As part of the facility impact analysis in Chapter 5, EPA assessed potential price increases and output losses that may result from the rule. EPA assessed the impact of these market level changes on the U. S. balance of trade using information provided by MP& M private facility surveys on the source of competition in domestic and foreign markets. The trade analysis allocates the value of changes in output for each facility that is projected to close due to the rule to exports, imports or domestic sales, based on the predominant source of competition in each market reported in the surveys.

EPA s analysis predicts no foreign trade impacts as a result of the final rule because no facility closures are expected. This analysis does not account for factors such as price increases from the rule or the response of foreign producers to the rule, but EPA believes that these factors will have a negligible effect on the U. S. balance of trade. This chapter analyzes the impact on foreign trade of the alternative regulatory options for which closures are predicted.

8.1 DATA SOURCES The assessment of foreign trade impacts is based on the facility closure analysis in Chapter 5. The revenue from any closing facilities is assumed to be lost output attributable to the rule.

The analysis uses survey responses to determine whether a closed facility s revenues are more likely to be replaced by either domestic or foreign producers. Question 5 in the Phase I § 308 survey asked respondents to identify their   major source of competition  in each of three markets: local/ regional, national, and international. Question 8 in the Phase II survey asked respondents to identify their   most significant source of competition  in domestic and international markets. Respondents selected one of the following possible responses:

  domestic firms,

  foreign firms,

  no competition in this market, and   do not operate in this market.

During the process of clarifying survey answers with respondents, EPA found that most respondents who did not select any of the sources of competition said that they did not participate in the relevant market. Therefore, if a respondent did not answer the question regarding the most important source of competition in the domestic or international markets, EPA classified the facility as not operating in the respective market ( domestic or foreign).

The analysis also uses survey responses to determine revenues from exports. The Phase I § 308 survey reported the percentage of revenues earned from domestic customers and from overseas markets. EPA used export share and total revenues for each facility to calculate export and domestic revenues. The Phase II survey asked respondents to report 8 1 MP& M EEBA Part II: Costs and Economic Impacts Chapter 8: Foreign Trade Impacts revenues from MP& M exports. EPA then calculated domestic sales by subtracting export revenues from total revenues for each facility.

The Iron & Steel survey did not report comparable information on the source of competition in domestic and foreign markets.

EPA relied on published trade statistics for the products produced by facilities in the Steel Forming & Finishing subcategory to assess potential impacts on trade for these facilities.

EPA obtained 1996 import and export data from the Bureau of the Census, Foreign Trade Division for those commodities determined to be MP& M related. The data included imports and exports by all facilities in relevant industries, including both dischargers and non dischargers.

8.2 METHODOLOGY The effect of an increase in domestic production costs on the foreign trade balance is influenced by a variety of factors,

including:

  the extent to which domestic producers attempt to raise prices to recover costs,

  the price elasticity of demand in both domestic and export markets,

  the likely pricing and supply response of foreign producers, and   trends in currency exchange rates.

EPA did not attempt to simultaneously model changes in prices, output, and sales in domestic and foreign markets for the products and services produced by the MP& M industry sectors. As in the facility impact analysis described in Chapter 5, the trade analysis relies on a sequential analysis that assesses price increases and then predicts output adjustments based on closures. EPA used facilities  own assessments of their competitive status relative to foreign producers, as reported in the survey, to assess impacts of these output adjustments on the balance of trade.

EPA expects that foreign firms would replace some but not all of the output from any closing facilities. Domestic firms that remain open or enter the market might also win customers that used to buy from the closing facility. Revenues lost by closing facilities are assigned to domestic or foreign producers as follows:

  Lost exports: If a closing facility stated that most of its international competition came from foreign firms, then EPA assigned the facility s export revenues to foreign firms. U. S. exports would therefore decline by the amount of the closing facility s exports. If the facility identified domestic businesses as its greatest source of competition in foreign markets, then EPA assigned the closing facility s export revenues to other domestic firms. Closures of these facilities, which reported relatively low foreign competition for exports, will have no impact on U. S. exports under the expected scenario.

  Increased imports: If a closing facility identified foreign producers as the main source of domestic sector competition, then EPA assigned the facility s lost domestic revenues to foreign firms. Imports would increase by the same amount. If other domestic businesses posed the strongest competition, then EPA assigned the closing facility s domestic sales to other U. S. producers, and imports would remain constant.

The survey data collected for the Steel Forming and Finishing facilities did not provide export data. EPA assumed that the ratio of exports to value of shipments for any closing facilities in the analysis was the same as the ratio for the industry as a whole.

From the estimated changes in exports and imports, EPA calculated the net trade impact ( reduction in exports plus increase in imports) and compared this value to baseline trade levels for ( 1) all commodities and ( 2) MP& M sector commodities, only.

8 2 MP& M EEBA Part II: Costs and Economic Impacts Chapter 8: Foreign Trade Impacts 8.3 RESULTS Chapter 3 provides an overview of exports, imports and the balance of trade in the MP& M industry sectors. U. S. MP& M producers as a group exported products with a value of $ 345 billion in 1996. Imports to the U. S. of the same products in 1996 totaled $ 421 billion, resulting in an overall net MP& M commodity trade deficit of $ 76 billion. Some MP& M sectors contribute to a positive commodity trade balance ( e. g. aircraft, with a $ 27 billion positive balance in 1996). In other sectors,

substantially more products are imported than exported ( e. g. motor vehicles, with a net negative balance of $ 63 billion.)

Table 8.1, below, summarizes the estimated impact of the final rule and alternative options on the U. S. balance of trade for all commodities. Because EPA s analysis indicates that the final rule will cause no facility closures, EPA expects that the final regulation will not affect the balance of trade. As shown in the table, the other regulatory options would have a negligible impact on U. S. imports, exports, and the national trade balance. Option II ( NODA option) results in the most closures and thus the largest trade impacts. However, even in this option, projected imports increase by only $ 85 million, or slightly more than one hundredth of one percent of baseline imports, and exports decrease by only $ 55 million, less than one hundredth of one percent of baseline exports. The net result for the NODA option is an insignificant 0.08 percent decline in the national balance of trade.

Table 8.1: ( millions, 2001$)

1996 Exports 1996 Imports Trade Balancea Baseline $ 666,321 $ 847,767 ($ 181,446)

Option I: Selected Option Change due to the ruleb n/ a n/ a n/ a Option II: Proposed/ NODA Option Change due to the rule ($ 55) $ 85 ($ 141)

Post compliance $ 666,266 $ 847,852 ($ 181,587)

% Change from baseline  0.008% 0.010% 0.078%

Option III: 413 to 433 Upgrade Option Change due to the rule $ 0 $ 22 ($ 22)

Post compliance $ 666,321 $ 847,789 ($ 181,468)

% Change from baseline 0% 0.0026% 0.012%

Option IV: All to 433 Upgrade Option Change due to the rule $ 0 $ 22 ($ 22)

Post compliance $ 666,321 $ 847,789 ($ 181,468)

% Change from baseline 0% 0.0026% 0.012% Estimated National Impacts on Total U. S. Foreign Trade a Trade balance is equal to exports minus imports.

b There were no regulatory closures in the selected option, and so this analysis predicts no foreign trade impacts.

Source: Bureau of Census and U. S. EPA analysis.

Table 8.2 shows regulatory impacts on foreign trade in MP& M industry commodities. As noted above, EPA estimates that the final rule will cause no closures and thus have no foreign trade impacts. In the other options, the projected changes in exports and imports represent only an insignificant percentage of commodity trade in the MP& M industry sectors. The 8 3 MP& M EEBA Part II: Costs and Economic Impacts Chapter 8: Foreign Trade Impacts largest impacts occur in Option II ( NODA Option), but even these impacts result in only a 0.2 percent decline in the net trade balance in these industries.

Table 8.2: Estimated National Impacts on MP& M Related Foreign Trade ( millions, 2001$)

1996 Exports 1996 Imports Trade Balancea Baseline $ 345,274 $ 421,015 ($ 75,741)

Option I: Selected Option Change due to the ruleb n/ a n/ a n/ a Option II: Proposed/ NODA Option Change due to the rule ($ 55) $ 85 ($ 141)

Post compliance $ 345,219 $ 421,100 ($ 75,882)

% Change from baseline  0.016% 0.020% 0.186%

Option III: 413 to 433 Upgrade Option Change due to the rule $ 0 $ 22 ($ 22)

Post compliance $ 345,274 $ 421,037 ($ 75,763)

% Change from baseline 0% 0.005% 0.030%

Option IV: All to 433 Upgrade Option Change due to the rule $ 0 $ 22 ($ 22)

Post compliance $ 345,274 $ 421,037 ($ 75,763)

% Change from baseline 0% 0.005% 0.030%

a Trade balance is equal to exports minus imports.

b There were no regulatory closures in the selected option, and so this analysis predicts no foreign trade impacts.

Source: Bureau of Census and U. S. EPA analysis.

The analysis of trade impacts does not explicitly account for responses to price increases caused by the rule, as noted previously. However, EPA expects little change in exports and imports as a result of the minimal price increases predicted for the final rule. The estimated price increases are less than one half of one percent in all sectors ( see Table 5.4 in Chapter 5).

Annual rates of inflation for the United States  major trading partners are generally well above the projected increases in MP& M prices, and price increases in the projected range are not likely to materially affect the terms of U. S. trade in MP& M products. 1 1 The following are 1990 98 annual inflation rates, as measured by the GDP implicit deflator, for nine of the U. S.  s top ten trading partners: Canada 1.4%, Mexico 19.5%, Japan 0.2%, China 9.7%, Germany 2.2%, United Kingdom 3.0%, Republic of Korea 6.4%, France 1.7%, and Singapore 2.1%. The annual change in the U. S. GDP deflator over the same period is 1.9% ( Data were not reported for Taiwan.) World Bank, 2000 World Development Indicators, Table 4.16.

