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Regulatory Impact Analysis for the Plywood and Composite Wood Products NESHAP

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Regulatory Impact Analysis for the Plywood and Composite Wood Products NESHAP Regulatory Impact Analysis for the Plywood and Composite Wood Products NESHAP Final Report EPA-452/R-04-005 February 2004 Regulatory Impact Analysis for the Plywood and Composite Wood Products NESHAP U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Air Quality Strategies and Standards Division Innovative Strategies and Economics Group Research Triangle Park, NC TABLE OF CONTENTS Executive Summary ........................................................ ES-1 1 Introduction .................................................................1-1 1.1 Scope and Purpose of the Report ..........................................1-1 1.2 Need for Regulatory Action ..............................................1-1 1.3 Requirements for the Regulatory Impact Analysis ............................1-2 1.4 Other Federal Programs .................................................1-5 1.5 Organization of the Regulatory Impact Analysis ..............................1-5 1.6 References ...........................................................1-6 2 Profile of the Plywood and Composite Wood Industries ..............................2-1 2.1 Introduction ..........................................................2-1 2.2 The Supply Side .......................................................2-3 2.3 The Demand Side .....................................................2-20 2.4 Industry Organization . 2-29 2.5 Markets . 2-42 2.6 References . 2-60 3 Regulatory Alternatives, Emissions, Emission Reductions, and Control and Administrative Costs 3.1 Regulatory Alternatives .................................................3-1 3.2 Emissions and Emission Reductions ......................................3-15 3.3 Control Equipment and Costs ...........................................3-26 3.4 Testing, Monitoring, Reporting, and Recordkeeping Costs ....................3-37 3.5 References ..........................................................3-40 4 Economic Impact Analysis .....................................................4-1 4.1 Results in Brief .......................................................4-1 4.2 Introduction ..........................................................4-1 4.3 Economic Impact Analysis Inputs .........................................4-2 4.4 Economic Impact Analysis Methodology ...................................4-4 4.5 Economic Impact Analysis Results ........................................4-6 4.6 Analysis of Economic Impacts on Engineered Wood Products Sector ............4-15 4.7 References ..........................................................4-22 5 Small Business Impacts .......................................................5-1 5.1 Results in Brief .......................................................5-1 5.2 Introduction ..........................................................5-1 5.3 Screening Analysis Data Sources .........................................5-2 5.4 Screening Analysis Methodology .........................................5-2 5.5 Screening Analysis Assumptions ..........................................5-3 5.6 Screening Analysis Results ..............................................5-3 5.7 Screening Analysis Conclusions .........................................5-10 5.8 EIA Results for Small Businesses .........................................5-1 5.9 References ..........................................................5-12 6 Qualitative Assessment of Benefits of Emission Reductions ........................... 6-1 6.1 Identification Of Potential Benefit Categories ...............................6-1 6.2 Qualitative Description of Air Related Benefits - HAP and CO .................. 6-1 6.3 Qualitative Description of Effects from Reductions and Increases in Emissions from Other Pollutants Due to HAP Controls .....................................6-9 6.4 Lack of Approved Methods to Quantify HAP Benefits .......................6-12 6.5 Summary ...........................................................6-13 6.6 References ..........................................................6-14 LIST OF EXHIBITS Exhibit 2-1: SIC & NAICS Codes for the Plywood and Composite Wood Industries .............. 2-2 Exhibit 2-2: Other Primary SIC Codes for the Plywood and Composite Wood Industries ........... 2-3 Exhibit 2-3: SIC and NAICS Codes and Products ........................................2-12 Exhibit 2-4: Specialization and Coverage Ratios, 1982 - 1997 ..............................2-13 Exhibit 2-5: Summary of Annual Costs and Shipments, 1992 -1997 ..........................2-14 Exhibit 2-6: Materials Consumed By Kind for Softwood Plywood and Veneer, 1997 ............ 