CW. ' '-." ' ECONOMIC IMPACT OF Air Pollution Controls U.S. DEPARTMENT OF COMMERCE/Business and Defense Services Administration ABOUT THE COVER The cover photograph shows a dust collector installation at an El Segundo, California, plant which restricts zinc oxide emission. (Photo courtesy of NASMI Information Service) ECONOMIC IMPACT OF Air Pollution controls ON THE SECONDARY NONFERROUS METALS INDUSTRY 1969 S *TES O* * U.S. DEPARTMENT OF COMMERCE Maurice H. Stans, Secretary Rocco C. Siciliano, Under Secretary K. N. Davis, Jr., Assistant Secretary for Domestic and International Business BUSINESS AND DEFENSE SERVICES ADMINISTRATION Forrest D. Hockersmith, Acting Administrator For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402. Price 35c Foreword The Air Quality Act of 1967 was enacted into law in November. Both during its consideration in the Congress and subsequent to its enactment considerable concern was expressed to the Business and Defense Services Administration by industry as to the economic impact which air quality standards for abatement of harmful emissions might impose. Their pri- mary concern, while recognizing and supporting the need for air pollution abatement, was that the criteria on which the standards would be based might be unnecessarily restrictive and impose an undue economic impact on industry. On the other hand the National Air Pollution Control Administration of the Department of Health, Education and Welfare, the agency of Federal Government charged with the responsibility for carrying out the pro- visions and intent of the Air Quality Act, expressed concern to the Busi- ness and Defense Services Administration that industry would not fully understand and readily support the Federal air pollution abatement and control program. The Business and Defense Services Administration of the Department of Commerce is responsible for fostering and promoting the growth and productivity of the industrial sector of the United States economy. BDSA monitors changes taking place in the economy and suggests ways in which business and government can adapt to change with minimum adverse impact. Stemming from these responsibilities, a problems search type study was initiated in BDSA in December 1967 to analyze the nature and extent of the probable difficulties related to the new Federal air pollution control authority. The initial investigations produced much conflicting informa- tion and introduced fundamental questions: What is, and what will be, the impact of air pollution control regulations on industry, on government, on trade, and on the American consumer? This study is a first step in seeking answers to these questions. Owing to a need to protect proprietary information of companies whose plants were visited, this report cannot give credit to each of the individual business organizations and persons who were so helpful and cooperative. However, thanks are extended to the National Association of Secondary Materials Industries, and the Association of Brass and Bronze Ingot Manufacturers. Appreciation is extended to the National Air Pollution Control Ad- ministration for their helpful review of the draft report and for funds they provided for its publication. Special thanks are conveyed to M. J. Mighdoll and E. L. Merrigan of the National Association of Secondary Materials Industries without whose support and interest this report would not have been written. Responsi- bility for analyses and conclusions rests, of course, with BDSA. James M. Owens Director Office of Basic Materials Business and Defense Services Administration ii Contents Page FOREWORD ' ii I. INTRODUCTION 1 Purpose 1 The Industry 1 Air Pollution Control Systems 1 Design and Scope of Study 1 Scope of study 1 Economic impact defined 2 II. INVESTMENT TRENDS 3 Tendency to Underinvest 3 Gas Cleaning Equipment Orders Spurt 3 "Wait-and-See" Attitude 3 Shortages in Technical Personnel 4 III. COST CONSIDERATIONS 5 Standards 5 Cost of Systems 5 Variations in installed cost 5 Depreciation period 5 Variations in operating cost 5 Dual purpose systems 6 Incidence of Costs 6 The Marginal Firm 7 IV. COST BURDEN ANALYSIS 9 Table A. Annual Cost of Air Pollution Control System 9 Table B. Approximation of Impact of Air Pollution Control Costs on Corporate Profit 9 V. CONCLUSIONS 11 Appendix A 12 Section 1. General Industry Statistics 12 Table 1. Key Industry Statistics 12 2. Industry and Product Distribution 12 3. Industry Employment Data 12 4. Cost of Materials 12 5. Geographic Distribution of Plants in Secondary Nonferrous Metals Industry 12 Section 2. BDSA Survey Statistics 12 Table 6. Geographic Distribution of Plants in Survey .. 