United States	Office Of Air Quality	EPA-452/R-99-004

Environmental Protection	Planning And Standards	November 1999

Agency	Research Triangle Park, NC 27711

Air

Economic Impact Analysis of the Proposed

Commercial and Industrial Solid Waste

Incineration NESHAP

This report has been reviewed by the Emission Standards Division of the Office of Air Quality Planning and Standards of the United States Environmental Protection Agency and approved for publication. Mention of trade names or commercial products is not intended to constitute endorsement or recommendation for use. Copies of this report are available through the Library Services (MD-35), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711, or from the National Technical Information Services 5285 Port Royal Road, Springfield, VA 22161.

CONTENTS

Section	Page

1	Introduction	1-1

1.1	Scope and Purpose	1-1

1.2	Organization of the Report	1-2

2	Waste Management Practices and Waste Incinerators	2-1

2.1	Background on Waste Management Practices	2-1

2.2	Incinerator Technology	2-3

2.2.1	Excess Air	2-4

2.2.2	Starved Air	2-5

2.2.3	Air Curtain	2-5

2.2.4	Fluidized Bed	2-5

2.2.5	Rotary Kiln	2-5

2.3	Incinerator Emissions	2-6

2.3.1	Particulate Matter	2-6

2.3.2	Metals	2-6

2.3.3	Acid Gases	2-6

2.3.4	Carbon Monoxide	2-6

2.3.5	Nitrogen Oxides	2-6

2.3.6	Organic Compounds	2-7

3	Profiles of Affected Units and Facilities	3-1

3.1	Affected Units	3-1

3.2	Affected Facilities	3-2

3.3	Waste Incinerated and Alternative Management Practices	3-3

CONTENTS (continued)

Section	Page

4	Profiles of Affected Industries	4-1

4.1	Lumber and Wood Products (SIC 24)	4-1

4.1.1	Supply Side of the Industry	4-3

4.1.2	Demand Side of the Industry	4-7

4.1.3	Organization of the Industry	4-7

4.1.4	Markets and Trends	4-9

4.2	Paper and Allied Products (SIC 26)	4-9

4.2.1	Supply Side of the Industry	4-11

4.2.2	Demand Side of the Industry	4-13

4.2.3	Organization of the Industry	4-16

4.2.4	Markets and Trends	4-16

4.3	Noncellulosic Man-Made Fibers Industry (SIC 2824)	4-17

4.3.1	Supply Side of the Industry	4-18

4.3.2	Demand Side of the Industry	4-22

4.3.3	Organization of the Industry	4-23

4.3.4	Markets and Trends	4-23

4.4	Pharmaceutical Preparations and Medicinal Chemicals and Botanical Products (SIC 2833, 2834)	4-25

4.4.1	Supply Side of the Industry	4-25

4.4.2	Demand Side of the Industry	4-31

4.4.3	Organization of the Industry	4-32

4.4.4	Markets and Trends	4-35

4.5	Industrial Organic Chemicals Industry (SIC 2869)	4-36

4.5.1	Supply Side of the Industry	4-36

4.5.2	Demand Side of the Industry	4-41

4.5.3	Organization of the Industry	4-41

4.5.4	Markets and Trends	4-42

CONTENTS (continued)

Section	Page

4.6	Fabricated Metals (SIC 34)	4-42

4.6.1	Supply Side of the Industry	4-43

4.6.2	Demand Side of the Industry	4-48

4.6.3	Organization of the Industry	4-48

4.6.4	Markets and Trends	4-49

5	Economic Impacts	5-1

5.1	Control Cost Estimates	5-1

5.1.1	Model Units	5-1

5.1.2	New Sources	5-2

5.2	Unit-Level Control Costs	5-5

5.3	Total Annual Control Costs	5-7

5.4	Alternative Disposal Methods Analysis	5-7

5.5	Market Impacts	5-11

5.6	Summary of Economic Impact Analysis	5-15

6	Regulatory Flexibility Analysis	6-1

6.1	Analysis of Facility-Level and Parent-Level Data	6-2

6.2	Small Business Impacts	6-4

References	R-1

Appendix A	Examples of Waste Being Incinerated at Affected Facilities	A-1

LIST OF FIGURES

Number	Page

3-1	Distribution of Incinerator Unit Capacity in the Inventory Database	3-2

3-2	Characteristics of Incinerator Units in the Inventory Database	3-3

5-1	Market Equilibrium Without and With Regulation	5-14

6-1	Parent Size by Employment Range	6-4

6-2	Number of Parents by Sales Range	6-5

LIST OF TABLES

Number	Page

2-1	Solid Waste Generation Recycling and Disposal Methods by State	2-2

2-2	National Waste Generation, Recycling, Incineration and Landfilling Rates (1988-1998)	2-3