2-17 Exhibit 2-7: Materials Consumed by Kind for Reconstituted Wood Products, 1997 ............. 2-18 Exhibit 2-8: Industry Outputs, by SIC Code .............................................2-21 Exhibit 2-9: MDF Shipments by Downstream Market, 1997 ................................2-23 Exhibit 2-10: Particleboard Shipments by Downstream Market, 1997 ........................ 2-24 Exhibit 2-11: Housing Market Indicators, 1988 - 1997 ..................................... 2-25 Exhibit 2-12: Trade for Household Furniture (SIC 251), 1989 - 1996 .........................2-25 Exhibit 2-13: Use of Wood and Non-wood Products in Residential Construction 1976 - 1995 ................................................................2-27 Exhibit 2-14: Demand Elasticities ..................................................... 2-29 Exhibit 2-15: Concentration Ratios by SIC Code, 1982-1992 ................................ 2-30 Exhibit 2-16: Facilities with Compliance Costs ..........................................2-31 Exhibit 2-17: Full Production Capacity Utilization Rates, Fourth Quarters, 1992 - 1997 .......... 2-33 Exhibit 2-18a: 1998 Employment at Facilities with Compliance Costs ........................ 2-34 Exhibit 2-18b: 1998 Employment at Facilities with Compliance Costs ........................ 2-34 Exhibit 2-19: Number of Mills, Average Capacity and Utilization, 1977 - 1997 ................. 2-36 Exhibit 2-20: Summary of Capital Expenditures, 1992 - 1997 ...............................2-37 Exhibit 2-21: Size Distribution of Firms Owning Affected Facilities .......................... 2-38 Exhibit 2-22: Types of Firm Ownership for Lumber and Wood Products (SIC 24), 1992 .......... 2-39 Exhibit 2-23: Indicators of Financial Condition, 1995-1997 ................................2-41 Exhibit 2-24: Trade Balance and Selected Statistics ....................................... 2-44 Exhibit 2-25: Production, Trade and Consumption Volumes for Selected Products (1988-1997) .... 2-45 Exhibit 2-26: 1997 U.S. Wood Products Imports by Region and Major Trading Partner ........... 2-48 Exhibit 2-27: 1997 U.S. Wood Product Exports by Region and Major Trading Partner ........... 2-50 Exhibit 2-28: Lumber and Wood Products Producer Price Index, 1988-1997 ................... 2-51 Exhibit 2-29: Producer Price Indices of Plywood and Wood Composite Products ................ 2-52 Exhibit 2-30: F.O.B. Prices of Southern plywood, OSB, and Particleboard ..................... 2-53 Exhibit 2-31: APA Forecasted Structural Panel Production and Demand ...................... 2-56 Exhibit 2-32: APA Actual and Forecasted Structural Panel Capacity and Production ............. 2-57 Exhibit 3-1: Illustration of Total HAP Calculation for an Emission Source ...................... 3-5 Exhibit 3-2: Summary of MACT for PCWP Process Units at New and Existing Sources ........... 3-7 Exhibit 3-3: Cost-Effectiveness Analysis Of Beyond-The-Floor Control Options ................. 3-9 Exhibit 3-4: Illustration Of Total HAP Calculation For An Emission Source ................... 3-17 Exhibit 3-5: Uncontrolled and Baseline HAP Emissions Estimates ...........................3-21 Exhibit 3-6: Speciated Nationwide Uncontrolled HAP Emissions by Product ................... 3-22 Exhibit 3-7: Speciated Nationwide Baseline HAP Emissions by Product ...................... 3-23 Exhibit 3-8: Estimated Number of Major Sources By Product ..............................3-24 Exhibit 3-9: Estimated Nationwide Reduction in Total HAP and THC ........................3-25 Exhibit 3-10: Press Enclosure Exhaust Flow Rates and Capital Costs .........................3-33 Exhibit 3-11: Control Equipment Costed for Process Units with Controlled MACT Floor ........ 3-34 Exhibit 3-12: Default Flow Rates .....................................................3-36 Exhibit 3-13: Estimated Nationwide Control Costs for the PCWP Industry ..................... 3-38 Exhibit 3-14: Dollars (In Total Annualized Costs) Per Ton Of HAP And THC Reduced .......... 3-39 Exhibit 4-1: Baseline Characterization of Plywood and Composite Wood Markets: 1997 ......... 4-3 Exhibit 4-2. Market-Level Impacts of the NESHAP .......................................4-7 Exhibit 4-3. Industry-Level Impacts of the NESHAP ......................................4-10 Exhibit 4-4: Distribution of Industry-Level Impacts of NESHAP: Affected and Unaffected Producers .............................................4-12 Exhibit 4-5: Distribution of Social Costs Associated with the NESHAP ...................... 4-13 Exhibit 4-6: Primary Uses and Substitutes for LSL .......................................4-16 Exhibit 4-7: Characteristics of LSL Plants ..............................................4-17 Exhibit 4-8: Primary Uses and Substitutes for PSL ........................................ 4-17 Exhibit 4-9: Characteristics of PSL Plants ..............................................4-18
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