12 7. Installed Costs of Gas-Cleaning Equipment Systems, by Type of Smelter 13 8. Installed Cost of Gas-Cleaning Equipment Systems, by Type of Equipment 13 9. Annual Operating Costs of Gas-Cleaning Equipment Systems, by Type of Smelter 13 Appendix B Air pollution control equipment systems 14 Appendix C Technology of the industry 18 Appendix D Factors causing cost of production variations 21 Appendix E Federal law and regulations 23 Appendix F Variations in local enforcement 24 iii Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://www.archive.org/details/economicimpactoOOunit I Introduction PURPOSE The Air Quality Act of 1967 empowers the Federal Government to assist States and local jurisdictions with their air pollution control programs and to establish appropriate air quality standards should the lower levels of government not do so. 1 The responsible agency, the National Air Pollution Control Administra- tion of the Department of Health, Education, and Welfare, has developed the "criteria" for such air quality standards. This study, prepared by the Business and Defense Services Administration, seeks to estimate the economic impact on the secondary non-ferrous metals industry of one type of air pollution control equipment, gas cleaning sys- tems, currently required by State and local laws and regulations. A study of this industry — with its great diversity of products, processes, problems, raw materials, locations and production plant sizes — should have im- plications for other industries as well. alloys, lead and aluminum all bulk large in industry output. Some plants specialize; this is particularly true of small smelters. Others pro- duce a combination of products. 2 AIR POLLUTION CONTROL SYSTEMS Three principal systems of air pollution con- trol equipment are available : dry baghouse, electrostatic precipitator and wet scrubber. 3 These systems also may be combined. While there are no restrictions on the selec- tion of a particular system, experience in the industry shows brass and bronze smelters gen- erally prefer the dry baghouse system while aluminum smelters usually select the wet scrub- ber. A smelter might logically employ a com- bination of systems in cases where its products, e.g., zinc and aluminum, require diverse meth- ods of pollution control. THE INDUSTRY The secondary nonferrous smelting and re- fining industry, Standard Industrial Classifica- tion (SIC) Code number 3341, is defined as that group of industrial establishments pri- marily engaged in recovering nonferrous metals and alloys from scrap and dross. The industry is a growing one, employing approximately 17,000 persons in about 500 production plants. Three-fifths of these plants are small, i.e., with fewer than 20 employees. The annual value of the industry's shipments in 1967 was approximately $1.6 billion. Cur- rently, the industry is making new capital in- vestments at the rate of about $50 million a year. Copper, including brass and bronze DESIGN AND SCOPE OF STUDY Two key questions confronting BDSA in- volved the scope of the study and the definition of "economic impact." In answering each ques- tion, practical limitations resulted in depart- ures from the ideal. Scope of Study The portion of the industry involving the smelting of precious metals has been excluded from this study, although it is included in SIC 3341. While production of precious metals from secondary sources is not insignificant in size when judged by dollar value, it is very minor when compared in physical volume to the other metals classified under SIC 3341. The magni- See Appendix K for a summary of th< - See Appendix A Tables 1-5 for basic data on the industry '' See Appendix B for description of each of these systems. tude of pollution problems is directly related to tonnages of raw material processed. For this reason and because of other restraints enu- merated elsewhere in this report, precious metals are not considered in this study as a part of the secondary nonferrous metals in- dustry. The study is based upon data obtained from 23 representative smelters, chosen on the basis of type of product produced, geographic loca- tion, value of shipments-size and air pollution control problems. 