8 4 MP& M EEBA Part II: Costs and Economic Impacts Chapter 8: Foreign Trade Impacts REFERENCES U. S. Department of Commerce, Bureau of the Census. 1997. Current Industrial Reports: Steel Mill Products.

U. S. Department of Commerce, Bureau of the Census, Foreign Trade Division. 1996. FT900.

http:// www. census. gov/ foreign trade/ Press Release/ 96_ press_ releases/ Final_ Revisions_ 1996/.

World Bank, 2000 World Development Indicators.

8 5 MP& M EEBA Part II: Costs and Economic Impacts Chapter 8: Foreign Trade Impacts THIS PAGE INTENTIONALLY LEFT BLANK 8 6 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts Chapter 9: Firm Level, New Source,

and Industry Impacts INTRODUCTION The previous chapters assessed impacts on MP& M facilities, on governments and communities, and on the U. S.

balance of trade. This chapter considers impacts on private businesses in more detail, by addressing three categories of impacts. First, the analysis of impacts on firms builds on the facility impact analysis to assess whether firms that own multiple facilities are likely to incur more significant impacts than indicated by the facility impact analysis.

Second, the new source facility impact analysis considers whether the final rule might impose disproportionate burdens on new sources relative to existing sources, and thereby pose a barrier to new entry. Third, this chapter discusses potential industry level impacts of the final rule.

9.1 FIRM LEVEL IMPACTS CHAPTER CONTENTS 9.1 evel Impacts ................. ......... 9 1 9.1.1 ................. ............. 9 1 9.1.2 Methodology ................. ........ 9 2 9.1.3 ................. ............. 9 2 9.2 ource Impacts ................. ........ 9 3 9.2.2 Methodology ................. ........ 9 4 9.2.3 ................. ............. 9 5 9.3 Level Impacts ................. ...... 9 7 Glossary ................. ................. .... 9 9 Acronyms ................. ................. .. 9 10 References ................. ................. . 9 11 Firm L Sources Results New S Results Industry EPA analyzed economic impacts on firms for the following reasons:

  Impacts may be more significant at the firm level than at the facility level if a firm owns a number of facilities that incur significant costs. To the extent allowed by the available data, the analysis therefore looks at the combined effect of the facility compliance costs for all facilities owned by a given firm.

  A firm level analysis is needed to assess impacts on small businesses, as required by the Regulatory Flexibility Act and SBREFA. Certain findings from the firm level analysis are used in the small business impact analysis presented in the following Chapter 10.

9.1.1 Sources The firm level analysis begins from the results of the facility level analysis presented in Chapter 5, supplemented by firm

level information provided by the MP& M facility surveys and publically available information.

EPA was not able to conduct a rigorous national analysis of firm level impacts because the sample frame used to provide national estimates from surveyed facilities reflects the population of facilities rather than firms. EPA therefore analyzed impacts for a hybrid dataset of MP& M firms that includes both national estimates ( for single facility firms) and sample firms ( for multiple facility firms), The Agency believes that the analysis of firm level impacts presented in this chapter provides a useful indication of national firm level impacts, however, for two reasons:

  Most MP& M facilities are single facility firms. The survey facility sample weights can be used to extrapolate to the national number of firms for these single site firms.

  EPA requested voluntary information in the Phase II detailed questionnaires on other MP& M facilities owned by the firms responding to the survey for a sampled facility. EPA aggregated multiple facility compliance costs to the firm

level by including costs for all surveyed facilities and, for the Phase II survey, facilities identified in voluntary responses.

9 1 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts It is unlikely that firm level impacts would be material among all MP& M firms in the nation, if this partial analysis does not indicate significant impacts among the firms identified in this analysis.

9.1.2 Methodology The various surveys asked respondents to provide firm level revenues for the parent firm. For single facility firms, firm revenue and compliance costs are identical to those for the facility. For firms that own more than one sample facility,

compliance costs are the sum of costs for all facilities reported on in the survey.

In Part V of the detailed Phase II questionnaire, respondents had the option to submit additional voluntary data for other MP& M facilities owned by the same parent firm. EPA did not perform a detailed engineering analysis to develop detailed estimates of compliance costs for these facilities; however, EPA used the detailed estimates of compliance costs to estimate costs for these additional facilities. EPA assumed that these additional facilities would have the same average compliance costs as facilities in the same subcategory, flow range, and discharge type for which detailed cost estimates were developed.

EPA then grouped together all facilities with a common parent firm from the Phase I, Phase II and Iron and Steel surveys.

For each firm in the analysis, firm level compliance cost is:

( 9.1)

where:

CCfirm = firm level compliance cost CCi = compliance cost for surveyed facility i owned by the firm Firm level compliance costs were compared to firm revenues. EPA judged that firms with compliance costs less than one percent of revenues would not be materially affected by the regulation. EPA identified firms as subject to potentially more serious impacts if their compliance costs exceeded three percent of revenues.

All firm level data were inflated to 2001 dollars using the Producer Price Index ( PPI), as described in Chapter 5.

9.1.3 Results As noted in the introduction, the Agency was not able to estimate the national numbers of firms that own MP& M facilities precisely, because the sample weights based on the survey design represent numbers of facilities rather than firms. EPA assumed that the national facilities that are represented by the 307 sample single site firms that remain open in the baseline are also all single site firms. Based on this assumption, EPA estimated that 26,472 of 36,480 ( or 73 percent) of private MP& M facilities nationwide are single facility firms.

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

The combined set of 26,748 firms ( 26,472 national level single facility firms plus 276 sample multi facility firms) provided the basis for the firm level analysis. This total does not represent a valid national total for the number of affected MP& M firms. Nonetheless, this analysis provides a reasonable indication of likely firm level impacts, given the large number of single facility firms and the use of Part V facility data to supplement the sample facility data for multi facility firms.

Table 9.1 presents the number of firms in the firm level analysis. Of the 26,472 facilities that are single facility firms, 25,297 are owned by potentially small firms. Of the 276 firms that own more than one sample facility, 85 are potentially small firms.

9 2 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts Table 9.1: Number of Privately Owned Facilities and Firms by Firm Type and Sizea Total Firms Owned by a small firm Owned by a large firm National number of single facility firms ( 304 unique sample firms) 26,472 25,297 1,175 Sample multi facility firms 276 85 191 Number of firms in the firm level analysis 26,748 25,382 1,366 a Excludes firms whose only facilities close in the baseline.

Source: U. S. EPA analysis.

Table 9.2 presents estimated firm level impacts of the MP& M rule. None of the firms in the analysis incur after tax compliance costs greater than 1 percent of annual revenues. Of the 1,027 firms that incur any costs at all, none close or incur moderate impacts as a result of the rule.

Table 9.2: Firm level After Tax Annual Compliance Costs as a Percent of Annual Revenues Firm Type Number of Firms in the Analysis a Number and Percent with After Tax Annual Compliance Costs/ Annual Revenues Equal to:

0% ( no costs) Between 0% and 1% > 1%

Number % Number % Number %

Single site 26,472 25,453 96.2% 1,019 3.8% 0 0.0%

Multi site 276 269 97.5% 8 2.9% 0 0.0%

Total 26,748 25,722 96.2% 1,027 3.8% 0 0.0%

a Single site firms whose only MP& M facilities close in the baseline are excluded. To be conservative, EPA included compliance costs for facilities that are owned by multi site firms but predicted to be baseline closures in the facility impact analysis.

Source: U. S. EPA analysis.

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

9.2 NEW SOURCE IMPACTS This section assesses the impacts of New Source Performance Standards ( NSPS) and Pretreatment Standards for New Sources ( PSNS ) limitations on new direct and indirect MP& M dischargers. EPA examines the impact of these regulations on new dischargers to determine whether new source limitations may pose sufficient financial burden on new facilities to constitute a material barrier to entry of new establishments into the MP& M industry sectors. The first section summarizes the framework for assessing new source impacts and the second section reviews the findings from our analysis.

Disproportionate regulatory burdens for new sources could cause adverse industry level outcomes in the long run in several ways:

  Imposing more significant costs on new facilities can make existing sources more competitive than new sources,

causing barriers to new entry.

9 3 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts   Barriers to entry may increase the market power of existing firms and could discourage competition over time, with resulting losses in market efficiencies.

  Creating a competitive advantage for existing facilities may hinder technological innovation, with resulting losses in productivity.

9.2.1 Methodology EPA used the existing facility database, sample weighted, as the basis for the new source analysis. This assumes that future entrants to the industry will look the same as indicated by the sample of facilities in the existing facility database.

To assess the potential impact of new source limitations, EPA assessed compliance costs for two cases: ( 1) the capital and operating cost of compliance systems for a new facility built in compliance with existing new source discharge limits (  current limits ), and ( 2) the capital and operating cost of compliance systems for a new facility built in compliance with discharge limits under consideration (  revised limits ), which would be more stringent than the current new source limits. The estimated capital costs for these cases account for the lower cost of a new construction installation compared to retrofit construction at existing facilities. These compliance cost estimates are described in detail in the Technical Development Document. For analyzing the additional cost burden of meeting new limits, EPA calculated the incremental cost of compliance as the cost of meeting the revised limits less the cost of meeting current limits.

