4 1 4 ECONOMIC IMPACT ANALYSIS 4.1 Results in Brief This economic impact analysis presents the results of modeling the effects of the plywood and composite wood products NESHAP upon affected facilities, firms, markets, and industries. The analysis shows that product prices increase for each of the four industry sectors included in the economic model, from 0.9 percent for the softwood plywood industry to 2.5 percent for the particleboard and medium density fiberboard industry. Output is expected to decrease from 0.1 percent for the softwood plywood industry to 0.7 percent for the particleboard and medium density fiberboard industry. Exports of these products are expected to decline by no more than 0.7 percent for these four industries, while imports are expected to rise. Only one product line closure at an affected facility is expected, and employment at affected firms is expected to decline by only 0.3 percent. In addition, an analysis of effects of this rule on the supply, distribution, or use of energy finds that these effects are not significant.

4.2 Introduction This NESHAP addresses the emissions of hazardous air pollutants ( HAPs) from facilities that produce plywood and composite wood products. As described in Chapter 3, the rule will result in some facilities in this industry incurring costs associated with controlling HAP emissions. The addition of these control costs will directly affect the individual facilities because their costs of production will increase. In addition, the addition of compliance costs may also have an effect on the overall markets for plywood and composite wood products through market price changes. Depending on market conditions, these changes could occur if facilities with compliance costs increase their prices, reduce their output, or cease operations altogether.

This section presents the result of the Economic Impact Analysis ( EIA) performed to estimate the economic changes that are expected to occur as a result of the NESHAP for the plywood and composite wood products industry U. S. EPA, 1999a). The goal of the assessment is to develop estimates of the following impact measures.

$ Market price changes $ Market quantity changes $ International trade effects $ Size and distribution of social costs Chapter 2 presented a profile of the different sectors within the plywood and composite wood industry, which provides market information necessary to design and implement the EIA for this industry. The plywood and composite wood products manufacturing industry affected by the proposed NESHAP rule includes five distinct market sectors.

$ Softwood Plywood and Veneer ( SWPW) 4 2 $ Oriented Strandboard ( OSB)

$ Other Wood Composites ( OWC), including $ Particleboard and Medium Density Fiberboard ( PB/ MDF)

$ Hardboard ( HB)

$ Engineered Wood Products ( EWP)

For all but the EWP market sector, the Agency applied partial equilibrium ( P/ E) modeling techniques to estimate the economic impacts of the NESHAP rule for plywood and composite wood products. For reasons presented in Section 4.4 below, developing an estimate of the economic impacts of the rule on the EWP sector required a qualitative approach.

Section 4.3 presents the inputs for the P/ E economic analysis, including producer characterization, market characterization, and compliance costs of the regulation. Section 4.4 describes the approach to estimating the economic impacts on the SWPW, OSB, PB/ MDF, and HB industry sectors, and Section 4.5 presents the results of the economic impact analysis. Section 4.6 presents the qualitative analysis of the EWP market sector. The economic analysis methodology and inputs are described more fully in the EIA.

4.3 Economic Impact Analysis Inputs The first step of an impact assessment is developing information used to characterize the baseline conditions of the industry. Key information needed for EIA inputs is used to characterize the following.

° Individual producers ° Product markets ° Compliance costs 4.3.1 Producer Characterization The primary source of baseline data on individual producers used in the EIA is a database developed using the data collected by 1998 ICR described in Chapter 2 ( U. S. EPA, 1998). The information in the facility database allowed the characterization of facilities according to several features needed for the analysis, including major products ( SWPW, OSB, etc), baseline production volumes, and facility capacity. The baseline year for the analysis is 1997 as it corresponds to the year for which plywood and composite wood producers provided this information for the ICR.

For certain facilities, production and capacity information was not available, and was supplemented by additional research. Those facilities without specific production and capacity data were assigned an estimate based on the average production and capacity data for facilities within the same market sector and size category ( as determined by employment).

4.3.2 Plywood and Composite Wood Markets The Plywood and Composite Wood Products industry is a broad category encompassing the four distinct markets listed above: ( 1) SWPW, ( 2) OSB, ( 3) OWC, and ( 4) EWP. For reasons discussed in the 1As mentioned in Chapter 1, some facilities in the " unaffected" category have monitoring, reporting, and record keeping costs of $ 25,194 per year.

4 3 EIA, the OWC sector is decomposed into two markets: PB/ MDF and HB. The Agency developed P/ E models representing each of these four markets.

Market level data used in this EIA are presented in Exhibit 4 1. The market prices and elasticities for each of the four markets were obtained from various industry market reports and economic literature as described in Chapter 2. Total market volumes used in the models for each product are the sum of the production of all identified U. S. facilities ( from the facility database) and imports from foreign producers. Total U. S. production for each market is the total production of all facilities identified in the EPA's facility database. The production was also separated in to two subsets  the total production of affected facilities and the total production of unaffected facilities. 1 The source of foreign trade data on exports and imports of these products was presented in Chapter 2.

Exhibit 4 1: Baseline Characterization of Plywood and Composite Wood Markets: 1997 Softwood Plywood Oriented Strandboard " Other Composites"

PB/ MDF HB Market price ( 1997$/ cubic meter) $ 235 $ 185 $ 169 $ 1,322 Price Elasticity of Demand Construction  0.1034  0.1034  0.1149  0.1149 Manufacturing/ Other  0.2585 n/ a  0.2872  0.2872 Price Elasticity of Supply 0.42 0.42 0.42 0.42 Market quantity ( thousand cubic meters) 17,568,254 9,595,121 11,646,227 1,768,930 Domestic production 17,568,162 9,590,456 11,644,523 1,768,545 Affected 11,680,778 4,691,645 9,670,639 1,768,545 Unaffected 5,887,384 4,898,811 1,973,884 n/ a Exports 1370 148 333 371 Imports 92 4,666 1,705 385 Sources: U. S. EPA facility database; Section 2; and Appendix B of the Economic Impact Analysis.

4.3.3 Facility Compliance Costs As described in Chapter 3, the Agency developed compliance costs estimates for those facilities that must control HAP emissions in accordance with the regulatory requirements of the NESHAP rule. The EIA uses these costs to develop a " with regulation" market equilibrium scenario used to estimate changes in individual facility production, total market volumes, market price, and social costs. Typically, the Agency adjusts the compliance cost estimates from nominal dollars to baseline dollars using the plant cost indices to be consistent with the baseline industry characterization of the economic model ( U. S. EPA, 1999b). In this case, there was virtually no change in the plant cost indices between the baseline year of 1997 and current period, so no adjustment was made to the costs used in this analysis. 4 4 4.4 Economic Impact Analysis Methodology The following section presents a summary of the approach used to assess the economic impacts of the NESHAP . The EIA contains a more detailed description of the methodology used to analyze the economic impact of this regulation on each of the markets analyzed. The purpose of the EIA is to model the responses of individual producers and the overall market to the imposition of compliance costs. For this EIA, the agency used a market based economic model that reflects the production choices producers make in the face of changes in their individual production costs and changes in overall market prices.

The economic model used in this analysis simulates the short run decisions of the producers in response to operating cost and price changes within a given market. For each of the four markets, the model used in this analysis assumes that the market is perfectly competitive, based on the conclusions drawn from the information in the industry profile. In a competitive market, each individual facility takes the price as determined by the market because they do not have the power to set the market price of the product. The approach used for this EIA assumes that the competitive market for each of the four products determines both prices and quantities ( U. S. EPA, 1999b).

In the short run, a firm with an existing plant will decide, based on the market price, how much output to produce with its capital stock ( e. g., fixed investment in the plant and equipment) considered as constant. In this decision, the firm considers the costs of inputs that vary with output levels, such as materials and labor ( U. S. EPA, 1999b). When the market price is equal to the average variable ( operating) costs, the firm is only recouping the cost of its variable inputs. When the price is less than the firm's variable costs, it will no longer produce output because it cannot recover all of its variable costs in the short run. When the market price exceeds variable costs, the firm can also recover a part of its fixed investment in the plant and equipment. In the long run, the firm must cover all of its fixed investment in the plant and equipment. Under this more stringent condition, the market price must exceed its average total costs, which include capital and variable input costs. In this analysis, which is short run in timeframe, the model assumes that all firms wish to maximize its profits and will produce output using their existing plants as long as the market price even marginally exceeds their variable costs of producing output. The short run focus for this analysis is appropriate since full implementation with this rule is required by 3 years from promulgation. Thus, implementation by affected firms must occur by 2007. Most of the economic impacts associated with this rule are therefore likely to occur between promulgation and 2007. In addition, the statutes and Executive Orders that call for economic impact analyses for regulations implicitly call for an assessement of impacts on current producers and consumers. Therefore, a long run approach has some weaknesses in addressing the requirements that an analysis like this one must adhere to. Thus, short run modeling of the economic impacts of this rule, which means presuming the capital stock as a constant, is a reasonable approach.

The market model developed by the Agency for this EIA is based on a series of equations that represent the market supply and demand functions for a given product. The demand functions use baseline price, total domestic production, import, and export data, as well as estimates of the price elasticity of demand for a given product as inputs. The market supply function is based on an estimated supply function for each plywood or composite wood product at all production facilities. The Agency developed a 4 5 spreadsheet model for each of the four markets to represent the conceptual model described below. The EIA provides a description of this process.

Figure 4 1 shows a generalized upward sloping supply function that characterizes the production function of each facility included in the analysis ( affected and unaffected). In the EIA model, this function represents the marginal cost curve for each supplier of the product within the market. The minimum constraint on this function is zero, and the maximum constraint is each facility's capacity. If the market price is above a given facility's average variable cost, the facility will produce output up to the point where production equals the facility's production capacity. If a given facility's marginal production cost is above the market price, it will produce zero output ( EPA, 1999b).

The model then aggregates the supply functions of the individual facilities within a market to represent the market level supply curve. Next, the model equilibrates the market demand curve and the market supply curve according to the baseline market price and quantity values. Figure 4 2 shows that market prices and quantities are set in the baseline according to the intersection of the supply and demand curves in the baseline ( the period prior to the imposition of compliance costs on affected facilities). The baseline scenario equilibrium market price and quantity ( P, Q) are the points on the graph's axes points where the downward sloping market demand curve ( DM) intersects with the upward sloping market supply curve ( SM). In the baseline, at price P, the industry produces total output, Q, with affected facilities producing the amount qa and unaffected facilities producing qu ( EPA, 1999b).

Next the same facility specific supply functions in the model are recalculated after taking into account the increase in production costs associated with the imposition of annual compliance costs on some producers. The costs are expresses in terms of dollars per unit of output in the baseline ( in this case per thousand cubic meter of product). Figure 4 1( b) show the effect of the compliance costs: the supply curve for the affected producers shift upward Sa to Sa' . This raises the point at which market price must cover variable production costs from pa to pa'. The supply curve Su for the unaffected facilities remain the same. When the supply curves for the affected and unaffected facilities are aggregated to represent the market level supply curve, the market supply curve also shifts upward from SM to SM'. Using the original market demand curve, DM, the new equilibrium price increases from P to P' and market output declines from Q to Q'. This reduction in market output is the net result from reductions at affected facilities and increases at unaffected facilities ( EPA, 1999b). 4 6 $/ lb S lbs/ year Figure 4 1. Supply Curves for Affected Facilities Source: U. S. EPA, 1999b. 4 7 p S a q a q u Q Affected Facilities S u SM DM p p + =

Unaffected Facilities Market a) Baseline Equilibrium p q  a q u Q

Affected Facilities S u SM

DM p p + =

Unaffected Facilities Market b) With Regulation Equilibrium p  S a q a q  u Q SM p  p  S  a Figure 4 2. Market Equilibrium Without and With Regulation Source: U. S. EPA, 1999b.

4.5 Economic Impact Analysis Results The following section presents the results of the Agency's implementation of the EIA models described in the previous section. The results are presented at three levels: market, industry, and societal. The market level results present the impacts in terms of changes in price and quantity for each of the four markets. The industry level impacts include changes in revenues, production, employment, and number of operating production lines.

4.5.1 Market Level Results Exhibit 4 2 presents the expected impacts of the regulation at the market level. These changes include the new price and quantity for each product and changes in foreign trade. In each market, prices increase and production quantities decrease due to the imposition of compliance costs on the affected producers. The reduction in market quantities of each product reflect reductions in domestic production ( including production for exports) and increases in foreign imports. The reduction in domestic production reflects production decreases by affected producers and increases by unaffected producers ( EPA, 1999b). 4 8 For softwood plywood, the market price is expected to increase by 0.9 percent, while market quantity declines by 0.1 percent, or 26,207 thousand cubic meters ( or M cubic meters) per year. For oriented strandboard, the market price is expected to increase by 1.3 percent, while market quantity declines by 0.1 percent, or 12,945 M cubic meters per year. For particleboard and medium density fiberboard, the market price is expected to increase by 2.5 percent, while market quantity declines by 0.7 percent, or 78,595 M cubic meters per year. Finally, for hardboard, the market price is expected to increase by 1.0 percent, while market quantity will decline by 0.3 percent, or 4,727 M cubic meters per year.