2-3	Facilities Engaged in Waste Management Practices	2-4

3-1	Incineration Technologies in Inventory Database	3-4

3-2	Affected Facilities by Industry Grouping and Government Sector	3-5

3-3	Breakdown of Affected Facilities in the Chemical Industry	3-6

3-4	Type of Waste Being Incinerated	3-7

3-5	Quantity of Waste Being Incinerated by Business Category	3-8

4-1	Lumber and Wood Products Markets Likely to be Affected by Regulation	4-2

4-2	Value of Shipments for the Lumber and Wood Products Industry (SIC 24),

1987-1996	4-2

4-3	Wastes and By-Products Incinerated at Lumber and Wood

Product Facilities	4-5

4-4	Inputs for the Lumber and Wood Products Industry (SIC 24),

1987-1996	4-6

4-5	Capacity Utilization Ratios for Lumber and Wood Products Industry,

1991-1996	4-6

4-6	Size of Establishments and Value of Shipments for the Lumber and Wood Products Industry (SIC 24)	4-8

4-7	Measures of Market Concentration for Lumber and Wood

Products Markets	4-10

4-8	Paper and Allied Products Industry Markets Likely to be

Affected by Regulation	4-10

4-9	Value of Shipments for the Paper and Allied Products Industry (SIC 26),

1987-1996	4-11

4-10	Waste and By-Products Incinerated at Paper and Allied Products

Facilities	4-14

4-11	Inputs for the Paper and Allied Products Industry (SIC 26),

1987 to 1996	4-15

LIST OF TABLES (continued)

Number	Page

4-12	Capacity Utilization Ratios for Paper and Allied Products Industry,

1991-1996	4-15

4-13	Size of Establishments and Value of Shipments for the Paper and

Allied Products Industry (SIC 26)	4-17

4-14	Measurements of Market Concentration for Paper and Allied

Products Markets	4-18

4-15	Value of Shipments for the Noncellulosic Man-Made Fibers Industry

(SIC 2824), 1987-1996	4-19

4-16	Wastes and By-Products Incinerated at Noncellulosic Man-Made

Fibers Facilities	4-20

4-17	Inputs for the Noncellulosic Man-Made Fibers Industry (SIC 2824),

1987-1996	4-21

4-18	Capacity Utilization Ratios for the Noncellulosic Man-Made Fibers

Industry, 1989-1996	4-22

4-19	Size of Establishments and Value of Shipments for the Noncellulosic

Man-Made Fibers Industry (SIC 2824)	4-24

4-20	Measures of Market Concentration for the Noncellulosic Man-Made Fibers Industry (SIC 2824)	4-25

4-21	Value of Shipments for the Botanicals, Medicinals, and Pharmaceutical

Preparations Industries, 1987-1996	4-26

4-22	Wastes and Materials Incinerated at Botanicals, Medicinals,

and Pharmaceutical Preparations Facilities	4-29

4-23	Inputs for Botanical Products and Medicinal Chemicals Industry

(SIC 2833), 1987-1996	4-30

4-24	Inputs for Pharmaceutical Preparations Industry (SIC 2834), 1987-1996	4-31

4-25	Capacity Utilization Ratios for the Botanical Products and Medicinal

Chemicals (SIC 2833) and Pharmaceutical Preparations (SIC 2834)

Industries, 1991-1996	4-32

4-26	Size of Establishments and Value of Shipments for the Botanical Products

and Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations

(SIC 2834) Industries	4-34

4-27	Measures of Market Concentration for the Botanical Products and

Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations

(SIC 2834) Industries	4-35

LIST OF TABLES (continued)