As noted above, EPA based its analysis of new source limits on the economic and financial information for the sample of facilities in the existing facility database. The new source analysis excludes sample facilities that are projected to close or to experience moderate economic impacts in the baseline, since the economic characteristics of these financially weak facilities are unlikely to be representative of new facilities. In addition, EPA excluded some sample facilities from the analysis because of issues in the engineering estimation of compliance costs.

The analysis assumes that new sources would benefit from price increases resulting from the final rule for existing sources in the same way as existing sources. EPA therefore increased the average baseline revenue for new facilities by the average percentage price increase estimated for existing facilities in each subcategory/ discharge category, to calculate post regulation revenues for new sources. This effect of this adjustment on new facility revenue is minor.

To test of financial burden of revised limits and whether this burden might pose a material barrier to entry for new establishments, EPA compared the incremental total annualized cost, after tax, with facility revenue ( cost to revenue ratio).

EPA classified the results in ranges as follows, fraction of sample weighted facilities with cost to revenue ratio of less than one percent, one to three percent, three to five percent, and greater than five percent.

Table 9.3 shows the total number of privately owned MP& M facilities in the survey sample, the number of existing facilities excluded from the new source analysis, and the number of existing facilities used in this analysis.

9 4 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts Table 9.3: Number of Existing Facilities Used in New Source Analysis Subcategory Discharger Type Total Number of Private MP& M Facilitiesa Number of Existing Facilities Excluded from New Source Analysis b Number of Existing Facilities Included in New Source Analysis General Metals Direct 888 181 707 Indirect 10,419 1,824 8,594 MF Job Shop Direct 12 0 12 Indirect 1,530 165 1,365 Non Chromium Anodizer Directc 122 29 93 Oily Wastes Direct 2,108 936 1,172 Indirect 23,292 6,148 17,144 Printed Wiring Boards Direct 8 0 8 Indirect 840 288 552 Railroad Rebuilders Direct 6 0 6 Shipbuilding Dry Dock Direct 6 0 6 All Subcategories 39,230 9,571 29,659 a EPA did not estimate new source impacts for municipal operations because   barrier to entry" is not a relevant consideration.

b EPA excluded an existing facility from the new source analysis either because it was financially weak in the baseline or because the engineers were unable to accurately estimate compliance costs.

c For the analysis of new source limit impacts on the direct discharge Non Chromium Anodizer category, EPA used sample facility information for indirect dischargers. The final sample facility database contained no observations for direct dischargers.

Source: U. S. EPA analysis.

9.2.2 Results Table 9.4 summarizes ( 1) the currently applicable discharge limit or technology option for new sources in each subcategory and discharge status, and ( 2) the alternative discharge limits or technology option that EPA considered in assessing whether revised new source discharge limits would constitute a barrier to entry. See Preamble Section VI and the Technical Development Document for discussion of the specific discharge limits and technology options that EPA considered for revised new source discharge limits.

9 5 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts Table 9.4: Current New Source Requirements and Potential Revised New Source Requirements Subcategory Discharge Type Current New Source Requirements Revised New Source Requirements General Metals Direct 40 CFR 433   Modified  Option 2,

( Two Stage Precipitation)

Indirect 40 CFR 433 Option 2 MF Job Shops Direct 40 CFR 433   Modified  Option 2,

( Two Stage Precipitation)

Indirect 40 CFR 433 Option 2 Non Chromium Anodizer Direct 40 CFR 433 Option 2 Oily Waste Direct Estimated existing baseline Option 6 Indirect Estimated existing baseline Option 6 Printed Wiring Boards Direct 40 CFR 433 Option 2 Indirect 40 CFR 433 Option 2 Railroad Rebuilders Direct Option 6 Option 10 Shipbuilding Dry Dock Direct Option 10 Option 8 Source: U. S. EPA analysis.

Table 9.5 reports the estimated percentages of new facilities incurring cost to revenue impacts of: ( 1) less than one percent,

( 2) one to three percent, ( 3) three to five percent, and ( 4) greater than five percent. As discussed earlier, these estimates are based on estimated incremental new source compliance costs compared to revenues for existing facilities in the MP& M survey universe.

From this analysis, EPA found that revised new source limits would create a barrier to entry for direct discharging facilities in the General Metals, Metal Finishing Job Shops, and Non Chromium Anodizer subcategories and indirect discharging facilities in the General Metals, Metal Finishing Job Shops, Printed Wiring Board, and Oily Wastes subcategories. On the basis of this finding, EPA decided against issuing revised new source discharge limits for these subcategories. The new source analysis indicated that revised new source limits would not create a barrier to entry for direct discharging facilities in the Oily Wastes, Printed Wiring Board, and Railroad Rebuilders subcategories. This finding supported EPA s decision to promulgate new source limits for the Oily Wastes direct discharger subcategory. Although the economic analysis did not indicate a barrier to entry for the Printed Wiring Board and Railroad Rebuilders direct dischargers subcategories, EPA decided against issuing new source limits for these subcategories based on other technical considerations as discussed in Preamble Section VI.

9 6 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts Table 9.5: Estimated Percentages of New Facilities by Cost to Revenue Impact Ranges Subcategory Discharger Type After Tax Compliance Costs as a Percent of Revenue < 1% 1 3% 3 5% > 5%

General Metals Direct 62% 14% 22% 2%

Indirect 65% 14% 20% 1%

MF Job Shop Direct 0% 0% 0% 100%

Indirect 80% 9% 5% 6%

Non Chromium Anodizer Direct 25% 0% 26% 49%

Oily Wastes Direct 97% 3% 0% 0%

Indirect 95% 1% 5% 0%

Printed Wiring Boards Direct 100% 0% 0% 0%

Indirect 92% 3% 0% 5%

Railroad Rebuilders Direct 100% 0% 0% 0%

Shipbuilding Dry Dock Direct 100% 0% 0% 0%

Source: U. S. EPA analysis.

9.3 INDUSTRY LEVEL IMPACTS Potential industry level impacts include price increases, reduced competitiveness within the domestic industry and in world markets, and reduced rates of innovation. EPA did not perform a sector specific analysis for several reasons:

  Sector level impacts are complicated by the large number of product and service markets included in the MP& M category ( e. g., over 200 SICs and three activities   manufacturing, rebuilding, and repair).

  Revenue and cost information is not available on a product by product basis, so it is impossible to link price increases to individual products. and   Many MP& M facilities derive revenue from multiple industry sectors.

EPA s analysis of facility and firm level impacts suggests, however, that material industry level impacts are unlikely in any of the affected sectors.

The Agency does not expect any industry level impacts from the MP& M regulation because of: ( 1) the low number of facilities that will have costs, ( 2) the absence of regulatory closures, and ( 3) the absence of moderate impacts. Of the estimated 89,000 facilities performing MP& M activities, slightly over half, or about 45,000, do not discharge water and thus will not be affected by the rule. An additional 3,593 discharge water but are expected to close in the baseline. Of the remaining 40,265 facilities that do discharge water and remain open in the baseline, EPA estimates that only 1,380 will incur costs under the final rule. That so few MP & M industry facilities incur costs results from the rule s subcategory exclusions and low flow cutoffs.

As discussed in Chapter 5, EPA estimates that no facilities will close or incur moderate impacts as a result of the final regulation. Given no regulatory closures or moderate impacts, EPA concludes that the final rule is unlikely to impose significant costs on a substantial number of facilities in the MP& M industry as a whole or at the subcategory level.

Chapter 5 also presented information on the prices increases predicted to occur in each industry sector due to the final rule.

Table 5.4 in Chapter 5 presented EPA s estimates of price increases by sector. Projected price increases are less than one half 9 7 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts of one percent for all sectors. Price increases of these magnitudes are unlikely to impose burdens on customers of the regulated facilities or substantially affect MP& M producers  position relative to competitive products ( e. g., products made with plastics) or foreign producers. Price increases may affect only some components of a product. In these cases, prices to end users would rise even less than the amounts detailed in Chapter 5.

EPA does not expect the final rule to affect the rate of technological innovation in the MP& M industry. Innovation impacts could result if the rule discouraged new entry, contributed to increased concentration in the affected industries, or specified the use of particular technologies. The following factors suggest that these conditions do not apply for the final rule:

  EPA s analysis of new source impacts presented in the previous section suggests that the final rule will not affect entry of new businesses in the regulated sectors. The final rule will increase the investment required to build a new facility somewhat. However, the increased capital costs are generally small relative to the overall financial resources of the MP& M facilities, as indicated by the results of the facility impact analysis. In addition, the low flow cutoffs applicable to a large number of MP& M facilities reduce the potential impacts of large capital requirements on small facilities.

  Given the small fraction of facilities regulated in each sector, and absence of closures of moderate impacts for the final regulation, EPA does not expect the rule to increase concentration in any of the MP& M sectors.

  The rule does not require the use of specific production or pollution control processes or technologies. Rather, it specifies a performance standard, based on levels of pollutants in wastewaters that have been shown to be achievable by available technologies. Facilities have the flexibility to achieve these limitations using a variety of approaches,

which is likely to encourage rather than discourage innovation in production and pollution control processes.

The final rule may affect the relative competitive position of different firms and facilities in those sectors that incur costs.

Facilities that may benefit from the rule include those that: ( 1) do not discharge wastewater, ( 2) are eligible for the subcategory exclusions and low flow cutoffs, ( 3) already have treatment in place, or ( 4) can more easily make process changes to reduce pollutant loads.

Facilities that have little or no treatment in place and that discharge substantial pollutant loads may become less competitive.