1 Annual shipments for the 20 plants reporting such data totalled $166 million in 1968 or about 9% of the industry total, but a significantly higher percentage when precious metals smelters are excluded. The geographical distribution of the plants surveyed is shown in Appendix A. 5 Informal visits and on-site interviews with managers were undertaken at each plant. While each visit contributed to the understanding of the pollution control problem, some did not re- sult in estimates of cost burden. The latter in- cluded eight plants which had no pollution con- trol equipment and four others which apparent- ly did not meet local standards. The systems in use by the remaining 11 plants with generally adequate equipment, were : Dry baghouse, eight ; electrostatic precipitator, one ; wet scrub- 4 Data on the total number or type of smelters in the industry which have air pollution control equipment are unavailable. r ' See Appenrtix A, Table fi. ber, one; and combination, one. Consequently, the cost burden analysis in Section IV has been restricted to plants using dry baghouse equipment, the system generally preferred for the very important brass and bronze smelters. All eight of these plants fall into the Census category of 20 or more em- ployees. This category accounted for about 40 percent of all smelters in 1963, and could well comprise more than half of all smelters if precious metals smelters are excluded. The study therefore casts little light on the situation of smelters with under 20 employees. Four of these small smelters were visited : one had an air pollution control system which apparently did not meet local control standards and three had no air pollution control equipment. Economic impact defined In view of the proprietary nature of pro- duction costs and profit information, these data were not requested from the plants visited. Costs of the pollution equipment have been related to the value of shipments and to the volume of gas cleaned. While certain rough approximations of the impact of the air pollu- tion control activity on costs and profits have been included, these represent only degrees of magnitude and reflect no new insight into the structure of costs and profits of the industry. II Investment Trends TENDENCY TO UNDERINVEST There appears to be a tendency for the pur- chaser of a gas-cleaning system to underdesign and underinvest, regardless of the industry involved. In the secondary non-ferrous metals industry, aside from collateral advantages of oxide removal and recovery in some plants, the investment, however necessary, is basically unproductive from the plant's standpoint. Con- sequently, a good business manager tends to select a minimum system. This raises the ques- tion of whether a minimum system is one de- signed toward control of an "average" emis- sion. The nature of furnace operations is such that the flue emission varies widely through the cycle from charging the scrap to pouring the melt. For example, little emission control is needed for an aluminum furnace during the charging period ; moderate control is needed during the melting and fluxing periods; but during the final period when the temperature of the furnace is raised to volatilize residual chlorine and metallic chlorides, the flue emis- sions are at a peak surge sufficient to exceed the ability of many wet scrubbers to do an effective cleaning job. Consequently, a reserve capacity, designed for peak emission surges, could be considered the minimum required sys- tem ; and satisfactory performance without the need for subsequent modification might more than compensate for the higher installation cost of such a system. Another aspect of the peak emission surge problem is the possibility of designing equip- ment which absorbs the peak emission at surge and releases it at other appropriate times. An adequate device would be analogous to a surge tank in an air compression system, a standpipe in an industrial water system, or the differen- tial solubility granules in modern medicine pills. GAS CLEANING EQUIPMENT ORDERS SPURT A recent Business and Defense Services Ad- ministration survey ,; indicates that the num- ber of establishments manufacturing gas- cleaning equipment increased only from 65 to 68 manufacturers from 1963 through 1967. During the same period, value of shipments rose from $50 million to $110 million, and the backlog of orders at the end of 1967 equalled about a one-year production volume. This situation, coupled with imminent Federal regu- lation, indicates fertile ground for expansion of the gas-cleaning equipment industry. In ad- dition, the backlog places time restraints on smelters wishing to go ahead with installation of gas-cleaning equipment systems. "WAIT-AND-SEE" ATTITUDE Ironically, enactment of the Air Quality Act of 1967 apparently has slowed down the rate of investment in gas-cleaning equipment for sec- ondary nonferrous smelters. Equipment al- ready ordered will, of course, be installed, but in most instances where the investor has the option, he is deferring action. Those who are under compulsion of local laws to proceed with equipment procurement are doing so with some uncertainty. As one smelter manager put it, "I want to have a look at the Federal criteria 7 before I invest another dime." Another said he would continue his plan but would delay com- mitting funds if possible until after the Gov- ernor of his State had indicated the air quality standards to be adopted. These attitudes, and the time lags inherent in the Federal law, sug- gest that the full weight of investment in air- cleaning equipment will be felt sometime after mid 1970. RDSAF-788, Industrial Gas Cleaning Equipment and End-Use, 1967. 