approximately
2,683
toxic
weighted
pounds
per
year.

2.2.2
Discharges
under
the
MP&
M
Regulation
Reductions
in
toxic
loadings
result
from
treatment
of
effluents
and
pollution
prevention
at
facilities
that
are
subject
to
the
regulation.
Table
2.4
shows
baseline
and
post­
regulation
loadings
by
type
of
pollutant,
both
as
unweighted
pounds
and
on
a
toxic­
weighted
basis,
for
facilities
that
are
regulated
under
the
final
rule.
The
final
rule
eliminates
80.1
percent
of
the
baseline
toxic­
weighted
loadings
from
the
facilities
that
are
regulated,
including
83.7
percent
of
the
priority
pollutants
(
87.3
percent
of
metals,
22.4
percent
of
organics,
and
1.3
percent
of
arsenic)
and
57.4
percent
of
the
nonconventional
pollutants
(
62.1
percent
of
metals,
13.3
percent
of
organics,
and
50.0
percent
of
 
other
inorganics ).
The
final
rule
also
eliminates
substantial
fractions
of
the
baseline
discharges
of
conventional
pollutants
from
the
regulated
facilities,
including
6.6
percent
of
2­
4
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
chemical
oxygen
demand
(
COD)
,
37.1
percent
of
biological
oxygen
demand
(
BOD)
,
93.2
percent
of
oil
and
grease
(
O&
G
),
and
54.1
percent
of
total
suspended
solids
(
TSS).
5
Table
2.4:
Summary
of
Discharges
by
Pollutant
Type
for
Facilities
Regulated
under
the
Final
Rulea
Pollutant
Category
Current
Releases
Releases
under
the
Final
Rule
Final
Rule
Reductions
Pounds
Pounds
Eq.
Pounds
Pounds
Eq.
Pounds
Pounds
Eq.

Priority
Pollutants
Metals
794
2,756
153
351
641
2,405
Organics
336
58
268
45
68
13
Arsenic
22
75
21
74
1
1
Cyanide
(
CN)
0
0
0
0
0
0
Nonconventional
Pollutants
Metals
25,863
417
16,428
158
9,435
259
Organics
2,159
45
1,038
39
1,121
6
Other
Inorganics
2,334
0.2
1,301
0.1
1,033
0.1
Bulk
Pollutants
335,679
167,295
168,384
Conventional
Pollutants
BOD
263,419
165,567
97,852
COD
523,440
488,697
34,743
O&
G
428,137
28,955
399,182
TSS
160,695
73,769
86,926
a
Discharges
discussed
in
this
table
are
facility
discharges
and
do
not
account
for
POTW
removals.
EPA
believes
it
is
appropriate
to
analyze
wastewater
discharges
disregarding
POTW
removals
because
indirect
discharges
present
environmental
risks
that
are
not
fully
addressed
by
POTW
treatment.
The
MP&
M
industry
releases
89
pollutants
that
cause
inhibition
problems
at
POTWs
and
an
additional
35
pollutants
that
volatilize
to
form
hazardous
air
pollutants
(
HAPs)
that
may
present
a
threat
to
human
health
or
the
environment.

Other
MP&
M
pollutants
released
by
the
industry
are
found
in
POTW
sludge.
Only
eight
of
these
pollutants
have
land
application
pollutant
criteria
that
limit
the
uses
of
sludge.

Source:
U.
S.
EPA
analysis.

2.3
ADDRESSING
MARKET
IMPERFECTIONS
Environmental
legislation
in
general,
and
the
CWA
and
the
MP&
M
regulation
in
particular,
seek
to
correct
imperfections
 
uncompensated
environmental
externalities
 
in
the
functioning
of
the
market
economy.
In
manufacturing,
rebuilding,
and
repairing
metal
products
and
machinery,
MP&
M
facilities
release
pollutants
that
increase
risks
to
human
health
and
aquatic
life
and
cause
other
environmental
harm
without
accounting
for
the
consequences
of
these
actions
on
other
parties
(
sometimes
referred
to
as
third
parties)
who
do
not
directly
participate
in
the
business
transactions
of
the
business
entities.

5
It
is
not
possible
to
provide
an
overall
estimate
of
total
pollutant
pounds
removed,
because
overlap
among
some
of
the
pollutant
categories
would
result
in
double­
counting
if
the
categories
were
summed.
For
example,
TSS
may
include
some
of
the
priority
pollutant
and
nonconventional
metals
discharges.
Use
of
the
toxic­
weighted
loadings
avoids
this
double­
counting,
but
does
not
include
conventional
pollutants.

2­
5
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
These
costs
are
not
borne
by
the
responsible
entities
and
are
therefore
external
to
the
production
and
pricing
decisions
of
the
responsible
entity.

A
profit­
maximizing
firm
or
a
cost­
minimizing
government­
owned
facility
will
ignore
these
costs
when
deciding
how
much
to
produce
and
how
to
produce
it.
In
addition,
the
externality
is
uncompensated
because
no
party
is
compensated
for
the
adverse
consequences
of
the
pollution
releases.

When
these
external
costs
are
not
accounted
for
in
the
production
and
pricing
decisions
of
the
responsible
entities,
their
decisions
will
yield
a
mix
and
quantity
of
goods
and
services
in
the
economy,
and
an
allocation
of
economic
resources
to
production
activities,
that
are
less
than
optimal.
In
particular,
the
quantity
of
pollution
and
related
environmental
harm
caused
by
the
activities
of
the
responsible
entities
will,
in
general,
exceed
socially
optimal
levels.
As
a
result,
society
will
not
maximize
total
social
welfare.

In
addition,
adverse
distributional
effects
may
accompany
the
uncompensated
environmental
externalities.
If
the
distribution
of
pollution
and
environmental
harm
is
not
random
among
the
U.
S.
population,
but
instead
is
concentrated
among
certain
population
subgroups
based
on
socio­
economic
or
other
demographic
characteristics,
then
the
uncompensated
environmental
externalities
may
produce
undesirable
transfers
of
economic
welfare
among
subgroups
of
the
population.
See
Chapter
17:
Environmental
Justice
and
Protection
of
Children
for
more
information.

The
goal
of
environmental
legislation
and
implementing
regulations,
including
the
final
MP&
M
rule
that
is
the
subject
of
this
EEBA,
is
to
correct
these
environmental
externalities
by
requiring
businesses
and
other
polluting
entities
to
reduce
their
pollution
and
environmental
harm.
Congress,
in
enacting
the
authorizing
legislation,
and
EPA,
in
promulgating
the
implementing
regulations,
act
on
behalf
of
society
to
achieve
a
mix
of
goods
and
services
and
a
level
of
pollution
that
more
nearly
approximates
socially
optimal
levels.
As
a
result,
the
mix
and
quantity
of
goods
and
services
provided
by
the
economy,
the
allocation
of
economic
resources
to
those
activities,
and
the
quantity
of
pollution
and
environmental
harm
accompanying
those
activities
will
yield
higher
economic
welfare
to
society.

Requiring
polluting
entities
to
reduce
levels
of
pollution
and
environmental
harm
is
one
approach
to
addressing
the
problem
of
environmental
externalities.
This
approach
imposes
costs
on
the
polluting
entities
in
the
form
of
compliance
costs
incurred
to
reduce
pollution
to
allowed
levels.
A
polluting
entity
will
either
incur
the
costs
of
meeting
the
regulatory
limits
or
will
determine
that
compliance
is
not
in
its
best
financial
interest
and
will
cease
the
pollution­
generating
activities.
This
approach
to
addressing
the
problem
of
environmental
externalities
will
generally
result
in
improved
economic
efficiency
and
net
welfare
gains
for
society
if
the
cost
of
reducing
the
pollution
and
environmental
harm
activities
is
less
than
the
value
of
benefits
to
society
from
the
reduced
pollution
and
environmental
harm.

It
is
theoretically
possible
to
correct
the
market
imperfection
by
means
other
than
direct
regulation.
For
example,
negotiation
and/
or
litigation
could
achieve
an
optimal
allocation
of
economic
resources
and
mix
of
production
activities
within
the
economy.
However,
the
transaction
costs
of
assembling
the
affected
parties
and
involving
them
in
the
negotiation/
litigation
process,
as
well
as
the
public
goods
character
of
the
improvement
sought
by
negotiation
or
litigation,
make
this
approach
impractical.

2.4
OVERLAP
WITH
OTHER
EFFLUENT
GUIDELINES
EPA
has
previously
promulgated
effluent
guidelines
regulations
for
13
metals­
related
industries.
In
some
instances,
these
industries
may
perform
operations
that
are
found
in
MP&
M
facilities.
These
effluent
guidelines
are:

 
Electroplating
(
40
CFR
Part
413),

 
Iron
&
Steel
Manufacturing
(
40
CFR
Part
420),

 
Nonferrous
Metals
Manufacturing
(
40
CFR
Part
421),

 
Ferroalloy
Manufacturing
(
40
CFR
Part
424),

 
Metal
Finishing
(
40
CFR
Part
433),

 
Battery
Manufacturing
(
40
CFR
Part
461),

2­
6
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
 
Metal
Molding
&
Casting
(
40
CFR
Part
464),

 
Coil
Coating
(
40
CFR
Part
465),

 
Porcelain
Enameling
(
40
CFR
Part
466),

 
Aluminum
Forming
(
40
CFR
Part
467),

 
Copper
Forming
(
40
CFR
Part
468),

 
Electrical
&
Electronic
Components
(
40
CFR
Part
469),
and
 
Nonferrous
Metals
Forming
&
Metal
Powders
(
40
CFR
Part
471).

In
1986,
the
Agency
reviewed
coverage
of
these
regulations
and
identified
a
significant
number
of
metals
processing
facilities
discharging
wastewater
that
these
13
regulations
did
not
cover.
From
this
review,
EPA
performed
a
more
detailed
analysis
of
these
unregulated
sites
and
identified
the
discharge
of
significant
amounts
of
pollutants.
This
analysis
resulted
in
the
formation
of
the
 
Machinery
Manufacturing
and
Rebuilding 
(
MM&
R)
point
source
category.
In
1992,
EPA
changed
the
name
of
the
category
to
 
Metal
Products
and
Machinery 
(
MP&
M)
to
clarify
coverage
of
the
category
(
57
FR
19748).

Only
direct
dischargers
in
the
Oily
Wastes
subcategory
will
be
regulated
under
the
final
regulations
for
40
CFR
Part
38.

Table
2.5
shows
the
MP&
M
subcategories
and
the
coverages
that
apply
to
each.
EPA
does
not
intend
this
table
to
be
exhaustive,
but
rather
to
provide
a
general
overview
of
the
applicability
of
the
Electroplating,
Metal
Finishing,
and
Metal
Products
&
Machinery
effluent
guidelines.

2­
7
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
Table
2.5:
Coverage
by
MP&
M
Subcategory
Subcategory
Continue
Coverage
under
40
CFR
Part
413
(
Electroplating)
Continue
Coverage
under
40
CFR
Part
433
(
Metal
Finishing)
Coverage
under
40
CFR
Part
438
(
Metal
Products
&
Machinery)

General
Metals
(
including
Continuous
Electroplaters)
Existing
indirect
dischargers
currently
covered
by
Part
413.
New
and
existing
direct
and
indirect
dischargers
currently
covered
by
Part
433.
None
Metal
Finishing
Job
Shops
Existing
indirect
dischargers
currently
covered
by
Part
413.
New
and
existing
direct
and
indirect
dischargers
currently
covered
by
Part
433.
None
Non­
Chromium
Anodizers
a
Existing
indirect
dischargers
that
are
currently
covered
by
413.
New
and
existing
direct
and
indirect
dischargers
currently
covered
by
Part
433.
None
Printed
Wiring
Board
(
Printed
Circuit
Board)
Existing
indirect
dischargers
that
are
currently
covered
by
413.
New
and
existing
direct
and
indirect
dischargers
currently
covered
by
Part
433.
None
Steel
Forming
&
Finishing
Wire
Drawinga
N/
A
N/
A
None
Oily
Wasteb
N/
A
N/
A
All
new
and
existing
direct
dischargers
under
this
subcategory.
(
See
438.20)

Railroad
Line
Maintenanceb
N/
A
N/
A
None
Shipbuilding
Dry
Docksb
N/
A
N/
A
None
a
These
facilities
will
continue
to
be
subject
to
Part
420.

b
There
are
no
national
categorical
pretreatment
standards
for
these
facilities.

Source:
U.
S.
EPA
analysis.

2­
8
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
Figure
2.1
illustrates
the
relationship
among
the
various
metals
industries
effluent
guidelines.

Figure
2.1:
Metals
Industries
Effluent
Guidelines
Covered
Under
40CFR
Source:
U.
S.
EPA
analysis.

2.5
MEETING
LEGISLATIVE
AND
LITIGATION­
BASED
REQUIREMENTS
EPA s
effluent
limitations
guidelines
and
standards
for
the
MP&
M
industry
are
under
authority
of
the
CWA,
Sections
301,

304,
306,
307,
and
501.
These
CWA
sections
require
the
EPA
Administrator
to
publish
limitations
and
guidelines
for
controlling
industrial
effluent
discharges
consistent
with
the
overall
CWA
objective
to
 
restore
and
maintain
the
chemical,

physical,
and
biological
integrity
of
the
Nation s
waters. 
EPA s
MP&
M
industry
regulation
responds
to
these
requirements.

In
addition,
the
MP&
M
regulation
responds
to
the
requirements
of
a
consent
decree
entered
by
the
Agency
as
a
result
of
litigation.
Section
304(
m)
of
the
CWA
(
33
U.
S.
C.
1314(
m)),
added
by
the
Water
Quality
Act
of
1987,
required
EPA
to
establish
schedules
for
(
i)
reviewing
and
revising
existing
effluent
limitations
guidelines
and
standards,
and
(
ii)
promulgating
new
effluent
guidelines.
On
January
2,
1990,
EPA
published
an
Effluent
Guidelines
Plan
(
55
FR
80),
in
which
schedules
were
established
for
developing
new
and
revised
effluent
guidelines
for
several
industry
categories.
One
of
the
industries
for
which
the
Agency
established
a
schedule
was
the
Machinery
Manufacturing
and
Rebuilding
Category
(
MM&
R).
6
6
The
name
was
changed
to
Metal
Products
and
Machinery
(
MP&
M)
in
1992
to
avoid
confusion
over
what
was
covered
by
the
rule.

2­
9
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
The
Natural
Resources
Defense
Council,
Inc.
(
NRDC)
and
Public
Citizen,
Inc.
challenged
the
Effluent
Guidelines
Plan
in
a
suit
filed
in
U.
S.
District
Court
for
the
District
of
Columbia
(
NRDC
et
al
v.
Reilly,
Civ.
No.
89­
2980).
The
plaintiffs
charged
that
EPA s
plan
did
not
meet
the
requirements
of
Section
304(
m).
A
Consent
Decree
in
this
litigation
was
entered
by
the
Court
on
January
31,
1992.
This
plan
required,
among
other
things,
that
EPA
propose
effluent
guidelines
for
the
MP&
M
category
by
November,
1994
and
take
final
action
on
these
effluent
guidelines
by
May,
1996.
EPA
filed
a
motion
with
the
Court
on
September
28,
1994,
requesting
an
extension
until
March
31,
1995,
for
the
EPA
Administrator
to
sign
the
proposed
regulation
and
a
subsequent
four
month
extension
for
signature
of
the
final
regulation
in
September
1996.
EPA
published
a
proposal
entitled,
 
Effluent
Limitations
Guidelines,
Pretreatment
Standards,
and
New
Source
Performance
Standards:
Metal
Products
and
Machinery 
(
60
FR
28210)
on
May
30,
1995.

EPA
initially
divided
the
industry
into
two
phases
based
on
industry
sector,
as
the
Agency
believed
that
would
make
the
regulation
more
manageable.
The
Phase
I
proposal
included
the
following
industry
sectors:
Aerospace;
Aircraft;
Electronic
Equipment;
Hardware;
Mobile
Industrial
Equipment;
Ordnance;
and
Stationary
Industrial
Equipment.
At
that
time,
EPA
planned
to
propose
a
rule
for
the
Phase
II
sectors
approximately
three
years
after
the
MP&
M
Phase
I
proposal.

EPA
received
over
4,000
pages
of
public
comment
on
the
Phase
I
proposal.
One
area
where
commenters
from
all
stakeholder
groups
(
i.
e.,
industry,
environmental
groups,
and
regulators)
were
in
agreement
was
that
EPA
should
not
divide
the
MP&
M
industry
into
two
separate
regulations.
Commenters
raised
concerns
regarding
the
regulation
of
similar
facilities
with
different
compliance
schedules
and
potentially
different
limitations
for
similar
processes
based
solely
on
whether
the
facilities
were
in
a
Phase
I
or
Phase
II
sector.
Furthermore,
a
large
number
of
facilities
performed
work
in
multiple
sectors.
In
such
cases,
permit
writers
and
control
authorities
(
e.
g.,
POTWs)
would
need
to
decide
which
MP&
M
rule
(
Phase
I
or
2)
applied
to
a
facility.

Based
on
these
comments,
EPA
decided
to
combine
the
two
phases
of
the
regulation
into
one
proposal.
EPA
published
a
proposal
entitled,
 
Effluent
Limitations
Guidelines,
Pretreatment
Standards,
and
New
Source
Performance
Standards
for
the
Metal
Products
and
Machinery
Point
Source
Category 
(
66
FR
424)
on
January
3,
2001.
The
proposal
published
in
January
2001
completely
replaced
the
1995
proposal.

On
June
5,
2002,
EPA
published
a
Notice
of
Data
Availability
(
NODA)
(
67
FR
38752).
In
the
NODA,
EPA
discussed
major
issues
raised
in
comments
on
the
2001
proposal;
suggested
revisions
to
the
technical
and
economic
methodologies
used
to
estimate
compliance
costs,
pollutant
loadings,
and
economic
and
environmental
impacts;
presented
the
results
of
these
suggested
methodology
changes
and
incorporation
of
new
(
or
revised)
data;
and
summarized
the
Agency s
thinking
on
how
these
results
could
affect
the
Agency s
final
decisions.

This
report
addresses
the
304(
m)
decree
as
amended,
requiring
the
MP&
M
rules
to
be
promulgated
by
February
14,
2003.

2­
10
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
GLOSSARY
Best
Available
Technology
Economically
Achievable:
Effluent
limitations
for
direct
dischargers,
addressing
priority
and
nonconventional
pollutants.
BAT
is
based
on
the
best
existing
economically
achievable
performance
of
plants
in
the
industrial
subcategory
or
category.
Factors
considered
in
assessing
BAT
include
the
cost
of
achieving
BAT
effluent
reductions,
the
age
of
equipment
and
facilities
involved,
the
processes
employed,
engineering
aspects
of
the
control
technology,
potential
process
changes,
non­
water
quality
environmental
impacts
(
including
energy
requirements),
economic
achievability,
and
such
factors
as
the
Administrator
deems
appropriate.
The
Agency
may
base
BAT
limitations
upon
effluent
reductions
attainable
through
changes
in
a
facility's
processes
and
operations.
Where
existing
performance
is
uniformly
inadequate,
EPA
may
base
BAT
upon
technology
transferred
from
a
different
subcategory
within
an
industry
or
from
another
industrial
category.

Best
Practicable
Control
Technology
Currently
Available:
Effluent
limitations
for
direct
discharging
facilities,

addressing
conventional,
toxic,
and
nonconventional
pollutants.
In
specifying
BPT,
EPA
considers
the
cost
of
achieving
effluent
reductions
in
relation
to
the
effluent
reduction
benefits.
The
Agency
also
considers
the
age
of
the
equipment
and
facilities,
the
processes
employed
and
any
required
process
changes,
engineering
aspects
of
the
control
technologies,
non­

water
quality
environmental
impacts
(
including
energy
requirements),
and
such
other
factors
as
the
Agency
deems
appropriate.
Limitations
are
traditionally
based
on
the
average
of
the
best
performances
of
facilities
within
the
industry
of
various
ages,
sizes,
processes,
or
other
common
characteristics.
Where
existing
performance
is
uniformly
inadequate,
EPA
may
require
higher
levels
of
control
than
currently
in
place
in
an
industrial
category
if
the
Agency
determines
that
the
technology
can
be
practically
applied.

bioavailable:
Degree
of
ability
to
be
absorbed
and
ready
to
interact
in
organism
metabolism.

(
http://
www.
epa.
gov/
OCEPAterms)

biological
oxygen
demand:
A
measure
of
the
amount
of
oxygen
consumed
in
the
biological
processes
that
break
down
organic
matter
in
water.
The
greater
the
BOD,
the
greater
the
degree
of
pollution.

(
http://
www.
epa.
gov/
OCEPAterms/
bterms.
html)

chemical
oxygen
demand:
A
measure
of
the
oxygen
required
to
oxidize
all
compounds,
both
organic
and
inorganic,
in
water.
(
http://
www.
epa.
gov/
OCEPAterms/
cterms.
html)

Clean
Water
Act:
Act
passed
by
the
U.
S.
Congress
to
control
water
pollution.
Formerly
referred
to
as
the
Federal
Water
Pollution
Control
Act
of
1972
or
Federal
Water
Pollution
Control
Act
Amendments
of
1972
(
Public
Law
92­
500),
33
U.
S.
C.

1251
et.
seq.,
as
amended
by:
Public
Law
96­
483;
Public
Law
97­
117;
Public
Laws
95­
217,
97­
117,
97­
440,
and
100­
04.

conventional
pollutants:
Statutorily
listed
pollutants
understood
well
by
scientists.
These
may
be
in
the
form
of
organic
waste,
sediment,
acid,
bacteria,
viruses,
nutrients,
oil
and
grease,
or
heat.
(
http://
www.
epa.
gov/
OCEPAterms)

distributional
effects:
Occurs
when
the
distribution
of
pollution
and
environmental
harm
is
not
random
among
the
U.
S.

population,
but
instead
is
concentrated
among
certain
population
subgroups
based
on
socio­
economic
or
other
demographic
characteristics,
then
the
uncompensated
environmental
externalities
may
produce
undesirable
transfers
of
economic
welfare
among
subgroups
of
the
population.

externalities:
Costs
or
benefits
of
market
transactions
that
are
not
reflected
in
the
prices
buyers
and
sellers
use
to
make
their
decisions.
An
externality
is
a
by­
product
of
the
production
or
consumption
of
a
good
or
service
that
affects
someone
not
immediately
involved
in
the
transaction.