Generally, increases in market price result in changes in foreign trade of these products: exports decrease and imports increase. Exhibit 4 2 shows that exports of softwood plywood from the United States are expected to decline by 0.2 percent ( or 2 M cubic meters per year); exports of oriented strandboard are expected to decline by 0.1 percent ( or 0.2 M cubic meters per year); exports of particleboard and medium density fiberboard are expected to decline by 0.7 percent ( or 2 M cubic meters per year); and exports of hardboard are expected to decline by 0.2 percent ( or 1 M cubic meter per year). Imports of each of these products to the United States are expected to increase as follows: SWPW by 685 percent ( or 630 M cubic meters per year), OSB by 28.82 percent ( or 1,345 M cubic meters per year), PB/ MDF by 85 percent ( or 1,451 M cubic meters per year), and HB by 100 percent ( or 387 M cubic meters per year).

Exhibit 4 2. Market Level Impacts of the NESHAP Industry Sector Baseline With Regulation Changes from Baseline Absolute Percent Softwood Plywood Market price ( 1997$/ cubic meter) $ 235 $ 237.20 $ 2.20 0.9%

Market output ( M cubic meters/ yr) 17,568,254 17,542,048  26,206  0.1%

Domestic production 17,568,162 17,541,326  26,837  0.2%

Affected Facilities 11,680,778 11,629,258  51,520  0.4%

Unaffected Facilities 5,887,384 5,912,067 24,683 0.4%

Exports 1,370 1,368  2  0.2%

Imports 92 722 630 685.1%

Oriented Strandboard Market price ( 1997$/ cubic meter) $ 185 $ 187.43 $ 2.43 1.3%

Market output ( M cubic meters/ yr) 9,595,121 9,582,176  12,945  0.1%

Domestic production 9,590,456 9,576,165  14,291  0.1%

Affected Facilities 4,691,645 4,654,117  37,528  0.8%

Unaffected Facilities 4,898,811 4,922,048 23,237 0.5%

Exports 147.8 147.6  0.2  0.1%

Imports 4,666 6,011 1,345 28.8% Exhibit 4 2. Market Level Impacts of the NESHAP Industry Sector Baseline With Regulation Changes from Baseline Absolute Percent 4 9 Particleboard and Medium Density Fiberboard Market price ( 1997$/ cubic meter) $ 169 $ 173.29 $ 4.29 2.5%

Market output ( M cubic meters/ yr) 11,646,228 11,567,633  78,595  0.7%

Domestic production 11,644,523 11,564,477  80,046  0.7%

Affected Facilities 9,670,639 9,553,510  117,129  1.2%

Unaffected Facilities 1,973,884 2,010,967 37,083 1.9%

Exports 333 331  2  0.7%

Imports 1,705 3,156 1,451 85.1%

Hardboard Market price ( 1997$/ cubic meter) $ 1,322 $ 1,335.17 $ 13.17 1.0%

Market output ( M cubic meters/ yr) 1,768,930 1,764,203  4,727  0.3%

Domestic production 1,768,545 1,763,431  5,114  0.3%

Affected Facilities 1,768,545 1,763,431  5,114  0.3%

Unaffected Facilities n/ a n/ a 0 n/ a Exports 371 370  1  0.2%

Imports 385 772 387 100.5%

4.5.2 Industry Level Results Industry impacts associated with the NESHAP for the plywood and composite wood industry are presented in Exhibit 4 3. Industry level impacts include changes in revenue, production, numbers of operating product lines, and changes in employment. The estimates for changes in production lines and employment are described in Section 4.5.3 below.

The EIA model estimates the change in prices and production levels after the imposition of the compliance costs on the affected facilities. Exhibit 4 3 shows that overall revenues for each industry increase slightly. Industry revenues increase because demand elasticities for these four markets mean that the change in price ( in percentage terms) is greater than the percentage reduction in output. Affected facilities will experience an increase in revenues due to the increase in the market price, but this effect is likely to be offset by the increase in production costs. Changes in profits, however, could not be estimated due to lack of information on production costs at the facility level. 4 10 Exhibit 4 3. Industry Level Impacts of the NESHAP Baseline With Regulation Changes from Baseline Absolute Percent Softwood Plywood Revenues ($ million/ yr) $ 4,128.5 $ 4,161 $ 32.4 0.78%

Production ( M cubic meters/ yr) 17,568162 17,541,326  26,836  0.15%

Operating product lines (#) 108 107  1  0.93%

Employment* 36,877 36,821  56  0.15%

Oriented Strandboard Revenues ($ million/ yr) $ 1,774.2 $ 1,794.9 $ 20.7 1.17%

Production ( M cubic meters/ yr) 9,590,456 9,576,164  14,292  0.15%

Operating product lines (#) 38 38 0 0.00%

Employment* 6,681 6,671  10  0.15%

Particleboard & Medium Density Fiberboard Revenues ($ million/ yr) $ 1,967.9 $ 2,004.0 $ 36.1 1.83%

Production ( M cubic meters/ yr) 11,644,523 11,564,477  80,046  0.69%

Operating product lines (#) 83 83 0 0.00%

Employment* 20,424 20,284  140  0.69%

Hardboard Revenues ($ million/ yr) $ 2,338.0 $ 2,354.5 $ 16.5 0.71%

Production ( M cubic meters/ yr) 1,768,545 1,763,431  5,114  0.29%

Operating product lines (#) 18 18 0 0.00%

Employment* 6,271 6,252  18  0.29%

* Baseline employment estimates are based total production and employment of all facilities in each market as reported in the EPA facility database. Average production per employee was calculated using the sum of facility specific production and employment. Because facilities reported employment as a range, they are assigned an employment estimate using the mid point of the reported range. Post regulation employment was then estimated by dividing post regulation production by the baseline production per employee.

4.5.3 Distribution of Impacts The distribution of regulatory impacts is presented in Exhibit 4 4. This table presents the same information as in Exhibit 4 3, but provides details on how the rule impacts affected and unaffected facilities differently.

One important result from the EIA model is the projection of process line closures that could occur following promulgation of the NESHAP. The model's estimate of process line closures may be sensitive to the accuracy of the baseline characterization of the facilities. Characteristics such as baseline production levels, revenues ( as a function of production and price), the underlying supply function that represents production costs, and the compliance cost estimates are all factors that affect the distribution of the rule's impacts. 4 11 Exhibit 4 4: Distribution of Industry Level Impacts of the NESHAP: Affected and Unaffected Producers Baseline With Regulation Changes From Baseline Absolute Percent Softwood Plywood Affected Process Lines Revenues ($ million/ yr) $ 2,745.0 $ 2,758.5 $ 13.5 0.49%

Production ( M cubic meters/ yr) 11,680,778 11,629,258  51,520  0.44%

Operating process lines (#) 66 65  1  1.52%

Employment* 24,519 24,411  108  0.44%

Unaffected Process Lines Revenues ($ million/ yr) $ 1,383.5 $ 1,402.4 $ 18.9 1.37%

Production 5,887,384 5,912,067 24,683 0.42%

Operating process lines (#) 42 42 0 0.00%

Employment* 12,358 12,410 52 0.42%

Oriented Strandboard Affected Process Lines Revenues ($ million/ yr) $ 868.0 $ 872.3 $ 4.4 0.50%

Production ( M cubic meters/ yr) 4,691,645 4,654,117  37,528  0.80%

Operating process lines (#) 20 20 0 0.00%

Employment* 3,268 3,242  26  0.80%

Unaffected Process Lines Revenues ($ million/ yr) $ 906.3 $ 922.6 $ 16.3 1.80%

Production 4,898,811 4,922,048 23,237 0.47%

Operating process lines (#) 18 18 0 0.00%

Employment* 3,413 3,429 16 0.47%

Particleboard & Medium Density Fiberboard Affected Process Lines Revenues ($ million/ yr) $ 1,634.3 $ 1,655.6 $ 21.2 1.30%

Production ( M cubic meters/ yr) 9,670,639 9,553,510  117,129  1.21%

Operating process lines (#) 53 53 0 0.00%

Employment* 16,962 16,756  205  1.21%

Unaffected Process Lines Revenues ($ million/ yr) $ 333.6 $ 348.5 $ 14.9 4.47%

Production 1,973,884 2,010,967 37,083 1.88%

Operating process lines (#) 30 30 0 0.00%

Employment* 3,462 3,527 65 1.88% Exhibit 4 4: Distribution of Industry Level Impacts of the NESHAP: Affected and Unaffected Producers Baseline With Regulation Changes From Baseline Absolute Percent 4 12 Hardboard Affected Process Lines Revenues ($ million/ yr) $ 2,338.0 $ 2,354.5 $ 16.5 0.70%

Production ( M cubic meters/ yr) 1,768,545 1,763,431  5,114  0.29%

Operating process lines (#) 18 18 0 0.00%

Employment* 6,271 6,252  18  0.29%

Unaffected Process Lines Revenues ($ million/ yr) n/ a n/ a n/ a n/ a Production n/ a n/ a n/ a n/ a Operating process lines (#) n/ a n/ a n/ a n/ a Employment* n/ a n/ a n/ a n/ a Total Affected Process Lines Revenues ($ million/ yr) $ 7,585.3 $ 7,640.9 $ 55.6 0.73%

Production ( M cubic meters/ yr) 27,811,607 27,600,316  211,291  0.76%

Operating process lines (#) 157 156  1  0.64%

Employment* 51,020 50,662  358  0.70%

Unaffected Process Lines Revenues ($ million/ yr) $ 2,623.4 $ 2,673.4 $ 50.1 1.91%

Production 12,760,079 12,845,082 85,003 0.67%

Operating process lines (#) 90 90 0 0.00%

Employment* 19,233 19,366 133 0.69%

All Process Lines ( net)

Revenues ($ million/ yr) 10,209 10,314 $ 105.6 1.03%

Production 40,571,686 40,445,398  126,288  0.31%

Operating process lines (#) 247 246  1  0.40%

Employment* 70,252 70,028  225  0.32%

n/ a = not applicable * Baseline employment estimates are based total production and employment of all facilities in each market as reported in the EPA facility database. Average production per employee was calculated using the sum of facility specific production and employment. Because facilities reported employment as a range, they are assigned an employment estimate using the mid point of the reported range. Post regulation employment was then estimated by dividing post regulation production by the baseline production per employee.

Exhibit 4 4 shows that one softwood plywood production line is expected to prematurely cease operations. The model does not predict any closures in all of the other product markets. The affected 4 13 entity that closes following adoption of the regulation is a small SWPW producer that incurs higher control costs per unit of production than other SWPW production lines. This facility, with one process line, did not respond to the EPA's ICR survey. Therefore, it was necessary to estimate baseline production and compliance costs based on very little facility specific information. Total baseline production of SWPW by the facility that closes was roughly 9,500 M cubic meters per year, or less than 0.05 percent of the 17,568,162 M cubic meters of SWPW produced by all SWPW facilities during 1997.

As a result of the closure and reductions in production at other affected facilities, the EIA model estimates a total net loss in employment of 225 employees ( 0.3 percent) attributable to the NESHAP across all four market sectors. Affected facilities experience employment loss of 358, which is offset by employment gains at unaffected facilities of 133. Overall the four sectors together experience a 1 percent increase in revenues, and a 0.3 percent decrease in production.

4.5.4 Social Costs of the NESHAP The social costs of a regulation are measured according to the impacts that it has on both consumers and producers. The NESHAP, because it is expected to result in changes in both market price and market quantity, will impact the consumers and producers of softwood plywood and composite wood products. Social costs, also called welfare impacts, are the measure of overall gains and losses experienced by the two groups that may result from the imposition of costs associated with the regulatory requirements.

The economic benefits producers experience when participating in a market is called producer surplus. Producers experience impacts when their revenues change either because of a new market price, increased production costs, or both. These impacts change the amount of producer surplus relative to the baseline. Likewise, the economic benefits consumers experience is called consumer surplus. Consumer surplus changes when consumers experience impacts when the amount of product they consume or the product price changes. The economic principles behind the measurement of social costs are presented in detail in the EIA.

The estimate of the social cost of the NESHAP, presented in Exhibit 4 5, is the sum of the change in producer and consumer surplus. The EIA model estimates the social cost of the proposed NESHAP as $ 135.1 million annually ( 1999 dollars). These costs are distributed across both consumers and producers of plywood and composite wood products according to projected changes in market price and quantity associated with the NESHAP.