7 Criteria providing guidance for States relating to technology and costs of emission control, under Sec. 107(b) and (c) Air Quality Act of 1967. SHORTAGES IN TECHNICAL PERSONNEL gineering skills to make such technical evalua- tions of gas-cleaning systems. They have There is a need for more industrial engineer- sometimes depended on intuitive choices, some ing consultants, who can recommend equipment f which were also bad ones, needed to meet clearly defined emission control As noted in Appendix F, technically qualified regulations, and supervise installation of gas- people are also scarce on the enforcement side cleaning systems. Many of the secondary non- a t the local level, ferrous smeltermen lack the specialized en- Ill Cost Considerations STANDARDS Rather wide variations exist in the adequacy of currently installed air pollution control sys- tems. "Adequacy" is here interpreted to mean that the equipment meets minimum require- ments of local air pollution codes. And, since local regulatory authority and codes also vary, adequate equipment in one locality may not be adequate in another. s It is believed, however, that all the dry baghouse systems studied would meet the most stringent local require- ments. It is this group which weighs most heavily in this analysis of cost burden. It is, however, conceivable that increasing degrees of emission control required under law could substantially increase requirements and hence costs of air pollution control equipment. COST OF SYSTEMS Variations in installed cost The cost of buying and installing a unit of capacity to treat flue gases might be supposed to be rather fixed for a given gas-cleaning sys- tem applied to a given metallurgical process. Information collected relating to this study does not support that belief. The relationship between manufacturers' prices and installation costs varies widely depending upon the need in such systems for structural modifications or extensive duct work, the urgency of time sched- ules and variations in labor costs. As Appendix A, tables 7 and 8 show, there are rather wide variations in installed costs between the different types of smelters, and the different types of gas-cleaning equipment. Depreciation period Clear guidelines are lacking relative to the useful life of pollution control equipment. Changes in available technology, changes in equipment performance requirements, and ini- tially poor or inadequate equipment selection have forced some plants into their third gen- eration of gas-cleaning systems in less than 10 years. Presumably, costly lessons of the past will lengthen the life of equipment purchased in the future. Even apart from the matter of early obsolescence, it would appear inappropri- ate to apply the 14-year useful life guidelines prescribed by the Internal Revenue Service for smelting equipment" because the control equipment is, in fact, a system consisting of various apparatus including soft goods. In this study, therefore, the cost burden has been computed on the alternative base of 5 and 7 years depreciation allowance for the air pollu- tion control systems. Variations in operating cost Information on operating costs is limited and was available from not more than four plants. 10 While the reported operating cost per pound of metal produced is very small, the variation be- tween plants is significant. The range is from one-twentieth of a cent to about one-fourth of a cent per pound of output. There is no clear pattern of operating or other conditions which account for this wide range. In one case, the low cost is associated with neglect and inade- quate equipment; in another, it is related to a well-engineered, efficient, and closely super- vised equipment system. The highest cost sys- tem is also associated with a well-engineered and closely supervised system, but the plant is located in an area of very stringent pollution control regulations, where the demands on the system are heavy in terms of efficiency and required labor and supervision. 1 Sec Appendix F. " Depreciation Guidelines and Rules, U.S. Treasury Department, Internal Revenue Service Publication No. 456, revised August 1964. 