(
http://
www.
enmu.
edu/
users/
biced/
home/
glossary.
html)

A
type
of
market
failure
that
causes
inefficiency.

(
http://
www.
amosweb.
com/
cgi­
bin/
gls_
dsp.
pl?
term=
externalities)

MP&
M
facilities:
MP&
M
facilities
are
defined
on
the
basis
of
three
considerations:
(
1)
they
produce
metal
parts,
products,

or
machines
for
use
in
one
of
the
19
industry
sectors
evaluated
for
coverage
in
the
MP&
M
point
source
category;
(
2)
they
use
operations
in
one
of
the
eight
regulatory
subcategories
evaluated
for
coverage
in
the
MP&
M
point
source
category;
and
(
3)

they
discharge
process
wastewater,
either
directly
or
indirectly,
to
surface
waters.
In
this
document,
the
term
 
MP&
M
facilities 
refers
to
all
facilities
meeting
the
above
definition,
regardless
of
whether
a
facility s
industrial
sector,
subcategory,

or
discharger
category
is
covered
by
the
final
regulation.
If
the
MP&
M
facilities
are
referred
to
as
 
regulated 
facilities
or
facilities
 
subject
to
the
final
regulation ,
the
use
of
the
qualifier
 
regulated 
or
 
subject
to
the
final
regulation 
restricts
2­
11
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
the
definition
to
include
only
those
facilities
in
the
industry
sectors,
subcategory,
and
discharger
category
covered
by
the
final
regulation.

MP&
M
industry:
The
facilities
and
markets
comprising
the
19
industry
sectors
evaluated
for
coverage
in
the
MP&
M
point
source
category.
In
this
document,
the
term
 
MP&
M
industry 
refers
to
the
full
19
industry
sectors,
regardless
of
whether
an
industry
sector
is
covered
by
the
final
regulation.
If
the
MP&
M
industry
is
referred
to
as
the
regulated
MP
&
M
industry,
the
use
of
the
qualifier
 
regulated 
restricts
the
definition
to
only
the
industry
sectors,
subcategory,
and
discharger
category
covered
by
the
final
regulation.

nonconventional
pollutants:
Any
pollutant
not
statutorily
listed
or
which
is
poorly
understood
by
the
scientific
community.

(
http://
www.
epa.
gov/
OCEPAterms)

oil
and
grease
(
O&
G):
These
organic
substances
may
include
hydrocarbons,
fats,
oils,
waxes
and
high­
molecular
fatty
acids.
Oil
and
grease
may
produce
sludge
solids
that
are
difficult
to
process.
(
http://
www.
epa.
gov/
owmitnet/
reg.
htm)

Pretreatment
Standards
for
Existing
Sources
(
PSES):
Categorical
pretreatment
standards
for
existing
indirect
dischargers,
designed
to
prevent
the
discharge
of
pollutants
that
pass
through,
interfere
with,
or
are
otherwise
incompatible
with
the
operation
of
POTWs.
Standards
are
technology­
based
and
analogous
to
BAT
effluent
limitations
guidelines.

priority
pollutants:
126
individual
chemicals
that
EPA
routinely
analyzes
when
assessing
contaminated
surface
water,

sediment,
groundwater
or
soil
samples.

publicly­
owned
treatment
works:
A
treatment
works
for
municipal
sewage
or
liquid
industrial
wastes
that
is
owned
by
a
State
or
municipality.

socially
optimal
level:
Situation
in
which
it
is
impossible
to
make
any
individual
better
off
without
making
someone
else
worse
off.
Also
referred
to
as
Pareto
optimal.

social
welfare:
The
sum
of
the
welfare
of
all
participants
in
the
society;
measured
by
the
sum
of
consumer
surplus
­­
the
value
consumers
derive
from
goods
and
services
less
the
price
they
have
to
pay
for
the
goods
and
services
­­
and
producers'

surplus
­­
the
revenue
received
by
producers
of
goods
and
services
less
their
costs
of
producing
the
goods
and
services.

third
parties:
Those
affected
by
a
by­
product
of
the
production
or
consumption
of
a
good
or
service
that
are
not
immediately
involved
in
the
transaction.

total
suspended
solids:
A
measure
of
the
suspended
solids
in
wastewater,
effluent,
or
water
bodies,
determined
by
tests
for
"
total
suspended
non­
filterable
solids."

(
http://
www.
epa.
gov/
OCEPAterms/
tterms.
htm
l).

toxic­
weighted
pollutants:
This
measure
weights
quantities
of
different
pollutants
in
effluents
by
a
measure
of
their
relative
toxicity.
Toxic­
weighted
loadings
measures
the
relative
toxic
effects
of
discharges
containing
different
mixtures
of
pollutants.

uncompensated:
Where
parties
damaged
by
externalities
receive
no
compensation
for
accepting
the
damage.

2­
12
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
ACRONYMS
BAT:
Best
Available
Technology
Economically
Achievable
BPT:
Best
Practicable
Control
Technology
Currently
Available
BOD:
biological
oxygen
demand
COD:
chemical
oxygen
demand
CWA:
Clean
Water
Act
MM&
R:
Machinery
Manufacturing
and
Rebuilding
MP&
M:
Metal
Products
and
Machinery
NPDES:
National
Pollutant
Discharge
Elimination
System
NRDC:
Natural
Resources
Defense
Council
O&
G:
oil
and
grease
POTW:
publicly­
owned
treatment
works
PSES:
Pretreatment
Standards
for
Existing
Sources
TSS:
total
suspended
solids
2­
13
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
2:
The
MP&
M
Industry
and
the
Need
for
Regulation
THIS
PAGE
INTENTIONALLY
LEFT
BLANK
2­
14
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
INTRODUCTION
The
final
MP&
M
rule
will
apply
to
facilities
that
manufacture,
rebuild,
or
maintain
metal
parts,
products
or
machines
to
be
used
in
a
large
number
of
industrial
sectors.

Manufacturing
is
the
series
of
unit
operations
necessary
to
produce
metal
products,
and
is
generally
performed
in
a
production
environment.
Rebuilding/
maintenance
is
the
series
of
unit
operations
necessary
to
disassemble
used
metal
products
into
components,
replace
the
components
or
subassemblies
or
restore
them
to
original
function,
and
reassemble
the
metal
product.
These
operations
are
intended
to
keep
metal
products
in
operating
condition
and
can
be
performed
in
either
a
production
or
a
non­
production
environment.
Manufacturing
and
rebuilding/
maintenance
activities
often
occur
at
the
same
facilities.

The
MP&
M
industry
encompasses
a
large
number
of
industries
that
manufacture
intermediate
and
final
goods,

support
transportation
and
other
vehicle
services,
and
repair
and
maintain
products
and
equipment.
The
health
of
the
MP&
M
industry
is
generally
tied
to
the
overall
economic
performance
of
the
economy.
The
MP&
M
industry
includes
manufacturing
and
non­
manufacturing
industries
defined
by
224
4­
digit
Standard
Industrial
Classification
(
SIC)

codes,
which
are
grouped
into
nineteen
industry
sectors.
1
Of
the
224
SIC
codes,
174
are
manufacturing
(
SICs
20
through
39)
and
50
are
non­
manufacturing.
All
nineteen
sectors
include
manufacturing
industries,
and
eleven
include
non­

manufacturing
industries
as
well.

Although
EPA
evaluated
regulatory
options
that
would
have
covered
facilities
operating
in
any
of
the
nineteen
sectors,
the
final
regulation
covers
facilities
operating
only
in
sixteen
of
those
sectors.
CHAPTER
CONTENTS
3.1
Data
Sources
.................
.............
3­
2
3.2
Overview
of
the
MP&
M
Industry
and
Industry
Trends
.................
...............
3­
3
3.2.1
Aerospace
.................
........
3­
7
3.2.2
Aircraft
.................
..........
3­
7
3.2.3
Electronic
Equipment
................
3­
7
3.2.4
Hardware
.................
........
3­
8
3.2.5
Household
Equipment
...............
3­
8
3.2.6
Instruments
.................
.......
3­
9
3.2.7
Iron
and
Steel
.................
.....
3­
9
3.2.8
Job
Shops
.................
........
3­
9
3.2.9
Mobile
Industrial
Equipment
..........
3­
9
3.2.10
Motor
Vehicle
and
Bus
&
Truck
......
3­
10
3.2.11
Office
Machine
.................
...
3­
10
3.2.12
Ordnance
.................
.......
3­
10
3.2.13
Precious
Metals
and
Jewelry
..........
3­
11
3.2.14
Printed
Wiring
Boards
..............
3­
11
3.2.15
Railroad
.................
........
3­
11
3.2.16
Ships
and
Boats
.................
..
3­
11
3.2.17
Stationary
Industrial
Equipment
.......
3­
12
3.3
Characteristics
of
MP&
M
Manufacturing
Sectors
3­
12
3.3.1
Domestic
Production
...............
3­
13
3.3.2
Industry/
Market
Structure
............
3­
18
3.3.3
Financial
Condition
and
Performance
.
.
3­
24
3.4
Characteristics
of
MP&
M
Non­
Manufacturing
Sectors
.................
.............
3­
25
3.4.1
Domestic
Production
...............
3­
25
3.4.2
Industry
Structure
and
Competitiveness
.
3­
28
3.5
Characteristics
of
All
MP&
M
Sectors
.........
3­
30
3.5.1
Eight­
firm
Concentration
Ratio
.......
3­
30
3.5.2
Risk
Normalized
Return
on
Assets
.....
3­
31
3.6
Characteristics
of
MP&
M
Facilities
...........
3­
32
Glossary
.................
.................
...
3­
38
Acronyms
.................
.................
..
3­
40
References
.................
.................
.
3­
41
This
chapter
provides
a
profile
of
the
industry
sectors
that
were
evaluated
for
coverage
by
the
MP&
M
rule.
The
profile
focuses
on
the
economic
characteristics
of
the
sectors
and
the
facilities
within
the
sectors,
which
may
affect
the
rule s
financial
and
economic
impacts.
It
presents
and
interprets
a
wide
variety
of
data
associated
with
production,
market
structure,

and
competitiveness,
for
each
sector
and
for
the
MP&
M
industry
as
a
whole.

1
Appendix
A
lists
the
nineteen
sectors
and
their
associated
4­
digit
SIC
codes.

3­
1
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
3.1
DATA
SOURCES
This
profile
presents
data
from
the
Economic
Censuses,
Statistics
of
U.
S.
Businesses
(
SUSB),
Annual
Survey
of
Manufacturers
(
ASM
),
U.
S.
Industry
and
Trade
Outlook,
EPA s
Sector
Notebooks,
and
other
sources,
to
characterize
the
MP&
M
sectors,
including
both
dischargers
and
non­
dischargers.

The
years
1988
and
1996
were
chosen
as
the
years
for
which
data
are
presented
because
these
are
the
base
analysis
years,

respectively,
for
the
MP&
M
Phase
1
sectors
survey
and
the
Phase
2
survey.
In
the
cases
when
data
for
those
years
were
not
available,
data
from
other
years
were
used.

This
profile
relies
on
industries
defined
by
SICs,
both
because
data
collection
for
the
MP&
M
sectors
was
defined
by
SICs
and
to
allow
use
of
historical
data.
The
Census
Bureau
switched
to
use
of
the
new
North
American
Industry
Classification
System
(
NAICS)
codes
starting
with
the
1997
Economic
Censuses.
Data
classified
by
NAICS
code
were
converted
to
SIC
format
before
being
included
in
the
profile.
The
conversion
used
a
bridge
containing
the
percentage
of
each
NAICS
code
that
needed
to
be
assigned
to
each
SIC
code.
For
a
detailed
discussion
of
the
bridge,
see
Appendix
A.

The
Agency
used
survey
data
to
characterize
the
facilities
within
the
MP&
M
sectors
that
are
potentially
subject
to
the
rule
because
they
discharge
process
wastewater
from
MP&
M
operations.
The
survey
provides
data
such
as
discharge
type,
small
business
status,
sources
of
revenues,
and
financial
performance.

The
survey
requested
information
on
the
sectors
from
which
each
facility
derives
its
revenues.
Many
facilities
derive
revenues
from
more
than
one
sector.
It
is
therefore
difficult
to
link
facility
characteristics
to
a
specific
sector.
Data
on
the
potentially­
regulated
facilities
are
therefore
summarized
by
the
regulatory
subcategories
rather
than
by
sectors.

All
monetary
values
are
shown
in
real
2001
dollars.
EPA
used
the
Producer
Price
Index
(
PPI)
for
industrial
commodities
as
a
conversion
tool.
A
PPI
is
an
index
that
measures
price
changes,
from
the
perspective
of
the
seller,
of
a
collection
of
goods
and
services
that
are
important
inputs
for
a
specific
industry
or
for
the
economy
as
a
whole.
This
chapter
uses
the
PPI
for
industrial
commodities
to
inflate
nominal
values
to
real
values.
Later
chapters
include
PPI s
that
are
sector
specific.

These
PPI s
are
derived
from
the
average
of
the
PPI s
for
each
component
industry
SIC
code,
weighted
by
industry
output.

Table
3­
1
shows
the
PPI
values
for
the
relevant
years
for
which
prices
were
deflated.
The
PPI
for
industrial
commodities
increased
slightly
every
year
between
1988
and
1996.
Total
inflation
for
industrial
commodities
from
1988
to
1996
was
19.8%.

3­
2
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.1:
Producer
Price
Index
for
Industrial
Commodities
Year
Producer
Price
Index
(
PPI)
Percent
Change
1988
100.0
n/
a
1989
105.0
5.0%

1990
108.9
3.8%

1991
109.6
0.6%

1992
110.4
0.8%

1993
111.9
1.4%

1994
113.5
1.4%

1995
118.1
4.0%

1996
119.8
1.4%

1997
120.1
0.3%

1998
117.4
­
2.3%

1999
119.0
1.4%

2000
126.8
6.6%

2001
127.7
0.7%

Source:
Bureau
of
Labor
Statistics,
Producer
Price
Index.

3.2
OVERVIEW
OF
THE
MP&
M
INDUSTRY
AND
INDUSTRY
TRENDS
This
section
provides
a
general
overview
of
the
MP&
M
industry.
It
describes
the
individual
MP&
M
industry
sectors,

provides
basic
economic
information
about
MP&
M
manufacturers,
and
summarizes
recent
industry
trends.

Figure
3­
1
shows
that
MP&
M
facilities
are
located
in
every
state.
A
few
MP&
M
sectors
such
as
shipbuilding
are
concentrated
geographically.
Transportation­
related
MP&
M
facilities
are
found
throughout
the
country.
Overall,
MP&
M
3­
3
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
facilities
are
most
concentrated
in
the
heavy
industrial
regions
along
the
Gulf
Coast,
both
the
East
and
West
Coasts,
and
the
Great
Lakes
Region
(
New
York,
Pennsylvania,
Ohio,
Indiana,
Illinois,
and
Michigan).

Figure
3.1:
Number
of
MP&
M
Facilities
by
State
in
1992
Source:
Department
of
Commerce,
Bureau
of
the
Census,
Census
of
Manufacturers,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries,
1992.

Table
3.2
lists
the
MP&
M
sectors
and
provides
a
brief
description
of
the
products
and
services
produced
by
each.
Appendix
A
provides
a
more
detailed
list
of
the
4­
digit
SIC
codes
in
each
sector.

3­
4
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.2:
MP&
M
Sector
Definitions
Sector
Sector
Description
Aerospace
Metal
parts
or
products
such
as
missiles,
space
vehicles,
satellites
and
associated
launching
equipment.

Aircraft
Metal
parts
or
products
including
all
types
of
aircraft
for
public,
private
or
commercial
use.
aircraft
parts
and
equipment
as
well
as
aircraft
maintenance
activities.

Bus
and
Truck
Metal
parts
or
products
including
freight
trucks
and
trailers
as
well
as
public,
private
and
commercial
buses.
ludes
all
associated
equipment
including
equipment
specific
to
truck
and
bus
terminals.

Includes
bus
and
truck
maintenance
activities.

Electronic
Equipment
Metal
parts
or
products
including
general
electronic
components
such
as
tubes,
capacitors,
and
transformers,
as
well
as
finished
electronic
equipment
such
as
televisions,
radios,
and
telephones.

Hardware
Metal
parts
or
products
such
as
tools,
cutlery,
valves
and
tubing,
dies,
springs,
sheet
metal,
drums,
and
heat
treating
equipment.

Household
Equipment
Metal
parts
or
products
including
appliances
such
as
refrigerators,
laundry
equipment,
lighting
equipment,
cooking
equipment,
and
vacuum
cleaners.
munication
type
radios
and
televisions
are
included
in
this
sector.

Iron
and
Steel
Sites
engaged
in
iron
or
steel
manufacturing,
forming
and
finishing.

Instruments
Metal
parts
or
products
such
as
laboratory
and
medical
equipment,
measuring
devices,
environmental
and
process
controls,
optical
equipment,
surgical
and
dental
equipment,
and
pens.

Metal
Finishing
Job
Shop
Facilities
with
more
than
50
percent
of
their
revenues
coming
from
work
on
products
not
owned
by
the
site.
While
there
are
SIC
codes
associated
with
some
Metal
Finishing
Job
Shops,
they
sell
to
a
variety
of
markets
and
are
not
a
market
in
and
of
themselves.

Mobile
Industrial
Equipment
Metal
parts
or
products
including
tractors
and
other
farm
equipment,
construction
machinery
and
equipment,
mining
machinery
and
equipment,
industrial
cranes
and
hoists,
and
tracked
military
vehicles.

Motor
Vehicle
Metal
parts
or
products
including
private
passenger
vehicles
and
associated
parts
and
accessories
such
as
automobiles,
motorcycles,
utility
trailers
and
recreational
vehicles,
and
mobile
homes.

Office
Machines
Metal
parts
or
products
including
office
computer
equipment,
storage
devices,
printers,
photocopiers
and
associated
parts
and
accessories.

Ordnance
Metal
parts
or
products
including
all
small
arms,
artillery,
and
ammunition
with
the
exception
of
missiles
(
aerospace).
anufacture
of
explosives.

Other
Metal
Products
Metal
parts
or
products
including
products
and
machinery
not
categorized
into
the
other
sectors
(
e.
g.,
sporting
goods,
musical
instruments).

Precious
Metals
and
Jewelry
Metal
parts
or
products
including
jewelry,
silverware,
trophies,
and
clocks
as
well
as
all
associated
parts
and
accessories.

Printed
Wiring
Boards
Metal
parts
or
products
including
printed
wiring
boards
and
printed
circuit
boards.

Railroad
Metal
parts
or
products
including
railcars,
locomotives
and
associated
parts
and
accessories
as
well
as
track,
switching
and
terminal
stations.

Ships
and
Boats
Metal
parts
or
products
including
ships
and
boats
for
military,
freight,
and
private
recreation.

submarines,
ferries,
tug
boats,
barges,
yachts,
and
other
recreational
boats
as
well
as
all
parts
and
accessories.
lso
includes
rebuilding
and
maintenance
activities
performed
at
marinas,
dry
docks,
and
other
on
shore
activities
specifically
related
to
ships
and
boats.

Stationary
Industrial
Equipment
Metal
parts
or
products
including
all
industrial
machinery,
such
as
turbines,
oil
field
machinery,
elevators
and
moving
stairways,
conveying
equipment,
chemical
process
industry
equipment,
pumps,

compressors,
blowers,
industrial
ovens,
vending
machines,
commercial
laundry
equipment,
commercial
refrigeration
and
heating
equipment,
welding
apparatus,
motors,
and
generators.
Includes
Inc
Non­
com
Does
not
include
the
chemical
processing
or
the
m
Includes
A
Source:
U.
S.
EPA
analysis.

Table
3.3
shows
output
by
sector
for
manufacturers,
non­
manufacturers,
and
all
MP&
M
firms.
Output
is
a
good
indicator
of
the
overall
size
of
a
market.
In
1997,
MP&
M
firms
accounted
for
more
than
$
2.8
trillion
in
output.
Motor
vehicles
were
the
3­
5
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
largest
single
MP&
M
sector,
accounting
for
43
percent
of
all
MP&
M
output.
Ordnance
is
the
smallest
sector,
with
0.2
percent
of
MP&
M
output.

The
MP&
M
manufacturing
and
non­
manufacturing
sectors
differ
in
several
important
ways.
The
manufacturing
sector
accounted
for
$
1.6
trillion
in
output,
equal
to
57
percent
of
the
total
MP&
M
output.
The
non­
manufacturing
sector
accounted
for
$
1.2
trillion,
or
43
percent
of
MP&
M
output.
Although
MP&
M
non­
manufacturers 
revenues
were
nearly
$
400
billion
smaller
than
manufacturers 
revenues,
the
MP&
M
non­
manufacturers
had
three
times
as
many
facilities
as
the
MP&
M
manufacturers.
Also,
although
manufacturing
output
was
relatively
evenly
divided
among
the
different
sectors,
more
than
86
percent
of
non­
manufacturing
output
came
from
the
motor
vehicle
and
bus
and
truck
sectors.

Table
3.3:
MP&
M
Output
and
Share
in
1997a
(
millions,
2001$)

Sector
Manufacturers
Non­
Manufacturers
Sector
Total
Output
b
Share
Output
b
Share
Output
b
Share
Aerospace
20,115.1
1.2%
20,115.1
0.7%

Aircraft
105,163.8
6.4%
9,935.9
0.8%
115,099.7
4.0%

Bus
&
Truck
15,118.4
0.9%
209,316.1
16.7%
224,434.5
7.8%

Electronic
Equipment
145,886.9
8.9%
145,886.9
5.1%

Hardware
189,145.5
11.6%
189,145.5
6.6%

Household
Equipment
102,242.3
6.3%
2,847.7
0.2%
105,090.0
3.6%

Instruments
141,548.0
8.7%
7,401.9
0.6%
148,949.9
5.2%

Iron
and
Steel
20,403.0
1.2%
20,403.0
0.7%

Job
Shop
c
15,360.2
0.9%
15,360.2
0.5%

Mobile
Industrial
Equipment
54,704.7
3.3%
54,704.7
1.9%

Motor
Vehicle
366,448.7
22.4%
870,450.5
69.6%
1,236,899.2
42.8%

Office
Machine
119,783.0
7.3%
30,929.9
2.5%
150,712.9
5.2%

Ordnance
5,778.8
0.4%
5,778.8
0.2%

Other
Metal
Products
60,249.6
3.7%
22,040.7
1.8%
82,290.3
2.9%

Precious
Metals
and
Jewelry
9,760.7
0.6%
367.4
0.0%
10,128.1
0.4%

Printed
Wiring
Boards
10,400.7
0.6%
10,400.7
0.4%

Railroad
d
8,412.6
0.5%
30,727.9
2.5%
39,140.5
1.4%

Ships
and
Boats
18,081.1
1.1%
37,383.0
3.0%
55,464.1
1.9%

Stationary
Industrial
Equipment
227,053.7
13.9%
29,747.1
2.4%
256,800.8
8.9%

Total
MP&
M
1,635,656.8
100.0%
1,251,148.1
100.0%
2,886,804.9
100.0%

Percent
of
total
56.7%
43.3%
100.0%

a
Data
for
1996
were
not
available,
so
economic
census
data
from
1997
were
used.

b
Value
of
shipments
for
manufacturing
industries;
total
sales
for
retail
and
wholesale
trade;
total
receipts
for
service
industries;
total
revenue
for
transportation.

c
Includes
facilities
in
two
SICs
that
are
defined
specifically
as
job
shops
(
SICs
3471
and
3479.)
Facilities
reporting
in
other
sectors
may
also
operate
as
job
shops,
so
these
data
are
likely
to
understate
the
true
output
of
MP&
M
job
shops.

d
Non­
manufacturing
railroad
data
are
estimated
based
on
1992
data.