The final rule may level the competitive playing field for facilities that have taken steps to reduce their environmental impacts, relative to facilities that have avoided investments to reduce or eliminate pollutant discharges. EPA views these effects as beneficial, given that the final regulation does not have significant impacts on the industry as a whole, and as long as the rule does not disproportionately impact small entities as a group ( impacts on small entities are addressed in the next chapter).

9 8 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts GLOSSARY new source: Any building, structure, facility, or installation from which there is or may be a discharge of pollutants, the construction of which commenced after promulgation of standards of performance under Section 306 of the Clean Water Act which are applicable to such source; and which ( 1) is constructed at a site at which no other source is located; ( 2) totally replaces the process or production equipment that causes the discharge of pollutants at an existing source; or ( 3) consists of processes that are substantially independent of an existing source at the same site.

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

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

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

Producer Price Index ( PPI): a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services. PPI's measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index ( CPI), that measure price change from the purchaser's perspective.

Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs.

( http:// stats. bls. gov/ ppifaq. htm# 1)

9 9 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts ACRONYMS NSPS: New Source Performance Standards PPI: Producer Price Index PSNS: Pretreatment Standards for New Sources 9 10 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts REFERENCES U. S. Bureau of Labor Statistics, Producer Price Index Revision Current Series. On line database at http:// stats. bls. gov/ ppihome. htm.

U. S. Environmental Protection Agency ( U. S. EPA). 2003. Technical Development Document for the Final Effluent Limitations Guidelines and Standards for the Metal Products & Machinery Point Source Category. February.

9 11 MP& M EEBA Part II: Costs and Economic Impacts Chapter 9: Firm Level, New Source, and Industry Impacts THIS PAGE INTENTIONALLY LEFT BLANK 9 12 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment INTRODUCTION The Regulatory Flexibility Act ( RFA), as amended by the Small Business Regulatory Enforcement Fairness Act ( SBREFA), requires EPA to consider the economic impacts a rule will have on small entities. RFA/ SBREFA requires an agency to prepare a Regulatory Flexibility Analysis for any rule subject to notice and comment rulemaking requirements, unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities ( Small Business Regulation Enforcement Fairness Act of 1996, P. L. 104 121, Section 243).

The economic analysis prepared for the 1995 MP& M Phase I proposal indicated that large numbers of small facilities could Chapter 10: Small Entity Impact Assessment CHAPTER CONTENTS 10.1 ................. .... 10 2 10.2 thodology ................. ............ 10 4 10.3 ................. ................. 10 4 10.3.1 all Entities ....... 10 4 10.3.2 ts on Facilities Owned by Small Entities ................. ............. 10 5 10.3.3 Impacts on Small Firms ............... 10 6 10.4 tion of Small Entity Impacts in Developing of the Final Rule ............. 10 7 Glossary ................. ................. ... 10 8 Acronyms ................. ................. .. 10 9 References ................. ................. 10 10 Defining Small Entities Me Results Number of Affected Sm Impac Considera be impacted by the rule and that a significant number of publically owned treatment works ( POTWs) would also be affected by the rule.

EPA addressed this issue by crafting the final rule to exclude as many small facilities as possible while still covering as much of the pollutant discharge as possible. With this in mind, EPA sought, from the beginning, to design a combined phase regulation that would not unreasonably burden small entities.

To ensure that all small entities were considered in developing the MP& M regulation, EPA developed, administered, and analyzed questionnaires for all entities that could potentially be affected, including: privately and government owned facilities that would have to comply with the regulation, and POTWs that receive MP& M discharges. The Agency balanced several factors when defining the final rule, including:

  the predominance of small entities in the MP& M industry,

  the pounds of pollutants discharged by large and small facilities,

  the toxicity of the pollutants discharged by large and small facilities,

  the need for additional reduction in effluent discharges from the MP& M industry,

  the need to achieve these reductions without imposing unreasonable burdens on small entities, and   the need to minimize burden on POTWs.

Given the large number of small entities that could be affected by the final rule, EPA undertook detailed analyses of potential small entity impacts and carefully considered the findings from this analysis in defining the final rule. From these assessments and based on the coverage and requirements of the final rule, EPA concluded that the final rule will not have a significant economic impact on a substantial number of small entities. EPA has therefore not prepared a Regulatory Flexibility Analysis.

The following sections of this chapter describe the methodology and results of EPA s small entity impact assessment, and discuss EPA's consideration of small entity impacts in designing the rule.

10 1 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment 10.1 DEFINING SMALL ENTITIES EPA identified small entities using Small Business Administration ( SBA) size threshold guidelines. 1 These thresholds define the minimum firm level employment or revenue size, by industry ( four digit SIC codes), below which a business qualifies as a small business under SBA guidelines. The SBA guidelines also set a threshold for small public sector entities. A small government is one that serves a population of 50,000 or less. MP& M facilities were determined to be owned by a small entity if the parent firm or government fell below the SBA threshold.

The SBA guidelines for businesses use either employment or revenue to measure size, depending on the specific four digit SIC industry. Manufacturing industries generally have employment size thresholds, while non manufacturing industries typically have revenue size thresholds. EPA used employment based thresholds for the manufacturing portion of each MP& M sector, and separate non manufacturing thresholds for sectors that include non manufacturing activities ( e. g.,

maintenance and repair).

EPA selected the SBA threshold occurring most frequently among each sector s four digit SIC codes as the sector threshold. 2 Table 10.1 presents the resulting employment size thresholds for manufacturers.

Table 10.1:

Thresholds for Manufacturers MP& M Sector Employees Aerospace 1,000 Aircraft 1,000 Bus and Truck 500 Electronic Equipment 750 Hardware 500 Household Equipment 500 Instrument 500 Job Shop 500 Mobile Industrial Equipment 500 Motor Vehicle 500 Office Machine 1,000 Ordnance 1,000 Other Metal Products 500 Precious and Non. Precious Metals 500 Printed Circuit Board 500 Railroad 1,000 Ship and Boat 1,000 Stationary Industrial Equipment 500 Steel Forming & Finishing 1,000 Small Business MP& M Sector Source: SBA and U. S. EPA analysis.

1 The SBA website provides the most recent size thresholds at http:// www. sba. gov/ regulations/ siccodes.

2 The SBA thresholds for four digit SICs were not used directly because the Phase II § 308 survey reports revenues by MP& M sector but does not report facility SIC codes.

10 2 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment Table 10.2 presents the employment size thresholds for non manufacturers, which are based on revenue except for the railroad sector. Some sectors do not have non manufacturing industries and do not appear in this table.

Table 10.2:

Thresholds for Non Manufacturers MP& M Sector Revenue Aircraft $ 5,000,000 Bus and Truck $ 5,000,000 Household Equipment $ 5,000,000 Instrument $ 5,000,000 Motor Vehiclea $ 5,000,000 Office Machine $ 18,000,000 Other Metal Products $ 5,000,000 Precious and Non Precious Metals $ 5,000,000 Railroad 1,500b Ship and Boatc $ 5,000,000 Stationary Industrial Equipment $ 5,000,000 a Also has a threshold of 100 employees.

b Employees.

c Also has a threshold of 500 employees.

Source: lysis.

EPA classified facilities as manufacturing or non manufacturing and selected an MP& M sector threshold based on the sector from which they rec eived the mo st revenue, as repo rted in the § 30 8 surveys. 3 EPA then compared the firm level employment or revenue for the firm owning each facility to the appropriate manufacturing or non manufacturing threshold for that sector.

The Phase II surv ey asked ea ch respo ndent to pro vide firm level emp loyment and revenue d ata. hase I survey also asked for firm lev el reve nue b ut not for firm em ploym ent. his om ission did not matter in the case of single facility businesses, where the facility s reported employment is the firm level employment. multiple facility firms in the Phase I survey, EPA estimated firm level employment by assuming that the number of employees per revenue dollar for the firm was the same as the em ployees pe r dollar at the facility.

( 10.1)

where:

Efirm = firm level emp loyme nt,

Efacility = facility level em ploym ent,

Rfirm = firm level revenue, and Rfacility = facility level revenue.

EP A ide ntified facilities ope rated by go vernm ents that se rve a p opu lation o f 50,0 00 o r fewer a s being ope rated by sma ll government entities. survey responses provided population data in most cases, which EPA supplemented using the Bureau o f the Ce nsus online 1990 Po pulatio n Ce nsus d ataba se ( B ureau of the C ensus.) Small Business MP& M Sector SBA and U. S. EPA ana The P T For Thus,

The § 308 municipal 3 The § 308 MP& M surveys did not collect firm level revenues by sector and therefore cannot be used to assign a unique sector to each firm. The assignment of a threshold was therefore based on the facility level revenues by sector.

10 3 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment 10.2 METHODOLOGY EPA used several impact measures for its small entity impact analysis. First, EPA reviewed the results of the facility impact analyses described in Chapter 5 according to business size to determine whether facilities owned by small entities are disproportionately subject to moderate impacts at the facility level. Second, EPA calculated the ratio of annualized compliance costs to facility revenues and examined the distribution of this ratio for facilities owned by small versus large firms.

The analysis excluded facilities that the facility impact analysis identifies as baseline failures ( see Chapter 5).

10.3 RESULTS 10.3.1 Number of Affected Small Entities There are an estimated 40,265 MP& M facilities nationwide ( excluding baseline closures). A large number of these facilities are owned by small entities, based on SBA thresholds. Table 10.3 shows the total number of facilities operating in the baseline and the number owned by small entities. Overall, 73 percent of all MP& M facilities are owned by small entities.