Consumer surplus is reduced by $ 136.1 million annually due to the increase in prices and reductions in consumption. Consumers of softwood plywood are worse off by $ 38.7 million annually; consumers of oriented strandboard are worse off by $ 23.3 million annually; consumers of particleboard and medium density fiberboard and of hardboard are worse off annually by $ 49.8 million and $ 23.3 million, respectively.

Producers ( in aggregate) are slightly better off because of the imposition of the NESHAP, with an increase in producer surplus of just under $ 1 million annually. Essentially all of this is change associated with domestic producers. Because the market prices for these products increase, certain individual domestic producers gain at the expense of their competitors. The size of this gain at any given facility depends on how much their production costs change ( as a result of new compliance costs) relative to the 4 14 change in market price and quantity that increases revenues. The benefit to foreign producers associated with higher market prices is quite small, under $ 100,000.

Exhibit 4 5: Distribution of Social Costs Associated with the NESHAP Stakeholder Change in Value ($ million  1999 dollars)

Social Costs of Regulation ( Change in consumer surplus + Change in producer surplus) $ 135.1 Total Change in Consumer Surplus $ 136.1 SWPW Consumers $ 38.7 OSB Consumers $ 23.3 PB/ MDF Consumers $ 49.8 HB Consumers $ 23.3 Total Change in Producer Surplus $ 0.9 Softwood Plywood Producer Surplus, total $ 8.3 Domestic producers $ 8.3 Affected Facilities $ 4.1 Unaffected Facilities $ 12.4 Foreign producers $ 0.0 Oriented Strandboard Producer surplus, total $ 1.4 Domestic producers $ 1.4 Affected Facilities $ 12.9 Unaffected Facilities $ 11.5 Foreign producers $ 0.0 Particleboard & Medium Density Fiberboard Producer surplus, total $ 5.2 Domestic producers $ 5.2 Affected Facilities $ 13.5 Unaffected Facilities $ 8.3 Foreign producers $ 0.0 Hardboard Producer surplus, total $ 0.8 Domestic producers $ 0.8 Affected Facilities $ 0.8 Unaffected Facilities n/ a Foreign producers $ 0.0 2U. S. Department of Energy, Energy Information Administration. Annual Energy Review, End Use Energy Consumption for 1998. Located on the Internet at http:// www. eia. doe. gov/ emeu/ aer/ enduse. html.

3 Ibid.

4 15 4.5.5 Energy Impact Analysis Executive Order 13211, " Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use" ( 66 FR 28355, May 22, 2001), provides that agencies shall prepare and submit to the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, a Statement of Energy Effects for certain actions identified as " significant energy actions." Section 4( b) of Executive Order 13211 defines " significant energy actions" as " any action by an agency ( normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: ( 1) ( i) that is a significant regulatory action under Executive Order 12866 or any successor order, and ( ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or ( 2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action." The rule is not a " significant energy action" because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The basis for the determination is as follows.

As stated in Chapter 2, this rule affects manufacturers in the softwood veneer and plywood ( NAICS 321212), reconstituted wood products ( NAICS 321219), and engineered wood products ( NAICS 321213) industries. There is no crude oil, fuel, or coal production from these industries. Hence, there is no direct effect on such energy production related to implementation of this rule. In fact, as mentioned in section IV. D. of this preamble, there will be an increase in energy consumption, and hence an increase in energy production, resulting from installation of regenerative thermal oxidizers ( RTOs) and wet electrostatic precipitators ( WESPs) likely needed for sources to meet the requirements of the rule. This increase in energy consumption is equal to 718 million killowatt hours/ year ( kWh/ yr) for electricity and 45 million cubic meters/ year ( m3/ yr) for natural gas. These increases are equivalent to 0.012 percent of 1998 U. S electricity production and 0.000001 percent of 1998 U. S. natural gas production. 2 It should be noted, however, that the reduction in demand for product output from these industries may lead to a negative indirect effect on such energy production, for the output reduction will lead to less energy use by these industries and thus some reduction in overall energy production.

For fuel production, the result of this indirect effect from reduced product output is a reduction of only about 1 barrel per day nationwide, or a 0.00001 percent reduction nationwide based on 1998 U. S. fuel production data3. For coal production, the resulting indirect effect from reduced product output is a reduction of only 2,000 tons per year nationwide, or only a 0.00001 percent reduction nationwide based on 1998 U. S. coal production data. For electricity production, the resulting indirect effect from reduced product output is a reduction of 42.8 million Kilowatt hours per year ( kWh yr), or only a 0.00013 percent reduction nationwide based on 1998 U. S. electricity production data. Given that the estimated price increase for product output from any of the affected industries is no more than 2.5 percent, there should be 4 U. S. Department of Energy, Energy Information Administration. 1998 Manufacturing Energy Consumption Survey. Located on the Internet at http:// www. eia. doe. gov/ emeu/ mecs/ mecs98/ datatables/ contents. html.

5 U. S. Environmental Protection Agency. " Energy Impact Analysis of the Proposed Plywood and Composite Wood Products NESHAP." July 30, 2001.

4 16 no price increase for any energy type by more than this amount. The cost of energy distribution should not be affected by this proposal at all since the rule does not affect energy distribution facilities. Finally, with changes in net exports being a minimal percentage of domestic output ( 0.01 percent) from the affected industries, there will be only a negligible change in international trade, and hence in dependence on foreign energy supplies. No other adverse outcomes are expected to occur with regards to energy supplies. Thus, the net effect of this rule on energy production is an increase in electricity output of 0.012 percent compared to 1998 output data, and a negligible change in output of other energy types. All of the results presented above account for the passthrough of costs to consumers, as well as the cost impact to producers. These results also account for how energy use is related to product output for the affected industries. 4 More detailed information on the estimated energy effects and the methodology employed to estimated them are in the background memo5 that provides such details for the proposed rule.

Therefore, we conclude that the rule when implemented is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

4.6 Analysis of Economic Impacts on Engineered Wood Products Sector 4.6.1 Overview The engineered wood products ( EWP) sector is much different than the other four sectors examined in this analysis. Due to both the nature of the products and their markets as mentioned in Section 4.6.4 below, and the limited availability of data, a quantitative analysis was not performed.

EWP products are characterized by differentiated structural beam products, although some can also be used as columns. EWPs are produced by firms using differentiated production systems. There are a number of large firms with market power, allowing them to set prices. Although many of the products in this market sector can be substituted for one another to an extent, each product's design usually provides it with an advantage over others in the design of final structures. Product differentiation allows each product to dominate particular market niches, but also makes many of the products complements as well as substitutes. Even when substitution is possible, some large firms use their market power to influence purchase decisions and persuade consumers to purchase their products. Consequently, these products are not standard commodities as are products in the other plywood and composite wood sectors. Therefore, commodity prices and other standard information that is characteristic of competitive markets are not available. These factors limit the ability of EPA to quantify the impact of the NESHAP on this sector using the same quantitative method applied to the other sectors.

Three of the fifty three EWP facilities in the U. S. will have compliance costs are a result of the NESHAP. This includes the country's two LSL plants, and one of the country's two PSL plants. Weyerhaeuser, Inc. purchased these four plants when they acquired Trus Joist MacMillan. ( Weyerhaeuser 6 LSL bending strength = 1700psi; stiffness ( modulus of elasticity or MOE) = 1.3 1.5E.

4 17 Trus Joist MacMillan will be referred to as W/ TJM for the remainder of this report.) W/ TJM is currently the only manufacturer of LSL and PSL in the world.

4.6.2 Characteristics of EWP Products EWPs include laminated veneer lumber ( LVL), laminated strand lumber ( LSL), parallel strand lumber ( PSL), wood I joists ( I J), and glue laminated timber ( GL). These are value added lumber products designed to be used in applications that are not suitable for ordinary framing lumber. The design and composition of each of these products differ, providing them with different strength, stiffness, cost, and dimensional properties. Strength properties allow products to carry heavier loads without breaking. Strength is particularly important for uses such as carrying beams in floors or bridge girders, which are used to support structures. Stiffness prevents materials from shaking as objects are moved over them. This is particularly important in floors and bridge decks where structure shakes or squeaks are uncomfortable or dangerous. Each product's strength and stiffness is partially a function of its dimensional characteristics. For example, I J are strong, stiff and typically less expensive than the other products. However, their structural integrity does not hold beyond certain lengths.

Laminated Strand Lumber W/ TJM introduced LSL in 1992. Its dimensional characteristics match nominal 2x4 and 4x4 framing lumber, but it provides greater and more uniform strength and stiffness properties. 6 Unlike many of the other EWPs, one of the primary uses of LSL is in vertical applications, as a stud or column. PSL is also used in vertical applications, but its primary uses are in horizontal applications, as a beam. The uses of LSL are summarized in Exhibit 4 6.

Exhibit 4 6: Primary Uses and Substitutes for LSL Application Uses Substitutes Columns or studs Wall, window, and door framing Framing lumber, PSL, solid sawn lumber, steel Headers Garage door, other wide span doors and windows Framing lumber, GL, LVL, PSL, steel Beams Light applications, low load bearing Solid sawn lumber, GL, LVL, PSL, I J Rim Board Floor systems, nailing surface for sheathing, decks and siding Plywood Source: http:// www. trusjoist. com Because W/ TJM is the sole producer of LSL, very little information is available about their costs or profits. Exhibit 4 7 below identifies the production information that is known. Note that neither plant operates near full capacity. The two plants combined operate at less than 50 percent of their combined capacity ( EWP survey). This may be due to a decline in demand or an immature market. 7 PSL bending strength = 2900psi; stiffness = 2.0E.

8 GL bending strength = 2400 3000psi; stiffness = 1.8  2.1E 4 18 Exhibit 4 7: Characteristics of LSL Plants Location Item Deerwood, MN Capacity Production Capacity Employees Plant Age 7,900,000 ft3/ yr 4,900,000 ft3/ yr 62% 100 249 1992 ( estimate)

Chavies, KY Capacity Production Capacity Employees Plant Age 14,900,000 ft3/ yr 5,400,000 ft3/ yr 36% 250 499 1992 ( estimate)

Source: EPA facility survey, 1998.

Parallel Strand Lumber PSL is a slightly older technology than LSL. It was introduced to the market in the mid 1980' s by W/ TJM. PSL is a high performance beam and header product that can also be used as a column. It is designed with exceptional strength, stiffness characteristics that is capable of spanning much longer distances than most other EWPs. 7 Only GL can match or beat PSL's ability to carry heavy loads over long spans. 8 Furthermore, PSL is a balanced beam, which means it has no top or bottom. This property is particularly desirable to the residential framing industry. Balanced beams save on labor costs due to lower skill required to install the product, providing PSL with an edge over GL for a number of years. However, Anthony Forest Products recently developed a line of balanced GL beams with comparable strength and stiffness properties to PSL, and a number of other GL manufacturers have since done the same. This has lead to a competitive more environment. However, PSL still maintains a share of the residential market. Exhibit 4 8 summarizes the uses of PSL.

Exhibit 4 8: Primary Uses and Substitutes for PSL Application Uses Substitutes Columns or studs Wall framing, street lights Steel, solid sawn lumber, steel Headers Garage door, other wide span doors and windows GL, LVL, steel Beams Heavy applications, high load bearing GL, steel, solid sawn lumber, LVL Because W/ TJM has been the only producer of this product, very little is known about their production costs and profits. Exhibit 4 9 below identifies the production information that is known about the two U. S. PSL production facilities. 4 19 Exhibit 4 9: Characteristics of PSL Plants Location Item Colbert, GA ( affected by rule) Capacity Production Capacity Factor Employees Plant Age 3,000,000ft3/ yr 2,770,000ft3/ yr 92% 250 499 mid 1980s ( estimate)

Buckhannon, WV ( not affected by rule) Capacity Production Capacity Factor Employees Plant Age 2,500,000ft3/ yr 1,929,000ft3/ yr 77% 250 499 mid 1980s ( estimate)

source: EPA facility survey, 1998.

Since PSL does compete directly with GL in some applications, there is slightly more information available on it than on LSL. There is one published source of EWP prices that includes some retail PSL delivered prices: Engineered Lumber Trends produced by The Irland Group in Winsor, ME. Exhibit 4 10 presents a comparison of retail prices for PSL and GL. However, it is not possible to estimate firm revenue using these prices because they are retail prices and there is considerable markup from the producer to retail level. The prices listed in the table below show that PSL is more expensive than GL.