Source:
Department
of
Commerce,
Bureau
of
the
Census,
Census
of
Manufacturers,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries,
1997.

The
following
sections
describe
the
MP&
M
sectors
and
briefly
discuss
recent
industry
trends
in
each
sector.
The
discussion
is
based
on
2001
Value
Line
Industry
Reports,
U.
S.
Industry
and
Trade
Outlook
2000
(
DRI­
McGraw
Hill),
EPA s
Sector
Notebooks,
and
other
sources.

3­
6
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
3.2.1
Aerospace
The
aerospace
industry
includes
original
equipment
manufacturers
(
OEM
)
and
facilities
that
rebuild
and
repair
aerospace
equipment.
The
industry
serves
both
military
and
commercial
end­
uses
such
as
space
vehicles
for
commercial
communication
satellites,
although
military
applications
dominate.
Its
products
include
guided
missiles,
space
vehicles,
and
associated
propulsion
units
and
parts.
The
assembly
of
aerospace
products
draws
on
numerous
other
industries,
including
plastics,

rubber,
fabricated
metals,
metal
casing,
glass,
textile,
and
electronic
components.
Aerospace
products
are
typically
produced
by
a
prime
contractor
and
several
tiers
of
subcontractors.
Final
assembly
is
performed
by
relatively
few
facilities,
only
a
small
number
compared
with
the
numerous
subassembly
and
parts
manufacturers.
Aerospace
manufacturing
is
extremely
capital
intensive.

The
U.
S.
aerospace
industry
has
consolidated
substantially
in
recent
years,
due
to
declines
in
defense
spending.
The
number
of
facilities
and
firms
as
well
as
sector
value
of
shipments
and
employment
decreased
from
1988
to
1996
in
the
US.

Growth
in
the
industry
is
expected
to
come
from
lower
cost
air­
to­
air
missiles,
with
strong
focus
on
increasing
efficiency
in
production
by
reducing
costs.
Consumer
demand
has
also
grown
for
direct­
to­
home
television,
voice
and
data
transmission,

and
other
satellite
services,
which
have
increased
the
commercial
demand
for
space
vehicles
needed
to
launch
satellites.

The
aerospace
industry
exports
a
substantial
share
of
its
output.
Many
North
American
and
European
governments
with
large
defense
budgets
have
been
seeking
to
reduce
their
military
budgets,
while
governments
in
South
America
(
with
smaller
budgets)
have
been
maintaining
or
increasing
their
defense
spending.
Substantial
consolidation
has
occurred
in
the
European
aerospace
industry,
which
has
become
more
competitive
with
U.
S.
companies
(
U.
S.
EPA
1997;
DRI/
McGraw
Hill
2000).

3.2.2
Aircraft
Trends
in
the
aircraft
sector
are
heavily
influenced
by
changes
in
industry
structure
and
in
the
international
political­
economic
arena.
Although
new
aircraft
production
increased
substantially
in
1998
and
1999,
production
weakened
in
2001
because
of
the
economic
slowdown
and
then
plummeted
following
the
September
11th
terrorist
attacks.
Airlines
have
reacted
to
falling
ticket
sales
by
cutting
scheduled
flights,
reducing
personnel,
and
delaying
or
cancelling
investment
in
new
aircraft.

During
the
1990'
s,
there
was
substantial
restructuring
through
mergers
and
consolidation
in
the
aircraft
manufacturing
industry,
including
producers
of
both
aircraft
and
aircraft
parts
nationally
and
internationally.
Firms
focused
on
improving
efficiency
through
cost
cutting
efforts
such
as
reduced
staffing.
In
addition,
there
is
a
growing
trend
for
U.
S.
producers
to
outsource
many
aircraft
parts
to
firms
in
other
nations,
in
order
to
bring
down
costs
and
compete
internationally.

In
addition
to
aircraft
manufacturing,
this
sector
includes
rebuilding
and
repair
of
aircraft
at
manufacturers 
facilities
or
at
airports.
2
The
aircraft
maintenance
and
repair
industry
has
slowed
with
the
post
9/
11
decline
in
passenger
travel.

3.2.3
Electronic
Equipment
The
electronic
equipment
sector
can
be
divided
into
two
general
groups
of
industries:
microelectronics
manufacturers
and
telecommunications
equipment
manufacturers.

Microelectronics
industries
manufacture
a
wide
range
of
products,
from
electronic
connectors
to
integrated
circuit
panels.

These
products
are
used
as
material
inputs
in
many
industries
such
as
automotive,
telecommunications,
aerospace,
computer,

and
medical
equipment.
Although
the
microelectronics
industry
covers
a
diverse
array
of
products,
producers,
and
end­
uses,

some
general
trends
have
been
evident
in
the
industry.
A
strong
increase
in
the
use
of
microelectronic
products
in
industries
throughout
the
economy
has
led
to
rapid
growth
in
microelectronics
manufacturing
over
the
past
two
decades.
Although
the
US
is
a
major
producer
of
consumer
electronics,
Japan
is
the
world s
leading
producer
of
consumer
electronics,
and
U.
S.

firms
face
strong
international
competition
for
cutting
edge
technological
advances
in
their
products.
Due
to
the
high
skill
level
necessary
in
the
development
of
products,
there
is
considerable
competition
for
skilled
labor.
The
recent
economic
slowdown
has
led
to
lowered
demand
for
end­
products
that
incorporate
microelectronics.
In
response,
the
microelectronics
2
The
rule
regulates
wastewater
generated
from
washing
vehicles
only
when
it
occurs
as
a
preparatory
step
prior
to
performing
an
MP&
M
unit
operation
(
e.
g.,
prior
to
disassembly
to
perform
engine
maintenance
or
rebuilding).
The
rule
does
not
cover
the
washing
of
cars,
aircraft,
or
other
vehicles
when
it
is
performed
only
for
aesthetic/
cosmetic
purposes.

3­
7
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
industry
has
reduced
capacity
and
laid
off
workers
to
reduce
costs.
Despite
this
decline,
microelectronics
continue
to
be
an
increasingly
necessary
component
of
the
global
economy.

Telecommunication
industries
focus
on
the
production
of
network
equipment,
fiber
optics,
and
wireless
communication
equipment.
Much
of
the
growth
in
the
industry
has
come
from
the
increasing
use
of
fiber
optics
and
wireless
end­
user
devices.
The
telecommunications
industries
experienced
rapid
growth
in
the
nineties;
however,
industry
activity
slowed
considerably
with
the
collapse
of
the
telecommunications
bubble.
Telecom
firms
have
reacted
by
cutting
employees,
reducing
costs,
and
selling
off
portions
of
their
firms.
Most
have
continued
their
R&
D
efforts.

3.2.4
Hardware
The
hardware
sector
consists
of
many
different
industries,
which
can
be
generally
classified
into
three
groups:
building
hardware,
conventional
hardware,
and
tooling
hardware.

Building
hardware
consists
of
a
group
of
industries
that
manufacture
metal
building
products,
including
fabricated
structural
metal,
sheet
metalwork,
and
architectural
metalwork.
This
group
of
industries
grew
rapidly
throughout
the
1990'
s.
The
building
products
industry
as
a
whole
saw
record
sales
in
1998
and
again
in
1999.
Much
of
this
growth
is
attributed
to
large
highway
projects
funded
by
the
Transportation
Efficiency
Act
for
the
21st
Century.

Conventional
hardware
includes
products
such
as
screws,
industrial
fasteners,
and
valves
and
hose
fittings.
The
products
produced
in
this
industry
are
used
in
the
production
of
manufactured
goods.
Trends
in
this
industry,
therefore,
generally
reflect
trends
in
other
manufacturing
industries.
One
of
the
most
important
industries
influencing
conventional
hardware
is
the
auto
industry.
Hardware
producers
have
experienced
pressures
from
end
users
such
as
auto
makers
to
reduce
costs.
The
industry
faces
a
continued
trend
of
consolidation
of
firms
and
increasing
global
pressure
from
countries
with
low
labor
costs.

Domestic
producers
of
screws
and
industrial
fasteners
saw
growth
in
the
real
value
of
shipments
due
to
the
strong
U.
S.

economy
in
the
late
nineties.

The
tooling
hardware
sector
also
contains
a
variety
of
different
industries
that
produce
various
types
of
tools
for
different
uses.
Because
these
industries
also
face
continued
globalization,
many
of
them
are
impacted
by
changes
in
the
global
economy.
The
decline
in
Asian
markets
in
1998
and
1999
resulted
in
a
sharp
decline
in
the
value
of
shipments
for
the
machine
tooling
industries.
Prior
to
the
1998
financial
crisis,
value
of
shipments
were
increasing
annually.
The
market
for
the
power­
driven
segment
of
hand
tools
has
increased,
however,
despite
troubled
overseas
markets.

3.2.5
Household
Equipment
There
are
three
general
groups
of
industries
included
in
the
household
equipment
sector:
household
furniture,
household
appliances,
and
plumbing
equipment.
Generally
speaking,
factors
that
affect
this
sector
are
consistent
across
these
three
groups.
Low
unemployment
and
increased
disposable
income
stimulated
growth
in
each
of
these
industries
in
the
nineties.

However,
because
purchases
of
household
equipment
are
relatively
expensive
and
discretionary,
consumers
cut
back
spending
in
the
recent
recession.
All
three
household
equipment
industries
face
international
competition,
as
imports
account
for
a
substantial
share
of
domestic
consumption.

Metal
furniture
accounts
for
20
percent
of
the
household
furniture
industry.
Metal
components
are
increasingly
being
added
to
non­
metal
furniture.
For
example,
there
is
a
trend
to
increase
the
functionality
of
non­
metal
furniture
by
equipping
recliners
with
heat
and
massage.
This
could
increase
the
industry s
reliance
on
metal
parts.
The
industry
has
integrated
vertically,
as
large
manufacturers
have
begun
to
open
their
own
retail
stores
in
an
effort
to
differentiate
their
products.

There
are
two
groups
of
household
appliance
manufacturers.
Major
appliances
such
as
washing
machines
and
refrigerators
are
produced
by
relatively
few
firms.
Smaller
appliances
are
characterized
by
little
product
differentiation
but
considerable
price
competition
and
are
manufactured
by
a
larger
number
of
companies.

Finally,
a
significant
characteristic
of
the
plumbing
equipment
market
is
the
extent
of
U.
S.
dependence
on
foreign
imports.

While
the
U.
S.
construction
market
has
grown
at
a
record
pace
in
the
past
few
years,
increasing
demand
for
plumbing
equipment,
much
of
the
demand
has
been
served
by
imports
and
this
industry
has
a
trade
deficit.

3­
8
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
3.2.6
Instruments
The
instruments
sector
is
characterized
by
a
diverse
array
of
technologically
advanced
products
and
intense
global
competition
among
many
firms
of
varying
sizes.
The
sector
can
be
generally
divided
into
industrial
measuring
and
testing
instruments,
and
medical
instruments.

In
the
industrial
measuring
industry,
producers
of
laboratory
instruments
are
typically
integrated
firms
who
have
consolidated
and
reduced
costs
in
response
to
pressures
from
medical
and
pharmaceutical
customers.
Producers
of
measuring
devices
are
also
facing
pressures
to
consolidate.
These
firms
have
been
hurt
by
low
commodity
prices
during
the
past
few
years,
which
have
led
to
reduced
investment
in
measuring
equipment
by
fuel
and
grain
producers.
Sales
should
rebound,
however,
if
Asian
economies
and
fuel
prices
continue
to
grow.
Small
companies
still
dominate
the
electronic
test
equipment
industry,
which
is
characterized
by
a
high
degree
of
product
differentiation.
Most
of
these
firms
are
not
large
enough
to
export
products.

Sales
for
medical
devices
increased
steadily
throughout
the
1990'
s,
while
employment
remained
relatively
constant.
The
industry
has
historically
been
characterized
by
many
small
to
mid­
size
firms
and
intense
competition
for
technological
innovation.
Efforts
to
bring
down
health
care
costs
is
one
of
the
primary
challenges
facing
this
industry.
Pressure
to
reduce
costs
has
reduced
insurance
companies 
willingness­
to­
pay
for
new
equipment.
As
the
population
ages,
however,
demand
for
medical
services
and
devices
is
expected
to
grow.
The
industry
will
likely
continue
to
grow
in
the
next
few
years,
but
at
a
slower
pace
than
it
has
grown
historically..

3.2.7
Iron
and
Steel
The
basic
iron
and
steel
industry
is
regulated
under
40
CFR
420,
and
primary
iron
and
steel
works,
blast
furnaces
and
rolling
mills
are
not
affected
by
the
MP&
M
rule.
The
MP&
M
rule
will
regulate
facilities
that
perform
MP&
M
operations
or
cold
forming
operations
on
steel
wire,
rod,
bar,
pipe,
or
tube.
This
subcategory
does
not
include
facilities
that
perform
those
operations
on
base
materials
other
than
steel,
nor
does
it
include
wastewater
from
cold
forming,
electroplating
or
continuous
hot
dip
coating
of
steel
sheet,
strip,
or
plates
or
wastewater
from
performing
any
hot
steel
forming
operations.

Events
in
the
global
steel
industry
in
the
past
few
years
have
had
significant
and
possibly
far
reaching
impacts
on
domestic
producers.
In
1998,
the
industry
experienced
a
global
steel
crisis.
This
crisis
was
caused
in
part
by
the
Asian
financial
crisis,

which
triggered
a
sharp
decline
in
imports
of
steel
by
major
steel
importing
countries
of
Asia.
This
led
to
a
flood
of
steel
imports
into
U.
S.,
and
U.
S.
steel
imports
rose
33
percent
in
1998.
The
situation
was
made
worse
by
global
overcapacity
largely
derived
from
producers
in
Russia
and
Latin
America.

This
flood
of
steel
into
the
U.
S.
and
Europe
led
to
rapidly
declining
steel
prices
in
both
regions.
Excess
inventories
that
accrued
during
the
surge
of
imports
hurt
domestic
producers.
The
 
unfair 
trading
prices
resulted
in
over
20
nations
taking
formal
trade
protection
actions
such
as
import
duties
and
price
floors.
The
US
Congress
determined
that
foreign
steel
was
being
sold
in
the
US
at
unfair
prices,
and
reacted
by
enacting
anti­
dumping
tariffs.
The
slowdown
in
the
US
economy
has
also
negatively
affected
the
steel
industry.
Most
steel
firms
are
being
forced
to
focus
on
rationalizing
capacity
and
cutting
costs.

3.2.8
Job
Shops
MP&
M
metal
finishing
job
shops
are
defined
as
those
facilities
with
more
than
50
percent
of
their
revenues
coming
from
products
not
owned
by
the
site.
While
there
are
specific
SIC
codes
associated
with
some
Metal
Finishing
Job
Shops,
they
sell
to
a
variety
of
markets
and
are
not
a
market
in
and
of
themselves.

3.2.9
Mobile
Industrial
Equipment
Mobile
industrial
equipment
includes
a
number
of
different
industries
that
produce
machinery
for
different
purposes,

including
construction,
farming,
and
mining.
Growth
in
the
construction
equipment
industry
is
typically
tied
to
economic
factors
such
as
housing
starts,
employment,
and
consumer
confidence.
Shipments
of
construction
equipment
rose
steadily
during
much
of
the
1990'
s.
The
1998
Transportation
Equity
Act
for
the
21st
Century
was
expected
to
stimulate
further
spending
by
federal,
state,
and
local
governments.
However,
the
current
recession
has
forced
many
industry
buyers
to
cut
back
or
cancel
orders.

3­
9
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
The
farm
and
mining
machinery
industries
both
have
been
suffering
from
low
commodity
prices.
Both
industries
experienced
growth
in
shipments
throughout
much
of
the
1990'
s,
but
were
hit
in
1999
by
low
prices.
Farm
equipment
was
hit
hardest
as
the
real
value
of
shipments
fell
by
38
percent
in
1999.
Output
is
expected
to
continue
to
decrease
until
grain
surpluses
decline
and
agricultural
prices
rise.
However,
the
consolidation
of
farms
has
also
had
a
significant
in
impact
on
this
industry.
With
the
increase
in
farm
size,
there
is
growing
dependence
upon
mechanization
to
farm
more
acres
per
farm.

3.2.10
Motor
Vehicle
and
Bus
&
Truck
The
major
trend
in
the
motor
vehicle
and
bus
and
truck
industries
is
the
continual
consolidation
of
firms
into
highly
capital
intensive
globalized
manufacturers.
Motor
vehicle
manufacturers
are
no
longer
constrained
within
national
boundaries,
as
mergers
and
joint
ventures
include
some
of
the
largest
firms
from
different
countries.
Many
foreign
owned
manufacturers
have
facilities
located
in
the
U.
S.,
and
relative
production
costs
and
exchange
rates
play
a
greater
role
in
determining
the
location
of
production
facilities
than
the
national
identity
of
parent
companies.

Manufacturers
have
increasingly
standardized
the
design
of
motor
vehicles
and
their
parts.
These
changes
have
resulted
in
much
less
product
differentiation
among
manufacturers,
but
also
in
greater
product
quality.
However,
greater
product
quality
has
resulted
in
a
consistently
sharp
increase
in
price
over
the
past
three
decades.
This
price
increase
may
have
reached
its
pinnacle
in
the
mid­
nineties,
since
prices
declined
in
1998
and
1999.
Industry
output
for
automobiles
increased
1.3
percent
between
1996
and
2000.
Although
the
current
recession
has
hurt
car
prices,
manufacturers
have
used
incentives
such
as
zero
percent
financing
to
maintain
sales
volume.

3.2.11
Office
Machine
The
office
machine
sector
experienced
rapid
growth
in
the
nineties
that
reversed
itself
with
the
downturn
in
the
economy.

The
industry
experienced
7.8
percent
growth
in
the
real
value
of
shipments
between
1996
and
2000.
While
this
growth
was
accomplished
with
only
a
1.3
percent
increase
in
total
employment,
production
employment
increased
by
5.4
percent.
The
relative
difference
between
total
and
production
employment
can
be
attributed
to
increasing
reliance
on
the
Internet
for
sales,

thereby
reducing
the
need
for
non­
production
sales
staff.
Despite
this
increase
in
production
employment,
the
industry
remained
extremely
capital
intensive.
The
recent
weakness
of
the
US
economy
hit
the
office
machine
sector
hard
with
business
purchases
of
computers
and
computer
accessories
falling
significantly.

Firms
in
the
office
machine
sector
have
undergone
mergers
and
acquisitions
to
bring
down
costs
in
order
to
compete.
Firms
often
rely
on
joint
venturing
agreements,
and
sometimes
form
alliances
with
past
competitors
to
produce
complementary
components
of
new
technologies.
Consolidation
also
allows
firms
to
diversify,
providing
a
range
of
products
such
as
PCs,

software,
and
information
technology
to
protect
against
the
strong
competition
in
the
market
for
any
one
product.
Firms
have
also
increasingly
outsourced
production
to
electronics
manufacturers
more
equipped
to
increase
production
and
take
advantage
of
economies
of
size,
while
the
original
firms
utilize
their
resources
for
research
and
development
of
new
technologies
to
stay
competitive.

Globalization
is
an
important
trend
in
this
industry
as
machine
components
are
produced
in
different
countries.
Despite
the
trend
toward
a
globalized
market,
the
U.
S.
has
held
a
negative
trade
balance
for
over
a
decade.

3.2.12
Ordnance
The
ordnance
sector
includes
firms
that
manufacture
small
arms,
including
grenade
launchers
and
heavy
field
machine
guns;

artillery,
including
naval,
aircraft,
anti­
aircraft,
tank,
coast,
and
field
artillery;
and
ammunition,
including
bullets,
bombs,

mines,
torpedoes,
grenades,
depth
charges,
and
chemical
warfare
projectiles.
It
does
not
include
the
chemical
processing
or
manufacture
of
explosives.
Overall,
the
industry
has
a
high
ratio
of
value
added
to
total
sales.

The
ordnance
sector
has
contracted
significantly
since
the
end
of
the
Cold
War.
Decreases
in
US
government
military
spending
have
caused
significant
declines
in
ordnance
production,
leading
to
lower
industry
shipments
and
cutbacks
in
employment.
Foreign
customers,
including
foreign
governments,
buy
over
80
percent
of
the
ordnance
manufactured
in
the
US.
Although
shipments
of
military
weaponry
have
declined,
sales
of
small
arms
have
increased
in
the
US
over
the
past
few
years.
Recent
military
actions
by
the
US
will
likely
result
in
government
weapons
purchases
that
will
benefit
the
industry.

3­
10
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
3.2.13
Precious
Metals
and
Jewelry
Domestic
production
in
the
precious
metals
and
jewelry
industry
is
dominated
by
many
small
firms
with
low
capital
intensity,

mostly
concentrated
in
the
northeast
US.
It
is
influenced
by
trends
in
consumer
behavior,
the
retail
market,
and
global
competition.
Devaluation
in
the
price
of
gold
due
to
declining
world
prices
has
benefitted
the
industry
because
it
reduces
the
cost
of
making
jewelry.
Increased
disposable
income
fueled
strong
consumer
spending
on
precious
metals
and
costume
jewelry
in
the
nineties,
but
this
trend
has
weakened
with
the
recent
economic
downturn.