Table 10.3: Number and Percent of MP& M Facilities Owned by Small Entities Type of Facility Number of Facilities of all Sizes Operating in the Baseline Number of Facilities Owned by Small Entities Percent of Facilities Owned by Small Entities Owned by small business 36,480 27,418 75%

Owned by small government 3,785 1,962 52%

Total owned by small entitiesa 40,265 29,380 73%

a Excludes baseline closures.

Source: U. S. EPA analysis.

EPA has limited the scope of the final rule to MP& M facilities performing oily operations. Table 10.4 shows that only a small percentage ( five percent) of small entities are potentially subject to regulation. The final rule excludes a large percentage ( 95 percent) of small entity owned MP& M facilities from regulation.

Table 10.4:

Type of Facility Number of Facilities Operating in the Baseline Number of Facilities Not Subject to the Final Rule Percentage of Facilities Not Subject to the Final Rule Owned by small business 27,418 26,368 96%

Owned by small government 1,962 1,682 86%

Total owned by small entities 29,380 28,050 95% Percent of Facilities Owned by Small Entities Excluded under the Final Option Source: U. S. EPA analysis.

10 4 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment 10.3.2 Impacts on Facilities Owned by Small Entities The facility impact analysis findings provide the first measure EPA used to assess impacts on facilities owned by small entities. No facilities, small or large, are projected to close or experience moderate impacts as a result of the final rule. A second approach to assessing small entity impacts   based on a comparison of compliance costs to post compliance revenues   indicates that no facilities will incur costs exceeding 1 percent of revenues, and only 1,019 facilities owned by small private businesses will incur any costs at all. This corresponds to 3.7 percent of the facilities owned by small private businesses that operate in the baseline.

Table 10.5 summarizes the results of the facility impact analysis for facilities owned by small entities for the final rule and the options considered by EPA.

Table 10.5: Closures and Moderate Impacts for Facilities Owned by Small Entities Final Option Option II Option III Option IV Number of facilities operating in the baseline 29,380 29,380 29,380 29,380 Number of facilities excluded from option 28,050 23,893 27,118 26,907 Percent excluded 95.5% 81.3% 92.3% 91.6%

Number of facilities with closures 0 813 109 109 Facilities with closures as a percent of facilities operating in the baseline 0.0% 2.8% 0.4% 0.4%

Facilities with closures as a percent of regulated facilities 0.0% 14.8% 4.8% 4.4%

Number of facilities with moderate impacts 0 0 37 37 Facilities with moderate impacts as a percent of facilities operating in the baseline 0.0% 0.0% 0.1% 0.1%

Facilities with moderate impacts as a percent of regulated facilities 0.0% 0.0% 1.6% 1.5%

Source: U. S. EPA analysis.

In summary, no facilities owned by small entities that operate in the baseline are expected to close or experience moderate impacts under the final rule.

Table 10.6 shows the results of the second approach to assessing small entity impacts, based on a comparison of compliance costs with facility revenues. EPA conducted this analysis only for MP& M facilities owned by private entities ( i. e., businesses,

but not governments), because of the low level of impacts on all sizes of governments.

10 5 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment Table 10.6: After Tax Annual Compliance Costs as a Percent of Annual revenues under the Final Option for Facilities Owned by Private Small Businessesa Discharge Status Number of Facilities Owned by Small Private Businesses Operating in the Baseline Number and Percent of Facilities Owned by Small Businesses that are Not Regulated Number and Percent of Facilities Owned by Small Businesses with After Tax Annual Compliance Costs/ Annual Revenues Equal to:

No Cost More than 0% and less than 1% Over 1%

Number % Number % Number % Number %

Direct 1,168 119 13.9% 31 2.5% 1,019 83.6% 0 0.0%

Indirect 26,253 26,253 100.0% 0 0.0% 0 0.0% 0 0.0%

Totalb 27,418 26,368 96.2% 31 0.1% 1,019 3.7% 0 0.0%

a Includes only facilities that remain open in the baseline.

b The sum of the number of direct and indirect dischargers does not add up to the total because some facilities are both indirect and direct dischargers.

Source: U. S. EPA analysis.

Of the facilities owned by small entities that operate in the baseline, 96.2 percent are not regulated under the final rule.

Another 0.1 percent are regulated but do not incur costs. The remaining 3.7 percent incur compliance costs but none incur after tax annualized costs exceeding 1 percent of annual revenue. These results are consistent with the finding that no facilities owned by small business will close or experience moderate financial impacts.

10.3.3 Impacts on Small Firms EPA also performed a firm level analysis in which it compared compliance costs with revenue at the firm level as a measure of compliance cost burden. EPA applied this analysis only for facilities owned by private entities ( i. e., businesses, but not governments). Table 10.7 shows the results of this comparison. The Agency was not able to estimate national numbers of firms that own MP& M facilities precisely, because the sample weights based on the survey design represent numbers of facilities rather than firms. Most of the facilities owned by small firms ( 25,297 of 27,578, or 92 percent) are single facility firms, however. These single facility firms can be analyzed using sample weights. In addition, 85 small multi facility firms own at least one sample facility. These firms are included in the analysis but with a sample weight of one, since it is not known how many sample firms these 85 small firms represent. The results shown in Table 10.7 therefore represent a total of 25,382 small MP& M firms ( 25,297 + 85).

Table 10.7: Firm Level Before Tax Annual Compliance Costs as a Percent of Annual Revenues for Private Small Businesses Number of Small Firms in the Analysisa Number and Percent with Before Tax Annual Compliance Costs/ Annual Revenues Equal to:

0% ( no costs) > 0% and < 1% Over 1%

Number % Number % Number %

25,382 24,363 95.99% 1,019 4.01% 0 0%

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

Source: U. S. EPA analysis.

The vast majority, 96 percent, of the small businesses in the analysis incur no costs due to the rule. The remaining 4 percent,

equal to 1,019 firms, incur before tax compliance costs of less than 1% of their after tax revenues. Of these 1,019 small firms, none were reported in the facility impact analysis to experience moderate impacts due to the final rule.

10 6 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment 10.4 CONSIDERATION OF SMALL ENTITY IMPACTS IN DEVELOPING THE FINAL RULE EPA gave special consideration to impacts on small entities in defining the final regulation. In particular, EPA attempted to minimize impacts on small entities while at the same time meeting Clean Water Act objectives of reducing pollutant discharges to the nation s waterways. The final rule minimizes impacts on small entities primarily by excluding all indirect dischargers and direct dischargers in all subcategories except Oily Wastes.

Table 10.8 shows the number and percentage of facilities owned by small versus large entities that are projected to close or experience moderate impacts under the final and alternative regulatory options analyzed by EPA in developing the final regulation.

Table 10.8: Percent of Facilities Estimated to Close or Experience Moderate Impacts by Owning Entity Size Class and by Regulatory Option Regulatory Option and Ty pe of Facility Number of Facilities Subject to Regulation Projected to Close Percent Closing Experiencing Moderate Impacts Percent with Moderate Impacts Final Regulatory Option Owned by Small Entities 1,330 0 0.0% 0 0.0%

Owned by Large Entities 1,052 0 0.0% 0 0.0%

Total 2,382 0 0.0% 0 0.0%

Option II Owned by Small Entities 5,487 813 14.8% 0 0.0%

Owned by Large Entities 2,863 0 0.0% 0 0.0%

Total 8,350 813 9.7% 0 0.0%

Option III Owned by Small Entities 2,262 109 4.8% 37 1.6%

Owned by Large Entities 1,182 0 0.0% 0 0.0%

Total 3,444 109 0.5% 37 1.1%

Option IV Owned by Small Entities 2,473 109 4.4% 37 1.5%

Owned by Large Entities 1,453 0 0.0% 12 0.8%

Total 3,926 109 2.8% 49 1.2%

Source: U. S. EPA analysis.

As reported in the table, the final rule avoids entirely the more material impacts on small entities that likely would have occurred under the alternative regulatory options.

In addition to avoiding impacts in the regulated community, the final rule, by excluding indirect discharging facilities from revised limits, also eliminated the potential additional burden to POTWs, including small POTWs, from issuance of new and revised permits. Chapter 11 and Appendix F discuss POTW administrative activities and costs under the four regulatory options.

10 7 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment GLOSSARY Regulatory Flexibility Analysis: an evaluation of the impact of a rule and alternative regulatory options on small entities.

small entity: a business, government or non profit organization defined as small for EPA s RFA/ SBREFA evaluation.

small business: a business with employment or revenue below the threshold specified by the Small Business Administration for each 4 digit SIC.

small government: a government that serves a population of 50,000 or less, as defined by the Small Business Administration.

10 8 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment ACRONYMS POTW: Publicly owned treatment works RFA: Regulatory Flexibility Act SBA: Small Business Administration SBREFA: Small Business Regulatory Enforcement Fairness Act 10 9 MP& M EEBA Part II: Costs and Economic Impacts Chapter 10: Small Entity Impact Assessment REFERENCES U. S. Department of Commerce, Bureau of the Census. Statistics of U. S. Businesses.