Exhibit 4 10: Retail Prices of GL and PSL Beams Delivered to Los Angeles Beam* Width ( inches) Depth ( inches) Price per linear foot PSL ( strength = 2900psi stiffness = 2.0E) 3 1/ 2 11 7/ 8 $ 8.16 GL ( strength = 2400psi stiffness = 1.8E) 3 1/ 8 12 $ 5.90 GL ** ( strength = 3000psi stiffness = 2.1E) 3 1/ 8 12 $ 7.08 Source: Engineered Lumber Trends ( December 1999) * Beam bending strength measured in pounds per square inch and stiffness the beams modulus of elasticity or E ** Price of the 3000 psi GL is estimated by marking up the 2400psi GL by 20% based on conversations with GL manufacturers W/ TJM has stated that PSL could be manufactured using waste material from plywood and LVL. Other industry members dispute this due to the high quality material required for the product. They feel that there is actually considerable wasted material in the production process in order to acquire the high 4 20 quality wood fiber. Consequently, there are two conflicting arguments why PSL is able to sell their product at the higher price.

° Consumers view it as a superior product despite the availability of substitutes, providing it with a higher profit margin. ° W/ TJM has used strategic behavior to maintain the price it requires to provide its product on the market.

4.6.3 Comparison to Other EWP Products Substitution among EWPs is a complicated dynamic. While the products can be viewed as distinct commodities, they are integral components in the engineering design of a structure. Therefore, it is possible for two EWP products to be both substitutes and complements. This is particularly true for W/ TJM's products because they sell both the individual products and entire framing systems that include either LSL or PSL, or both.

LSL is more comparable to framing lumber and solid sawn lumber than most other engineered wood products. As a header it competes with LVL, GL, and PSL. However, as a column or stud, it is fairly unique. It is also a very new technology, which may partially explain why competing firms have not developed comparable products to date. Furthermore, LSL is marketed as a complementary product to W/ TJM's other engineered wood products ( I J, LVL, PSL) in various structures they design.

As an individual product, PSL has more direct substitutes than LSL. In shorter spanning applications ( such as headers or floor joists) LVL, I J, GL, or LSL can be substituted for each other depending on the application. In longer spanning applications, PSL competes with GL and steel. W/ TJM also designed PSL to complement their other products in pre designed framing systems. If an architect or engineer purchases the pre designed framing system, PSL will be specified in the system. This eliminates the possibility of substitutes in these applications. These characteristics are discussed in greater detail below.

4.6.4 Market Characterization The EWP sector is characterized by imperfect competition among firms, particularly. In the case of LSL and PSL, W/ TJM is a monopoly producer because it operates all four facilities that produce products affected by the rule. Although a number of other products can be substituted for both LSL and PSL at the commodity level, W/ TJM has a monopoly on these two products. In addition, they have some ability to control material choice within the residential framing market because they produce Computer Automated Design ( CAD) programs used by architects, engineers, and lumber product distribution companies to design structures. The individual using the program is actually purchasing a complete architectural design, which competes with other architectural designs on the basis of total design cost. Other EWP companies have not developed such programs to the same extent that W/ TJM has.

By pre specifying its products as material inputs in these design packages, W/ TJM assures that they are used in the structure. Moreover, the individual product prices are less important to W/ TJM because the price the buyer using the program is concerned with is the price of the whole structure. Further, because W/ TJM makes all the products used in the design, they can sell any one of the 4 21 components at a loss provided the loss is made up by profits on the whole structure. In addition, W/ TJM also sells pre designed floor, roof, and wall systems that incorporate its EWP products.

Therefore, W/ TJM is a price setter in both these markets. The high price of PSL allows producers of comparable GL a substantial markup over its costs. However, GL manufacturers offered the opinion that PSL could not raise its price without suffering a loss in demand . Those same producers believe that PSL is already selling at a loss to promote the sale of its other products, although this information cannot be confirmed. Another complicating factor is the purchase of TJM by Weyerhaeuser, Inc. Even if TJM had been selling PSL at a loss, Weyerhaeuser may not be willing to do this, particularly if costs increase due to the NESHAP.

4.6.5 Appropriateness of Partial Equilibrium Economic Analysis for the EWP Market It is not appropriate to use a partial equilibrium analysis to quantify the impact of the rule on the EWP sector. The EWP facilities that will have compliance costs due to the rule are not part of a competitive market. W/ TJM has a monopoly on both PSL and LSL because they are the only company in the world producing both these products. Although the products compete to an extent with other EWPs, W/ TJM is able to use its market power to influence consumer purchasing decisions and prices. Also, W/ TJM may be able to absorb cost increases on one product with profits from another.

4.6.6 Analysis The estimated total annual compliance costs for the three impacted EWP facilities are $ 3.2 million, which is only 2.4 percent of the overall compliance cost of the rule of $ 142 million per year. Moreover, the costs are incurred by one of the largest wood products companies in the world. The costs incurred by W/ TJM are less than 1 percent the corporation's total annual revenues, which now include revenues from the facilities purchased from TJM. Although the specific impact on W/ TJM's profitability cannot be determined, it is likely that W/ TJM can afford the costs at the corporate level.

The Agency cannot be certain of the impact that these cost increases will have on the markets for LSL and PSL. W/ TJM could decide use their price setting power to increase the price of PSL and/ or LSL. This could lead to a decrease in consumer surplus. However, it is important to note the distributional impact of this potential price increase. EWPs are often used in high end residential and commercial construction. They typically provide luxury features, such as squeak proof floors, large open rooms with high ceilings and no support columns.

Alternatively, W/ TJM may choose not to raise the prices of PSL and LSL. For example, PSL is already more expensive than GL, a substitute product. A rise in PSL prices could lead to a loss in market share. Furthermore, production data showed that the PSL market is functioning at about 50 percent of its full capacity. These factors indicate that a PSL price increase may not be favorable to W/ TJM. W/ TJM could choose to absorb the cost increase with profits from its other products in the short run. In the long run they could abandon production of these products. In order to meet the demand for their pre designed structural systems, they could either produce or buy a substitute product to use in the structural systems.

If W/ TJM chooses to shut down these plants, there may be a number of unfavorable short run impacts. First, the closures could mean the loss of 600 1250 jobs, spread over three communities. EPA 4 22 expects that the reduction in employment at these facilities would be offset by an increase in employment at a competing firm, but the community impacts may remain.

The impact of the NESHAP on both consumers and the individual facilities and firms will depend upon corporate strategy. Given the acquisition of Trus Joist MacMillan by Weyerhaeuser, corporate decisions and long term strategy are more influential than what could be represented in a model.

4.6.7 Conclusions Although the specific impacts to the EWPs sector cannot be determined, it is unlikely that substantial economic losses will result. The cost burden of this sector is minimal in comparison to the other sectors. Furthermore, the affected facilities are all owned by W/ TJM, which has sufficient resources to handle the compliance costs. Even if W/ TJM passes this cost on to consumers, the price increase is likely to be minimal as substitute products are available. 4 23 4.7 References Abt Associates Inc. 1999. Profile of the Plywood and Wood Composite Industries. Prepared for Larry Sorrels, Innovative Strategies and Economic Group, Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC. December Abt Associates Inc. 2000. Economic Analysis Methodology for the Plywood and Wood Composite Industries. Prepared for Larry Sorrels, Innovative Strategies and Economic Group, Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC. March.

U. S. Environmental Protection Agency. 1998. Industry Specific Information Collection Request ( ICR) for the Development of Plywood and Particleboard Maximum Achievable Control Technology ( MACT) Standards. Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC.

U. S. Environmental Protection Agency. 1999a. OAQPS Economic Analysis Resource Document. Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC.

U. S. Environmental Protection Agency. 1999b. Economic Impact Analysis for the Polymers & Resins III NESHAP. Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC. 5 1 5 SMALL BUSINESS IMPACTS Under the requirements of the Regulatory Flexibility Act ( RFA) of 1980, Federal regulatory agencies must give special consideration to small entities that are affected by regulatory actions. In 1996, amendments to the RFA under the Small Business Regulatory Enforcement Fairness Act ( SBREFA) added certain requirements associated with analyses and procedures associated with determining whether a regulatory action will have a significant impact on a substantial number of small entities ( U. S. EPA, 1999a, 1999b).

5.1 Results in Brief The screening analysis of small business impacts presented in this EIA chapter indicates that 17 of the 83 businesses affected by this rule are small. Of these 17 small firms, ten have annual compliance costs of 1 percent or greater of their sales. Of these 10 firms, three have annual compliance costs of 3 percent or greater of their sales. Of the 32 facilities owned by these 17 small firms, only one facility is predicted to close in order to avoid incurring costs associated with compliance with the rule. This analysis supports a certification of no significant impact on a substantial number of small entities ( SISNOSE) for this rule because, while a few small firms may experience significant impacts, there will not be a substantial number incurring such a burden.

5.2 Introduction The NESHAP for the plywood and composite wood industries will affect the owners of the facilities that will incur compliance costs to control their HAP emissions. The owners, either firms or individuals, are the entities that will bear the financial impacts associated with these additional operating costs. The rule has the potential to impact all firms owning affected facilities, both large and small. This section presents the results of EPA's small business impact analysis of the impact the NESHAP for the Plywood and Composite Wood Industries on small businesses. The analysis was performed in two stages: a screening level analysis, and an examination of impacts on small businesses developed using the models described in Chapter 4.

The screening analysis provides EPA with a preliminary estimate of the magnitude of impacts the NESHAP may have on the ultimate domestic parent companies that own facilities EPA expects to be impacted by the standard. The analysis focused on small firms because they may have more difficulty complying with a new regulation or affording the costs associated with meeting the new standard. This section first describes the data sources used in the screening analysis, the methodology we applied to develop estimates of impacts, the results of the analysis, and conclusions about the results. The results of the impact assessment specific to small businesses that own affected facilities follows. Detailed documentation of the screening analysis presented in this section is contained in the economic impact analysis ( EIA). 5 2 5.3 Screening Analysis Data Sources The screening analysis was based on the following information:

° Industry Specific Information Request ( ICR) for the Development of Plywood and Particleboard MACT Standards ( U. S. EPA, 1998). ° Profile of the Plywood and Composite Wood Products Industries ( Abt Associates, January 2000). ° Estimated Nationwide Costs of Control: Plywood and Composite Wood Products ( MRI, April 14, 2000). ° Dun & Bradstreet, Ward's Business Directory, and Internet research on facility and firm employment and sales.

5.4 Screening Analysis Methodology Cost Analysis After summing annual compliance costs for each affected facility associated with a given parent firm, EPA developed ratios of firm level compliance costs to firm level sales. The preparation of cost to sales ratios is a typical part of screening analyses such as this one. The analysis incorporated firm level compliance costs from the most recent facility compliance cost estimates for all affected facilities. The firm sales data for the majority of the firms with affected facilities was obtained through a search of the Dun & Bradstreet ( D& B) company database. The information obtained from D& B was supplemented with data from firm web sites and several other business databases available through the Internet ( e. g., Zapdata, Hoover's Online, Thomas' Register, and Lycos Companies Online).

Profitability Analysis For the second step in the screening analysis, EPA reviewed the profitability of only those firms with affected facilities with a cost to sales ratio ( C/ S) greater than 1 percent. Specifically, EPA examined a measure of profitability called the net profit margin, also known as the return on sales ratio ( R/ S), calculated by dividing net profit after taxes by annual net sales. Profitability data is not publicly available for those affected firms with cost / sales ratios greater than 1 percent because they are all privately held 5 3 firms. EPA estimated profitability according to industry wide average profitability measures available from public sources. Exhibit 5 1 presents the profitability measure of R/ S by product category.

Exhibit 5 1: Net Profit Margins by Product Type Product Category 1997 Return on Sales Ratio Softwood, Plywood, and Veneer 1.7 Oriental Strandboard 3.5 Other Wood Composites 3.5 Engineered Wood Products* 5.0 Multiple Processes** 2.6 Notes: Source: Dun & Bradstreet ( 1999). Indicator values are based on median values of the industrial sample. * Includes 1998 data for Structural Wood Members, the only data reported for this sector. ** Firms with multiple product lines were assigned an R/ S ratio based on the average of the R/ S ratios for firms with Softwood Plywood and Other Wood Composite product lines.

5.5 Screening Analysis Assumptions Because there were certain gaps in the data, EPA had to make assumptions regarding some affected firms' employment and sales data as follows.

° For those affected facilities for which no parent company data were available, EPA assumed that the facility represents the ultimate parent. EPA then assumed that the employees or the sales associated with the facility were the same for the parent firm. ° For 8 affected firms for which Dun & Bradstreet, Ward's, or Internet sales data was not available at the firm or facility level, EPA applied a sales estimate based on the average sales for firms in the same product and employee size category. ° For one affected firm, EPA obtained employment information for all three of its identified facilities and sales information for two of the three. EPA extrapolated the sales data on a dollar per employee basis from the two facilities with complete data to the facility with only employment data and added those sales to estimate the firm's total sales.