Increases
in
spending
have
not
always
translated
into
gains
for
domestic
producers.
The
lowering
of
tariffs
has
resulted
in
a
steady
increase
in
imports
of
costume
jewelry,
as
labor­
intensive
production
is
often
less
expensive
in
developing
countries.

Domestic
producers
have
also
been
hurt
by
the
strong
U.
S.
dollar,
which
makes
U.
S.
exports
more
expensive.
Another
challenge
comes
from
the
retail
market,
which
has
put
strong
pressure
on
producers
to
bring
down
prices
in
order
to
compete.

These
challenges
include
consolidation
of
retailers,
giving
them
greater
purchasing
power,
increased
Internet
and
television
home
shopping,
and
a
decrease
in
the
number
of
wholesalers.

3.2.14
Printed
Wiring
Boards
Printed
wiring
boards
(
also
referred
to
as
printed
circuit
boards)
are
the
physical
structures
on
which
electronic
components
such
as
semiconductor
and
capacitors
are
mounted.
Computers
and
comm
unications
are
the
largest
uses
for
printed
wiring
boards.
In
addition,
printed
wiring
boards
are
used
in
a
wide
array
of
other
products,
including
toys,
radios,
television
sets,

electronic
wiring
in
cars,
guided­
missile
and
airborne
electronic
equipment,
biotechnology,
medical
devices,
digital
imaging
equipment,
and
industrial
control
equipment.
While
some
producers
of
PWBs
produce
them
for
their
own
use,
most
manufacturers
are
independent
firms
that
sell
PWBs
to
the
open
market.
The
majority
of
PWB
manufacturers
are
small
firms.

The
domestic
PWB
industry
experienced
considerable
growth
throughout
the
1990'
s.
Real
industry
output
grew
nine
percent
from
1996
to
2000.
Growth
was
spurred
by
continual
growth
in
end­
use
markets.
In
addition
to
the
increased
in
value
of
shipments,
U.
S.
firms
saw
a
5.6
percent
increase
in
average
hourly
earnings
and
a
16.3
percent
increase
in
capital
expenditures
over
the
same
period.
However,
demand
in
the
PC,
telecommunications,
and
electronics
sectors
has
weakened
recently.
In
parallel,
there
is
growing
international
competitive
pressure
for
PWB
makers
to
reduce
production
costs.
Consequently,
many
of
the
larger
PWB
firms
are
looking
to
relocate
offshore.

3.2.15
Railroad
Railroad
service
consists
of
both
freight
and
passenger
service.
In
the
past
few
years,
railroad
companies
have
been
focusing
on
improving
the
efficiency
of
their
lines
and
services.
There
has
been
a
continued
trend
toward
consolidation
of
major
freight
railroads.
Consequently,
companies
have
reduced
the
number
of
lines
and
focused
attention
on
increasing
the
capacity
of
fewer
lines.
Railroads
have
also
begun
to
focus
on
guaranteeing
deliveries
at
specific
times,
which
will
allow
them
to
compete
with
the
trucking
industry.

Since
the
1980'
s
railroad
traffic
increased
by
50
percent,
while
the
line
network
decreased
by
39
percent.
This
was
accomplished
by
increasing
capital
expenditures
for
equipment
such
as
new
locomotives
with
greater
horsepower,
installation
of
double
tracks,
and
increases
in
the
capacity
of
non­
railroad
owned
freight
cars.
Consequently,
freight
service
in
the
nineties
saw
the
first
increase
in
operating
revenue
since
1984,
although
this
was
coupled
with
sharp
decreases
in
employment.
Passenger
service
has
undergone
similar
changes
to
increase
efficiency
by
adding
new
locomotives
and
beginning
a
transition
to
high
speed
train
service.
Total
industry
output
increased
7.6
percent
per
year
from
1988
to
1996.

Although
transportation
volume
is
sensitive
to
the
generally
poor
macroeconomic
situation,
railways
have
succeeded
in
cutting
costs
to
maintain
earnings.

3.2.16
Ships
and
Boats
Ship
manufacturing
experienced
continual
declines
throughout
the
1990'
s.
Despite
efforts
by
the
Federal
Government
to
stimulate
investment
in
converting
the
industry
from
production
of
military
ships
to
merchant
ships,
the
U.
S.
Navy
remains
the
primary
customer
of
shipbuilders.
The
U.
S.
Navy
dramatically
reduced
its
orders
for
new
vessels
since
the
end
of
the
Cold
War,
and
has
decommissioned
many
ships
and
submarines.
The
Navy
decreased
its
fleet
by
208
ships
from
1985
to
1998.
Although
the
Navy
plans
to
add
66
new
ships
through
construction
and
conversion
from
2000
through
2004,
this
represents
a
decline
of
over
60
percent
in
the
procurement
of
new
ships
since
the
1980'
s.
The
ship
building
industry
was
3­
11
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
helped
by
the
Oil
Pollution
Act
of
1990,
which
required
all
oil
tankers
entering
U.
S.
ports
to
have
double
hulls.
General
economic
woes
and
instability
in
the
Middle
East
are
expected
to
hurt
the
ships
and
boats
industry.

This
sector
also
manufactures
recreational
boats,
with
sales
that
reflect
overall
trends
in
recreational
expenditures.
The
U.
S.

boat
building
business
is
the
world s
leading
supplier
of
recreational
craft.
Despite
this,
rapid
growth
in
the
market
for
smaller
personal
water
craft
(
e.
g.,
jet
skis)
has
led
to
an
increase
in
imports
of
boats.

3.2.17
Stationary
Industrial
Equipment
The
stationary
industrial
equipment
sector
includes
firms
that
manufacture
machinery
and
machinery
parts
used
for
oil,
paper,

and
food
production,
printing
and
packaging,
as
well
as
heaters
and
air
conditioners,
electric
generating
equipment,
and
motor
generators.
These
industries
also
produce
large
metal­
working
machines
used
in
making
parts
for
other
industries.

The
industries
supplying
oil
and
gas
production,
paper
production,
and
printing
machinery
were
affected
by
similar
global
factors,
and
consequently
followed
similar
trends.
Low
petroleum
prices
affected
oil
production
in
1998.
Natural
gas
production
was
influenced
by
the
low
oil
prices,
which
put
pressure
on
the
gas
industry
to
reduce
costs
in
order
to
compete.

These
factors
led
to
a
decline
of
38
percent
in
real
value
of
shipments
for
oil
production
equipment
manufacturers
in
1998
and
1999.
The
price
of
petroleum
increased
in
1999
and
2000
and
machinery
shipments
rebounded
by
9.2
percent.
However,

natural
gas
prices
fell
in
2001,
hurting
the
industry.

Paper
manufacturing
equipment
has
suffered
from
events
overseas.
Although
the
U.
S.
has
seen
a
decline
in
the
production
of
paper
throughout
the
latter
half
of
the
1990'
s,
the
U.
S.
remains
the
largest
producer
of
paper
manufacturing
machinery.
The
industry
therefore
relies
heavily
on
exports
to
sustain
growth.
With
struggling
economies
overseas,
the
industry
saw
a
decline
in
value
of
shipments
from
1996
to
2000.
Printing
machinery
manufacturers
realized
strong
growth
during
the
first
half
of
the
1990'
s
due
to
increased
demand
for
new
digital
presses,
but
a
decline
in
exports
resulted
in
slower
growth
for
the
later
half
of
the
decade.
Global
events
did
not
have
such
an
impact
on
manufacturers
of
packaging
machinery,
as
the
U.
S.
is
not
only
the
leading
producer
of
this
equipment
but
also
its
leading
end­
user.

A
variety
of
industries
manufacture
equipment
used
to
produce
energy
or
to
power
equipment.
Refrigeration,
air
conditioning,
and
heating
equipment
sales
tend
to
follow
growth
in
housing
starts
and
construction
of
new
office
buildings.
A
number
of
factors
contributed
to
strong
growth
in
this
industry
throughout
the
1990'
s
including
record
housing
starts,
record
heat
in
the
summer
of
1999,
replacement
of
chlorofluorocarbon
(
CFC)
air
conditioning
units,
and
a
large
percentage
of
new
homes
being
built
with
central
air
conditioning.
With
66
percent
of
the
existing
air
conditioners
containing
CFC
technology
still
in
operation,
replacement
of
these
machines
provides
an
opportunity
for
growth
in
this
industry
in
the
future.

Manufacturers
of
turbines,
transformers,
and
switchboards,
all
of
which
are
used
for
the
production
of
electricity,
saw
considerable
growth
in
the
late
1990s
as
the
domestic
economy
grew.
This
strength
has
been
limited
by
the
recent
recession.

A
number
of
advanced
technologies
have
been
developed
to
meet
the
demands
of
a
deregulated
industry.
These
new
technologies
are
capable
of
producing
electricity
from
smaller
facilities
at
competitive
costs.
Implementation
of
these
technologies
is
not
expected
to
take
place
for
a
few
years,
however,
until
the
effects
of
deregulation
become
clearer.

3.3
CHARACTERISTICS
OF
MP&
M
MANUFACTURING
SECTORS
The
data
in
these
analyses
come
primarily
from
the
Annual
Survey
of
Manufacturers
and
the
Small
Business
Administration,

although
some
data
from
the
1997
Census
were
used
for
important
economic
indicators
that
were
not
available
in
1996.
The
multi­
year
analyses
presented
in
this
section
cover
a
nine
year
period
from
1988
to
1996,
the
base
years
for
the
original
Phase
1
and
Phase
2
survey
data.
Although
ideally
data
would
have
been
presented
for
the
ten
year
period
from
1987
to
1996,
OMB
reclassified
a
number
of
4­
digit
SIC
industries
in
1987.
This
made
it
difficult
to
compare
SIC
codes
before
and
after
this
reclassification
and
resulted
in
incomplete
data
in
the
Annual
Survey
of
Manufacturers
for
many
SIC
codes
in
1987.
Because
the
data
were
incomplete
in
1987,
1988
was
chosen
as
the
first
year
of
the
time
series.
With
the
exception
of
data
for
non­

manufacturing
sectors,
single­
year
data
focus
on
the
year
1996,
the
base
analysis
year
for
the
overall
MP&
M
regulatory
analysis.
Because
the
Annual
Survey
of
Manufacturers
does
not
include
data
for
non­
manufacturing
sectors,
single­
year
data
for
these
sectors
are
for
1997,
the
most
recent
year
of
the
Economic
Census.

3­
12
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
3.3.1
Domestic
Production
a.
Output
The
two
most
common
measures
of
manufacturing
output
are
value
of
shipments
(
VOS)
and
value
added
(
VA).

Historical
trends
in
these
measures
provide
insight
into
the
overall
economic
health
of
an
industry.
Value
of
shipments
is
the
sum
of
the
receipts
a
manufacturer
earns
from
the
sale
of
its
outputs.
It
is
an
indicator
of
the
overall
size
of
a
market
or
the
size
of
a
firm
in
relation
to
its
market
or
competitors.
Value
added
is
the
difference
between
the
value
of
shipments
and
the
value
of
purchased
non­
labor
inputs
used
to
make
the
products
sold.
It
is
used
to
measure
the
value
of
production
activity
in
a
particular
industry.
The
ratio
of
VA
to
VOS
is
an
indicator
of
the
importance
of
the
industry s
contribution
to
the
total
value
of
the
product.
A
ratio
close
to
zero
indicates
that
the
value
of
the
input
materials
is
much
more
important
than
the
value
of
industry
processing.
A
ratio
close
to
one
indicates
that
industry
processing
is
the
primary
source
of
value
in
the
product.

Table
3.4
presents
Department
of
Commerce
data
on
VOS
and
VA
for
the
MP&
M
manufacturing
sectors
during
the
period
from
1988
to
1996.
VOS
for
the
entire
MP&
M
manufacturing
sector
grew
from
1.27
trillion
dollars
in
1988
to
1.51
trillion
dollars
in
1996,
for
an
average
annual
growth
rate
of
2.1
percent.
VA
for
the
entire
industry
grew
at
a
slower
annual
rate
of
1.5
percent,
from
638
billion
dollars
to
720
billion
dollars.
In
comparison,
US
GDP
grew
at
2.6
percent
per
year
over
the
same
period.

Value
added
as
a
percent
of
value
of
shipments
for
the
MP&
M
manufacturing
industries
as
a
whole
was
48
percent
in
1996.

This
indicates
that
48
percent
of
the
value
of
their
output
was
the
result
of
MP&
M
processing
and
52
percent
was
the
cost
of
purchased
inputs.
In
general,
MP&
M
processing
is
important
to
the
value
of
MP&
M
output
products.

Growth
in
the
individual
sectors
was
generally
consistent
with
the
overall
trend
in
MP&
M
manufacturing
of
slow
positive
growth.
Fourteen
of
the
nineteen
sectors
had
positive
growth
in
VOS,
and
thirteen
had
positive
growth
in
VA.
Railroad
equipment
manufacturers
enjoyed
the
largest
average
annual
growth
of
7.6
percent
in
VOS.
Electronic
equipment
experienced
the
next
largest
average
growth,
with
annual
growth
in
VOS
averaging
5.1
percent.
Only
the
aerospace
and
ordnance
industries
experienced
a
large
decline
in
VOS
and
VA
over
this
period.
Aerospace
VOS
declined
7.6
percent
per
year
and
ordnance
VOS
declined
7.3
percent
per
year.
Both
decreases
were
attributable
to
cutbacks
in
government
defense
spending
at
the
end
of
the
Cold
War.

VA
as
a
percent
of
VO
S
for
the
individual
sectors
varied
substantially
from
the
manufacturing
average
of
48
percent.
The
ordnance
sector
had
the
highest
ratio
of
VA
to
VOS,
at
67.6
percent,
and
the
instrument
and
printed
wiring
board
sectors
also
had
high
ratios.
In
these
sectors,
industry
processing
is
the
most
important
part
of
the
value
of
the
finished
product.
Sectors
with
low
ratios
of
VA
to
VOS
included
the
iron
and
steel
sector,
railroad
sector,
bus
and
truck
sector
and
especially
the
motor
vehicle
sector,
for
which
VA
as
a
percent
of
VOS
was
equal
to
only
33.7
percent.
The
value
of
input
materials
was
the
most
important
contributor
to
the
value
of
products
in
these
sectors.

b.
Number
of
facilities
and
firms
The
number
of
facilities
and
firms
in
an
industry
is
an
indicator
of
industry
size
and
structure.
Changes
in
the
number
of
firms
and
facilities
can
indicate
whether
or
not
the
industry
is
experiencing
growth,
and
changes
in
the
ratio
of
facilities
to
firms
can
indicate
whether
an
industry
is
becoming
more
integrated.

This
profile
uses
SUSB
data
to
assess
the
number
of
firms
and
facilities
in
the
MP&
M
manufacturing
sector.
The
SUSB
did
not
begin
its
survey
until
1989,
and
it
did
not
include
firms
in
its
survey
until
a
year
later.
Thus,
facilities
data
are
presented
in
1989
and
firm
data
are
presented
in
1990.

Table
3.5
shows
the
number
of
MP&
M
manufacturing
facilities
in
1989
and
1996
and
the
number
of
firms
in
1990
and
1996.

Overall,
the
number
of
firms
grew
2.1
percent
annually
and
the
number
of
facilities
grew
1.4
percent
annually
over
this
period.
By
1996,
there
were
144,603
manufacturing
firms
and
153,354
facilities.
The
average
number
of
facilities
per
firm
was
relatively
constant,
with
only
a
minor
decrease
from
1.07
in
1990
to
1.06
in
1996.
Most
MP&
M
manufacturers
are
single­
facility
firms.

Trends
in
the
individual
manufacturing
sectors
were
generally
consistent
with
overall
trends
in
manufacturing.
The
aerospace
industry
was
the
only
MP&
M
manufacturing
sector
to
experience
significant
downsizing
during
this
period,
with
firms
and
facilities
decreasing
annually
by
4.1
and
4.2
percent,
respectively.
The
iron
and
steel
industry
experienced
a
more
modest
decrease
in
number
of
firms
and
facilities.
The
number
of
firms
and
facilities
in
the
printed
wiring
board
sector
grew
the
fastest,
by
a
little
over
five
percent
annually.

3­
13
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.4:
Real
Value
of
Shipments
and
Value
Added:
MP&
M
Manufacturing
Sectors
(
millions,
2001$)

Sector
Value
of
Industry
Shipments
Value
Added
by
Manufacture
1988
1996
Average
Annual
Growth
Rate
1988
1996
Average
Annual
Growth
Rate
Value
Added
as
a
%
of
Value
of
Shipments
in
1996
Aerospace
35,991
19,111
­
7.6%
24,167
10,645
­
9.7%
55.7%

Aircraft
101,554
88,897
­
1.7%
51,692
48,204
­
0.9%
54.2%

Bus
&
Truck
9,843
14,362
4.8%
3,622
5,513
5.4%
38.4%

Electronic
Equipment
85,498
127,347
5.1%
48,862
67,071
4.0%
52.7%

Hardware
152,597
180,756
2.1%
82,644
98,674
2.2%
54.6%

Household
Equipment
87,764
98,763
1.5%
42,595
45,551
0.8%
46.1%

Instruments
118,322
136,377
1.8%
78,160
89,052
1.6%
65.3%

Iron
and
Steel
19,396
19,963
0.4%
7,228
7,103
­
0.2%
35.6%

Job
Shops
11,733
14,927
3.1%
6,967
8,307
2.2%
55.7%

Mobile
Industrial
Equipment
45,150
56,159
2.8%
21,356
24,302
1.6%
43.3%

Motor
Vehicle
315,641
387,547
2.6%
107,025
130,627
2.5%
33.7%

Office
Machine
86,352
110,084
3.1%
43,008
43,849
0.2%
39.8%

Ordnance
10,241
5,567
­
7.3%
6,631
3,761
­
6.8%
67.6%

Other
Metal
Products
58,809
63,995
1.1%
36,039
37,431
0.5%
58.5%

Precious
Metals
and
Jewelry
10,790
9,242
­
1.9%
5,018
4,403
­
1.6%
47.6%

Printed
Wiring
Boards
10,162
11,408
1.5%
5,927
6,997
2.1%
61.3%

Railroad
4,195
7,533
7.6%
1,893
2,761
4.8%
36.7%

Ships
and
Boats
18,802
16,666
­
1.5%
10,086
8,424
­
2.2%
50.5%

Stationary
Industrial
Equipment
176,961
236,213
3.7%
97,388
125,443
3.2%
53.1%

Total
1,359,801
1,604,916
2.1%
680,309
768,118
1.5%
47.9%

US
GDP
7,189,924
8,821,069
2.6%
n/
a
n/
a
n/
a
n/
a
Source:
Department
of
Commerce,
Bureau
of
the
Census,
Annual
Survey
of
Manufacturers;
Economagic
Horizontal
integration
varied
substantially
across
sectors.
The
railroad
sector,
with
1.41
facilities
per
firm
in
1996,
was
the
most
horizontally
integrated,
but
the
iron
and
steel
and
aerospace
sectors
also
had
high
numbers
of
facilities
per
firm.
The
precious
metals
and
jewelry
sector
had
nearly
a
one
to
one
ratio
between
facilities
and
firms,
indicating
a
very
low
level
of
horizontal
integration.

3­
14
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.5:
Number
of
Firms
and
Facilities:
MP&
M
Manufacturing
Sectors
Sector
Number
of
Firms
Number
of
Facilities
Facilities
per
Firm
1990
1996
Average
Annual
Growth
Rate
1989
1996
Average
Annual
Growth
Rate
1990a
1996
Aerospace
109
85
­
4.1%
143
106
­
4.2%
1.33
1.25
Aircraft
1,428
1,486
0.7%
1,633
1,691
0.5%
1.16
1.14
Bus
&
Truck
889
953
1.2%
1,016
1,040
0.3%
1.11
1.09
Electronic
Equipment
5,649
6,180
1.5%
6,396
6,693
0.7%
1.08
1.08
Hardware
34,984
37,832
1.3%
37,861
40,044
0.8%
1.06
1.06
Household
Equipment
6,787
7,563
1.8%
7,914
8,303
0.7%
1.11
1.10
Instruments
7,963
9,730
3.4%
8,959
10,552
2.4%
1.10
1.08
Iron
and
Steel
597
583
­
0.4%
784
770
­
0.3%
1.30
1.32
Job
Shop
4,798
5,280
1.6%
5,104
5,549
1.2%
1.04
1.05
Mobile
Industrial
Equipment
3,318
3,341
0.1%
3,606
3,591
­
0.1%
1.07
1.07
Motor
Vehicle
4,991
6,044
3.2%
5,977
7,024
2.3%
1.17
1.16
Office
Machine
1,828
2,002
1.5%
2,050
2,087
0.3%
1.07
1.04
Ordnance
340
421
3.6%
385
442
2.0%
1.09
1.05
Other
Metal
Products
11,517
13,819
3.1%
12,069
14,198
2.3%
1.03
1.03
Precious
Metals
and
Jewelry
3,719
3,867
0.7%
3,870
3,892
0.1%
1.01
1.01
Printed
Wiring
Boards
1,034
1,452
5.8%
1,046
1,530
5.6%
1.06
1.05
Railroad
147
152
0.6%
180
215
2.6%
1.27
1.41
Ships
and
Boats
2,511
3,195
4.1%
2,708
3,310
2.9%
1.05
1.04
Stationary
Industrial
Equipment
35,231
40,618
2.4%
37,261
42,317
1.8%
1.04
1.04
Total
127,840
144,603
2.1%
138,962
153,354
1.4%
1.07
1.06
a
Calculated
using
data
from
1990
for
facilities
and
firms.

Source:
Small
Business
Administration,
Statistics
of
U.
S.
Businesses.

c.
Employment
Employment
is
a
measure
of
the
level
and
trend
of
activity
in
an
industry.
While
employment
growth
generally
signals
economic
strength
in
an
industry,
strong
productivity
growth
and
scale
economies
can
yield
growth
in
revenues
that
exceeds
growth
in
employment.
Changing
patterns
of
labor
utilization
relative
to
output
are
particularly
important
in
understanding
how
regulatory
requirements
may
translate
into
job
losses
both
in
aggregate
and
at
the
community
level.
This
profile
presents
DOC
data
on
employment
for
1988
and
1996.