10 See Appendix A. Table 9. Operating costs in relation to gas-cleaning capacity likewise vary among plants. Only three sets of data were available on this relationship. Since the three systems are technologically dissimilar and the smelter products are dis- similar metals, interpretation of results is limited. The averages indicate a cost of about 80 cents per year per cubic-foot-per-minute of capacity. Since some of the larger plants have air-cleaning equipment with a capacity to treat 150,000 cubic feet of flue gases per minute, their associated costs of servicing and main- taining this equipment could be as much as $120,000 per year. However, since large plants also have large production, their operating cost per pound of product tends to be small. Dual purpose systems The analysis of cost burden is complicated by the fact that each of the smelters engages in recovery of metallic oxides. The technology for accomplishing this recovery is similar to the technology used in air pollution control. Hence, for example, the baghouse systems of the two largest smelters in the sample both antedate public air pollution control programs and were designed originally to recapture oxides — incidentally they also control air pollu- tion. The smelters with baghouse systems would not, however, have needed such sophis- ticated systems as they now have merely to recover oxides. Much of the cost of acquiring, installing and operating the baghouse systems is due to air pollution control programs, but an indeterminate amount of such cost is attrib- utable to recovery of oxides. INCIDENCE OF COSTS The industry's costs of air pollution control are distributed through one or a combination of the following: an increase in smelter product prices, a decrease in prices paid by smelters for scrap, a reduction in other production costs, and/or a reduction in smelter profits. Product price discipline in the secondary non- ferrous metals producing industry is imposed rather rigidly by the competition with primary nonferrous metals. That is, the price of metals derived from mine production which satisfies essentially the same market, is the ceiling for metals derived from scrap. 11 Though primary smelters are also affected by air pollution con- trol regulations, any resulting costs would probably have less effect on total production costs because smelting is a smaller proportion of their total activity. In short, the outlook for the secondary industry passing along any air pollution control costs in the form of price increases is uncertain at best. Collecting, processing and selling of scrap is highly competitive. Production cost increases in secondary smelters might exert a downward pressure on scrap dealer prices for either or both of two reasons: increasingly cost con- scious smelters would seek to negotiate more effectively for lower prices, and/or the disap- pearance from the industry of certain small marginal plants would tend to increase the price negotiating leverage of the remander. Empirical evidence on this point is lacking and no investigation was made of the relevant price elasticities. Should such downward price pres- sure on scrap come about, not all grades of scrap would necessarily suffer equivalent price damage. Certain grades of scrap preferred for technical and economic reasons related to air pollution problems within the smelter might experience increased demand and growing premiums above quoted markets. These gen- erally would be materials free of pollution- causing contaminants, such as polyvinyl chlo- ride plastic coatings and coverings, turnings and borings free of oil from metal lathes and drills, and lead storage batteries free of sul- furic acid and metallic sulfates. It may, there- fore, develop that there will be some re- structuring of the scrap processing and scrap selling businesses during the next 5 years to accommodate the changing needs of the sec- ondary smelters and to arrest the erosion of scrap prices. In any event, prices of scrap are subject to many influences and it would be imprudent for the secondary smelting industry to anticipate relief from this source. Nor does there appear to be any basis for assuming an easing in any other production costs of the industry. Despite uniformity throughout the industry of the technology for 11 This has not always obtained. Under certain abnormal condi- tions, secondary prices have climbed above primary prices during short-run intervals. When this occurred there were unusual restraints imposed on primary prices, but secondary prices were set by demand in an open and rising market. processing each metal, many differential cost factors result in a wide dispersion of costs and profits from plant to plant and company to company. 