Number	Page

4-28	Value of Shipments for the Industrial Organic Chemicals, N.E.C. Industry

(SIC 2869), 1987-1996	4-37

4-29	Wastes and Materials Incinerated at Industrial Organic Chemicals

Facilities	4-39

4-30	Inputs for the Industrial Organic Chemicals Industry (SIC 2869),

1987 to 1996	4-40

4-31	Capacity Utilization Ratios for the Industrial Organic Chemicals

Industry (SIC 2869), 1991-1996	4-41

4-32	Size of Establishments and Value of Shipments for the Industrial

Organic Chemicals Industry (SIC 2869)	4-42

4-33	Measurements of Market Concentration for Industrial Organic

Chemicals Industry	4-43

4-34	Value of Shipments for the Fabricated Metals Industry (SIC 34),

1987 to 1996	4-44

4-35	Wastes and Materials Incinerated at Fabricated Metals Industry	4-46

4-36	Inputs for Fabricated Metals Industry (SIC 36), 1987 to 1996	4-47

4-37	Capacity Utilization Ratios for Fabricated Metals Industry, 1991-1996	4-48

4-38	Size of Establishments and Value of Shipments for the Fabricated

Metals Industry (SIC 36)	4-49

4-39	Measures of Market Concentration for Fabricated Metals Markets	4-50

5-1	Description of Model Incinerator Units	5-2

5-2	Distribution of Model Incinerator Units	5-4

5-3	Summary of Model Incinerator Costs (third-quarter 1998 dollars)	5-5

5-4a	Total Annualized Unit-Level Control Costs for Floor Alternative	5-6

5-4b	Total Annualized Unit-Level Control Costs for Above the Floor

Alternative	5-6

5-5	Total Annual Control Costs	5-8

5-6	Alternative Disposal Methods	5-10

5-7	Economic Feasibility of Alternative Waste Management (landfills)	5-12

6-1	Facility-Level and Parent-Level Data	6-3

6-2	Small Parent Companies	6-6

6-3	Floor Cost-to-Sales Ratio	6-7

SECTION 1

INTRODUCTION

The U.S. Environmental Protection Agency (EPA) is developing regulations under Sections 111 and 129 of the Clean Air Act for commercial and industrial incineration units that burn nonhazardous solid waste materials. Section 129 requires EPA to develop and adopt "standards of performance" and "emission guidelines" for solid waste incineration units pursuant to Section 111 of the Act. Section 111(b) requires EPA to establish standards of performance for new sources, and Section 111(d) requires EPA to establish procedures for submitting state plans to implement emission guidelines for existing sources. Under Section 129, the standards and guidelines adopted for solid waste incineration units pursuant to Section 111 must reflect maximum achievable control technology (MACT). MACT is the maximum degree of reduction in emissions of specified air pollutants, taking into consideration the cost of achieving the reductions and any nonair quality health and environmental impacts and energy requirements.

Section 129 specifies the following ten pollutants for which emission limits are required: particulate matter, dioxins/furans, HCl, mercury, cadmium, lead, NOx, SO2, CO, and opacity. Additionally, Section 129 requires an operator training and certification program and siting criteria for new units. Because there is no major or area source distinction under Section 129, units of all sizes are covered. EPA has developed a definition of nonhazardous solid waste to clarify when a unit is subject to the Section 111 and 129 regulations.

1.1	Scope and Purpose

EPA identified 122 commercial and industrial incinerators located at 112 facilities. Based on these 122 sources and MACT guidelines, the Agency has identified control measures for the facilities to reduce HAP emissions. Control measures implemented to comply with the proposed regulation will impose regulatory costs on affected facilities in the commercial, industrial, and government sectors. The purpose of this report is to evaluate the impact (both negative and positive) of these costs on facilities, the parent companies who own the facilities, and the U.S. economy. Additionally, impacts on small entities are evaluated in compliance with the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA).

The standards and guidelines will apply to new and existing commercial and industrial solid waste incineration units (CISWI) that burn nonhazardous solid waste. The combustion of hazardous waste under the Resource Conservation and Recovery Act (RCRA) is not covered. Additionally, to avoid any potential for overlapping regulations, incineration units are not covered under the standards and guidelines if they are addressed by regulations in 40 CFR Part 60 for municipal waste combustors (Subparts Cb, Ea, and Eb) or hospital/medical/infectious waste incinerators (Subparts Ce and Ec). Additionally, the standards and guidelines do not apply to incineration units that burn greater than 90 percent by weight pathological waste, which includes human and animal tissue and any associated containers or bedding materials.