Table
3.6
shows
that
employment
in
the
MP&
M
manufacturing
sectors
as
a
whole
decreased
modestly
between
1988
and
1997.
Over
those
years,
total
employment
dropped
from
7.98
million
to
7.55
million,
an
average
decline
of
0.7
percent
annually.
To
put
this
in
perspective,
VOS
for
the
entire
MP&
M
manufacturing
sector
grew
about
2.1%
annually
over
the
same
period
of
time,
signaling
that
growth
in
output
has
been
driven
by
increases
in
capital
expenditures
and
labor
productivity,
not
by
increases
in
employment.

Although
total
MP&
M
industry
employment
declined
over
the
analysis
period,
not
all
sectors
experienced
employment
declines.
Employment
grew
or
stayed
constant
in
ten
of
the
nineteen
sectors.
However,
while
a
number
of
sectors
evidenced
3­
15
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
large
percentage
and
absolute
losses
in
employment,
no
sectors
showed
large
percentage
gains
and
only
two
showed
large
absolute
gains
in
employment
.
Employment
shrank
by
11.6
percent
annually
in
the
aerospace
sector,
9.1
percent
in
the
ordnance
sector,
and
5.6
percent
in
the
aircraft
sector,
due
to
cutbacks
in
defense
spending
following
the
Cold
W
ar.
The
greatest
absolute
decline
occurred
in
the
aircraft
sector,
which
lost
almost
220,000
jobs.
The
largest
percentage
increase
in
employment
was
in
the
railroad
sector,
which
gained
just
2.1
percent
annually.
The
largest
absolute
increase
in
employment
over
the
nine
years
was
in
the
stationary
industrial
equipment
sector,
which
gained
127,100
jobs.

Table
3.6:
Employment:
MP&
M
Manufacturing
Sectors
Sector
Number
of
Employees
1988
1996
Average
Annual
Growth
Rate
Aerospace
223,700
81,000
­
11.9%

Aircraft
596,600
376,800
­
5.6%

Bus
&
Truck
63,900
67,700
0.7%

Electronic
Equipment
602,500
604,800
0.0%

Hardware
1,246,200
1,307,600
0.6%

Household
Equipment
584,900
570,600
­
0.3%

Instruments
886,500
753,800
­
2.0%

Iron
and
Steel
65,500
67,900
0.5%

Job
Shops
123,300
129,200
0.6%

Mobile
Industrial
Equipment
232,400
232,600
0.0%

Motor
Vehicle
928,000
974,000
0.6%

Office
Machine
329,800
259,100
­
3.0%

Ordnance
86,500
40,200
­
9.1%

Other
Metal
Products
368,100
361,400
­
0.2%

Precious
Metals
and
Jewelry
87,100
65,800
­
3.4%

Printed
Wiring
Boards
80,900
88,300
1.1%

Railroad
25,900
30,600
2.1%

Ships
and
Boats
182,900
141,300
­
3.2%

Stationary
Industrial
Equipment
1,269,800
1,396,900
1.2%

Total
7,984,500
7,549,600
­
0.7%

Source:
Department
of
Commerce,
Bureau
of
the
Census,
Annual
Survey
of
Manufacturers.

3­
16
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
d.
Capital
expenditures
Capital
expenditures
are
an
indicator
of
production
characteristics
and
market
structure.
Capital
expenditures
are
the
amount
of
money
spent
annually
on
capital,
which
includes
equipment,
machinery,
vehicles,
software,
buildings,
intellectual
rights,
or
any
other
permanent
addition
to
a
firm.
Capital
does
not
refer
to
input
materials
that
are
consumed
in
the
course
of
production.
New
capital
expenditures
are
needed
to
modernize,
expand,
and
replace
a
firm s
existing
production
capacity
to
meet
growing
demand
or
to
stay
current
with
new
regulations
or
changing
technology.

An
industry
with
high
capital
stock
compared
to
its
employee
payroll
is
considered
capital
intensive:
its
production
relies
more
heavily
on
machinery,
software,
and
other
forms
of
capital
than
on
labor.
An
industry
with
high
capital
requirements
can
have
significant
barriers
to
entry
for
new
firms,
making
the
market
less
competitive.

Table
3.7
presents
DOC
data
on
new
capital
expenditures
by
MP&
M
manufacturing
sector.

Table
3.7:
New
Capital
Expenditures:
MP&
M
Manufacturing
Sectors
Sector
Capital
Expenditures
(
millions,
2001$)
Capital
Expenditures
per
Facility
(
2001$)

1988
1996
Average
Annual
Growth
Rate
1988/
89
1996
Change
from
1988/
89
to
1996
Aerospace
1,310
522
­
10.9%
9,160,839
4,924,528
­
4,236,311
Aircraft
3,015
2,156
­
4.1%
1,846,295
1,274,985
­
571,310
Bus
&
Truck
161
213
3.6%
158,465
204,808
46,343
Electronic
Equipment
3,118
4,482
4.6%
487,492
669,655
182,163
Hardware
3,517
5,624
6.0%
92,892
140,446
47,553
Household
Equipment
2,150
2,616
2.5%
271,670
315,067
43,396
Instruments
4,002
4,832
2.4%
446,702
457,923
11,221
Iron
and
Steel
420
623
5.0%
535,714
809,091
273,377
Job
Shops
353
772
10.3%
69,161
139,124
69,963
Mobile
Industrial
Equipment
1,121
1,121
0.0%
310,871
312,169
1,299
Motor
Vehicle
5,697
12,840
10.7%
953,154
1,828,018
874,864
Office
Machine
3,044
3,109
0.3%
1,484,878
1,489,698
4,820
Ordnance
196
91
­
9.2%
509,091
205,882
­
303,209
Other
Metal
Products
1,768
1,999
1.5%
146,491
140,794
­
5,697
Precious
Metals
and
Jewelry
93
156
6.7%
24,031
40,082
16,051
Printed
Wiring
Boards
430
624
4.8%
411,090
407,843
­
3,247
Railroad
78
103
3.6%
433,333
479,070
45,736
Ships
and
Boats
483
374
­
3.1%
178,360
112,991
­
65,369
Stationary
Industrial
Equipment
4,333
7,222
6.6%
116,288
170,664
54,376
Total
35,288
49,480
4.3%
253,940
322,652
68,712
Source:
Department
of
Commerce,
Bureau
of
the
Census,
Annual
Survey
of
Manufacturers.

In
general,
the
MP
&
M
manufacturing
sector
is
relatively
capital
intensive.
In
1988,
manufacturing
capital
expenditures
were
38.3
billion
dollars.
They
increased
by
4.3
percent
annually
to
reach
a
total
yearly
investment
in
capital
of
49.5
billion
dollars
in
1996.
Average
yearly
capital
expenditures
per
firm
increased
from
$
254,000
in
1988
to
$
353,000
in
1996.

For
the
most
part,
changes
in
capital
investment
from
1988
to
1996
in
the
individual
manufacturing
sectors
followed
the
trend
for
the
MP&
M
manufacturing
sectors
as
a
whole.
Capital
expenditures
in
the
job
shop
and
motor
vehicle
sectors
grew
at
over
3­
17
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
10%
annually.
The
only
sectors
for
which
spending
on
new
capital
declined
were
aerospace,
aircraft,
ordnance,
and
ships
and
boats.

There
was
large
variation
in
capital
expenditures
across
the
MP&
M
sectors.
A
few
industries
stood
out
as
being
extremely
capital
intensive.
Aerospace
firms
spent
an
average
of
4.8
million
dollars
on
capital
per
firm
in
1996,
and
the
aircraft,
motor
vehicle,
and
office
machine
sectors
each
spent
more
than
one
million
dollars
per
firm
in
1996.
The
precious
metal
and
jewelry
sector
had
the
lowest
levels
of
capital
investment,
with
only
$
40,000
spent
per
firm
in
1996.

3.3.2
Industry/
Market
Structure
A
number
of
factors
play
an
important
role
in
determining
market
structure
for
an
industry,
including
the
barriers
that
firms
face
in
entering
and
exiting
the
market,
the
degree
to
which
firms
in
the
market
are
vertically
and
horizontally
integrated,
and
the
extent
to
which
markets
have
been
globalized.
The
following
sections
discuss
these
factors.

a.
Facility
size
Facility
size
is
an
indicator
of
economies
of
scale.
The
presence
of
many
large
facilities
can
indicate
that
there
are
advantages
to
building
on
a
larger
scale,
such
as
dividing
labor
more
efficiently,
utilizing
equipment
more
effectively,
or
getting
bulk
discounts.

Table
3.8
shows
1997
Census
data
on
the
distribution
of
manufacturing
facilities
and
VOS
by
employment
size
category
and
MP&
M
sector.
The
MP&
M
industry
is
characterized
by
a
large
number
of
small
facilities.
The
Census
data
indicate
that,
in
1997,
98.6
percent
of
all
facilities
in
the
MP&
M
industry
employed
less
than
500
employees.
Those
facilities,
however,

accounted
for
only
59
percent
of
the
total
value
of
shipments
from
the
manufacturing
industries.
The
1.4
percent
of
facilities
with
500
or
more
employees
generated
41
percent
of
the
total
VOS
from
the
manufacturing
industries.
These
large
facilities
are
likely
to
enjoy
substantial
economies
of
scale.

3­
18
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.8:
Number
of
Facilities
and
Value
of
Shipments
by
Employment
Size
Category:
MP&
M
Manufacturing
Sectors
in
1997
Sector
Number
of
Facilities
Value
of
Shipments
(
millions,
2001$)

1
to
19
20
to
99
100
to
499
500
to
2,499
2,500
or
more
1
to
19
20
to
99
100
to
499
500
to
2,499
2,500
or
more
Aerospace
33
23
20
13
10
42
991
15,993
185
2,916
Aircraft
898
441
270
72
32
716
10,087
74,417
2,744
17,913
Bus
&
Truck
658
335
154
18
1
675
8,013
573
2,366
3,357
Electronic
Equipment
3,450
2,086
1,019
205
21
2,945
37,794
37,178
14,258
54,660
Hardware
26,065
11,854
2,686
189
0
20,669
79,456
3
69,005
25,619
Household
Equipment
4,958
2,274
1,110
191
11
3,745
40,843
7,314
13,747
37,067
Instruments
6,741
2,667
1,103
253
20
5,592
44,850
21,168
17,124
52,680
Iron
and
Steel
278
292
205
13
0
528
11,072
0
4,530
4,254
Job
Shop
3,701
1,654
199
6
0
2,103
5,610
0
7,273
343
Mobile
Industrial
Equipment
2,116
990
383
90
9
1,937
17,351
8,913
7,219
26,684
Motor
Vehicle
4,004
1,874
1,206
324
79
3,495
54,221
231,896
13,404
119,088
Office
Machine
1,408
485
218
73
21
1,553
16,551
59,499
4,842
35,440
Ordnance
298
77
40
17
2
168
1,472
935
522
2,686
Other
Metal
Products
11,265
2,375
611
68
3
5,382
21,579
7,473
12,511
16,812
Precious
Metals
and
Jewelry
3,250
480
100
12
0
1,777
3,436
0
2,864
1,666
Printed
Wiring
Boards
801
412
156
20
0
526
4,322
0
2,022
3,334
Railroad
81
71
54
13
1
99
2,659
1,222
678
3,714
Ships
and
Boats
3,755
469
179
25
6
1,314
5,714
6,414
2,036
2,404
Stationary
Industrial
Equipment
30,513
8,555
2,344
343
12
18,793
86,348
10,837
50,039
69,921
Total
104,274
37,413
12,056
1,947
227
72,061
452,366
483,834
227,368
480,558
Source:
Department
of
Commerce,
Bureau
of
the
Census,
Census
of
Manufacturers,
1997.

Although
the
majority
of
MP&
M
industry
facilities
are
small,
the
distribution
of
facilities
by
employment
size
category
varies
substantially
among
the
19
MP&
M
sectors.
The
aerospace,
aircraft,
motor
vehicle,
and
railroad
sectors
all
had
proportionally
high
numbers
of
large
facilities.
The
aerospace
sector,
in
particular,
had
large
economies
of
scale,
with
23
percent
of
its
facilities
employing
500
or
more
employees.
The
hardware,
job
shop,
other
metal
products,
precious
metal,
and
ships
and
boats
sectors
had
proportionally
large
numbers
of
small
facilities.
At
least
93
percent
of
facilities
in
each
of
these
sectors
had
less
than
100
employees.

b.
Firm
size
This
profile
uses
firm
employment
size
as
an
indicator
of
market
power
and
barriers
to
entry.
If
the
largest
firms
in
an
industry
own
disproportionately
many
facilities
or
control
a
large
portion
of
industry
output,
then
they
may
have
significant
market
power.
These
firms
can
use
their
large
production
capacities
to
control
and
exploit
markets.
The
presence
of
many
large
firms
in
an
industry
can
also
indicate
that
there
are
barriers
to
entry
into
that
industry,
such
as
capital
requirements
or
3­
19
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
economies
of
scale,
that
give
existing
firms
in
the
industry
a
competitive
advantage.
EPA
used
1996
SUSB
data
to
assess
the
competitiveness
of
the
MP&
M
manufacturing
industries.

Table
3.9
presents
the
distribution
of
manufacturing
firms,
facilities,
and
VOS
by
firm
employment
size
and
MP&
M
sector.

Overall,
most
MP&
M
manufacturing
firms
were
small,
but
the
firms
that
were
big
owned
many
facilities
and
had
disproportionately
high
receipts.
In
1996,
138,492
firms,
equal
to
96
percent
of
manufacturers,
had
fewer
than
500
employees.
These
small
businesses
owned
92
percent
of
all
facilities
but
had
total
sales
of
only
418.3
billion
dollars,
equal
to
28
percent
of
total
estimated
receipts.
In
1996,
6,111
firms
had
500
or
more
employees.
These
firms
owned
eight
percent
of
all
facilities
but
had
estimated
receipts
of
1.08
trillion
dollars,
equal
to
72
percent
of
the
total
for
manufacturers.
It
is
likely
that
there
are
significant
economies
of
scale
in
the
MP&
M
manufacturing
industries.

Although
MP&
M
manufacturing
firms
tend
to
be
small,
firm
size
varies
significantly
among
individual
sectors.
The
aerospace,
iron
and
job
shops,
and
railroad
sectors
had
proportionally
high
numbers
of
large
facilities.
In
the
aerospace
sector,
50
percent
of
facilities
were
owned
by
firms
with
500
or
more
employees,
and
38
percent
of
firms
had
500
or
more
employees.
In
contrast,
over
98
percent
of
firms
in
the
job
shop,
other
metal
products,
precious
metals,
and
ships
and
boats
sectors
had
less
than
500
employees.

3­
20
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.9:
Number
of
Firms,
Facilities,
and
Estimated
Receipts
by
Firm
Employment
Size
Category,
1996:
MP&
M
Manufacturing
Sectors
Sector
Firms
Facilities
Estimated
Receipts
(
millions,
2001$)

1
to
99
100
to
499
500
or
more
1
to
99
100
to
499
500
or
more
1
to
99
100
to
499
500
or
more
Aerospace
51
2
32
51
2
53
n/
a
n/
a
19,029
Aircraft
1,209
135
142
1,212
158
321
2,453
2,840
93,860
Bus
&
Truck
805
92
56
810
107
123
2,269
2,638
6,702
Electronic
Equipment
4,936
681
563
4,977
786
930
12,156
17,353
81,615
Hardware
34,162
2,345
1,325
34,398
2,968
2,678
66,557
42,561
61,295
Household
Equipment
6,408
665
490
6,455
791
1,057
12,799
17,412
66,409
Instruments
8,273
727
730
8,320
842
1,390
17,248
16,243
96,894
Iron
and
Steel
362
108
113
368
153
249
2,015
4,426
12,737
Job
Shops
4,945
240
95
5,001
338
210
7,157
3,487
3,097
Mobile
Industrial
Equipment
2,875
263
203
2,898
319
374
6,668
6,321
32,129
Motor
Vehicle
4,950
614
480
4,987
724
1,313
11,314
21,376
366,635
Office
Machine
1,662
167
173
1,668
180
239
5,373
7,535
64,424
Ordnance
358
25
38
358
28
56
329
453
4,213
Other
Metal
Products
13,097
492
230
13,152
602
444
13,568
10,738
30,677
Precious
Metals
and
Jewelry
3,747
86
34
3,753
89
50
3,559
2,019
2,148
Printed
Wiring
Boards
1,250
137
65
1,258
150
122
2,231
2,402
5,769
Railroad
99
24
29
101
30
84
326
496
6,271
Ships
and
Boats
3,003
137
55
3,012
165
133
2,699
2,954
11,501
Stationary
Industrial
Equipment
37,669
1,691
1,258
37,835
2,002
2,480
52,700
35,623
119,210
Total
129,861
8,631
6,111
130,614
10,434
12,306
221,420
196,877
1,084,612
Source:
Small
Business
Administration,
Statistics
of
U.
S.
Businesses,
1996.

c.
Foreign
trade
This
profile
uses
two
measures
of
foreign
competitiveness:
export
dependence
and
import
penetration.
Export
dependence
is
the
share
of
value
of
shipments
that
is
exported.
Import
penetration
is
the
share
of
domestic
consumption
met
by
imports.
For
both
measures,
a
high
value
indicates
a
relatively
high
openness
to
foreign
markets
and
global
competition.

This
openness
has
benefits,
including
providing
domestic
consumers
with
a
wider
selection
of
products
and
services
at
lower
prices,
and
allowing
domestic
producers
to
make
profits
in
foreign
markets.
It
can
have
costs,
too,
if
imports
to
domestic
consumers
are
unreliable
or
if
foreign
competition
drives
down
prices
for
domestic
producers.
This
profile
uses
1996
data
from
the
Department
of
Commerce
to
illustrate
trends
in
foreign
trade.

Table
3.10
shows
that
overall,
the
U.
S.
is
an
importer
of
MP&
M
manufactured
goods,
with
net
imports
of
75.7
billion
dollars
in
1996.
In
general,
MP&
M
industry
sectors
face
global
competition,
as
illustrated
by
the
number
of
sectors
that
had
both
a
3­
21
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
high
export
dependence
and
import
penetration.
For
example,
in
the
precious
metals
sector,
roughly
77
percent
of
U.
S.

consumption
was
met
by
imports,
while
almost
23
percent
of
U.
S.
production
was
sold
as
exports.

Although
overall
the
US
has
a
large
trade
deficit
in
MP&
M
manufactured
goods
and
services,
the
US
was
a
net
exporter
in
six
of
the
eighteen
sectors
for
which
balance
of
trade
data
was
available.
Eighty
one
percent
of
production
in
the
ordnance
sector
and
67
percent
of
production
in
the
aircraft
sector
was
consumed
overseas.
The
aircraft
sector
had
the
highest
absolute
net
exports,
valued
at
27.26
billion
dollars.
A
few
sectors,
especially
aerospace,
ships
and
boats,
iron
and
steel,
and
bus
and
truck,

were
relatively
closed
to
global
competition,
with
low
levels
of
imports
and
exports.
Foreign
imports
had
the
highest
relative
importance
in
the
precious
metals,
office
machine,
and
household
equipment
sectors.
The
motor
vehicle
sector
had
the
highest
absolute
net
imports,
valued
at
63.12
billion
dollars.

3­
22
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.10:
Trade
Statistics,
1996:
MP&
M
Manufacturing
Sectors
Sector
Value
of
Imports
(
millions,

2001$)
Value
of
Exports
(
millions,

2001$)
Value
of
Shipments
(
millions,
2001$)
Implied
Domestic
Consumptiona
Import
Penetrationb
Export
Dependencec
(
a)
(
b)
(
c)
(
d)
(
e)
(
f)
(
g)

Aerospace
143
143
19,111
19,112
0.7%
0.7%

Aircraft
14,015
41,278
88,896
61,633
22.7%
67.0%

Bus
&
Truck
410
436
14,362
14,335
2.9%
3.0%

Electronic
Equipment
31,478
30,615
127,347
128,211
24.6%
23.9%

Hardware
26,753
20,560
180,756
186,949
14.3%
11.0%

Household
Equipment
40,697
16,809
98,762
122,650
33.2%
13.7%

Instruments
18,990
31,462
136,376
123,904
15.3%
25.4%

Iron
and
Steel
937
263
19,963
20,637
4.5%
1.3%

Job
Shopd
n/
a
n/
a
14,927
n/
a
n/
a
n/
a
Mobile
Industrial
Equipment
10,775
16,634
56,159
50,300
21.4%
33.1%

Motor
Vehicle
124,203
61,015
387,546
450,735
27.6%
13.5%

Office
Machine
67,082
47,783
110,084
129,384
51.8%
36.9%

Ordnance
647
2,792
5,566
3,421
18.9%
81.6%

Other
Metal
Products
25,282
11,243
63,996
78,035
32.4%
14.4%

Precious
Metals
and
Jewelry
15,839
4,607
9,243
20,474
77.4%
22.5%

Printed
Circuit
Boards
2,667
1,947
11,408
12,127
22.0%
16.1%

Railroad
1,208
773
7,533
7,969
15.2%
9.7%

Ships
and
Boats
1,081
1,080
16,666
16,666
6.5%
6.5%

Stationary
Industrial
Equipment
38,809
55,835
236,213
219,187
17.7%
25.5%

Totale
421,015
345,274
1,604,915
1,680,656
25.1%
20.5%

a
Implied
domestic
consumption
based
on
value
of
shipments,
imports,
and
exports
[
column
d
+
column
b
­
column
c].

b
Import
penetration
based
on
implied
domestic
consumption
and
imports
[
column
b
/
column
e].
Export
dependence
based
on
value
of
shipments
and
exports
[
column
c
/
column
d].

d
As
explained
in
the
text,
job
shops
include
only
two
SICs
specific
to
job
shops,
and
not
facilities
in
other
SICs
that
may
be
operating
as
job
shops.

e
Components
may
not
sum
to
totals
due
to
rounding.

Source:
Department
of
Commerce,
Bureau
of
the
Census.

d.
Establishment
births
and
deaths
The
number
of
firms
starting
up
and
closing
each
year
reflects
the
competitiveness
of
an
industry.
Industries
with
high
numbers
of
these
 
births 
and
 
deaths 
relative
to
the
total
number
of
firms
in
the
industry
are
likely
to
have
low
barriers
to
entry
or
exit.
These
industries
are
likely
to
be
competitive.
Industries
with
low
number
of
births
and
deaths
are
more
likely
to
have
significant
barriers
to
entry
and
exit,
such
as
capital
requirements
or
economies
of
scale,
that
make
the
industries
less
competitive.
As
discussed
in
previous
sections,
firms
in
less
competitive
industries
can
manipulate
prices
to
generate
profits,

while
firms
in
more
competitive
industries
have
little
control
over
prices.
This
profile
presents
SUSB
data
from
1989
to
3­
23
c
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
1997
on
establishment
births
and
deaths.
These
data
are
only
available
by
three
digit
SIC
code,
making
it
impossible
to
calculate
sector
specific
birth
and
deaths
rates.
However,
data
for
the
MP&
M
industry
as
a
whole
are
presented.