5.6 Screening Analysis Results Cost Analysis Based on the results of the C/ S ratio test, EPA developed the following summary information.

° The total number and percent of affected firms with C/ S ratios greater than 3 percent. ° The total number and percent of affected small firms with C/ S ratios greater than 3 percent. ° The total number and percent of affected firms with C/ S ratios greater than 1 percent. ° The total number and percent of affected small firms with C/ S ratios greater than 1 percent. ° The median and mean C/ S ratios for the following groups of firms: 1Medium density fiberboard, hardboard, conventional particle board and molded particleboard.

2Firms categorized according to the process types associated with the affected facilities. Firms owing facilities with more than one process type were assigned to the " Multiple Processes" category.

5 4 ° All firms. ° Small firms. ° Firms owning affected softwood plywood and veneer facilities. ° Firms owning affected oriented strand board facilities. ° Firms owning affected other wood composite products facilities. 1 ° Firms owning affected engineered wood product facilities. ° Firms owning affected facilities that make multiple products.

The screening analysis showed that of the 52 firms that own facilities incurring both capital and monitoring, recordkeeping , and reporting ( MRR costs), 17 of them ( 33 percent) are small firms according to the U. S. Small Business Administration's " Small Business Size Standards Matched to NAICS Codes" ( U. S. SBA, 2000). Small firms with affected facilities had a median C/ S of 1.22 percent. The remaining 35 firms ( 67 percent) are large, with a median C/ S ratio of 0.33 percent. Overall, the weighted median C/ S ratio for all firms is 0.62 percent. Exhibit 5 2 summarizes this information, along with the mean, maximum and minimum C/ S by firm size category.

Exhibit 5 2: Affected Firms by Size Firm Size1 Number of Affected Firms2 Percent of Total Affected Firms Median C/ S Ratio Mean C/ S Ratio Maximum C/ S Ratio Minimum C/ S Ratio Small 17 33.0% 1.2% 2.3% 8.3% 0.53%

Large 35 67.0% 0.3% 0.6% 5.1% 0.01%

Total/ Weighted Average 52 100.0% 0.6% 1.2% 8.3% 0.01%

Notes: 1For those firms for which firm size information was not available, EPA assumed a typical firm size within the product type category. 2Based on affected facilities only. Includes the firm that has capital costs but no annual costs.

When screened by process type, 2 EPA found that the affected softwood plywood and veneer firms ( 40 percent of all firms), other composite wood firms ( 25 percent of all firms) and firms with multiple processes ( 29 percent of all firms) make up the majority of affected firms. The firms owning facilities that produce softwood plywood have the highest median C/ S ratio, 0.82 percent, followed by the owners of other composite wood facilities, with a mean C/ S ratio of 0.41 percent. See Exhibit 5 3 for a summary of the data by process type, including mean, maximum and minimum C/ S ratios. 5 5 Exhibit 5 3: Affected Firms by Process Type Process Type1 Number of Affected Firms3 Percent of Total Affected Firms Median C/ S Ratio Mean C/ S Ratio Maximum C/ S Ratio Minimum C/ S Ratio Softwood Plywood/ Veneer 21 40.4% 0.8% 1.1% 8.3% 0.01%

Oriented Strand Board 3 5.8% 0.2% 0.7% 1.9% 0.01%

Other Wood Composites2 13 25.0% 0.4% 2.1% 8.2% 0.03%

Engineered Wood Products 0 0.0% n/ a n/ a n/ a n/ a Multiple Processes 15 28.8% 0.4% 0.6% 2.0% 0.01%

Total/ Weighted Average3 52 100.0% 0.6% 1.2% 8.3% 0.01%

Notes: 1Firms categorized according to the process types associated with the affected facilities. Firms owing facilities with more than one process type were assigned to the " Multiple Processes" category. 2Includes Medium Density Fiberboard, Hardboard, and Particleboard ( conventional and molded). 3Based on affected facilities only ( facilities incurring capital and MRR costs). Includes one firm that has capital costs but no annual costs.

Of the four firms with C/ S ratios of 3 percent or greater, three are small. Ten small firms have C/ S ratios of one percent or greater out of 16 in this category. One large firm has a C/ S ratio of 3 percent or greater and six of them have C/ S ratios of one percent or greater. The other wood composite category has the most firms with C/ S ratios of 3 percent or greater ( three out of the four). The softwood plywood has seven firms followed by other wood composites with five firms with C/ S ratios of one percent or greater ( out of 16). The C/ S screening results are presented in Exhibits 4 and 5, below. These tables also compare the number of affected firms ( i. e., firms with facilities incurring only MRR costs as well as those incurring capital and MRR costs) to the estimated total number of firms nationally. 5 6 Exhibit 5 4: Affected Firms with C/ S Ratios of 3 Percent or Greater Category Number of Firms Nationwide* Number of Affected Firms Firms as a Percent of National Firms Firms as a Percent of Affected Firms Firm Size Small 38 3 7.9% 17.6%

Large 42 1 2.4% 2.9%

Undetermined 3 n/ a n/ a n/ a Total/ Weighted Average 83 4 4.8% 7.7%

Process Type Softwood Plywood/ Veneer 30 1 3.3% 4.8%

Oriented Strand Board 2 0 0.0% 0.0%

Other Wood Composites 19 3 15.8% 23.1%

Engineered Wood Products 11 n/ a n/ a n/ a Multiple Processes 21 0 0.0% 0.0%

Total/ Weighted Average 83 4 4.8% 7.7%

Notes: See notes to Exhibits 5 2 and 5 3 above. * Estimate. 3 That is, firms with C/ S ratios greater than one percent.

5 7 Exhibit 5 5: Affected Firms with C/ S Ratios of 1 Percent or Greater Category Number of Firms Nationwide* Number of Firms Firms as a Percent of National Firms Firms as a Percent of Affected Firms by Category Firm Size Small 38 10 26.3% 58.8%

Large 42 6 14.3% 17.1%

Undetermined 3 n/ a n/ a n/ a Total/ Weighted Average 83 16 19.3% 30.8%

Process Type Softwood Plywood/ Veneer 30 7 23.3% 33.3%

Oriented Strand Board 2 1 50.0% 33.3%

Other Wood Composites 19 5 26.3% 38.5%

Engineered Wood Products 11 0 0.0% n/ a Multiple Processes 21 3 14.3% 20.0%

Total/ Weighted Average 83 16 19.3% 30.8%

Notes: See notes to Exhibits 5 2 and 5 3 above. * Estimate. In a few cases, a firm's process type changed when all facilities were taken into account.

Profitability Analysis Based on the results of the profitability analysis performed as described above, EPA developed the following information.

° The total number and percent of affected firms3 whose C/ S ratio: 1) exceeds their profitability ratio by 50 percent or more; 2) is between zero and 50 percent; or 3) is less than or equal to their profitability ratio. ° The total number and percent of affected small firms whose C/ S ratio: 1) exceeds their profitability ratio by 50 percent or more; 2) is between zero and 50 percent; or 3) is less than or equal to their profitability ratio.

When EPA compared the C/ S ratio to the R/ S ratio for those firms with C/ S ratios greater than one percent, EPA found that in 14 of the 16 cases, the C/ S ratio exceeded the R/ S by over 50 percent. Two firms' C/ S ratio exceeded their R/ S ratio by between zero and 50 percent. Exhibit 5 6 presents these results in tabular form. 4Research indicates that one of the small firms with particularly high impacts, Dominance Industries ( d. b. a. Pan Pacific Products) is a single location private corporation owned Philip Ling. However, Dr. Ling is also the owner of a group of companies around the world and is the chairman of Malaysian based Pan Pacific Asia Berhad, an investment holding company that also provides management services. Pan Pacific Asia's 1998 sales were $ 88 million ( U. S.). The group manufactures and distributes timber logs and timber moldings. Other activities of the company are stockbroking and investment holding. While this information is not necessarily applicable to the ultimate domestic parent of Dominance Industries' affected facility, is indicates that the facility's owner has access to financial capital beyond what the sales from the facility generate.

5 8 Exhibit 5 6: C/ S to R/ S comparison for firms with C/ S of one percent or greater C/ S exceeds R/ S by over 50 percent C/ S exceeds R/ S by between 0 and 50 percent C/ S is less than or equal to R/ S Firm Size Number of Firms Percent of Total Firms with Costs Number of Firms Percent of Total Firms with Costs Number of Firms Percent of Total Firms with Costs Small 10 58.8% 1 5.9% 0 n/ a Large 4 11.4% 1 2.9% 0 n/ a Total/ Weighted Average 14 26.9% 2 3.8% 0 n/ a Notes: See notes to Exhibits 5 2 and 5 3 above.

EPA focused its review of the results for the 16 firms with C/ S ratios greater than one percent. For 4 of the 10 small firms in this category, no sales data were available. EPA developed sales estimates for these firms according to the average sales for firms with the same number of employees in the same product category. It is possible that in reality, these firms have parent level sales that differ from those assumed in the current analysis. However, based on extensive research into domestic parent level employment and sales data, EPA expects that this information is not publicly available for these firms. 4 For the remaining 6 small firms with C/ S ratios greater than one percent, EPA assumed that the domestic parent firm sales information obtained from D& B, Wards, or the other Internet sources are reliable for the purpose of this analysis.

EPA assumed that the firm size and sales data are reliable for 5 of the 6 large firms with C/ S ratios greater than 1 percent. One firm, Sierra Pine ( a California Limited Partnership), should be regarded as a special case. Sierra Pine recently purchased three affected facilities from Weyerhaeuser, greatly increasing the total costs associated with Sierra Pine. However, Sierra Pine's sales data is from a query of D& B data performed in late 1999. As a result, the sales associated with recent acquisition of the three plants are not reflected in Sierra Pine's sales data. If, for instance, Sierra Pine's total compliance costs were prorated to exclude the costs attributed to the plants previously owned by Weyerhaeuser, Sierra Pine's C/ S would change from 4.9 percent to 1.7 percent.

EPA also tested the sales estimates applied to large firms. The one large firm for which EPA assumed sales had a C/ S ratio well below one percent. In this case, the firm's actual sales would have to 5 9 be approximately half of the assumed sales in order for the firm's C/ S ratio to exceed one percent. EPA believes that while the assumed sales are potentially higher than the actual sales of this firm, it is less likely that the firm has actual sales that would result in a C/ S ratio over one percent.

EPA used industry wide measures of profitability because such information is not available for privately held firms. Because all the affected firms with C/ S ratios above one percent are privately held, firm specific information regarding R/ S is not publicly available. If firm specific profitability measures were available, it is likely that a comparison of firms' C/ S ratio to their R/ S ratio would produce significantly different results. It should be noted that while overall industry return on sales may be low, it is not necessarily the case for any given firm.

All ten small firms with C/ S ratios of one percent or greater had a C/ S ratio that exceeded the industry profitability measure of return on sales. For the three small firms whose C/ S ratios were three percent or greater, the comparison of compliance costs and profitability measures showed that their C/ S ratios exceeded the industry R/ S by over 100 percent. This divergence between the C/ S ratios for these firms and the industry R/ S is an indicator that these three firms may experience high impacts as a result of incurring the costs of compliance associated with the rule. However, the results of the economic impact analysis show that the affected facilities owned by these firms will continue to operate after controls have been applied to comply with the rule. Therefore, the impact on these firms, while relatively high, are not enough to lead them to cease operations at these facilities.

5.7 Screening Analysis Conclusions The Regulatory Flexibility Act ( RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: ( 1) a small business according to Small Business Administration size standards by 5 digit NAICS code of the domestic parent owning entity ( in this case, 500 employees); ( 2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and ( 3) a small organization that is any not for profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impact of today's rule on small entities, we certify that this action will not have a significant impact on a substantial number of small entities. In accordance with the RFA, we conducted an assessment of the standard on small businesses in the industries affected by the rule. Based on SBA size definitions for the affected industries and reported sales and employment data, the Agency identified 17 of the 52 companies, or 32 percent, owning affected facilities as small businesses. These facilities incur capital and MRR costs associated with the rule. There 31 other firms that only incur MRR costs; and all of these firms are small. Although small businesses represent 32 percent of the affected companies within the source category, they are expected to incur only 6 percent of the total industry compliance costs of $ 142 million. There are only three small firms with compliance costs equal to or 5 10 greater than 3 percent of their sales. In addition, there are seven small firms with cost to sales ratios between 1 and 3 percent.