U. S. Small Business Administration. http:// www. sba. gov/ regulations/ siccodes.

10 10 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs INTRODUCTION This chapter presents EPA s estimates of the regulation s costs to society. Previous chapters described the economic impacts of the final rule in terms of facility closures and moderate financial impacts, employment losses, community impacts, international trade effects, financial impacts on firms owning MP& M facilities, and impacts on small entities. The economic impact analyses were based on the estimated costs to MP& M facilities of complying with the regulation. These costs of labor, equipment, material, and other economic resources needed for regulatory compliance are also the major component of the cost to society of the regulation. Other components of social costs include costs to governments administering the regulation, and the social costs associated with unemployment resulting from facility closures. Chapter 11: Social Costs CHAPTER CONTENTS 11.1 s of Social Costs ............... 11 1 11.2 ............. 11 2 11.3 dministration Costs ............... 11 4 11.4 ts of Unemployment ............. 11 5 11.4.1 ost of Worker Dislocation .... 11 5 11.4.2 Administering Unemployment Benefits Programs ................. ... 11 6 11.4.3 ost of Unemployment ......... 11 6 11.5 ial Costs ................. ...... 11 7 Glossary ................. ................. . 11 8 References ................. ................ 11 9 Component Resource Costs of Compliance POTW A Social Cos Social C Cost of Total C Total Soc Section 11.1 provides an overview of the three components of social cost analyzed for this regulation: the cost of society s economic resources used to comply with the rule; the cost to governments of administering the rule; and the social costs of unemployment resulting from the rule. The next three sections discuss each of these three components of social cost in more detail. The last section, Section 11.5, summarizes the estimated total social costs.

11.1 COMPONENTS OF SOCIAL COSTS The social costs of regulatory actions are the opportunity costs to society of employing scarce resources in pollution prevention and pollution control activities. The social costs of regulation include both monetary and non monetary outlays made by society. Monetary outlays include the resource costs of compliance, government administrative costs, and other adjustment costs, such as the cost of relocating displaced workers. Non monetary outlays, some of which can be assigned monetary values, include losses in consumers  and producers  surplus in affected product markets, the adverse effects of involuntary unemployment, possible loss of time ( e. g., delays in investment decisions), and possible adverse impacts on the rate of innovation.

To assess the MP& M regulation s social costs, EPA relied first on the estimated costs to MP& M facilities for the labor,

equipment, material, and other economic resources needed to comply with the regulation. The compliance costs used to estimate total social costs differ from those used to assess facility and firm level economic impacts in their consideration of taxes and revenue effects. In the facility and firm impact analysis, compliance costs are measured as they affect the financial performance of regulated facilities and firms. The analyses therefore explicitly consider the tax deductibility of compliance expenditures. 1 In the analysis of costs to society, however, these compliance costs are considered on a before tax basis. In general, because tax deductibility reduces the burden of compliance expenditures to private firms, the estimated compliance costs are greater from the perspective of society than from the perspective of private industry. In addition, the analysis of the regulation s impact on regulated facilities and firms accounted for potential recovery of compliance costs through output price increases. The assessment of social cost ignores these potential cost offsets because, like taxes, they represent only a transfer of compliance costs from the complying entity and not a true reduction in compliance cost.

Social costs also include lost producers  and consumers  surplus that result from reduction in the quantity of goods and services produced. Lost producers  surplus is measured as the difference between revenues earned and the cost of production for the lost production. Lost consumers  surplus is the difference between the price paid by consumers for the lost production and the maximum amount they would have been willing to pay for those goods and services.

1 Costs incurred by government facilities are not adjusted for taxes, since these facilities are not subject to income taxes.

11 1 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs Accurate calculation of lost producers  and consumers  surplus requires knowledge of market supply and demand characteristics for each affected industry. EPA was not able to conduct an industry specific partial equilibrium analysis of changes in market prices and output, both because of the very large number of markets involved and because it was not possible to link compliance costs to specific products at multi sector facilities.

EPA s assessment of social cost includes two additional cost elements: the cost to governments of administering permitting and compliance monitoring activities under the regulation, and the social costs associated with unemployment that may result from facility closures. The unemployment related costs include the cost of administering unemployment programs for workers who are projected to lose employment ( but not the cost of unemployment benefits, which are a transfer payment within society); and an estimate of the amount that workers would be willing to pay to avoid involuntary unemployment.

11.2 RESOURCE COSTS OF COMPLIANCE This section reviews the resource costs of compliance for the final rule and the costs for the alternative regulatory options considered by EPA. The resource costs of compliance are the value of society s productive resources   including labor,

equipment, and materials   expended to achieve the reductions in effluent discharges required by the regulation. The social costs of these resources are higher than the financial burden borne by facilities because facilities are able to deduct the costs from their taxable income and may be able to recover some of the costs through price increases to customers. The costs to society, however, are the full value of the resources used, whether paid for by the regulated facilities, by taxpayers in the form of lost tax revenues, or by customers through increased prices. EPA included no costs for facilities assessed as baseline closures.

EPA estimated after tax annualized compliance costs of $ 11.9 million for the final regulation ( see Chapter 5: Facility Impact Analysis, Table 5.6). The estimated social value of these compliance costs, however, is $ 13.8 million, as shown in Table 11 1. This amount represents the value to society of the resources that would be used to comply with the rule.

For the alternative regulatory options, EPA s estimates included compliance costs both for facilities estimated to close because of the rule and for facilities estimated to continue operating under the regulation. This approach results in an upper

bound estimate of the social costs of compliance, since the lost value incurred by closing facilities is presumably less than the 2 estimated cost of compliance.

Under the Proposed/ NODA Option, annual compliance costs amount to $ 1,111.4 million for indirect dischargers and $ 508.9 million for direct dischargers ( 2001$). The total annualized compliance costs are $ 1,620.3 million, or approximately 117 times the compliance costs under the final rule. This cost increase results from including additional subcategories under the Proposed/ NODA Option. General Metals indirect dischargers, which are excluded from the final regulation, account for approximately 40 percent of the total compliance costs under the Proposed/ NO DA O ption.

Under the Directs + 413 to 433 Upgrade Option, annual compliance costs amount to $ 83.0 million for indirect dischargers and $ 13.8 million for direct dischargers ( 2001$). The total annualized compliance costs are $ 96.8 million, or approximately 7 times the final rule s compliance costs. This cost increase results from requiring indirect dischargers that currently comply with the standards of 413 to upgrade to 433 standards. General Metals facilities, which are excluded from the final regulation,

account for approximately 44 percent of the total compliance costs under this option.

Under the Directs + All to 433 Upgrade Option, annual compliance costs amount to $ 124.4 million for indirect dischargers and $ 13.8 million for direct dischargers ( 2001$). The total annualized compliance costs are $ 138.2 million, or approximately 10 times the compliance costs under the final rule. This cost increase results from requiring general metals facilities that currently comply local limit standards to upgrade to 433 standards. General Metals facilities, which are excluded from the final regulation, account for approximately 61 percent of the total compliance costs under this option.

2 Including costs for regulatory closures yields an estimate of social costs assuming that every facility continued to operate post

regulation. Calculating costs as if all facilities continue operating will overstate social costs if some facilities find it more economical to close than comply with the regulation.

11 2 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs Table 11.1: Resource Value of Compliance Costs ( millions, 2001$)

Subcategory Indirect Direct Total Option I: Selected Option ( Directs Only)

General Metals $ 0.0 $ 0.0 $ 0.0 MF Job Shop $ 0.0 $ 0.0 $ 0.0 Non Chromium Anodizing $ 0.0 $ 0.0 $ 0.0 Oily Wastes $ 0.0 $ 13.8 $ 13.8 Printed Wiring Boards $ 0.0 $ 0.0 $ 0.0 Railroad Rebuilders $ 0.0 $ 0.0 $ 0.0 Shipbuilding Dry Docks $ 0.0 $ 0.0 $ 0.0 Total $ 0.0 $ 13.8 $ 13.8 Option II: Proposed/ NODA Option General Metals $ 652.9 $ 396.1 $ 1,049.0 MF Job Shop $ 185.2 $ 4.6 $ 189.8 Non Chromium Anodizing $ 0 $ 38.0 $ 38.0 Oily Wastes $ 92.8 $ 35.9 $ 128.7 Printed Wiring Boards $ 157.9 $ 0.3 $ 158.2 Railroad Rebuilders $ 0.0 $ 0.7 $ 0.7 Shipbuilding Dry Docks $ 0.0 $ 3.2 $ 3.2 Steel Forming & Finishing $ 22.6 $ 30.1 $ 52.7 Total $ 1,111.4 $ 508.9 $ 1,620.3 Option III: Directs + 413 to 433 Upgrade Option General Metals $ 42.4 $ 0.0 $ 42.4 MF Job Shop $ 17.1 $ 0.0 $ 17.1 Non Chromium Anodizing $ 0.0 $ 0.0 $ 0.0 Oily Wastes $ 0.0 $ 13.8 $ 13.8 Printed Wiring Boards $ 23.5 $ 0.0 $ 23.5 Railroad Rebuilders $ 0.0 $ 0.0 $ 0.0 Shipbuilding Dry Docks $ 0.0 $ 0.0 $ 0.0 Total $ 83.0 $ 13.8 $ 96.8 Option IV: Directs + All to 433 Upgrade Option General Metals $ 83.8 $ 0.0 $ 83.8 MF Job Shop $ 17.1 $ 0.0 $ 17.1 Non Chromium Anodizing $ 0.0 $ 0.0 $ 0.0 Oily Wastes $ 0.0 $ 13.8 $ 13.8 Printed Wiring Boards $ 23.5 $ 0.0 $ 23.5 Railroad Rebuilders $ 0.0 $ 0.0 $ 0.0 Shipbuilding Dry Docks $ 0.0 $ 0.0 $ 0.0 Total $ 124.4 $ 13.8 $ 138.2 Source: U. S. EPA analysis.

11 3 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs 11.3 POTW ADMINISTRATION COSTS This section discusses the POTW administrative costs of the final rule and the costs of the alternatives considered by EPA.