The population of affected incinerators used in this analysis was developed from the EPA Inventory Database V.4—Incinerators/Flairs (referred to as the Inventory Database). The incinerators contained in the inventory database are based on information from the Aerometric Information Retrieval System (AIRS) and Ozone Transport Assessment Group (OTAG) databases, state and local permit records, and the combustion source Information Collection Request (ICR) conducted by the agency in 1997. The list of incinerator units contained in the Inventory Database was reviewed and updated by industry and environmental stakeholders as part of the Industrial Combustion Coordinated Rulemaking (ICCR), chartered under the Federal Advisory Committee Act (FACA). Information to support the small business impacts analysis was obtained from the American Business Information database and the Small Business Administration.

1.2	Organization of the Report

The remainder of this report is divided into five sections that support and provide details on the methodology and results of this analysis.

Section 2 provides background on waste production and disposal methods. Included is a discussion of incinerator technology and typical emissions and control costs associated with commercial and industrial incinerators.

Section 3 profiles the units and facilities affected by the regulation. Included in the profile is a description of the type and quantity of waste being incinerated and alternative waste management m ethods.

Section 4 profiles the industries with the largest number of affected facilities. Included are profiles of the lumber and wood products, paper and allied products, noncellulosic manmade fibers, pharmaceutical, organic chemicals, and fabricated metals industries.

Section 5 presents the economic analysis of the proposed regulation. The regulatory control options and associated costs of compliance are described and costs are linked to individual units in the incinerator population. Total cost of compliance is estimated for each regulatory control option, and market impacts are discussed. Alternative waste management options are also discussed in Section 5.

Section 6 assesses the firm-level impacts of the proposed regulation, including an initial regulatory flexibility analysis to evaluate the small business effects of the regulation.

SECTION 2

WASTE MANAGEMENT PRACTICES AND WASTE INCINERATORS

This section provides background information on waste management practices and waste incinerators. Included is a discussion of waste incinerator technologies and typical emissions generated by commercial and industrial waste incinerators.

2.1	Background on Waste Management Practices

The U.S. generates more than 360 million tons of solid waste per year. As shown in Table 2-1, California, New York, and Florida are the top three waste generating states in the U.S., as measured in terms of tons per year. Table 2-2 shows recent trends in total waste generated and in recycling and waste disposal methods. In 1998, 61 percent of solid waste was managed using landfills, 9 percent was incinerated, and the remaining 30 percent was recycled (Glenn, 1998).

As shown in Table 2-2, the share of total waste (by tons) incinerated in the U.S. has remained fairly constant since 1991. Currently, the Mid-Atlantic region and the South have the highest incinerator capacity in the country, 27,650 ton/day (tpd) and 27,070 tpd, respectively. These regions are followed by New England with 19,390 tpd and the Great Lakes with 12,505 tpd. Incineration capacity west of the Mississippi is lower than 10,000 tpd. The majority of incinerated wastes in all parts of the country are handled by municipal and commercial waste management organizations and are controlled regulated under separate regulations for municipal waste combustors.

Approximately 80 percent of incinerated waste (by weight) is defined as nonhazardous waste, also known as Subtitle D waste. Subtitle D waste includes any solid, liquid, semi-
solid, or contained gaseous material resulting from industrial, commercial, or institutional operations that is not regulated as hazardous under Subtitle C of RCRA. The large majority of Subtitle D waste is handed by municipal or private waste management organizations. A survey of industrial Subtitle D establishments found that approximately three-fourths of the waste management practices of Subtitle D establishments include off-site waste management.
Table 2-3 indicates the percentage of U.S. facilities engaging in different waste management practices. Land-based waste management practices account for the large majority of on-site waste management activities.

As shown in Table 2-3, less than one percent of the industrial facilities surveyed in 1981 used incineration as a waste management practice. In addition, based on information from the 1997 combustion source ICR, a significant number of incineration units have been shut down between 1985 and 1995, with most of this waste being switched to land-based management practices, such as on-site and off-site landfills.

2.2	Incinerator Technology

Industrial and commercial incinerators vary greatly in size, capacity, technology, and materials combusted (EPA, 1998). However, the majority have capacities between 150 and 2,000 pounds per hour and are of single or multiple chamber design. Typically, these incinerators are manually charged and intermittently fed. A few industrial incinerators are on par with municipal waste combustors in both size and capacity (EPA, 1993). The most

common types of commercial and industrial nonhazardous waste incinerators are described below.