We performed an economic impact analysis to estimate the changes in product price and production quantities for the firms affected by this rule. The analysis shows that of the 32 facilities owned by affected small firms, only one would be expected to shut down rather than incur the cost of compliance with the proposed rule. Although any facility closure is cause for concern, it should be noted that the baseline economic condition of the facilities predicted to close affects the closure estimate provided by the economic model. Facilities which are already experiencing adverse economic conditions for reasons unconnected to this rule are more vulnerable to the impact of any new costs than those that are not.

This analysis indicates that therule should not generate a significant impact on a substantial number of small entities for the coatings manufacturing source category for the following reasons. First, of the 10 small firms that have compliance costs greater than 1 percent of sales, only 3 have compliance costs of greater than 3 percent of sales. Second, the results of the economic impact analysis show that only 1 facility owned by a small firm out of the 32 facilities owned by affected small firms may close due to the implementation of this rule. The facility that may close rather than incur the cost of compliance appear to have low profitability levels currently. It also should be noted that the estimate of compliance costs for this facility is likely to be an overestimate due to the lack of facility specific data available to assign a precise control cost in this case. In sum, this analysis supports today's certification under the RFA because, while a few small firms may experience significant impacts, there will not be a substantial number incurring such a burden.

Although this rule will not have a significant economic impact on a substantial number of small entities, we minimized the impact of this rule on small entities in several ways. First, we considered subcategorization based on production and throughput level to determine whether smaller process units would have a different MACT floor than larger process units. Our data show that subcategorization based on size would not result in a less stringent level of control for the smaller process units. Second, in light of cost considerations, we chose to set the emission limitation at the MACT floor control level and not at a control level more stringent than the MACT floor control level. Thus, the control level specified in the PCWP rule is the least stringent allowed by the CAA. Third, the rule contains multiple compliance options to provide facilities with the flexibility to comply in the least costly manner while maintaining a workable and enforceable rule. The compliance options include emissions averaging and production based emission limits which allow inherently low emitting process units to comply without installing add on control devices and facilities to use innovative technology and pollution prevention methods. Fourth, the rule includes multiple test method options for measuring methanol, formaldehyde, and total HAP.

5.8 Economic Impact Analysis Results for Small Businesses Exhibit 5 7 provides a summary of the economic impact on small businesses associated with the estimated market adjustments due to compliance with the NESHAP. As shown, the Agency's economic analysis indicates that the 17 small businesses that own 18 affected process lines will be affected as follows: 5 11 Exhibit 5 7: Economic Impacts on Small Businesses Associated with Projected Market Adjustments*

Changes from Baseline Baseline With Regulation Absolute Percent Revenues ($ thousands/ yr)** 394,393 387,229 7,164  1.82 Production ( million m3/ yr) 1,791,408 1,737,969 53,439  2.98 Compliance Costs ($ thousands/ yr) 0 9,194 9,194 n/ a Operating Process Lines 18 17 1  5.56 Employment loss ( FTEs) 3,621 3,513 108  2.98 Notes: * Does not include small businesses that own facilities with MRR costs only. ** Estimated using production and price data in economic impact model FTEs = full time equivalents The one process line closure predicted by the economic impact model is owned by a small business. This results in a 5.6 percent decrease in the number of process lines owned by small business. Overall, the small businesses' revenues decrease by just under 2 percent, their production decreases by just under 3 percent, and their total employment decreases by just under 3 percent, or 108 FTEs. The estimate of employment loss assumes that the production per employee at the affected facilities owned by small firms is the same as the industry average.

5.9 References Abt Associates Inc. 2000a. Small Business Screening Analysis for the Plywood and Wood Composite Industries: Revised Draft. Prepared for Larry Sorrels, Innovative Strategies and Economic Group, Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC. June.

Abt Associates Inc. 2000b. Corporate employment and sales data collected through Internet business information resources, including Dun & Bradstreet, Hoover's On line, Lycos Companies On line, Thomas' Register, Ward's Business Directory, and Zapdata. com. 5 12 Abt Associates Inc. 1999. Profile of the Plywood and Wood Composite Industries. Prepared for Larry Sorrels, Innovative Strategies and Economic Group, Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC. December.

Midwest Research Institute. 1999. Memorandum from Becky Nicholson and Melissa Icenhour to Mary Tom Kissell and Larry Sorrels, U. S. EPA: " Preliminary facility specific cost estimates for implementation of the plywood and composite wood products NESHAP." October 20.

Midwest Research Institute. 2000. " Estimated Nationwide Costs of Control: Plywood and Wood Composite Products." April 14.

U. S. Environmental Protection Agency. 1998. Industry Specific Information Collection Request ( ICR) for the Development of Plywood and Particleboard Maximum Achievable Control Technology ( MACT) Standards. Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC.

U. S. Environmental Protection Agency. 1999a. OAQPS Economic Analysis Resource Document. Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Research Triangle Park, NC.

U. S. Small Business Administration. 2000. " Small Business Size Standards Matched to NAICS Codes." 6 1 6 QUALITATIVE ASSESSMENT OF BENEFITS OF EMISSION REDUCTIONS The emission reductions achieved by this environmental regulation will provide benefits to society by improving environmental quality. This chapter provides information on the types and levels of social benefits anticipated from the plywood and composite wood products ( PCWP) NESHAP, including the health and welfare effects associated with the HAPs and other pollutants emitted by affected sources.

In general, the reduction of HAP emissions resulting from the regulation will reduce human and environmental exposure to these pollutants and thus, reduce potential adverse health and welfare effects. This chapter provides a general discussion of the various components of total benefits that may be gained from a reduction in HAPs through this NESHAP. The rule will also achieve reductions of coarse particulate matter ( PM10), volatile organic compounds ( VOC), and carbon monoxide ( CO). There will also be emissions increases in nitrogen oxides ( NOx) and sulfur dioxide ( SO2) associated with the use of incineration based controls. The benefits and disbenefits of the PM, NOx, and SO2 emissions reductions and increases are presented separately from the benefits associated with HAPs and CO. The benefits and disbenefits associated with PM, NOx, and SO2, along with the benefits associated with HAPs and CO are presented in this chapter.

6.1 Identification Of Potential Benefit Categories The benefit categories associated with the emission reductions predicted for this regulation can be broadly categorized as those benefits which are attributable to reduced exposure to HAPs, which are also VOCs, and those attributable to reduced exposure to other pollutants. Some of the HAPs associated with this regulation have been classified as probable or possible human carcinogens. As a result, one of the benefits of the regulation is a reduction in the risk of cancer mortality from leukemia or other cancers. Other benefit categories include: reduced incidence of neurological effects and irritants associated with exposure to noncarcinogenic HAPs, reduced incidence of cardiovascular and central nervous system problems associated with CO. In addition to health impacts occurring as a result of reductions in HAP and CO emissions, there are welfare impacts which can also be identified. In general, welfare impacts include effects on crops and other plant life, materials damage, soiling, and acidification of estuaries. Each category is discussed separately in the following section.

6.2 Qualitative Description Of Air Related Benefits  HAPs and CO The operation of plywood and composite wood product sources produces emissions of acrolein, formaldehyde, acetaldehyde, and phenol, among other HAPs. The qualitative health and welfare benefits of these HAPs, and CO reductions are summarized separately in the discussions below. 6 2 6.2.1 Benefits of Reducing HAP Emissions According to emission estimates, the regulation will reduce approximately 11,000 tons of emissions of HAPs such as acrolein, formaldehyde, acetaldehyde, phenol, and methanol at all affected plywood and composite wood products sources.

Human exposure to these HAPs may occur directly through inhalation or indirectly through ingestion of food or water contaminated by HAPs or through dermal exposure. HAPs may also enter terrestrial and aquatic ecosystems through atmospheric deposition. HAPs can be deposited on vegetation and soil through wet or dry deposition. HAPs may also enter the aquatic environment from the atmosphere via gas exchange between surface water and the ambient air, wet or dry deposition of particulate HAPs and particles to which HAPs adsorb, and wet or dry deposition to watersheds with subsequent leaching or runoff to bodies of water. 1 This analysis is focused only on the air quality benefits of HAP reduction. A summary of the range of potential physical health and welfare effects categories that may be associated with HAP emissions is provided in Exhibit 6 1. As noted in the table, exposure to HAPs can lead to a variety of acute and chronic health impacts as well as welfare impacts. 6 3 Exhibit 6 1. Potential Health And Welfare Effects Associated With Exposure To Hazardous Air Pollutants2 Effect Type Effect Category Effect End Point Citation Health Mortality Carcinogenicity Genotoxicity Non Cancer lethality EPA ( 1990) 3, Graham et al. ( 1989) 4 Graham et al. ( 1989) 5 Voorhees et al. ( 1989) 6 Chronic Morbidity Neurotoxicity Immunotoxicity Pulmonary function decrement Liver damage Gastrointestinal toxicity Kidney damage Cardiovascular impairment Hematopoietic ( Blood disorders)

Reproductive/ Developmental toxicity All morbidity end points obtained from Graham et al. ( 1989) 7 Voorhees et al.

( 1989) 8, Cote et al. ( 1988) 9 Acute Morbidity Pulmonary function decrement Dermal irritation Eye irritation Welfare Materials Damage Corrosion/ Deterioration NAS ( 1975) 10 Aesthetic Unpleasant odors Transportation safety concerns Agriculture Yield reductions/ Foliar injury Stern et al. ( 1973) 11 Ecosystem Structure Biomass decrease Species richness decline Species diversity decline Community size decrease Organism lifespan decrease Trophic web shortening Weinstein and Birk ( 1989) 12 6 4 <IP_ADDRESS> Health Benefits of Reduction in HAP Emissions.

The HAP emission reductions achieved by this rule are expected to reduce exposure to ambient concentrations of acrolein, formaldehyde, acetaldehyde, and phenol, which will reduce a variety of adverse health effects considering both cancer and noncancer endpoints. Acrolein is classified as a possible human carcinogen, according to the Integrated Risk Information System ( IRIS) 13, an EPA system for classifying chemicals by cancer risk. This means that there is some evidence to indicate that exposure to this chemical causes an increased risk of cancer in humans. Acrolein may also cause general respiratory congestion and upper respiratory tract irritation. Formaldehyde and acetaldehyde are classified as probable human carcinogens, according to IRIS. All of these HAPs are a concern to EPA because long term exposure to these chemicals have been linked with cases of leukemia in humans in an occupational setting. Therefore, a reduction in human exposure to acrolein, formaldehyde, and acetaldehyde could lead to a decrease in cancer risk and ultimately to a decrease in cancer mortality.

The remaining species of HAP emitted by plywood and composite wood products sources, phenol and methanol, have not been shown to cause cancer. However, exposure to these pollutants may still result in adverse health impacts to human and non human populations. Noncancer health effects can be generally grouped into the following broad categories: genotoxicity, developmental toxicity, reproductive toxicity, systemic toxicity, and irritation. Genotoxicity is a broad term that usually refers to a chemical that has the ability to damage DNA or the chromosomes. Developmental toxicity refers to adverse effects on a developing organism that may result from exposure prior to conception, during prenatal development, or postnatally to the time of sexual maturation. Adverse developmental effects may be detected at any point in the life span of the organism. Reproductive toxicity refers to the harmful effects of HAP exposure on fertility, gestation, or offspring, caused by exposure of either parent to a substance. Systemic toxicity affects a portion of the body other than the site of entry. Irritation, for the purpose of this document, refers to any effect which results in irritation of the eyes, skin, and respiratory tract. 14 In particular, methanol has been shown to be an irritant causing dizziness, headaches, and slight visual impairment.

For the HAPs covered by the NESHAP, evidence on the potential toxicity of the pollutants varies. However, given sufficient exposure conditions, each of these HAPs has the potential to elicit adverse health or environmental effects in the exposed populations. It can be expected that emission reductions achieved through the NESHAP will decrease the incidence of these adverse health effects.

<IP_ADDRESS> Welfare Benefits of Reduction in HAP Emissions.

The welfare effects of exposure to HAPs have received less attention from analysts than the health effects. However, this situation is changing, especially with respect to the effects of toxic substances on ecosystems. Over the past ten years, ecotoxicologists have started to build models of ecological systems which focus on interrelationships in function, the dynamics of stress, and the adaptive potential for recovery. This perspective is reflected in Exhibit 6 1 where the end points associated with ecosystem functions describe structural attributes rather than species specific responses to HAP exposure. This is consistent with the observation that chronic sub lethal exposures may affect the normal functioning of individual species in ways that make it less than competitive and therefore more susceptible to a variety of factors including disease, insect attack, and decreases in habitat quality. 15 All of these factors may contribute to an overall change in the structure ( i. e., composition) and function of the ecosystem.