EPA estimates that the final rule will not increase POTW administrative costs. EPA expects no increase in permitting costs for facilities that already hold a permit in the baseline. However, governments will incur additional permitting costs from ( 1)

permitting of unpermitted facilities ( under the NODA/ Proposal option only) and ( 2) acceleration of repermitting for some indirect dischargers that currently hold permits. The alternative regulatory options may also cause some administrative costs to decrease. For example, control authorities will no longer have to repermit facilities that are estimated to close as a result of the MP& M rule.

Table 11.2 shows the number of facilities requiring a new permit under the four options considered for the final rule. Only the NODA/ Proposal option would require POTWs to issue new concentration based permits for the first time. None of the options considered would require a new mass based permit or a conversion from a concentration based to a mass based permit. The table also shows the number of facilities that will require early repermitting ( within three years rather than within five years), the number of estimated regulatory closures, and the total number of facilities that are expected to require permits under the different regulatory options.

Table 11.2: Permitting Requirements for Regulatory Alternatives ( number of indirect discharging facilities)

Permitting required: Option I:

Selected Option Option II:

NODA/ Proposal Option Option III:

Directs + 413 to 433 Upgrade Option IV:

Directs + All to 433 Upgrade New concentration based permit n/ a 103 0 0 New mass based permita n/ a 0 0 0 Convert from existing concentration based to mass baseda n/ a 0 0 0 Repermit within 3 rather than 5 years n/ a 1,434 382 566 Regulatory closures ( no longer requiring permits) b n/ a 722 120 120 Number of facilities operating post regulation requiring a permit n/ a 3,687 954 1,414 a EPA does not require mass based permits under any of the option considered for the final rule.

b Some facilities with existing permits will no longer require permitting due to regulatory closures.

Source: U. S. EPA analysis.

Table 11.3 below presents the estimated permitting costs to governments of administering the final rule and alternative options. Chapter 7: Government and Community Impact Analysis describes the methodology used to estimate these administrative costs.

Because the final regulation excludes from coverage all indirect dischargers, EPA estimates that the final rule will not increase POTW administrative costs. Each of the three alternative regulatory options considered would result in reduced POT W regulatory costs. These cost savings result from regulatory closures ( i. e., facilities that currently hold a permit and would have required repermitting in the baseline, but that will no longer require repermitting under the regulatory options).

The cost savings from regulatory closures outweigh the additional costs for issuing new permits ( under the NODA/ Proposal option only) and repermitting on an accelerated, three year schedule. Estimated annualized cost savings to POTWs for the three alternative regulatory options range between $ 0.05 and $ 1.0 million under the NODA/ Proposal option, and between $ 0.03 and $ 0.2 million under the Directs + 413 to 433 Upgrade option and the Directs + 413+ 50% LL Upgrade option ( all costs in ($ 2001).

11 4 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs Table 11.3: Annualized Government Administrative Costs by Regulatory Option ($ 2001)

Option Low Medium High Option I: Selected Option ( Directs Only) n/ a n/ a n/ a Option II: Proposed/ NODA Option ($ 46,000) ($ 198,000) ($ 1,027,000)

Option III: Directs + 413 to 433 Upgrade Option ($ 26,000) ($ 56,000) ($ 218,000)

Option IV: Directs + All to 433 Upgrade Option ($ 26,000) ($ 55,000) ($ 213,000)

Source: U. S. EPA analysis.

11.4 SOCIAL COSTS OF UNEMPLOYMENT This section discusses the social costs of unemployment associated with the final rule and the alternatives EPA considered.

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

Chapter 6: Employment Effects discusses the effects of the alternative regulatory options on employment, including the jobs potentially lost due to facility closures and the jobs potentially created by expenditures to comply. This section estimates the social cost of the estimated changes in employment. EPA considered two components of the social cost of unemployment:

  The cost of worker dislocation ( exclusive of cash benefits) to unemployed individuals, as measured by their willingness to pay to avoid unemployment; and   The additional cost to governments to administer unemployment benefits programs.

11.4.1 Social Cost of Worker Dislocation EPA calculated the cost of worker dislocation based on an estimate of the value that workers would pay to avoid involuntary job losses. The amount that workers would pay to avoid a job loss was derived from hedonic studies of the compensation premium required by workers to accept jobs with a higher probability of unemployment. This framework has been used in the past to impute a trade off between wages and job security ( Topel, 1984; Adams, 1985; Anderson and Chandran, 1987).

Specifically, this estimate approximates a one time willingness to pay to avoid an involuntary episode of unemployment and reflects all monetary and non monetary impacts of involuntary unemployment incurred by the worker. It does not include any offsets to the cost of unemployment, such as unemployment compensation or the value of increased leisure time.

Studies by Topel ( 1984) and Adams ( 1985) suggest that the compensation premium for accepting a one percent increase in the annual probability of unemployment is in the range of 2.5 percent to 3.3 percent of the base compensation value. To illustrate this finding, assume that a worker is presented with a choice between two employment opportunities: one with compensation of $ 30,000 per year and an annual unemployment probability of zero, and a second otherwise equivalent opportunity but with an annual unemployment probability of one percent. For the worker to accept the second opportunity, his or her compensation must be at least 2.5 to 3.3 percent greater than the $ 30,000 offered for the first opportunity, or at least $ 30,750 to $ 30,990 ( depending on the percentage premium used). In this case, the dollar premium required to accept the additional one percent annual probability of unemployment is $ 750 to $ 990.

For analyzing the unemployment related costs of the MP& M regulation, the hypothetical choice is assumed to be between an employment opportunity with a zero percent annual probability of unemployment and a second opportunity with a 100 percent annual probability of unemployment. In this case, the one time premium for accepting the employment opportunity with the 100 percent probability of employment is assumed to be 250 to 330 percent of the compensation for the otherwise 11 5 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs comparable employment opportunity with the assumed zero probability of employment. 3 To estimate the premium for an increase in the probability of unemployment requires an estimate of the average compensation to workers in the MP& M industry. EPA calculated an average annual compensation for MP& M industry production workers of $ 38,309 ( 2001$) 4 Accordingly, the annual compensation premium for a one percentage point increase in the annual probability of unemployment would be $ 958 to $ 1,264 and the cost of a 100 percent probability event would be $ 95,772 to $ 126,420 ( 2001$). This calculation assumes that the cost of a certainty unemployment event is directly proportional to the increase in probability from the low probability event ( i. e., one percent) on which the calculation is based.

Chapter 6: Employment Effects presents EPA s estimate that as many as 32,729 jobs might be lost due to facility closures under the Proposed/ NODA Option. Multiplying these 32,729 job losses by the estimated range of willingness to pay values for avoiding unemployment results in a total cost of unemployment for the Proposed/ NODA Option of $ 3.1 billion to $ 4.1 billion ( 2001$). EPA annualized these values over a 15 year period at a 7 percent rate, yielding an annualized cost of $ 344 to $ 454 million. These values are the annualized amounts over a 15 year period that workers would be willing to pay to avoid the job losses projected to result from compliance with the Proposed/ NODA Option.

EPA estimates that as many as 7,874 jobs might be lost due to facility closures under the Directs + 413 to 433 Upgrade Option and the Directs + All to 433 Upgrade Option. Multiplying these 7,874 job losses by the estimated range of willingness to pay values for avoiding unemployment results in a total cost of unemployment for both of the 433 Upgrade Options of $ 754 million to $ 995 million ( 2001$). EPA annualized these values over a 15 year period at a 7 percent rate,

yielding an annualized cost of $ 83 to $ 109 million.

11.4.2 Cost of Administering Unemployment Benefits Programs Unemployment as the result of regulation also imposes costs on society through the additional administrative burdens placed on the unemployment system. The cost of unemployment benefits per se is not a social cost but instead a transfer payment within society from taxpayers to the unemployed. Administrative costs include the cost of processing unemployment claims,

retraining workers, and placing workers in new jobs. Data obtained from the Interstate Conference of Employment Security Agencies indicated that the cost of administering an initial unemployment claim over the period 1991 1993 averaged $ 93.25 ( 1991$ 1993$). These costs included total Federal and State funding for administering unemployment benefit programs but not the cost of the benefits themselves. Inflating this estimate to 2001 dollars using the BLS Employment Cost Index for and 5 Local Government workers yields a value of $ 122 per claim. Based on this estimate, EPA assumed that the cost of administering unemployment programs would amount to approximately $ 122 per job loss. Multiplying this figure by the estimated loss of 32,729 jobs under the Proposed/ NODA Option yields an additional $ 4.0 million in social costs. EPA annualized this value over the 15 year analysis period at a 7 percent rate to yield an annual cost of approximately $ 438,027 ( 2001$). Multiplying the per job loss estimate of the cost of administering unemployment by the estimated loss of 7,874 jobs under the 433 Upgrade Options yields almost an additional $ 960,000 in social costs. EPA annualized these values over the 15 year analysis period at a 7 percent rate to yield an annual cost of $ 105,000 under the 433 Upgrade Options.

11.4.3 Total Cost of Unemployment As mentioned above, EPA did not estimate a cost of unemployment for the final rule because no job loss is expected. As shown in Table 11.4 below, the 32,729 estimated job losses at facility closures under the Proposed/ NOD A Option have an estimated social cost of $ 345 million to $ 455 million ( 2001$). The 7,874 estimated job losses at facility closures under the 433 Upgrade Options have an estimated social cost of $ 83 million to $ 109 million ( 2001$).

3 This analysis has a considerable artificiality in that a worker would not realistically be presented with this choice. The artificiality of the choice in turn underscores the very strong assumption in the analysis. That is, that the cost of an unemployment event can be estimated by linearly extrapolating the premium estimated for small percentage differences in the probability of unemployment to a circumstance in which the probability of unemployment is 100 percent. An investigation of literature on unemployment failed to find an alternative method for estimating unemployment costs. This analytic issue warrants further research.