The
M
P&
M
manufacturing
sector
has
an
annual
birth
rate
of
8.1
percent
and
an
annual
death
rate
of
7.8
percent,
indicating
that
in
general
the
MP&
M
manufacturing
sector
is
relatively
competitive.
Three
digit
SIC
industry
birth
and
death
rates
are
much
more
variable,
ranging
from
4
percent
to
up
to
15
percent.
For
a
more
complete
discussion,
along
with
the
three
digit
SIC
birth
and
death
rates,
see
Appendix
A.

3.3.3
Financial
Condition
and
Performance
Operating
margin
is
a
measure
of
industry
financial
performance.
Operating
margin
is
defined
as
VOS
less
annual
payroll
and
cost
of
materials,
as
a
percent
of
VOS,
and
thus
measures
pre­
tax
operating
profitability
before
capital­
and
financing­

related
charges.
Firms
with
higher
operating
margins
have
more
cushion
against
operating
losses
as
a
consequence
of
fluctuating
input
prices,
and
thus
are
likely
to
be
more
stable.

Table
3.11
presents
DOC
data
on
operating
margins
for
each
MP&
M
manufacturing
industry
for
the
years
1988
and
1996,
as
well
as
the
change
in
operating
margin
between
the
two
years.
In
1996,
the
average
operating
margin
for
the
MP&
M
sectors
was
29.6
percent.
This
was
a
slight
increase
from
1988,
when
the
average
operating
margin
for
the
MP&
M
manufacturers
was
28.0
percent.
Ten
MP&
M
manufacturing
sectors
experienced
increases
in
their
operating
margins
during
this
time
period,
while
nine
industries
experienced
decreases.

Instruments,
other
metal
products,
and
ordnance
were
the
most
profitable
sectors,
according
to
this
measure,
with
operating
margins
around
40
percent.
The
iron
and
steel,
motor
vehicle,
railroad,
and
ships
and
boats
sectors
had
the
lowest
operating
margins,
all
near
22
percent.
The
greatest
increases
in
operating
margin
occurred
in
the
aircraft,
ordnance,
and
bus
&
truck
industries,
which
all
gained
between
five
and
six
percent.
The
greatest
decrease
occurred
in
the
aerospace
industry,
which
lost
3.5
percent.

3­
24
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.11:
Operating
Margina:
MP&
M
Manufacturing
Sectors
in
1988
and
1996
Sector
1988
1996
Change
in
Operating
Margin
Aerospace
32.4%
28.9%
­
3.5%

Aircraft
20.6%
26.7%
6.1%

Bus
&
Truck
18.5%
24.4%
5.9%

Electronic
Equipment
32.0%
33.8%
1.8%

Hardware
27.5%
29.7%
2.2%

Household
Equipment
29.7%
29.5%
­
0.2%

Instruments
37.1%
41.1%
4.0%

Iron
and
Steel
23.2%
22.9%
­
0.3%

Job
Shops
31.8%
30.8%
­
1.0%

Mobile
Industrial
Equipment
27.9%
28.2%
0.3%

Motor
Vehicle
20.9%
22.4%
1.5%

Office
Machine
31.7%
30.2%
­
1.5%

Ordnance
34.3%
39.6%
5.3%

Other
Metal
Products
41.9%
40.4%
­
1.5%

Precious
Metals
and
Jewelry
27.9%
28.2%
0.3%

Printed
Wiring
Boards
37.2%
36.8%
­
0.4%

Railroad
22.4%
22.1%
­
0.3%

Ships
and
Boats
23.2%
22.5%
­
0.7%

Stationary
Industrial
Equipment
29.4%
31.5%
2.1%

All
MP&
M
Manufacturersb
28.0%
29.6%
1.6%

a
Operating
Margin
is
calculated
as
(
value
of
shipments
­
cost
of
materials
­
payroll)/
value
of
shipments.

b
Weighted
average
by
VOS.

Source:
Department
of
Commerce,
Bureau
of
the
Census,
Annual
Survey
of
Manufacturers.

3.4
CHARACTERISTICS
OF
MP&
M
NON­
MANUFACTURING
SECTORS
Eleven
of
the
18
MP&
M
sectors
include
non­
manufacturing
industries.
The
non­
manufacturing
activities
are
defined
by
50
four­
digit
SIC
codes:
26
transportation
SIC
codes,
18
service
SIC
codes,
five
retail
trade
SIC
codes,
and
one
wholesale
trade
SIC
code.
MP&
M
facilities
may
perform
both
manufacturing
and
non­
manufacturing
activities.

The
analyses
presented
in
this
section
cover
1997
only,
because
the
Census
does
not
collect
data
annually
for
non­

manufacturing
SICs
as
it
does
for
manufacturers
in
the
Annual
Survey
of
Manufacturers.
The
profile
is
based
on
data
from
the
1997
Censuses
of
Transportation,
Communications,
and
Utilities;
Service
Industries;
Retail
Trade;
and
Wholesale
Trade.

3.4.1
Domestic
Production
a.
Output
This
profile
uses
sales
and
receipts
as
a
measure
of
output.
The
sum
of
the
receipts
a
manufacturer
earns
from
the
sale
of
its
outputs
is
an
indicator
of
the
overall
size
of
a
market
or
the
size
of
a
firm
in
relation
to
its
market
or
competitors.
EPA
used
Department
of
Commerce
data
to
assess
sales
and
receipts
for
the
MP&
M
non­
manufacturing
sectors.

Table
3.12
shows
sales
and
receipts
by
sector
for
MP&
M
non­
manufacturers.
The
MP&
M
nonmanufacturing
sector
generated
1.25
trillion
dollars
in
sales
and
receipts
in
1997.
Motor
vehicle
repair
and
maintenance,
with
sales
and
receipts
of
870
billion
dollars,
accounted
for
almost
70
percent
of
total
sales
and
receipts.
Bus
and
truck,
with
sales
and
receipts
of
209
3­
25
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
billion
dollars,
accounted
for
another
17
percent.
These
two
vehicle
sectors
made
up
87%
of
total
non­
manufacturing
output.

The
smallest
sector
was
precious
metals
and
jewelry,
which
accounted
for
only
367
million
dollars
in
sales
and
receipts.

Table
3.12:
Sales/
Receipts:
MP&
M
Non­
Manufacturing
Sectors
in
1997
(
millions,
2001$)

Sector
Output
a
Share
Aircraft
9,935.9
0.8%

Bus
&
Truck
209,316.1
16.7%

Household
Equipment
2,848
0.2%

Instruments
7,402
0.6%

Motor
Vehicle
870,451
69.6%

Office
Machine
30,930
2.5%

Other
Metal
Products
22,041
1.8%

Precious
Metals
and
Jewelry
367
0.029%

Railroadb
30,728
2.5%

Ships
and
Boats
37,383
3.0%

Stationary
Industrial
Equipment
29,747
2.4%

Total
1,251,148
100.0%

a
Total
sales
for
retail
and
wholesale
trade,
total
receipts
for
service
industries,
total
revenue
for
transportation.

b
Railroad
sales/
receipts
is
estimated
from
1992
data.

Source:
Department
of
Commerce,
Bureau
of
the
Census,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries,
1997.

b.
Number
of
facilities
and
firms
The
number
of
facilities
and
firms
in
an
industry
is
an
indicator
of
the
size
and
structure
of
an
industry.
Increases
and
decreases
in
the
number
of
firms
and
facilities
can
indicate
whether
an
industry
is
growing
or
shrinking,
and
changes
in
the
ratio
of
facilities
and
firms
can
indicate
whether
an
industry
is
becoming
more
integrated
and
concentrated.
This
profile
uses
SBA
data
to
assess
the
number
of
facilities
and
firms
in
the
non­
manufacturing
sector
from
1989
to
1996.
The
SBA
changed
its
survey
to
include
firms
in
1990,
but
data
on
the
number
of
firms
are
not
available
from
this
source
in
1989.

Table
3.13
shows
the
number
of
facilities
and
firms
in
the
MP&
M
non­
manufacturing
sectors
in
1989/
1990
and
1996,
with
average
annual
growth
rates.
The
number
of
firms
and
facilities
grew
from
1989
to
1996
in
all
of
the
sectors.
The
average
number
of
facilities
per
firm
shrank
slightly
over
this
time
period,
from
1.13
to
1.11,
due
to
the
fact
that
the
number
of
firms
in
the
non­
manufacturing
sector
grew
at
4.5
percent
per
year
while
the
number
of
facilities
grew
at
only
3.6
percent
per
year.

In
general,
most
MP&
M
non­
manufacturers
are
single
facility
firms.

Although
the
number
of
facilities
and
firms
increased
for
all
of
the
sectors
over
this
time
period,
not
all
industries
grew
at
the
same
rate.
The
number
of
facilities
in
the
other
metal
products
sector
grew
at
only
0.6
percent
annually,
and
the
number
of
facilities
in
the
stationary
industrial
equipment
and
instruments
sectors
grew
at
1.3
percent
annually.
In
contrast,
the
number
of
facilities
in
the
office
machine
sector
grew
by
20.2
percent
annually
and
the
number
of
firms
in
the
office
machine
sector
grew
by
23.7
percent
annually.

Concentration
varied
across
the
sectors.
Stationary
industrial
equipment
was
the
most
concentrated
sector,
with
an
average
of
1.45
facilities
per
firm
in
1996.
The
other
metal
products,
household
equipment,
and
office
machine
sectors
were
the
least
concentrated
sectors,
with
only
1.04,
1.06,
and
1.07
facilities
per
firm,
respectively.

3­
26
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.13:
Number
of
Firms
and
Facilities:
MP&
M
Non­
Manufacturing
Sectors
Sector
Number
of
Firms
Number
of
Facilities
Facilities
per
Firm
1990
1996
Average
Annual
Growth
Rate
1989
1996
Average
Annual
Growth
Rate
1989/
90
1996
Aircraft
2,024
3,281
8.4%
2,463
4,062
7.4%
1.22
1.24
Bus
&
Truck
74,719
113,840
7.3%
88,128
127,675
5.4%
1.18
1.12
Household
Equipment
3,234
3,706
2.3%
3,367
3,935
2.3%
1.04
1.06
Instruments
7,214
7,444
0.5%
8,365
9,185
1.3%
1.16
1.23
Motor
Vehicle
183,986
213,355
2.5%
203,592
234,542
2.0%
1.11
1.10
Office
Machine
9,206
32,916
23.7%
9,714
35,150
20.2%
1.06
1.07
Other
Metal
Products
32,865
36,290
1.7%
34,683
37,902
1.3%
1.06
1.04
Precious
Metals
and
Jewelry
1,379
1,625
2.8%
1,535
1,838
2.6%
1.11
1.13
Railroada
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
Ships
and
Boats
5,739
8,290
6.3%
6,561
9,262
5.0%
1.14
1.12
Stationary
Industrial
Equipment
14,672
15,075
0.5%
20,880
21,791
0.6%
1.42
1.45
Total
335,038
435,822
4.5%
379,288
485,342
3.6%
1.13
1.11
a
The
railroad
sector
has
only
two
non­
manufacturing
SIC
codes,
both
of
which
were
excluded
from
the
1997
Census.
Thus
no
data
on
railroads
is
available.

Source:
Small
Business
Administration,
Statistics
of
U.
S.
Businesses.

3­
27
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
c.
Employment
Employment
is
a
measure
of
the
level
and
trend
of
activity
in
an
industry.
Payroll
is
a
measure
of
the
skill
level
of
employees
and
of
their
value
to
the
production
process.
While
employment
growth
is
often
correlated
with
economic
strength
in
an
industry,
strong
productivity
growth
and
scale
economies
can
result
in
growth
in
revenues
that
could
not
be
predicted
from
employment
trends
alone.
Trends
in
labor
utilization
relative
to
output
are
important
in
understanding
how
regulatory
requirements
may
translate
into
job
losses
both
in
aggregate
and
at
the
community
level.

Table
3.14
shows
DOC
data
on
employment
and
payroll
for
the
non­
manufacturing
MP&
M
sectors
in
1997.
Total
employment
for
the
non­
manufacturing
sector
was
5.99
million,
and
total
payroll
was
$
201
billion.
Average
yearly
pay/
employee
was
$
33,610.

The
majority
of
total
employment
came
from
the
motor
vehicle
and
bus
and
truck
sectors.
The
motor
vehicle
sector
had
2.6
million
employees,
and
the
bus
and
truck
sector
had
2.1
million
employees.
Together
these
two
sectors
accounted
for
over
78
percent
of
total
employment
in
the
non­
manufacturing
sector.
The
precious
metals
and
jewelry
sector
had
the
lowest
employment,
with
only
5,599
employees.

Workers
in
a
few
industries
were
highly
compensated.
The
railroad
sector
paid
its
workers
$
58,851
per
year,
and
the
office
machine
sector
paid
$
56,092
per
year.
On
the
other
extreme,
workers
in
the
precious
metals
and
jewelry
sector
earned
only
$
20,121
per
year.

Table
3.14:
Employment
and
Payroll,
1997:
MP&
M
Non­
Manufacturing
Sectors
Sector
Employment
Share
Payroll
(
thousands,
2001$)
Share
Pay/
Employee
Aircraft
121,210
2.0%
3,286,985
1.6%
27,118
Bus
&
Truck
2,106,432
35.1%
65,643,990
32.6%
31,164
Household
Equipment
25,455
0.4%
935,661
0.5%
36,757
Instruments
76,970
1.3%
2,530,404
1.3%
32,875
Motor
Vehicle
2,622,049
43.7%
83,223,310
41.3%
31,740
Office
Machine
235,332
3.9%
13,200,240
6.6%
56,092
Other
Metal
Products
226,069
3.8%
6,981,264
3.5%
30,881
Precious
Metals
and
Jewelry
5,599
0.1%
112,659
0.1%
20,121
Railroad
197,421
3.3%
11,618,460
5.8%
58,851
Ships
and
Boats
178,560
3.0%
7,221,006
3.6%
40,440
Stationary
Industrial
Equipment
198,735
3.3%
6,701,350
3.3%
33,720
Total
5,993,832
100.0%
201,455,328.90
100.0%
33,610.44
Source:
Department
of
Commerce,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries,
1997.

3.4.2
Industry
Structure
and
Competitiveness
A
number
of
factors
play
an
important
role
in
determining
market
structure
for
an
industry,
including
the
barriers
that
firms
face
in
entering
and
exiting
the
market,
the
degree
to
which
firms
in
the
market
are
vertically
and
horizontally
integrated,
and
the
extent
to
which
markets
have
been
globalized.
This
profile
shows
facility
size
and
firm
size
as
measures
of
industry
structure
and
competitiveness
in
the
MP&
M
non­
manufacturing
sector.

a.
Facility
size
Facility
size
is
an
indicator
of
economies
of
scale.
The
presence
of
many
large
facilities
in
an
industry
can
indicate
that
there
are
advantages
to
building
on
a
larger
scale,
such
as
dividing
labor
more
efficiently,
utilizing
equipment
more
effectively,
or
getting
bulk
discounts.
EPA
used
data
from
the
1997
Census
to
assess
facility
size
for
manufacturing
facilities.

3­
28
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Non­
manufacturing
facilities
tend
to
be
small.
There
were
255,602
non­
manufacturing
facilities,
or
52.9
percent,
that
employed
4
employees
or
less.
These
facilities
accounted
for
7
percent
of
sales
and
receipts
in
the
non­
manufacturing
MP
&
M
sectors.
Facilities
with
less
than
20
employees
accounted
for
88
percent
of
all
non­
manufacturing
facilities
but
generated
only
24
percent
of
non­
manufacturing
revenues.
Facilities
with
more
than
100
employees
employed
less
than
one
percent
of
total
employees,
but
generated
17
percent
of
total
revenues.
Non­
manufacturing
MP&
M
facilities
appear
to
experience
significant
economies
of
scale.

Although
the
individual
non­
manufacturing
sectors
tended
to
have
small
facilities,
there
was
some
variation
between
sectors
in
facility
size.
The
aircraft
sector
and
the
ships
and
boats
sector
had
relatively
large
facilities,
probably
because
these
sectors
are
involved
with
large­
scale
transportation.
For
both
sectors,
6.3
percent
of
facilities
had
more
than
100
employees.
In
contrast,
the
other
metal
products
and
precious
metals
and
jewelry
sectors
had
mostly
small
facilities.
Ninety
four
percent
of
facilities
in
the
other
metal
products
sector
and
96
percent
of
facilities
in
the
precious
metals
and
jewelry
sector
had
less
than
20
employees.

Table
3.15
presents
the
number
of
facilities
and
total
sales
by
facility
employment
size
category
for
each
category.

Table
3.15:
Number
of
Facilities
and
Sales/
Receipts
by
Facility
Employment
Size
Category:
MP&
M
Non­
Manufacturing
Sectors
in
1997
Sector
Number
of
Facilities
Sales/
Receipts
(
millions,
$
2001)

0
to
4
5
to
9
10
to
19
20
to
99
100
or
more
0
to
4
5
to
9
10
to
19
20
to
99
100
or
more
Aircraft
1,936
936
720
870
299
381
482
879
2,767
5,433
Bus
&
Truck
67,959
24,548
19,355
21,294
3,573
15,924
16,044
24,189
75,663
81,036
Household
Equipment
1,886
735
456
305
37
358
411
551
1,072
457
Instruments
5,535
1,737
988
711
131
1,017
936
1,064
2,473
1,917
Motor
Vehicle
126,505
58,372
28,184
23,021
2,548
41,209
45,438
62,030
388,395
180,200
Office
Machine
16,849
3,619
2,186
1,935
408
3,598
2,592
3,327
9,285
12,146
Other
Metal
Products
21,564
7,585
3,813
2,136
138
3,810
3,856
4,444
7,178
2,118
Precious
Metals
and
Jewelry
790
215
88
41
2
109
81
70
88
19
Railroada
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
Ships
and
Boats
2,605
930
848
1,046
366
2,578
1,580
2,161
9,535
19,380
Stationary
Industrial
Equipment
9,974
7,601
3,601
2,084
134
3,183
5,487
6,000
9,321
3,189
Total
255,602
106,277
60,238
53,443
7,635
72,168
76,907
104,714
505,778
305,894
a
The
non­
manufacturing
railroad
sector
is
comprised
of
two
SIC
codes,
both
of
which
were
excluded
from
the
1997
Census.

Source:
Department
of
Commerce,
Bureau
of
the
Census,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries,
1997.

b.
Firm
size
This
profile
uses
firm
employment
size
as
an
indicator
of
market
power
and
barriers
to
entry.
The
distribution
of
facilities
and
output
by
firm
size
can
indicate
that
the
firms
in
an
industry
have
market
power.
If
the
largest
firms
own
disproportionately
many
facilities,
in
which
case
they
are
considered
horizontally
integrated,
or
if
the
largest
firms
control
a
large
portion
of
industry
output,
then
they
may
have
significant
market
power.
These
firms
can
use
their
large
capacities
to
control
and
exploit
markets.
The
presence
of
many
large
firms
in
an
industry
can
also
indicate
that
there
are
barriers
to
entry
into
that
industry,
such
as
capital
requirements
or
economies
of
scale,
that
give
existing
firms
in
the
industry
a
competitive
advantage.

Table
3.16
presents
SUSB
data
on
numbers
of
firms
and
facilities
with
estimated
receipts
by
firm
employment
size
category
in
1996
for
MP&
M
non­
manufacturers.
In
general,
although
the
majority
of
MP&
M
non­
manufacturing
firms
were
small,
the
larger
firms
owned
many
facilities
and
had
disproportionately
large
market
shares.
The
vast
majority
of
non­
manufacturing
3­
29
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
firms
 
427,173
firms
or
about
98
percent
of
non­
manufacturers
 
employed
fewer
than
100
employees.
However,
these
firms
owned
only
90
percent
of
all
facilities
and
earned
610
billion
dollars,
only
58
percent
of
all
revenues.
The
2,338
firms
with
500
or
more
employees,
equal
to
0.54
percent
of
all
non­
manufacturers,
owned
6.5
percent
of
all
facilities
and
generated
207
billion
dollars,
equal
to
19.8
percent
of
total
revenue.

Firm
size
in
the
individual
MP&
M
non­
manufacturing
sectors
is
relatively
similar
to
the
trends
in
the
non­
manufacturing
sector
as
a
whole.
At
least
94
percent
of
the
firms
in
every
sector
had
less
than
100
employees.
Although
firm
size
varies
little
by
sector,
there
were
larger
variations
in
receipts
by
firm
size.
The
aircraft,
instruments,
and
ships
and
boats
sectors
each
had
a
small
percentage
of
firms
that
controlled
a
large
share
of
the
market.
In
the
aircraft
sector,
the
largest
2.35
percent
of
firms
generated
60.4
percent
of
total
revenues.
In
the
instruments
sector,
the
largest
1.2
percent
of
firms
generated
50.2
percent
of
total
revenues.
In
the
ships
and
boats
sector,
the
largest
2.6
percent
of
firms
generated
57.4
percent
of
total
revenues.

Table
3.16:
Number
of
Firms,
Facilities,
and
Estimated
Receipts
by
Firm
Employment
Size
Category,
1996:
MP&
M
Non­
Manufacturing
Sectors
Sector
Firms
Facilities
Estimated
Receipts
(
millions,

2001$)

1
to
99
100
to
499
500
or
more
1
to
99
100
to
499
500
or
more
1
to
99
100
to
499
500
or
more
Aircraft
3,124
80
77
3,189
139
734
2,717
1,264
6,071
Bus
&
Truck
111,038
2,001
801
112,751
4,334
10,590
79,331
23,943
66,113
Household
Equipment
3,669
19
18
3,700
23
212
2,032
275
873
Instruments
7,277
76
91
7,536
206
1,443
3,119
562
3,715
Motor
Vehicle
209,814
3,010
531
216,707
7,119
10,716
465,989
186,083
87,113
Office
Machine
32,428
290
198
32,745
759
1,646
14,787
4,800
10,565
Other
Metal
Products
35,788
284
218
36,205
567
1,130
16,749
2,308
4,610
Precious
Metals
and
Jewelry
1,615
6
4
1,661
105
72
269
0
0
Railroad
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
n/
a
Ships
and
Boats
7,833
243
214
8,000
519
743
9,087
6,122
20,493
Stationary
Industrial
Equipment
14,587
302
186
16,331
1,359
4,101
15,422
4,606
7,739
Total
427,173
6,311
2,338
438,825
15,130
31,387
609,502
229,963
207,294
a
The
non­
manufacturing
railroad
sector
is
comprised
of
two
SIC
codes,
both
of
which
were
excluded
from
the
1997
Census.