The adverse, non human biological effects of HAP emissions include ecosystem and recreational 6 5 and commercial fishery impacts. Atmospheric deposition of HAPs directly to land may affect terrestrial ecosystems. Atmospheric deposition of HAPs also contributes to adverse aquatic ecosystem effects. This not only has adverse implications for individual wildlife species and ecosystems as a whole, but also the humans who may ingest contaminated fish and waterfowl. In general, HAP emission reductions achieved through the NESHAP should reduce the associated adverse environmental impacts.

6.2.2 Benefits of Reduced CO Emissions Due to HAP Controls As is mentioned above, controls that will be required on plywood and composite wood products sources to reduce HAPs will also reduce emissions of CO. The EPA Staff Paper for CO provides a summary of the health effects information pertinent to the NAAQS for CO16. This information is a summary of information from the CO Criteria Document ( CD) 17, which provides a critical review of a wide variety of health effects studies, including a limited number of newer health effects studies, as well as older studies. Some were conducted at extremely high levels of CO ( i. e. much higher than typically found in ambient air); however, the focus of this Staff Paper is on those key controlled exposure laboratory studies and newer epidemiology studies, which were conducted with human subjects at COHb levels that are most relevant to regulatory decision making.

Based on the CD, staff concludes that human health effects associated with exposure to CO include cardiovascular system and central nervous system ( CNS) effects. In addition, consideration is given in the CD to combined exposure to CO, other pollutants, drugs, and the influence of environmental factors. Cardiovascular effects of CO are directly related to reduced oxygen content of blood caused by combination of CO with Hb to form COHb, resulting in tissue hypoxia. Most healthy individuals have mechanisms ( e. g. increased blood flow, blood vessel dilation) which compensate for this reduction in tissue O2, although the effect of reduced maximal exercise capacity has been reported in healthy persons at low COHb levels. Several other medical conditions such as occlusive vascular disease, chronic obstructive lung disease, and anemia can increase susceptibility to potential adverse effects of CO during exercise.

Effects of CO on the CNS involve both behavioral and physiological changes. These include modification of visual perception, hearing, motor and sensorimotor performance, vigilance, and cognitive ability. Developmental toxicity effects of low level ambient CO exposures, though not well studied in humans, may pose a threat to the fetus. Finally, environmental factors ( e. g. altitude, temperature), drug interaction, and pollutant interaction also can play a role in the public health impact of ambient CO exposure. There is little new information on these effects.

Exhibit 6 2 is a summary of key health effects and studies which have been identified as being most pertinent to a regulatory decision on the NAAQS for CO18. Each of the key studies is considered in light of limitations discussed in the CD and the Staff Paper. For example, epidemiological studies are limited by factors such as exposure uncertainties and confounding variables, and many of the controlled exposure studies of CO health effects have been hampered by uncertainties regarding COHb measurements, relatively small sample sizes, and lack of " real world" exposure conditions. 6 6 Exhibit 6 2. Key Health Effects Of Exposure To Ambient Carbon Monoxide Target Organ Health Effectsa, b Tested Populationc References Lungs Reduced maximal exercise duration with 1 h peak CO exposures resulting in

2.3% COHb ( GC) Healthy individuals Drinkwater et al. ( 1974) Raven et al. ( 1974b) Horvath et al. ( 1975)

Heart Reduced time to ST segment change of the ECG ( earlier onset of myocardial ischemia) with peak CO exposures resulting in

2.4% COHb ( GC) Individuals with coronary artery disease Allred et al. ( 1989a, b; 1991)

Heart Reduced exercise duration because of increased chest pain ( angina) with peak CO exposures resulting in

3% COHb ( CO Ox) Individuals with coronary artery disease Anderson et al. ( 1973) Sheps et al. ( 1987) Adams et al. ( 1988) Kleinman et al. ( 1989, 1998*) Allred et al. ( 1989a, b; 1991)

Heart Increased number and complexity of arrhythmia ( abnormal heart rhythm) with peak CO exposures resulting in

6% COHb ( CO Ox) Individuals with coronary artery disease and high baseline ectopy ( chronic arrhythmia) Sheps et al. ( 1990)

Heart Increased hospital admissions associated with ambient pollutant exposures Individuals > 65 years old with cardiovascular disease Schwartz and Morris ( 1995*) Morris et al. ( 1995*) Schwartz ( 1997*) Burnett et al. ( 1997*)

Brain Central nervous system effects, such as decrements in hand eye coordination ( driving or tracking) and in attention or vigilance ( detection of infrequent events), with 1 h peak CO exposures (  5 to 20% COHb) Healthy individuals Horvath et al. ( 1971) Fodor and Winneke ( 1972) Putz et al. ( 1976, 1979) Benignus et al. ( 1987)

aThe EPA has set significant harm levels of 50 ppm ( 8 h average), 75 ppm ( 4 h average), and 125 ppm ( 1 h average). Exposure under these conditions could result in COHb levels of 5 to 10% and cause significant health effects in sensitive individuals. bMeasured blood COHb level after CO exposure. cFetuses, infants, pregnant women, elderly people, and people with anemia or with a history of cardiac or respiratory disease may be particularly sensitive to CO. dThis table is a reproduction of Table 6 7 of the CD ( p. 6 36, U. S. EPA, 1999a).

* Newer studies, published since completion of the last CO NAAQS review. 6 7 Although acute poisoning induced by CO can be lethal and is probably the best known health endpoint of CO, this only occurs at very high concentrations of CO ( greater than 100 ppm, hourly average), which are not pertinent to the setting of the NAAQS. In the ambient air, exposures to lowerlevels of CO predominate ( generally, less than 50 ppm, hourly average or less than 20 ppm, 8 hr average), and at these levels the best documented adverse health endpoint in human subjects is the decrease in time to onset of reproducible exercise induced angina pectoris ( chest pain). Adverse effects have been demonstrated in individuals with CAD at 3 to 6% COHb by optical ( CO Ox) methods of measurement19. Indicators of myocardial ischemia ( as detected by electrocardiographic changes as ST segment depression) and associated angina were statistically significant in a multi center study at 2.4% COHb ( GC) and showed a dose response relationship with increasing COHb levels. In some individuals with CAD and high levels of baseline ectopy ( chronic arrhythmia), increased number and complexity of exercise related arrhythmias that may present an increased risk of sudden death have been observed at > 6% COHb ( CO Ox). Results of these human exposure studies and reports of workers routinely exposed to combustion products provide support for recent epidemiology research suggesting day to day variations in ambient CO concentrations are related to cardiovascular hospital admissions and daily mortality, especially for individuals over 65 years of age19. Uncertainties about the association between these health endpoints and ambient CO and the relative influence of indoor vs. outdoor CO have not been resolved and will require further research.

Very little data are available demonstrating human health effects in healthy individuals caused by or associated with exposures to low CO concentrations. Decrements in maximal exercise duration and performance in healthy individuals have been reported at COHb levels of > 2.3% an d > 4.3% ( GC), respectively; however, these decrements are small and likely to affect only athletes in competition. No effects were seen in healthy individuals during submaximal exercise, representing more typical daily activities, at levels as high as 15 to 20 % COHb20. Most recent evidence of CNS effects induced by exposure to CO indicates that behavioral impairments in healthy individuals should not be expected until COHb levels exceed 20% ( CO Ox), well above what would be caused by typical ambient air levels of CO21. Evidence of CO induced fetal toxicity or of interactions with high altitudes, drugs, other pollutants, or other environmental stresses remains uncertain or suggests that effects of concern will occur in healthy individuals only with exposure to very high levels of CO22.

Exhibit 6 3 summarizes the population groups potentially at risk to low level CO exposures ( i. e., resulting in COHb levels below 5%) based on current evidence and mechanistic considerations. The table includes the cardiovascular disease group, which is most clearly defined as an " at risk" population based a collection of studies, and other groups which may be more susceptible to CO based on more limited and uncertain evidence and plausible biological mechanisms. Except for persons with angina pectoris and peripheral vascular disease, there is little specific experimental evidence to clearly demonstrate increased risk for CO induced health effects at levels below 5% COHb. However, it is reasonable to expect that individuals with preexisting illness or physiological conditions which limit oxygen absorption or oxygen transport to body tissues would be somewhat more susceptible to the hypoxic ( i. e., oxygen starvation) effects of CO. Exhibit 6 3 provides population estimates for each subpopulation and a brief summary of why each group is suspected of being potentially more susceptible than healthy individuals to CO exposures.

The current health effects evidence suggests that the population group at greatest risk from exposure to ambient levels of CO is individuals with stable exercise induced angina. Given the likely mechanisms of CO effects on the cardiovascular system, individuals with other indications of ischemic heart disease and those with silent ischemia are considered to be similarly at risk for low level ambient CO 6 8 exposures. 6 9 Exhibit 6 3. Summary of Subpopulations Potentially at Riska Groups at Risk to Lowlevel CO Rationale U. S. Population Estimates % of U. S. Populationb References Coronary Heart Disease( CHD) Strongest evidence is for the group with symptomatic angina pectoris, although the predominant type of ischemia ( ST segment depression) is asymptomatic ( i. e,

silent) putting individuals unknowingly at risk. Prevalence of diagnosed ischemic heart disease was 8 million in 1994. Prevalence of silent ischemia was about 3 to 4 million in 1989. 481,000 fatalities were caused by heart attacks in 1995. About 3.1%

About 1.4% DHHS, 1995 DHHS, 1990 American Heart Assn, 1989, 1997 Congestive Heart Failure ( CHF) Evidence associates ambient CO levels with hopitalization for CHF. 5 million Americans have CHF, with about 400,000 new cases/ yr About 2 % American Heart Assn., 1997 Cerebrovascular Disease This condition is associated with limited blood flow to the brain; CO may increase O 2 deprivation. 3 million in 1994 About 1.2% DHHS, 1995 Anemias O 2 carrying capacity of blood is already compromised,

increasing the likelihood of CO induced hypoxia. 4.7 million in 1994 About 1.8% DHHS, 1995 Chronic Obstructive Lung Disease These subgroups have reduced reserve capacities for dealing with cardiovascular stresses and have reduced O 2 supply in blood which may hasten onset of CO induced hypoxic effects. Bronchitis  14 million Emphysema  2 million Asthma  14.6 million ( above for 1994) About 5.5%

About 0.8%

About 5.7% DHHS, 1995 Fetuses and Young Infants Some human and several animal studies report adverse effects in offspring ( e. g., reduced birthweight, increased mortality) 3.9 million live births per year in 1998 About 1.5% DHHS, 2000 aAll subgroups listed are not necessarily sensitive to CO exposure at normal ambient levels.

bPercentages were calculated based on 1995 U. S. population base of 256 million and assumed the absolute numbers in the previous column were the same for 1995. Neither the absolute numbers nor the percentages can be added because of significant overlap among these groups.

6.3 Qualitative Description of Effects from Reductions and Increases in Emissions from Other Pollutants Due to HAP Controls As is mentioned above, controls that will be required on PCWP sources to reduce HAPs will also reduce emissions of other pollutants,

namely: PM10, PM2.5, and increase NOx and SO2 emissions. For more information on these non HAP emissions and emission reductions, please refer to Chapter 3 of this RIA, the preamble for this rule, and the docket. The effects associated with exposure to PM ( both coarse and fine), NOx,

and SO2 emissions are presented below. 6 10 6.3.1 Effects of NOx Emissions.

Emissions of NOx produce a wide variety of health and welfare effects. Nitrogen dioxide can irritate the lungs at high occupational levels and may lower resistance to respiratory infection, although the research has been equivocal. NOx emissions are an important precursor to acid rain and may affect both terrestrial and aquatic ecosystems. Atmospheric deposition of nitrogen leads to excess nutrient enrichment problems (" eutrophication") in the Chesapeake Bay and several nationally important estuaries along the East and Gulf Coasts. Eutrophication can produce multiple adverse effects on water quality and the aquatic environment, including increased algal blooms, excessive phytoplankton growth, and low or no dissolved oxygen in bottom waters. Eutrophication also reduces sunlight, causing losses in submerged aquatic vegetation critical for healthy estuarine ecosystems. Deposition of nitrogen containing compounds also affects terrestrial ecosystems. Nitrogen fertilization can alter growth patterns and change the balance of species in an ecosystem.

Nitrogen dioxide and airborne nitrate also contribute to pollutant haze ( often brown in color), which impairs visibility and can reduce residential property values and the value placed on scenic views.