11 ' An industry in which 60 r r of the firms have fewer than 20 employees would seem likely to have at least its share of mar- ginal establishments. Therefore, in view of the highly speculative nature of any price and production cost changes which might conceivably compensate in whole or in part for the cost of air pollution control systems, the cost burden analysis which follows assumes no such compensating changes. THE MARGINAL FIRM For any given product price, there will be a number of producers for whom an increase in the cost of any factor of production not offset by rising receipts will have serious conse- quences. Thus the cost of investing and operat- ing air-cleaning equipment to meet air pollu- tion control regulations could cause some sec- ondary nonferrous metals plants to cease pro- duction and liquidate their facilities. General obsolescence coupled with other production and market adversities have reportedly prompted some plant owners to elect to close their plants when faced with the added need to invest in air-cleaning equipment. Thus, air pollution con- trol regulations may have been, in a few cases, the straw that broke the camel's back. There is Al.j" dix 1) little evidence to indicate, however, that clos- ures attributable exclusively to air pollution control expense have yet occurred. It would be an over simplification to infer that all obsolete plants will become sub- marginal. Inefficient as an obsolete plant may be, if the plant's capital equipment has been fully amortized, the capital cost burden per unit of production may be more than sufficient- ly low to offset inordinately high operating costs. Owing to their ability to distribute a given added investment cost over a large num- ber of production units, the large secondary nonferrous smelters have a decided competi- tive edge over the obsolete small plants which lack a production base adequate to diminish the importance of their fixed investment costs. Consequently, some, perhaps many, large plants may elect to invest in modern efficient air- cleaning equipment to meet required emission standards despite the obsolescence of their pro- duction facilities. Also, closed, sub-marginal plants owned by large companies have at least a limited ability to transfer their market share to other production plants within the same company; while small independent plants do not have this option. Thus, a number of small obsolete nonferrous smelters, and perhaps some larger ones, may go out of business during the next several years as air pollution abatement and control programs become more stringent and perva- sive, surrendering their customers to the re- maining producers. IV Cost Burden Analysis The following formula would approximate the economic impact on a smelter of air pollu- tion abatement expenditures assuming no com- pensating adjustments in prices charged, prices paid or other changes in production costs ; 1. Installed cost of equipment converted to annualized cost on basis of depreciation factor, 2. Plus annual operating and maintenance costs, 3. Minus (a) allowance for portion of in- stalled cost which would have been required to recover oxides in the absence of an air pollution control program, and (b) allowance for value of oxides recovered by the control system, 4. Equals the net annual cost of air pollu- tion control activity (1. + 2. — 3. = 4.) 5. Divided by value of annual shipments, 6. Equals cost of air pollution control systems as percentage of shipments (4.^-5. X 100 = 6) . Table A.— ANNUAL COST OF AIR POLLU- TION CONTROL SYSTEMS Secondary Non-ferrous Metals Industry 5 Tear 7 Year Depreciation Depreciation Jlasis Haiti Annual cost as percentage of annual ra ue of shipments '/, % Mean Installed equipment .4(5 .3:s Operating ami maintenance .44 .44 TOTAL .90 .77 Median Installed equipment fj'> .37 Operating and maintenance .43 .43 TOTAL .9.". ,R0 Annual per eubic-foot-per-niinute (cfm) of gas cleaning capacity (dollars) $ $ Mean Installed equipment .86 .61 Operating and maintenance .76 .76 TOTAL 1.62 1.37 Median Installed equipment .80 .60 Operating and maintenance .88 .88 However, the study did not gather data for item 3 of the formula, i.e., the offset for oxide recovery operations. Item 3, therefore, has to be ignored in the computation of cost burden. The two large plants whose baghouse systems were not attributable to the air pollution control program (see page 6), were not in- cluded in the computation. Installed cost of equipment, however, is understated to the ex- tent that it does not include interest costs. This omission of interest costs might tend to com- pensate for the omission of allowances for oxide recovery operations. The cost burden analysis, as set forth in table A, indicates that the cost of air pollution control activity averaged from about % of 1% to about 1% of the value of annual shipments. The second part of the table indicates that the annual average cost is on the order of $1.35 to $1.70 per cubic foot per minute (cfm) of gas cleaning capacity. Additional cost data are set forth in tables 7 through 9 of Appendix A. As noted above, no data on production costs or profits were collected in the BDSA inter- Table B.