4 Calculated the total payroll ($ 407.7 billion) / total employment ( 12.2 million) in MP& M SIC codes based on data obtained from the 1997 Economic Censuses which is $ 33,508. Inflated this estimate to 2001 dollars using the BLS Seasonally Adjusted Employment Cost Index ( ECI) for Private Industry Manufacturing  1997 ( 4th Qtr): 135.4, 2001 ( 4th Qtr): 154.8.

5 BLS, 2000. Table 1a: Employment Cost Index ( Compensation), State and Local Government: 1992 ( December): 118.5, 1999 ( December): 144.2.

11 6 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs Table 11.4: Total Annual Social Costs of Unemployment ( millions, 2001$)

Social Cost of Unemployment Categories Option I:

Selected Option ( Directs Only) Option II:

Proposed/ NODA Option Option III:

Directs + 413 to 433 Upgrade Option IV:

Directs + All to 433 Upgrade Employment Loss in Closing Facilities n/ a 32,729 7,874 7,874 Annualized Worker Dislocation Cost Low Unit Cost ( based on 2.5 percent premium) n/ a $ 344.16 $ 82.80 $ 82.80 High Unit Cost ( based on 3.3 percent premium) n/ a $ 454.29 $ 109.30 $ 109.30 Annualized Unemployment Administration Cost ( million 2001$) n/ a $ 0.44 $ 0.11 $ 0.11 Sum, Worker Dislocation and Unemployment Administration Costs ( based on employment loss in closing facilities)

Low Value n/ a $ 344.60 $ 82.91 $ 82.91 High Value n/ a $ 454.73 $ 109.40 $ 109.40 Source: U. S. EPA analysis.

11.5 TOTAL SOCIAL COSTS Summing across the final rule s social cost components results in a total social cost estimate of $ 13.8 million annually ( 2001$), as shown in Table 11.5. The total social costs of the Proposed/ NODA Option range between $ 2.0 billion and $ 2.1 billion. The total social costs for the Directs + 413 to 433 Upgrade Option range between $ 180 million and $ 206 million.

The total social costs for the Directs + All to 433 Upgrade Option range between $ 221 million and $ 247 million.

Table 11.5: Total Social Cost ( millions, 2001$)

Social Cost Categories Option I:

Selected Option ( Directs Only) Option II:

Proposed/ NODA Option Option III:

Directs + 413 to 433 Upgrade Option IV:

Directs + All to 433 Upgrade Low High Low High Low High Resource cost of compliance expenditures $ 13.8 $ 1,620.3 $ 96.8 $ 138.2 Costs to POTWs of administering the rule $ 0.0 ($ 0.05) ($ 1.0) ($ 0.03) ($ 0.2) ($ 0.03) ($ 0.2)

Social costs of unemployment $ 0.0 $ 344.6 $ 454.7 $ 82.9 $ 109.4 $ 82.9 $ 109.4 Total Social Cost $ 13.8 $ 1,964.8 $ 2,074.0 $ 179.7 $ 206.0 $ 221.1 $ 247.4 Source: U. S. EPA analysis.

11 7 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs GLOSSARY consumers  surplus: the value that consumers derive from goods and services above the price they have to pay to obtain the goods and services.

opportunity cost: the lost value of alternative uses of resources ( capital, labor and raw materials) used in pollution control activ ities.

producers  surplus: the difference between what producers  earn on their output and the economic costs of producing that output, including a normal return on capital.

social costs: the costs incurred by society as a whole as a result of the final rule; does not include costs that are simply transfers among parties but that do not represent a net cost overall.

11 8 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs REFERENCES Adams, James D. 1985. Permanent differences in unemployment and permanent wage differentials. Quarterly Journal of Econometrics 100, no. 1, 29 56.

Anderson, Donald W. and Ram V. Chandran. 1987. Market estimates of worker dislocation costs. Economics Letters 24,

381 384.

Interstate Conference of Employment Security Agencies. Employment Security Funding Survey 1991 1993. Presented in Christopher Van Atten,   Cost of Unemployment,  memorandum to the MP& M Record, March 16, 1995.

Topel, Robert H. 1984. Equilibrium earnings, turnover, and unemployment: new evidence. Journal of Labor Economics 2 no. 4: 500 522.

U. S. Bureau of Labor Statistics. 2000. Employment Cost Index, Historical Listing ( June 1989= 100).

http:// stats. bls. gov/ ecthome. htm. July 27.

U. S. Department of Labor. 1995. State Unemployment Claims 1989 1993. Presented in Christopher Van Atten,   Cost of Unemployment , memorandum to the MP& M Record, March 16.

11 9 MP& M EEBA Part II: Costs and Economic Impacts Chapter 11: Social Costs THIS PAGE INTENTIONALLY LEFT BLANK 11 10


[Federal Register: January 22, 2007 (Volume 72, Number 13)]
[Notices]
[Page 2675-2676]
[DOCID:fr22ja07-51]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP06-421-000]

Transcontinental Gas Pipe Line Corporation; Notice of
Availability of the Environmental Assessment for the Proposed Potomac
Expansion Project

January 16, 2007.
    The staff of the Federal Energy Regulatory Commission (Commission
or FERC) has prepared the Environmental Assessment (EA) for the
construction and operation of the Potomac Expansion Project as proposed
by Transcontinental Gas Pipe Line Corporation (Transco) in the above-
referenced docket.
    The EA was prepared to satisfy the requirements of the National
Environmental Policy Act. The staff concludes that approval of the
proposed Potomac Expansion Project, with appropriate mitigating
measures as recommended, would not constitute a major federal action
significantly affecting the quality of the human environment. The EA
evaluates alternatives to the proposal, including the no-action
alternative.
    The EA addresses the potential environmental effects of the
construction and operation of the proposed Potomac Expansion Project in
Campbell, Pittsylvania, and Fairfax Counties, Virginia, including the
construction of:
     About 16.4 miles of 42-inch-diameter pipeline;
     About 3.4 miles of 30-inch-diameter pipeline replacement
with 42-inch-diameter pipeline; and
     New and replacement aboveground facilities at existing
aboveground facilities.
    The purpose of the Potomac Expansion Project is to: expand delivery
capacity on Transco's existing mainline pipeline system to deliver up
to 165,000 dekatherms per day of incremental primary firm
transportation from Transco's interconnects with East Tennessee Natural
Gas and Pine Needle LNG to interconnects with the customers' local
distribution systems in northern Virginia, Washington, DC, and
Baltimore, Maryland.
    The EA has been placed in the public files of the FERC. A limited
number of copies of the EA are available for distribution and public
inspection at: Federal Energy Regulatory Commission, Public Reference
Room, 888 First Street NE, Room 2A, Washington, DC 20426, (202) 502-
8371.
    In addition, copies of the EA have been mailed to Federal, State,
and local government agencies; elected officials; Native American
tribes; local libraries and newspapers; intervenors in the FERC's
proceeding; and affected landowners and individuals.
    Any person wishing to comment on the EA may do so. To ensure
consideration prior to a Commission decision on the proposal, it is
important that we receive your comments before the date specified
below. Please carefully follow these instructions to ensure that your
comments are received in time and properly recorded:
     Send an original and two copies of your comments to:
Secretary, Federal Energy Regulatory Commission, 888 First Street, NE,
Room 1A, Washington, DC 20426.
     Label one copy of the comments for the attention of the
Gas Branch 1;
     Reference Docket No. CP06-421-000; and
     Mail your comments so that they will be received in
Washington, DC on or before February 16, 2007.
    The Commission strongly encourages electronic filing of any
comments, interventions, or protests to this proceeding. See 18 CFR
385.2001(a)(1)(iii) and the instructions on the Commission's Web site
at http://www.ferc.gov under the ``e-Filing'' link and the link to the

User's Guide. Before you can file comments you will need to create a
free account, which can be created by clicking on ``Login to File'' and
then ``New User Account.'' You will be asked to select

the type of filing you are making. This filing is considered a
``Comment on Filing.''
    Comments will be considered by the Commission but will not serve to
make the commentor a party to the proceeding. Any person seeking to
become a party to the proceeding must file a motion to intervene
pursuant to Rule 214 of the Commission's Rules of Practice and
Procedures (18 CFR 385.214). Only intervenors have the right to seek
rehearing of the Commission's decision. Anyone may intervene in this
proceeding based on this EA. You must file your request to intervene as
specified above.\1\ You do not need intervenor status to have your
comments considered.
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    \1\ Interventions may also be filed electronically via the
Internet in lieu of paper. See the previous discussion on filing
comments electronically.
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    Additional information about the project is available from the
Commission's Office of External Affairs, at 1-866-208-FERC or on the
FERC Internet Web site (http://www.ferc.gov) using the eLibrary link.

Click on the eLibrary link, click on ``General Search'' and enter the
docket number excluding the last three digits in the Docket Number
field. Be sure you have selected an appropriate date range. For
assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at 1-866-208-3676, or for TTY,

contact<PHONE_NUMBER>. The eLibrary link on the FERC Internet Web site
also provides access to the texts of formal documents issued by the
Commission, such as orders, notices, and rulemakings.
    In addition, the Commission now offers a free service called
eSubscription which allows you to keep track of all formal issuances
and submittals in specific dockets. This can reduce the amount of time
you spend researching proceedings by automatically providing you with
notification of these filings, document summaries and direct links to
the documents. Go to the eSubscription link on the FERC Internet Web
site.

Magalie R. Salas,
Secretary.
 [FR Doc. E7-786 Filed 1-19-07; 8:45 am]

BILLING CODE 6717-01-P