NOx in combination with volatile organic compounds ( VOC) also serves as a precursor to ozone. Based on a large number of recent studies, EPA has identified several key health effects that may be associated with exposure to elevated levels of ozone. Exposures to ambient ozone concentrations have been linked to increased hospital admissions and emergency room visits for respiratory problems. Repeated exposure to ozone may increase susceptibility to respiratory infection and lung inflammation and can aggravate preexisting respiratory disease, such as asthma. Repeated prolonged exposures ( i. e., 6 to 8 hours) to ozone at levels between 0.08 and 0.12 ppb, over months to years may lead to repeated inflammation of the lung, impairment of lung defense mechanisms, and irreversible changes in lung structure, which could in turn lead to premature aging of the lungs and/ or chronic respiratory illnesses such as emphysema, chronic bronchitis, and asthma.

Children have the highest exposures to ozone because they typically are active outside playing and exercising, during the summer when ozone levels are highest. Further, children are more at risk than adults from the effects of ozone exposure because their respiratory systems are still developing. Adults who are outdoors and moderately active during the summer months, such as construction workers and other outdoor workers, also are among those with the highest exposures. These individuals, as well as people with respiratory illnesses such as asthma, especially children with asthma, may experience reduced lung function and increased respiratory symptoms, such as chest pain and cough, when exposed to relatively low ozone levels during periods of moderate exertion. In addition to human health effects, ozone adversely affects crop yield, vegetation and forest growth, and the durability of materials. Ozone causes noticeable foliar damage in many crops, trees, and ornamental plants ( i. e., grass, flowers, shrubs, and trees) and causes reduced growth in plants.

Particulate matter ( PM) can also be formed from NOx emissions. Secondary PM is formed in the atmosphere through a number of physical and chemical processes that transform gases such as NOx, SO2, and VOC into particles. A discussion of the effects of PM on human health and the environment are discussed further below. Overall, emissions of NOx from PCWP sources can lead to some of the effects discussed in this section  either those directly related to NOx emissions, or the effects of ozone and PM resulting from the combination of NOx with other pollutants. 6 11 6.3.2 Benefits of PM Reductions.

Scientific studies have linked PM ( alone or in combination with other air pollutants) with a series of health effects ( EPA, 1996). Fine particles ( PM2.5) can penetrate deep into the lungs to contribute to a number of the health effects. These health effects include decreased lung function and alterations in lung tissue and structure and in respiratory tract defense mechanisms which may be manifest in increased respiratory symptoms and disease or in more severe cases, increased hospital admissions and emergency room visits or premature death. Children, the elderly, and people with cardiopulmonary disease, such as asthma, are most at risk from these health effects.

PM also causes a number of adverse effects on the environment. Fine PM is the major cause of reduced visibility in parts of the U. S., including many of our national parks and wilderness areas. Other environmental impacts occur when particles deposit onto soil, plants, water, or materials. For example, particles containing nitrogen and sulfur that deposit onto land or water bodies may change the nutrient balance and acidity of those environments, leading to changes in species composition and buffering capacity. Particles that are deposited directly onto leaves of plants can, depending on their chemical composition, corrode leaf surfaces or interfere with plant metabolism. Finally, PM causes soiling and erosion damage to materials.

Thus, reducing the emissions of PM and PM precursors from PCWP sources can help to improve some of the effects mentioned above  either those related to primary PM emissions, or the effects of secondary PM generated by the combination of NOx or SO2 with other pollutants in the atmosphere.

6.3.3 Effects of SO2 Emissions.

Very high concentrations of sulfur dioxide ( SO2) affect breathing and ambient levels have been hypothesized to aggravate existing respiratory and cardiovascular disease. Potentially sensitive populations include asthmatics, individuals with bronchitis or emphysema, children and the elderly. SO2 is also a primary contributor to acid deposition, or acid rain, which causes acidification of lakes and streams and can damage trees, crops, historic buildings and statues. In addition, sulfur compounds in the air contribute to visibility impairment in large parts of the country. This is especially noticeable in national parks.

PM can also be formed from SO2 emissions. Secondary PM is formed in the atmosphere through a number of physical and chemical processes that transform gases, such as SO2, into particles. Overall, emissions of SO2 can lead to some of the effects discussed in this section  either those directly related to SO2 emissions, or the effects of ozone and PM resulting from the combination of SO2 with other pollutants.

6.4 Lack Of Approved Methods To Quantify HAP Benefits The most significant effect associated with the HAPs that are controlled with the rule is the incidence of cancer. In previous analyses of the benefits of reductions in HAPs, EPA has quantified and 6 12 monetized the benefits of reduced incidences of cancer 23, 24. In some cases, EPA has also quantified ( but not monetized) reductions in the number of people exposed to non cancer HAP risks above no effect levels25.

Monetization of the benefits of reductions in cancer incidences requires several important inputs, including central estimates of cancer risks, estimates of exposure to carcinogenic HAPs, and estimates of the value of an avoided case of cancer ( fatal and non fatal). In the above referenced analyses, EPA relied on unit risk factors ( URF) developed through risk assessment procedures. The unit risk factor is a quantitative estimate of the carcinogenic potency of a pollutant, often expressed as the probability of contracting cancer from a 70 year lifetime continuous exposure to a concentration of one µ g/ m3 of a pollutant. These URFs are designed to be conservative, and as such, are more likely to represent the high end of the distribution of risk rather than a best or most likely estimate of risk.

In a typical analysis of the expected health benefits of a regulation ( e. g., the Heavy Duty Engine / Diesel Fuel Regulatory Impact Analysis), health effects are estimated by applying changes in pollutant concentrations to best estimates of risk obtained from epidemiological studies. As the purpose of a benefit analysis is to describe the benefits most likely to occur from a reduction in pollution, use of high end, conservative risk estimates will lead to a biased estimate of the expected benefits of the regulation. For this reason, we will not attempt to quantify the health benefits of reductions in HAPs unless best estimates of risks are available. While we used high end risk estimates in past analyses, recent advice from the EPA Science Advisory Board ( SAB) and internal methods reviews have suggested that we avoid using high end estimates in current analyses. EPA is working with the SAB to develop better methods for analyzing the benefits of reductions in HAPs.

While not appropriate for inclusion in our primary quantified benefits analysis, to estimate the potential baseline risks posed by the PCWP source category and the potential impact of applicability cutoffs, EPA performed a " rough" risk assessment for 185 of the 223 facilities in the PCWP source category. There are large uncertainties regarding all components of the risk quantification step, including location of emission reductions, emission estimates, air concentrations, exposure levels and dose response relationships. However, if these uncertainties are properly identified and characterized, it is possible to provide estimates of the reduction in inhalation cancer incidence associated with this rule. It is important to keep in mind that these estimates will only cover a very limited portion of the potential HAP effects of the rule, as they exclude non inhalation based cancer risks and non cancer health effects.

The HAP included in this " rough" risk assessment were acetaldehyde, acrolein, benzene, formaldehyde, manganese, methanol, methylene chloride, and phenol. Of these HAP, four are presently not considered to have thresholds: acetaldehyde, benzene, formaldehyde, and methylene chloride.

Of the 185 facilities assessed, 148 facilities were found to pose cancer risks equal to or greater than 1 in 1,000,000 to their surrounding population. Forty six facilities were predicted to pose cancer risks of 1 in 100,000 or greater, and two PCWP facilities were found to pose cancer risks equal to or greater than 1 in 10,000.

If this rule is implemented at all PCWP facilities, annual cancer incidence would be reduced from about 0.09 cases/ year to about 0.02 cases/ year, while the number of people at or above a cancer risk level of 1 in a million would be reduced from about 900,000 to 150,000. In addition, the number of people 6 13 exposed to hazard index ( HI) values equal to or greater than 1 was estimated to be reduced from about 270,000 to about 30,000, and the number of people exposed to HI values of 0.2 or greater was predicted to decrease from about 1,500,000 to about 250,000. ( Details of these analyses are available in the docket). EPA has not tried to monetize this reduced incidence of inhalation cancer for several important technical reasons. The primary reasons include the lack of information on the latency period for the onset of the disease and the fact that we have no information on the proportion of fatal versus nonfatal cancers which may occur. These factors prevent us from providing monetized estimates.

For non cancer health effects, previous analyses have estimated changes in populations exposed above the reference concentration level ( RfC). However, this requires estimates of populations exposed to HAPs from controlled sources. Due to data limitations, we do not have sufficient information on emissions from specific sources and thus are unable to model changes in population exposures to ambient concentrations of HAPs above the RfC. As a result, we are unable to place a monetary value of the HAP related benefits associated with this rule.

6.5 Summary The HAPs that are reduced as a result of implementing the plywood and composite wood products NESHAP will produce a variety of benefits, some of which include: the reduction in the incidence of cancer to exposed populations, neurotoxicity, irritation, and crop or plant damage. The rule will also produce benefits associated with reductions in CO. Human health effects associated with exposure to CO include cardiovascular system and central nervous system ( CNS) effects, which are directly related to reduced oxygen content of blood and which can result in modification of visual perception, hearing, motor and sensorimotor performance, vigilance, and cognitive ability. Although we are unable to place a monetary value on these benefits, the information on the variety of effects associated with these pollutants and the level of reductions anticipated from the NESHAP indicate that the benefits of the rule will be substantial. 6 14 6.6 REFERENCES 1. U. S. Environmental Protection Agency. Regulatory Impact Analysis for the National Emissions Standards for Hazardous Air Pollutants for Source Categories: Organic Hazardous Air Pollutants from the Synthetic Organic Chemical Manufacturing Industry and Seven Other Processes. Draft Report. Office of Air Quality Planning and Standards. Research Triangle Park, NC. EPA 450/ 3 92 009. December 1992.

2. Mathtech, Inc. Benefit Analysis Issues for Section 112 Regulations. Final report prepared for U. S. Environmental Protection Agency. Office of Air Quality Planning and Standards. Contract No. 68 D8 0094. Research Triangle Park, NC. May 1992.

3. U. S. Environmental Protection Agency. Cancer Risk from Outdoor Exposure to Air Toxics. Volume I. EPA 450/ 1 90 004a. Office of Air Quality Planning and Standards. Research Triangle Park, NC. September 1990.

4. Graham, John D., D. R. Holtgrave, and M. J. Sawery. " The Potential Health Benefits of Controlling Hazardous Air Pollutants." In: Health Benefits of Air Pollution Control: A Discussion. Blodgett, J. ( ed). Congressional Research Service report to Congress. CR589 161. Washington, DC. February 1989.

5. Reference 4.

6. Voorhees, A., B. Hassett, and I. Cote. Analysis of the Potential for Non Cancer Health Risks Associated with Exposure to Toxic Air Pollutants. Paper presented at the 82nd Annual Meeting of the Air and Waste Management Association. 1989.

7. Reference 4.

8. Reference 6.

9. Cote, I., L. Cupitt and B. Hassett. Toxic Air Pollutants and Non Cancer Health Risks. Unpublished paper provided by B. Hassett. 1988.

10. NAS. Chlorine and Hydrogen Chloride. National Academy of Sciences, National Research Council. Chapter 7. 1975.

11. Stern, A. et al. Fundamentals of Air Pollution. Academic Press, New York. 1973.

12. Weinstein, D. and E. Birk. The Effects of Chemicals on the Structure of Terrestrial Ecosystems: Mechanisms and Patterns of Change. In: Levin, S. et al. ( eds). Ecotoxicology: Problems and Approaches. Chapter 7. pp. 181 209. Springer Verlag, New York. 1989.

13. U. S. Environmental Protection Agency. Integrated Risk Information System; website access available at www. epa. gov/ ngispgm3/ iris. 6 15 14. Reference 1. p. 3 5.

14. Reference 1. pp. 8 4 to 8 5.

15. U. S. Environmental Protection Agency. Ecological Exposure and Effects of Airborne Toxic Chemicals: An Overview. EPA/ 6003 91/ 001. Environmental Research Laboratory. Corvallis, OR. 1991.

16. U. S. Environmental Protection Agency; Staff Paper for the Carbon Monoxide NAAQS; Office of Air Quality Planning and Standards, Research Triangle Park, N. C.; 2000.

17. U. S. Environmental Protection Agency; Criteria Document for Carbon Monoxide; Office of Air Quality Planning and Standards, Research Triangle Park, N. C.; 1999.

18. Reference 17 at Section 6.9.

19. Reference 18.

20. Reference 18.

21. Reference 18.

22. Reference 18.

23. U. S. Environmental Protection Agency. 1992. Draft Regulatory Impact Analysis of National Emissions Standards for Hazardous Air Pollutants for By Product Coke Oven Charging, Door Leaks, and Topside Leaks. Office of Air Quality Planning and Standards, Research Triangle Park, NC.

24. U. S. Environmental Protection Agency. 1995. Regulatory Impact Analysis for the Petroleum Refinery NESHAP. Revised Draft for Promulgation. Office of Air Quality Planning and Standards, Research Triangle Park, NC.

25. Reference 24.