Source:
Small
Business
Administration,
Statistics
of
U.
S.
Businesses.

3.5
CHARACTERISTICS
OF
ALL
MP&
M
SECTORS
This
section
presents
additional
market
structure
data
for
the
MP&
M
industry
as
a
whole.
It
includes
eight­
firm
concentration
data
and
risk­
normalized
return
on
assets
(
ROA)
data
as
measures
of
industry
competitiveness.

3.5.1
Eight­
firm
Concentration
Ratio
The
eight­
firm
concentration
ratio
(
8­
firm
CR)
is
a
measure
of
the
degree
to
which
the
largest
firms
in
an
industry
have
market
power.
It
is
defined
as
the
percentage
of
the
value
of
total
industry
shipments
that
is
produced
by
the
top
eight
firms
of
a
given
industry.
In
general,
an
industry
with
a
high
8­
firm
CR
are
likely
to
have
larger
entry
and
exit
barriers
and
to
be
less
competitive.
Firms
in
this
kind
of
industry
have
less
incentive
to
compete
and
more
ability
to
manipulate
prices
to
increase
their
profits.
It
is
more
difficult
for
firms
in
a
competitive,
less
concentrated
industry
to
manipulate
prices.
This
profile
presents
8­
firm
CR
data
from
the
1992
Census.

3­
30
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.17
shows
the
8­
firm
CR
for
each
sector
in
1992.
The
aerospace
and
aircraft
sectors
were
particularly
concentrated,

with
the
largest
eight
firms
in
each
sector
producing
92
percent
and
85
percent
of
industry
shipments,
respectively.
The
motor
vehicle,
ordnance,
and
railroad
sectors
were
also
relatively
concentrated.
The
job
shop
and
hardware
industries
were
the
least
concentrated,
with
only
19
percent
and
25
percent
of
output,
respectively,
being
produced
by
the
eight
largest
firms.

Table
3.17:
ght­
firm
Concentration
Ratio,
1992
Sector
8­
firm
Concentration
Ratio
Value
Ranka
Aerospace
92.29
19
Aircraft
85.3
18
Bus
&
Truck
42.51
7
Electronic
Equipment
47.27
9
Hardware
24.52
2
Household
Equipment
54.22
10
Instruments
44.2
8
Iron
and
Steel
41.87
6
Job
Shop
19.26
1
Mobile
Industrial
Equipment
58.56
13
Motor
Vehicle
77.30
17
Office
Machine
61.38
14
Ordnance
76.90
16
Other
Metal
Products
54.27
11
Precious
Metals
and
Jewelry
35.0
4
Printed
Circuit
Boards
35.0
3
Railroad
71.00
15
Ships
and
Boats
58.20
12
Stationary
Industrial
Equipment
41.16
5
Ei
a
Rank
is
a
comparison
within
the
MP&
M
manufacturing
sectors
only.
A
rank
of
1
indicates
the
lowest
level
of
concentration.

Source:
Department
of
Commerce,
Bureau
of
the
Census.

3.5.2
Risk
Normalized
Return
on
Assets
Firms 
abilities
to
enter
and
exit
markets
determine,
in
part,
the
competitiveness
of
an
industry.
If
significant
barriers
to
entry
exist,
potential
entrants
may
be
dissuaded
and
existing
firms
may
enjoy
market
power.
If
few
barriers
to
entry
exist,
existing
firms
are
more
likely
to
face
competition
for
market
share
via
price
and
other
competitive
tactics.
Some
important
entry
barriers
for
the
MP
&
M
industry
are
large
capital
requirements,
economies
of
scale,
and
brand
name
recognition.
Although
data
on
barriers
to
entry
are
limited,
the
available
data
show
that
market
power
exists
in
some
sectors.

EPA
used
the
risk
normalized
return
on
assets
as
an
indicator
of
the
existence
of
entry
or
exit
barriers
for
each
industry
3.
A
firm s
return
on
assets
is
the
profit
the
firm
earns
from
investing
in
assets.
Normally,
firms
in
riskier
industries
tend
to
have
higher
ROA s.
However,
barriers
to
entry
or
exit
can
allow
firms
to
achieve
higher
ROA s
than
would
be
predicted
from
their
3
The
risk
normalized
ROA
only
assigns
MP&
M
industry
sectors
relative
rankings
and
does
not
imply
that
they
face
high
or
low
barriers
to
competition
in
absolute
terms.

3­
31
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
risk
level.
The
risk
normalized
return
on
assets
measures
the
additional
profit
that
firms
earn
above
and
beyond
what
their
risk
level
predicts.
EPA
used
data
from
Marketguide.
com
to
calculate
a
risk
normalized
ROA.
The
agency
calculated
risk
normalized
ROA
by
dividing
each
firm s
ROA
by
its
asset
beta
(
a
measure
of
the
relative
riskiness
of
the
firm s
common
stock)
and
averaging
over
the
five­
year
period
from
1996
to
2000.

The
electronic
equipment,
printed
circuit
board,
and
office
machine
industries
had
the
lowest
risk
normalized
ROA s,

indicating
relatively
weaker
barriers
to
entry
or
exit
for
these
industries.
The
instrument,
other
metal
products,
mobile
industrial
equipment,
and
motor
vehicle
industries
had
the
highest
ROA s.
These
industries
are
likely
to
have
significant
barriers
to
entry
and
exit.

Table
3.18
presents
the
average
risk
normalized
return
on
assets
for
the
period
from
1996
to
2001,
based
on
data
from
Marketguide.
com.

Table
3.18:
Average
Risk
Normalized
Return
on
Assets,
1996
to
2001
Sector
Risk­
Normalized
ROA
(%)

Value
Rank
Aerospace
13.19
8
Aircraft
16.15
13
Bus
&
Truck
12.31
7
Electronic
Equipment
7.21
1
Hardware
17.18
15
Household
Equipment
12.02
5
Instruments
19.64
18
Iron
and
Steel
11.38
4
Job
Shop
13.44
9
Mobile
Industrial
Equipment
18.13
17
Motor
Vehicle
18.10
16
Office
Machine
9.58
3
Ordnance
12.30
6
Other
Metal
Products
26.60
19
Precious
Metals
and
Jewelry
14.43
10
Printed
Circuit
Boards
7.50
2
Railroad
14.62
11
Ships
and
Boats
16.11
12
Stationary
Industrial
Equipment
16.78
14
Source:
www.
marketguide.
com
3.6
CHARACTERISTICS
OF
MP&
M
FACILITIES
This
section
uses
survey
data
to
characterize
MP&
M
facilities.
It
includes
data
on
facility
revenue
sources,
discharge
type,

small
business
status,
market
type,
and
financial
performance.
These
data
are
organized
according
to
MP&
M
regulation
subcategories
based
on
unit
operations
performed
and
the
nature
of
the
waste
generated.
EPA
determined
that
a
basis
exists
for
dividing
the
MP&
M
category
into
the
following
subcategories:
General
Metals,
Non­
Chromium
Anodizing,
Metal
Finishing
Job
Shops,
Printed
Wiring
Boards,
Steel
Forming
and
Finishing,
Oily
Wastes,
Railroad
Line
Maintenance,
and
Shipbuilding
Dry
Dock.
EPA
did
not
generally
define
subcategories
in
terms
of
industrial
sectors
because
many
facilities
perform
operations
covered
by
multiple
sectors
and,
as
a
result,
the
industrial
sectors
are
too
broad
for
subcategorization.

3­
32
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.19
shows
the
national
number
of
MP&
M
facilities
that
sell
products
to
different
combinations
of
sectors.
The
table
shows
that
many
MP&
M
facilities
operate
in
multiple
market
sectors.
Almost
every
combination
of
sectors
shows
overlap,

and
some
MP&
M
facilities
report
revenues
from
three
or
more
sectors.

3­
33
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.19:
Overlap
of
Sectors
Sector
Aerospace
Aircraft
Bus
and
Truck
Electronic
Equipment
Hardware
Household
Equipment
Instrument
Mobile
Industrial
Equipment
Motor
Vehicle
Office
Machine
Ordnance
Other
Metal
Products
Precious
Non­
Precious
Metals
Printed
Circuit
Boards
Railroad
Ships
and
Boats
Stationary
Industrial
Equipment
Unknown
Aerospace
1,828
Aircraft
0
2,350
Bus
and
Truck
129
169
5,574
Electronic
Equipment
1,327
1,318
824
4,073
Hardware
345
399
914
1,129
7,075
Household
Equipment
289
317
477
898
1,600
2,635
Instrument
1,046
1,126
398
1,680
678
610
4,965
Mobile
Industrial
Equipment
47
116
1,511
704
738
417
404
2,467
Motor
Vehicle
157
220
1,790
619
823
678
524
1,089
13,853
Office
Machine
265
349
198
622
515
477
356
159
223
1,088
Ordnance
132
119
52
204
86
77
202
80
153
89
481
Other
Metal
Products
289
321
457
850
1,450
1,393
475
438
695
329
36
5,359
Precious
and
Non­

Precious
Metals
47
47
0
36
47
24
47
12
36
36
0
92
1,651
Printed
Circuit
Boards
160
164
0
164
160
160
4
0
0
375
0
160
0
1,229
Railroad
16
61
95
86
143
67
69
124
154
91
58
81
12
26
1,132
Ship
and
Boat
102
0
237
146
191
156
104
138
245
138
25
78
12
0
48
1,366
Stationary
Industrial
Equipment
1,169
1,255
714
1,818
1,151
687
1,293
688
530
486
130
469
39
164
109
324
4,907
Unknown
583
Source:
U.
S.
EPA
analysis.

3­
34
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
The
remainder
of
this
profile
focuses
on
MP&
M
industry
facilities
that
discharge
effluent.
Out
of
a
total
population
of
638,696
MP&
M
industry
establishments
reported
in
the
Statistics
of
U.
S.
Businesses
for
1996,
approximately
seven
percent,

or
43,858
facilities,
are
effluent
dischargers
as
identified
by
the
MP&
M
surveys.

Figure
3.2
shows
the
breakdown
of
MP
&
M
facilities
by
discharge
type.
Of
the
effluent
dischargers,
41,119
(
94
percent)
are
indirect
dischargers,
meaning
that
they
discharge
into
a
sewer
or
a
POTW,
and
2,699
(
6
percent)
are
direct
dischargers
that
discharge
directly
into
a
surface
water
body.
The
remaining
40
facilities
are
both
direct
and
indirect
dischargers.

Figure
3.2:
Facilities
by
Discharge
Type
Source:
U.
S.
EPA
analysis.

Figure
3.3
shows
facilities
by
revenue
source.
Local
governments
or
municipalities
operate
3,785
facilities
(
9
percent).
The
remaining
40,073
facilities
are
privately
owned.
Of
these,
17,428
facilities
(
40
percent)
are
rebuilding
and
maintenance
facilities
and
20,172
facilities
(
46
percent)
are
manufacturing
facilities.

Figure
3.3:
Facilities
by
Revenue
Source
Source:
U.
S.
EPA
analysis.

Figure
3.4
shows
facilities
by
small
entity
status.
Small
Business
Administration
(
SBA)
thresholds
were
used
to
estimate
the
number
of
facilities
that
are
likely
to
be
owned
by
small
businesses,
as
defined
by
the
SBA.
Using
the
methodology
detailed
in
3­
35
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
the
Small
Entity
Impact
Analysis
(
see
Chapter
10),
EPA
determined
that
32,179
facilities
(
73
percent)
are
owned
by
small
or
potentially
small
entities.

Figure
3.4:
Facilities
by
Small
Entity
Status
Source:
U.
S.
EPA
analysis.

Figure
3.5
indicates
that
MP&
M
facilities
derive
approximately
22
percent
of
their
revenues
from
export
sales.
Almost
78
percent
of
MP&
M
revenues
come
from
domestic
non­
government
sources.
Government
purchases
account
for
a
very
small
share
of
MP&
M
revenues
overall.

Figure
3.5:
1996
Facility
Revenues
by
Market
Type
(
billions,
2001$)

Export
data
were
not
available
for
Iron
and
Steel
surveys.

Source:
U.
S.
EPA
analysis.

To
characterize
baseline
financial
performance
across
regulation
subcategories,
EPA
used
Pre­
Tax
Return
on
Assets
(
PTRA)
as
a
measure
of
industry
profitability.
PTRA
measures
the
return,
before
tax,
to
total
capital
that
company
management
achieves
from
its
deployed
capital
assets.
Unlike
the
ROA
measure
noted
above
in
section
3.5.2,
the
PTRA
reported
in
this
discussion
is
not
adjusted
for
risk.

3­
36
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Table
3.20
shows
that
the
printed
wiring
board
subcategory
has
the
highest
median
PTRA
(
13.4
percent
)
of
all
the
subcategories.
The
shipbuilding
drydock
subcategory
has
the
lowest
median
PTRA
(
2.5
percent).
The
median
PTRA
for
all
of
the
MP&
M
facilities
is
11.1
percent.

Table
3.20:
Financial
Performance
Subcategory
Median
Pre­
Tax
Return
on
Assets
(
PTRA)

Shipbuilding
Drydock
2.5%

General
Metals
11.5%

Steel
Forming
&
Finishing
9.1%

Metal
Finishing
Job
Shops
9.2%

Non­
Chromium
Anodizer
9.0%

Oily
Wastes
9.6%

Printed
Wiring
Boards
13.4%

Railroad
Line
Maintenancea
n/
a
a
PTRA
data
was
not
available
for
railroad
line
maintenance
because
these
facilities
were
treated
as
cost­
centers
in
the
survey
analysis.

Source:
U.
S.
EPA
analysis.

3­
37
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
GLOSSARY
capital
expenditures:
expenditures
for
permanent
additions
and
major
alterations
to
facilities
and
equipment,
as
well
as
replacements
and
additions
to
capacity,
which
are
ordinarily
depreciated.
Reported
capital
expenditures
include
work
done
on
contract
and
expenditures
for
assets
leased
from
other
concerns
through
capital
leases.
Expenditures
for
land
and
cost
of
maintenance
and
repairs
charged
as
current
operating
expenses
are
excluded
concentration
ratio:
the
percentage
of
output
from
a
given
industry
that
is
produced
by
the
largest
firms
in
that
industry.

For
example,
the
eight
firm
concentration
ratio
measures
the
percentage
of
output
that
is
produced
by
the
eight
largest
firms
in
an
industry.
The
concentration
ratio
is
a
measure
of
industry
competitiveness.

employment:
total
number
of
full­
time
equivalent
employees,
including
production
workers
and
non­
production
workers.

export
dependence:
the
share
of
shipments
by
domestic
producers
that
is
exported;
calculated
by
dividing
the
value
of
exports
by
the
value
of
domestic
shipments.

import
penetration:
the
share
of
all
consumption
in
the
U.
S.
that
is
provided
by
imports;
calculated
by
dividing
imports
by
reported
or
apparent
domestic
consumption
(
the
latter
calculated
as
domestic
value
of
shipments
minus
exports
plus
imports).

manufacturing:
series
of
unit
operations
necessary
to
produce
metal
products;
generally
performed
in
a
production
environment.

North
American
Industry
Classification
System:
classification
system
adopted
beginning
in
1997
to
replace
SIC
codes.
NAICS
codes
will
be
used
throughout
North
American
and
allow
for
greater
comparability
with
the
International
Standard
Industrial
Classification
System
(
ISIC),
which
is
developed
and
maintained
by
the
United
Nations.
The
new
system
also
better
reflects
the
structure
of
today s
economy,
including
the
growth
of
the
service
sectors
and
new
technologies.

nominal
values:
dollar
values
expressed
in
current
dollars.

operating
margin:
measure
of
the
relationship
between
input
costs
and
the
value
of
production,
as
an
indicator
of
financial
performance
and
condition.
Everything
else
being
equal,
industries
and
firms
with
lower
operating
margins
will
generally
have
less
flexibility
to
absorb
the
costs
associated
with
a
regulation
than
those
with
higher
operating
margins.
Operating
margins
were
calculated
in
this
profile
by
subtracting
the
cost
of
materials
and
total
payroll
from
the
value
of
shipments.
Operating
margin
is
only
an
approximate
measure
of
profitability,
since
it
does
not
consider
capital
costs
and
other
costs.
It
is
used
to
examine
trends
in
revenues
compared
with
production
costs
within
an
industry;
it
should
not
be
used
for
cross­
industry
comparisons
of
financial
performance.

pre­
tax
return
on
assets
(
PTRA):
the
ratio
of
cash
operating
income
(
net
income
plus
depreciation)
to
the
book
value
of
total
assets.
This
ratio
is
a
measure
of
facility
profitability.

producer
price
index
(
PPI):
a
family
of
indexes
that
measures
the
average
change
over
time
in
selling
prices
received
by
domestic
producers
of
goods
and
services
(
Bureau
of
Labor
Statistics,
PPI
Overview).
Used
in
this
profile
to
convert
nominal
values
into
real
dollar
values.

real
values:
nominal
values
normalized
using
a
price
index
to
express
values
in
a
single
year s
dollars.
Removes
the
effects
of
price
inflation
when
evaluating
trends
in
dollar
measures.

rebuilding/
maintenance:
unit
operations
necessary
to
disassemble
used
metal
products
into
components,
replace
the
components
or
subassemblies
or
restore
them
to
original
function,
and
reassemble
the
metal
product.
These
operations
are
intended
to
keep
metal
products
in
operating
condition
and
can
be
performed
in
either
a
production
or
a
non­
production
environment.

return
on
assets:
the
profit
the
firm
earns
from
investing
in
assets.
Generally
firms
in
riskier
industries
have
higher
returns
on
assets.
A
risk
normalized
return
on
assets
(
RNRO
A)
measures
the
additional
profit
that
firms
earn
above
and
beyond
what
their
risk
level
predicts.
The
RNROA
is
a
measure
of
industry
competitiveness.

3­
38
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
Standard
Industrial
Classification:
classification
system
used
for
all
establishment­
based
Federal
economic
statistics
classified
by
industry.
Each
establishment
is
assigned
a
4­
digit
SIC
code
based
on
its
principal
product,
or
service.
Last
revised
in
1987
and
currently
being
replaced
by
the
NAICS.

value
added:
measure
of
manufacturing
activity,
derived
by
subtracting
the
cost
of
purchased
inputs
(
materials,
supplies,

containers,
fuel,
purchased
electricity,
contract
work,
and
contract
labor)
from
the
value
of
shipments
(
products
manufactured
plus
receipts
for
services
rendered),
and
adjusted
by
the
addition
of
value
added
by
merchandising
operations
(
i.
e.,
the
difference
between
the
sales
value
and
the
cost
of
merchandise
sold
without
further
manufacture,
processing,
or
assembly)
plus
the
net
change
in
finished
goods
and
work­
in­
process
between
the
beginning­
and
end­
of­
year
inventories.
Value
added
avoids
the
duplication
in
value
of
shipments
as
a
measure
of
economic
activity
that
results
from
the
use
of
products
of
some
establishments
as
materials
by
others.
Value
added
is
considered
to
be
the
best
value
measure
available
for
comparing
the
relative
economic
importance
of
manufacturing
among
industries
and
geographic
areas.

value
of
shipments:
net
selling
values
of
all
products
shipped
as
well
as
miscellaneous
receipts.
Includes
all
items
made
by
or
for
an
establishment
from
materials
owned
by
it,
whether
sold,
transferred
to
other
plants
of
the
same
company,
or
shipped
on
consignment.
Value
of
shipments
is
a
measure
of
the
dollar
value
of
production,
and
is
often
used
as
a
proxy
for
revenues.
This
profile
uses
value
of
shipments
to
indicate
the
size
of
a
market
and
how
the
size
differs
from
year
to
year,
and
to
calculate
operating
margins.

3­
39
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
ACRONYMS
NAICS:
North
American
Industry
Classification
System
PPI:
producer
price
index
PTRA:
pre­
tax
return
on
assets
ROA:
return
on
assets
SIC:
Standard
Industrial
Classification
VA:
value
added
VOS:
value
of
shipments
3­
40
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
REFERENCES
DRI/
McGraw­
Hill
and
U.
S.
Department
of
Commerce,
International
Trade
Administration.
2000.
U.
S.
Industry
and
Trade
Outlook.

Marketguide.
com.
1992.
Risk
Normalized
Return
on
Assets.
http://
www.
marketguide.
com.

U.
S.
Bureau
of
Labor
Statistics.
2000.
Producer
Price
Index.

U.
S.
Department
of
Commerce.
1992.
Bureau
of
the
Census.
Census
of
Manufacturers,
Census
of
Transportation,
Census
of
Wholesale
Trade,
Census
of
Retail
Trade,
Census
of
Service
Industries.

U.
S.
Department
of
Commerce.
1996.
Bureau
of
the
Census.
Annual
Survey
of
Manufacturers.

U.
S.
Department
of
Commerce.
2000.
Bureau
of
the
Census.
Foreign
Trade
Data.

U.
S.
Environmental
Protection
Agency.
1995a.
Profile
of
the
Electronics
and
Computer
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
95­
002.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Environmental
Protection
Agency.
1995b.
Profile
of
the
Fabricated
Metal
Products
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
95­
007.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Environmental
Protection
Agency.
1995c.
Profile
of
the
Iron
and
Steel
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
95­
005.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Environmental
Protection
Agency.
1995d.
Profile
of
the
Motor
Vehicle
Assembly
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
95­
009.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Environmental
Protection
Agency.
1995e.
Printed
Wiring
Board
Industry
and
Use
Cluster
Profile.
Design
for
the
Environment
Printed
Wiring
Board
Project.
EPA
744­
R­
95­
005.
http://
www.
epa.
gov/
opptintr/
dfe/
pwb/
techreports/
usecluster
U.
S.
Environmental
Protection
Agency.
1997.
Profile
of
the
Shipbuilding
and
Repair
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
97­
008.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Environmental
Protection
Agency.
1998.
Profile
of
the
Aerospace
Industry.
EPA
Office
of
Compliance
Sector
Notebook
Project.
EPA
310­
R­
98­
001.
http://
es.
epa.
gov/
oeca/
sector/
index.
html
U.
S.
Small
Business
Administration.
Statistics
of
U.
S.
Businesses.
http://
www.
sba.
gov/
advo/
stats/
int_
data.
html
Value
Line
Investment
Survey.
Industry
Reports.
Value
Line
Publishing,
Inc:
December
2001.