2.2.1	Excess Air

In excess air incinerators, waste is batch fed into a primary chamber and moved through the unit by hydraulic transfer rams, oscillating grates, or a revolving hearth. As materials combust, bottom ash may be discharged to a wet quench pit, and recirculated combustion air and flue gas may help maintain desired temperatures. In some incinerators, a secondary chamber provides additional flue gas residence time for improved fuel/carbon burnout. Some facilities recover energy by sending waste heat to a boiler.

2.2.2	Starved Air

Waste is batch fed into a starved air incinerator's primary chamber and moved through by either hydraulic transfer rams or reciprocating grates. Bottom ash may be discharged into a wet quench pit. Gases flow into a secondary chamber where they may be recharged and circulated back into the primary chamber. As with excess air incinerators, starved air incinerators may also send waste heat to a boiler for energy recovery. The two types differ in that starved air units operate using less air in the primary chamber (EPA, 1993).

2.2.3	Air Curtain

Also known as trench combustors, air curtain incinerators forcefully project a curtain of air across a pit in which open burning occurs (EPA, 1993). The air curtain is meant to increase combustion efficiency while reducing smoke and emissions of particulate matter. The waste may also be underfired with air to decrease the amount of time needed for complete combustion. These units are commonly used to combust wood wastes, yard wastes, and clean lumber.

2.2.4	Fluidized Bed

In a fluidized bed incinerator, waste is either continuously or batch fed into a combuster vessel equipped with a gas distribution plate. An undergird air windbox at the bottom fluidizes the combustion bed. Undergird air is maintained at a high flow rate to optimize combustion. Overfire air may be used to decrease the amount of time needed for combustion.

2.2.5	Rotary Kiln

A rotary kiln incinerator is a steel shell slightly tilted on its horizontal axis into which waste materials are typically batch fed. As the shell rotates, hot air is introduced into the chamber and the waste material is "tumbled" by its own gravity. Rotation and length and slope of the kiln determine the time needed for materials to combust (Santoleri, 1992). Rotary kiln incinerators evolved from kilns used in the lime, cement, and aggregate industries. They are generally considered to be the most flexible incineration systems (Santoleri, 1992).

Other less common incineration technologies include open burn, liquid injection, rotary hearth, and fixed hearth.

2.3	Incinerator Emissions

Emissions from incinerators vary by incinerator type and materials combusted. Consistent with Section 129, the ICCR Coordinating Committee (EPA, 1998) recommended six general emissions categories for municipal, industrial, and commercial incinerators:

2.3.1	Particulate Matter

The amount of particulate matter (PM) generated depends on the waste characteristics, physical nature of the incinerator design, and the incinerator's operation. During operation, solid flyash from incombustible matter in the unit may be released with the flue gas.

2.3.2	Metals

Metals enter the incinerator through the waste stream. During combustion, metals may be emitted in gaseous form or condense onto PM.

2.3.3	Acid Gases

The chief acid gases of concern are hydrogen chloride (HCl) and sulfur dioxide (SO2). The presence of HCl and SO2 in the flue gas is related to the amount of chlorine and sulfur in the combusting materials and combustion air. HCl derives from the chlorine in wastes such as paper products and plastics. SO2 develops when items such as asphalt shingles, gypsum products, some paper products, rubber, and other materials containing sulfur are combusted.

2.3.4	Carbon Monoxide

Carbon monoxide (CO) develops from carbon not fully oxidized into carbon dioxide (CO2). CO can be a good indicator of combustion efficiency. For example, high levels of CO might indicate that sufficiently high temperatures inside the unit were not maintained long enough to completely convert CO to CO2. Oxygen and air distribution vary by incinerator type, causing levels of CO to vary as well.

2.3.5	Nitrogen Oxides

Nitrogen oxides (NOx) are formed during most combustion processes. For incinerators, NOx is generated from oxidation of nitrogen in the wastes and from fixation of atmospheric nitrogen.

2.3.6	Organic Compounds

A host of toxic organic compounds exists in the waste or is generated during combustion. They may condense, be absorbed onto PM, or be emitted as gases.

BioCycle, 1998	2-1

EPA, 1981	2-4

EPA, 1993	2-5, 2-7

Incinerator Work Group (1998)	2-7

IWG, 1998	2-5

Office of Air Quality Planning and Standards (1993)	2-7

Santoleri, 1992	2-7

Santoleri, 1993	2-7