3­
41
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
3:
Profile
of
the
MP&
M
Industry
Sectors
THIS
PAGE
INTENTIONALLY
LEFT
BLANK
3­
42
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
Chapter
4:
Regulatory
Options
INTRODUCTION
The
preamble
for
the
final
rule
describes
the
regulatory
options
considered
by
EPA
for
the
final
MP&
M
effluent
guidelines.
This
chapter
provides
a
brief
summary
of
the
subcategories
and
the
regulatory
options.

4.1
SUBCATEGORIZATION
EPA
may
divide
a
point
source
category
into
subcategories
to
address
variations
in
products,
raw
materials,
processes,

and
other
factors
that
result
in
distinctly
different
effluent
characteristics.
Defining
subcategories
makes
it
possible
to
establish
effluent
limitations
that
take
into
account
technological
achievability
and
economic
impacts
unique
to
each
subcategory.
EPA
considered
the
following
factors
in
defining
MP&
M
subcategories:

In
a
way
similar
to
the
proposed
rule,
EPA
established
subcategories
for
the
final
MP
&
M
rule
based
on
unit
operations
performed.
The
subcategories
are
defined
in
part
based
on
the
type
of
wastewater
that
facilities
discharge,
including:
CHAPTER
CONTENTS
4.1
orization
.................
.........
4­
1
4.2
y
Options
.................
.......
4­
3
4.3
T
Options
for
Direct
Dischargers
........
4­
3
4.4
or
Indirect
Dischargers
..........
4­
3
4.5
NS
Options
for
New
Sources
.......
4­
4
4.6
Summary
of
the
Final
Rule
and
Regulatory
Alternatives
.................
.............
4­
4
Glossary
.................
.................
...
4­
5
Acronyms
.................
.................
..
4­
6
Subcateg
Technolog
BPT/
BA
PSES
Options
f
NSPS
and
PS
 
unit
operation,
 
nature
of
the
waste
generated,

 
activity,
 
econo
mic
impacts,

 
raw
materials,
 
treatment
costs,

 
products,
 
total
energy
requirem
ents,

 
size
of
site,
 
air
pollution
control
method
s,

 
location,
 
solid
waste
generation
and
disposal,
and
 
age,
 
publicly­
owned
treatment
work
(
POTW)

burd
en.

facilities
that
discharge
wastewaters
with
high
metals
content,
with
or
without
oil
and
grease
(
O&
G)
;
and
 
facilities
that
discharge
wastewaters
containing
mainly
O&
G,
with
limited
metals
and
other
associated
organic
constituents.

The
subcategories
identified
by
EPA
in
each
group
are:

Metal­
bearing
(
with
or
without
O&
G):

 
General
Metals,

 
Metal
Finishing
Job
Shops,

 
Non­
Chromium
Anodizing,

 
Printed
Wiring
Board,

 
Steel
Forming
&
Finishing;
and
4­
1
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
Oil­
bearing
only:

 
Oily
Wastes,

 
Railroad
Line
Maintenance,
and
 
Shipbuilding
Dry
Docks.

For
the
final
rule,
EPA
is
establishing
limitations
and
standards
only
for
direct
dischargers
in
the
Oily
Wastes
subcategory.

The
other
subcategories
were
considered
at
proposal
and
for
some
of
the
alternative
regulatory
options
but
are
not
further
regulated
under
the
final
rule.
Section
VI.
B
of
the
preamble
accompanying
the
final
rule
describes
the
basis
for
defining
these
subcategories.
The
following
are
brief
summaries
of
each
subcategory:

General
Metals:
The
General
Metals
subcategory
includes
facilities
that
perform
operations
that
generate
metal­
bearing
wastewater.
1
At
a
minimum,
wastewater
at
these
sites
requires
metals
removal
and
may
also
require
the
preliminary
treatment
steps
of
oil/
water
separation,
chromium
reduction,
and
cyanide
destruction.
For
example,
wastewater
generated
from
most
manufacturing
operations
and
heavy
rebuilding
operations
(
e.
g.,
aircraft/
aerospace,
bus/
truck,
railroad,
ship,
industrial
equipment)
would
be
regulated
under
the
General
Metals
subcategory
as
well
as
sites
performing
surface
finishing
operations
at
a
captive
shop
(
i.
e.,
not
a
metal
finishing
job
shop)
including
continuous
electroplating
as
defined
in
today s
rule.

Metal
Finishing
Job
Shops:
These
facilities
must
perform
one
or
more
of
the
six
operations
regulated
by
the
existing
Metal
Finishing
(
40
CFR
433)
and
Electroplating
(
40
CFR
413)
effluent
guidelines,
and
must
meet
the
definition
of
a
job
shop.

The
six
metal
finishing
operations
are
electroplating,
electroless
plating,
anodizing,
coating,
chemical
etching
and
milling,
and
printed
circuit
board
manufacture.
A
job
shop
is
a
facility
that
owns
no
more
than
50
percent
of
the
materials
undergoing
metal
finishing.
EPA
proposes
to
regulate
Printed
Wiring
Board
facilities
that
are
job
shops
under
this
subcategory,
but
is
seeking
comment
on
this
proposal.

Non
Chromium
Anodizing:
This
subcategory
includes
facilities
that
perform
aluminum
anodizing
without
the
use
of
chromic
acid
or
dichromate
sealants.
The
wastewater
generated
at
these
facilities
contains
very
low
levels
of
metals
(
except
for
aluminum)
and
toxic
organic
pollutants.

Printed
Wiring
Board:
These
facilities
manufacture,
maintain,
and
repair
printed
wiring
boards
(
i.
e.,
circuit
boards),
not
including
job
shops.
They
perform
some
unique
operations,
including
applying,
developing,
and
stripping
of
photoresist;

lead/
tin
soldering;
and
wave
soldering.

Steel
Forming
&
Finishing:
This
subcategory
applies
to
facilities
that
perform
MP&
M
operations
or
cold
forming
operations
on
steel
wire,
rod,
bar,
pipe,
or
tube.
Other
operations
on
steel,
including
any
hot
forming
operations
for
steel,
or
cold
forming,
electroplating,
or
continuous
hot
dip
coating
of
other
steel
products,
will
be
regulated
under
the
revisions
to
the
existing
Iron
and
Steel
Manufacturing
effluent
guidelines
(
40
CFR
420).

Oily
Wastes:
The
Oily
Wastes
subcategory
is
a
 
catch­
all 
for
sites
that
discharge
wastewater
exclusively
from
oily
operations
and
are
not
otherwise
covered
by
the
Railroad
Line
Maintenance
or
Shipbuilding
Dry
Dock
subcategory.
Oily
operations
for
the
this
subcategory
are
defined
in
today s
final
rule
as:
alkaline
cleaning
for
oil
removal,
aqueous
or
solvent
degreasing,
corrosion
preventative
coating
(
as
specified
in
§
438.21(
b));
floor
cleaning;
grinding;
heat
treating;
deformation
by
impact
or
pressure;
machining;
painting
(
spray
or
brush);
steam
cleaning;
and
testing
(
such
as
hydrostatic,
dye
penetrant,

ultrasonic,
magnetic
flux);
iron
phosphate
conversion
coating;
abrasive
blasting,
alkaline
treatment
without
cyanide;

assembly/
disassembly;
tumbling/
barrel
finishing/
mass
finishing/
vibratory
finishing;
burnishing;
electrical
discharge
machining;
polishing,
thermal
cutting;
washing
of
final
products;
welding;
wet
air
pollution
control
for
organic
constituents;

adhesive
bonding;
and
calibration.

Railroad
Line
Maintenance:
This
is
one
of
two
specific
subcategories
that
discharge
only
oil­
bearing
wastewaters
(
as
defined
above
for
the
Oily
Wastes
subcategory).
The
Railroad
Line
Maintenance
subcategory
includes
facilities
that
discharge
from
performing
routine
cleaning
and
light
maintenance
on
railroad
engines,
cars,
car­
wheel
trucks,
or
similar
parts
or
machines.
Facilities
engaged
in
the
manufacture,
overhaul
or
heavy
maintenance
of
railroad
engines,
cars,
car­
wheel
1
These
sites
may
also
perform
operations
that
generate
oil­
bearing
wastewater.

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MP&
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EEBA
Part
I:
Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
trucks,
or
similar
parts
or
machines
are
not
covered
by
this
subcategory
and
depending
on
the
operations
performed
may
be
covered
by
either
the
General
Metals
or
Oily
Wastes
subcategory.

Shipbuilding
Dry
Docks:
This
is
the
second
of
two
specific
subcategories
that
discharge
only
oil­
bearing
wastewaters
(
as
defined
above
for
the
Oily
Wastes
subcategory).
The
Shipbuilding
Dry
Dock
subcategory
applies
to
discharges
of
process
wastewater
generated
in
or
on
dry
docks
and
similar
structures,
such
as
graving
docks,
building
ways,
marine
railways
and
lift
barges
at
shipbuilding
facilities
(
or
shipyards).
When
generated
by
operations
from
within
a
dry
dock
or
similar
structure,
this
subcategory
covers
process
wastewater
generated
inside
and
outside
the
vessel
(
including
bilge
water)
and
wastewater
generated
from
barnacle
removal
conducted
as
preparation
for
ship
maintenance,
rebuilding
or
repair.
Wastewaters
generated
from
other
operations
at
shipyards
are
not
included
in
this
subcategory.

4.2
TECHNOLOGY
OPTIONS
EPA
defined
specific
effluent
limitations
guidelines
and
standards
for
consideration
in
developing
the
regulation
based
on
a
statistical
analysis
of
the
performance
of
several
wastewater
treatment
technology
options.
This
analysis
is
described
in
Section
9
of
the
Technical
Development
Document
and
the
Statistical
Support
Document.

EPA
is
establishing
BPT
pH
limitations
and
daily
maximum
limitations
for
two
pollutants,
oil
and
grease
as
hexane
extractable
material
(
O&
G
(
as
HEM))
and
total
suspended
solids
(
TSS),
for
direct
dischargers
in
the
Oily
Wastes
subcategory
based
on
the
proposed
technology
option
(
Option
6).
The
technology
requirements
include
the
following
treatment
measures:

(
1)
in­
process
flow
control
and
pollution
prevention;
and
(
2)
oil­
water
separation
by
chemical
emulsion
breaking
and
skimming
(
see
Section
9
of
the
TDD).
This
technology
is
available
technology
readily
applicable
to
all
facilities
in
the
Oily
Wastes
subcategory.
Approximately
42%
of
the
direct
discharging
facilities
in
the
Oily
Wastes
subcategory
currently
employ
this
technology
already.

4.3
BPT/
BAT
OPTIONS
FOR
DIRECT
DISCHARGERS
EPA
selected
the
Best
Practicable
Control
Technology
Currently
Available
(
BPT)
for
direct
dischargers
in
each
subcategory
based
on
the
average
of
the
best
performances
within
the
industry
from
operations
of
various
ages,
sizes,

processes,
and
other
characteristics.
The
Agency
considered
the
cost
of
these
treatment
technologies
relative
to
the
effluent
reductions
achieved
to
assess
the
cost­
reasonableness
of
these
limitations.
EPA
then
considered
application
of
the
Best
Available
Technology
Economically
Achievable
(
BAT)
for
priority
and
nonconventional
pollutants
and
Best
Conventional
Pollutant
Control
Technology
(
BCT)
for
conventional
pollutants.
EPA
is
promulgating
BCT
equivalent
to
BPT
for
facilities
in
the
Oily
Wastes
subcategory
and
has
decided
not
to
establish
BAT
limitations.

Table
4.1
shows
the
technology
basis
for
the
selected
option
for
BPT,
BCT
and
BAT
for
the
Oily
Wastes
subcategory.

Table
4.1:
Selected
Options
For
Direct
Dischargers:
BPT,
BCT
and
BAT
Subcategory
BPT
Option
BCT/
BAT
For
oil­
bearing
wastes
Oily
Wastes
6
BCT
=
6
BAT
not
promulgated
Source:
U.
S.
EPA
analysis.

4.4
PSES
OPTIONS
FOR
INDIRECT
DISCHARGERS
EPA
considered
Pretreatment
Standards
for
Existing
Sources
(
PSES)
options
for
regulating
existing
indirect
dischargers
under
today s
final
rule.
EPA
has
selected
no
further
regulation
for
indirect
dischargers
in
all
of
the
defined
subcategories.

4­
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MP&
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EEBA
Part
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Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
Wastewater
discharges
to
POTWs
from
facilities
in
all
subcategories
will
continue
to
be
regulated
by
local
limits,
general
pretreatment
standards,
and
40
CFR
413
or
433,
as
appropriate.

4.5
NSPS
AND
PSNS
OPTIONS
FOR
NEW
SOURCES
EPA
is
promulgating
New
Source
Performance
Standards
(
NSPS)
for
new
direct
dischargers
in
the
Oily
Wastes
subcategory
at
the
BPT
and
BCT
levels.
New
facilities
have
the
opportunity
to
incorporate
the
best
available
demonstrated
technologies,
including
process
changes,
in­
plant
controls,
and
end­
of­
pipe
treatment
technologies,
without
the
cost
of
retrofitting.
EPA
considered
the
same
technologies
discussed
previously
for
BPT/
BAT
and
PSES
as
the
basis
for
new
source
technology.
In
addition,
because
new
sites
may
be
able
to
install
pollution
prevention
and
pollution
control
technologies
more
cost­
effectively
then
existing
sources,
the
Agency
strongly
considered
more
advanced
treatment
options.
EPA
is
not
promulgating
Pretreatment
Standards
for
New
Sources
(
PSNS)
for
new
indirect
dischargers.

Table
4.2
lists
the
technology
options
and
exclusions
for
new
direct
and
indirect
dischargers.

Table
4.2:
Options
For
New
Direct
Dischargers
(
NSPS)
and
Indirect
Dischargers
(
PSNS)

Subcategory
NSPS
Technology
Option
PSNS
Technology
Option
For
oil­
bearing
wastes
Oily
Wastes
6
No
further
regulation
Source:
U.
S.
EPA
analysis.

4.6
SUMMARY
OF
THE
FINAL
RULE
AND
REGULATORY
ALTERNATIVES
The
following
describes
the
final
rule
and
the
three
alternative
regulatory
options
considered
by
EPA:

 
Final
Rule:
technology
Option
6
applied
only
to
direct
dischargers
in
the
Oily
Wastes
subcategory;

 
NODA/
Proposal
Option:
applies
limitations
and
standards
for
direct
dischargers
in
all
eight
MP&
M
subcategories
and
pretreatment
standards
for
all
indirect
dischargers
in
three
subcategories
(
i.
e.,
Metal
Finishing
Job
Shops,
Printed
Wiring
Board,
and
Steel
Forming
&
Finishing);
pretreatment
standards
for
facilities
above
a
certain
wastewater
flow
volume
in
two
subcategories
(
i.
e.,
General
Metals
and
Oily
Wastes);
and
no
national
pretreatment
standards
for
facilities
in
three
subcategories
(
i.
e.,
Non­
Chromium
Anodizing,
Railroad
Line
Maintenance,
and
Shipbuilding
Dry
Docks);

 
Direct
Dischargers
+
413
to
433
Upgrade
Option:
applies
the
same
technology
requirements
for
direct
dischargers
as
the
final
rule
and
includes
new
requirements
for
indirect
dischargers
in
the
General
Metals,
Printed
Wiring
Board,

and
Metal
Finishing
Job
Shops
subcategories
currently
regulated
under
the
Electroplating
regulations
(
40
CFR
413);

and
 
Direct
Dischargers
+
413
plus
50%
Local
Limits
Upgrade
Option:
applies
the
same
technology
requirements
for
direct
dischargers
as
the
final
rule
and
includes
new
requirements
for
indirect
dischargers
in
the
General
Metals,

Printed
Wiring
Board,
and
Metal
Finishing
Job
Shops
subcategories
currently
regulated
under
the
Electroplating
regulations
(
40
CFR
413)
and
also
includes
new
requirements
for
indirect
dischargers
in
the
General
Metals
subcategory
that
are
currently
regulated
by
local
limits
or
general
pretreatment
standards.

4­
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MP&
M
EEBA
Part
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Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
GLOSSARY
Best
Practicable
Control
Technology
Currently
Available
(
BPT):
effluent
limitations
for
direct
discharging
facilities,
addressing
conventional,
toxic,
and
nonconventional
pollutants.
In
specifying
BPT,
EPA
considers
the
cost
of
achieving
effluent
reductions
in
relation
to
the
effluent
reduction
benefits.
The
Agency
also
considers
the
age
of
the
equipment
and
facilities,
the
processes
employed
and
any
required
process
changes,
engineering
aspects
of
the
control
technologies,
non­
water
quality
environmental
impacts
(
including
energy
requirements),
and
such
other
factors
as
the
Agency
deems
appropriate.
Limitations
are
traditionally
based
on
the
average
of
the
best
performances
of
facilities
within
the
industry
of
various
ages,
sizes,
processes,
or
other
common
characteristics.
Where
existing
performance
is
uniformly
inadequate,
EPA
may
require
higher
levels
of
control
than
currently
in
place
in
an
industrial
category
if
the
Agency
determines
that
the
technology
can
be
practically
applied.

Best
Available
Technology
Economically
Achievable
(
BAT):
effluent
limitations
for
direct
dischargers,
addressing
priority
and
nonconventional
pollutants.
BAT
is
based
on
the
best
existing
economically
achievable
performance
of
plants
in
the
industrial
subcategory
or
category.
Factors
considered
in
assessing
BAT
include
the
cost
of
achieving
BAT
effluent
reductions,
the
age
of
equipment
and
facilities
involved,
the
processes
employed,
engineering
aspects
of
the
control
technology,
potential
process
changes,
non­
water
quality
environmental
impacts
(
including
energy
requirements),
economic
achievability,
and
such
factors
as
the
Administrator
deems
appropriate.
The
Agency
may
base
BAT
limitations
upon
effluent
reductions
attainable
through
changes
in
a
facility's
processes
and
operations.
Where
existing
performance
is
uniformly
inadequate,
EPA
may
base
BAT
upon
technology
transferred
from
a
different
subcategory
within
an
industry
or
from
another
industrial
category.

Best
Conventional
Pollutant
Control
Technology
(
BCT):
effluent
limitations
for
direct
discharging
facilities,

addressing
conventional
pollutants.
Conventional
pollutants
include
biochemical
oxygen
demand
(
BOD5
),
total
suspended
solids
(
TSS),
fecal
coliform,
pH,
and
O&
G.
BCT
is
the
equivalent
of
Best
Available
Technology
(
BAT)
for
control
of
conventional
pollutants.
EPA
evaluates
the
reasonableness
of
BCT
candidate
technologies
by
applying
a
two­
part
cost
test:

(
1)
the
POTW
test,
and
(
2)
the
industry
cost­
effectiveness
test.
In
the
POTW
test,
EPA
calculates
the
cost
per
pound
of
conventional
pollutant
removed
by
industrial
dischargers
to
upgrade
from
BPT
to
a
BCT
candidate
technology,
and
then
compares
this
cost
to
the
POTW
cost
per
pound
for
similar
pollutant
load
reductions.
The
upgrade
cost
to
industry
must
be
less
than
the
POTW
benchmark
of
$
0.25
per
pound
(
in
1976
dollars).
In
the
industry
cost­
effectiveness
test,
the
ratio
of
the
incremental
BPT
to
BCT
cost
divided
by
the
BPT
cost
for
the
industry
must
be
less
than
1.29
(
i.
e.,
the
cost
increase
must
be
less
than
29
percent).

Job
Shop:
Facilities
with
more
than
50
percent
of
their
revenues
coming
from
work
on
products
not
owned
by
the
site.

While
there
are
SIC
codes
associated
with
some
Metal
Finishing
Job
Shops,
they
sell
to
a
variety
of
markets
and
are
not
a
market
in
and
of
themselves.

New
Source
Performance
Standards
(
NSPS):
effluent
limitations
for
new
direct
dischargers
based
on
the
best
available
demonstrated
control
technology.
NSPS
represents
the
greatest
degree
of
effluent
reduction
attainable
through
the
application
of
the
best
available
demonstrated
control
technology
for
all
pollutants
(
i.
e.,
conventional,
nonconventional,
and
priority
pollutants).
In
establishing
NSPS,
EPA
considers
the
cost
of
achieving
the
effluent
reduction
and
any
non­
water
quality
environmental
impacts
and
energy
requirements.

Pretreatment
Standards
for
Existing
Sources
(
PSES):
categorical
pretreatment
standards
for
existing
indirect
dischargers,
designed
to
prevent
the
discharge
of
pollutants
that
pass
through,
interfere
with,
or
are
otherwise
incompatible
with
the
operation
of
POTWs.
Standards
are
technology­
based
and
analogous
to
BAT
effluent
limitations
guidelines.

Pretreatment
Standards
for
New
Sources
(
PSNS):
pretreatment
standards
for
new
indirect
dischargers,
designed
to
prevent
discharges
of
pollutants
that
pass
through,
interfere
with,
or
are
otherwise
incompatible
with
the
operation
of
POTWs.

Addresses
all
pollutants
(
i.
e.,
conventional,
nonconventional,
and
priority
pollutants).
Based
on
the
same
factors
as
are
considered
in
promulgating
NSPS.

4­
5
MP&
M
EEBA
Part
I:
Introduction
and
Background
Information
Chapter
4:
Regulatory
Options
ACRONYMS
BAT:
Best
Available
Technology
Economically
Achievable
BCT:
Best
Conventional
Pollutant
Control
Technology
BPT:
Best
Practicable
Control
Technology
Currently
Available
NSPS:
New
Source
Performance
Standards
O&
G:
oil
and
grease
POTW:
publicly­
owned
treatment
works
PSES:
Pretreatment
Standards
for
Existing
Sources
PSNS:
Pretreatment
Standards
for
New
Sources
4­
6