— APPROXIMATION OF IMPACT OF AIR POLLUTION CONTROL COSTS ON CORPORATE PROFITS Secondary Nonferrous Metals Industry (percent) Assumed Situation Assumed Situation Without Air With Air Pollution Control Pollution Control S/lslcms Costs < St/stems Costs 2 Value of sales (shipments) 100.0',.; 100.0% Costs and expenses 90.3 91.3 Net profit from operations, before taxes 9.7 8.7 Federal income tax at 38% :l 3.7 3.3 Net profit after taxes 6.0 5.4 Reduction in net profit after taxes due to air pollution control systems: assuming 1% cost increase (as above) 10.0% assuming .9.")'/; cost increase (see table A) 9.8% assuming .77% cost increase (see table A) 8.0% 1.68 1.48 TOTAL Source: 1968 BDSA survey interview of six plants with in- stalled dry baghouse systems. 1 The first column assumes a net after-tax profit of 6 percent on sales. 2 The second column assumes a 1 percent increase in annual costs due to introduction of pollution control systems. •' Average effective rate. view survey, nor does the Commerce Depart- ment have such information for secondary non- ferrous smelters and refiners. In order to evalu- ate the significance of the preceding cost data in relation to earnings, a net after-tax profit of 6'/< on sales has been assumed. The short- coming of this assumption is recognized. The sole reason for its adoption is to estimate whether the data developed in the BDSA study are significant when related to overall industry costs and profits. Table B indicates that installation and oper- ation of air pollution control systems may have the effect of reducing net after-tax profits by 8 to 10%. Accepting this as a degree of magnitude, it appears that the costs involved in installation and operation of air pollution control systems could be a moderately significant element in the secondary nonferrous metals industry. 10 V Conclusions 1. After some years of experimentation, the secondary nonferrous metals industry has made progress in identifying and adapting the particular systems of air pollution con- trol best suited to the various types of smelters. It seems probable that there are significant opportunities for continued re- finement and improvement in air pollution control techniques, and for expansion of production of control equipment. 2. Useful data on the extent of air pollution control throughout the industry are lacking. However, it is clear that there are great variations in the utilization and adequacy of control systems. Factors accounting for variations include: relative newness of ait- pollution control programs, variations in air pollution control standards and enforce- ment in different jurisdictions, uncertainty as to up-coming standards, and differences in scale and technology between smelters. With respect to the last factor, differences in scale alone result in certain types of smelters using oxide recovery processes which have greater or lesser ancillary ef- fect on the control of air pollution. 3. The sample of plants upon which BDSA has based a cost burden analysis is reasonably representative of large- and medium-sized smelters, and of brass-bronze smelters, which are important in the industry. Al- though the analysis is implicitly based on the varying State and local air pollution control regulations which govern the opera- tion of the plants in the sample, it is believed that virtually all of the systems covered in the computations would meet the most strin- gent of current State and local requirements. 4. The study shows that the annualized in- stalled cost, plus the annual cost of operat- ing and maintaining air pollution systems is under one percent of the annual value of shipments, and in the range of $1.35 to $1.70 per year for each cubic foot per minute (cfm) of the gas cleaning capacity. 5. The cost of air pollution control systems appears to be a moderately significant ele- ment of overall costs in the secondary non- ferrous metals industry. 6. It seems probable that the cost burden of air pollution control would be heavier in smaller firms than in larger ones. The in- dustry contains a number of small, eco- nomically marginal firms for which even modest increases in production costs would prove highly burdensome and, possibly, in- supportable. 7. Future changes, both in technology and in pollution control regulations and standards, raise the possibility that an investment today in a currently adequate gas-cleaning system might not be written off before it became technically obsolete or legally in- adequate. Perhaps a new kind of insurance coverage or a new kind of insurance com- pany for this purpose, with or without Government support, is required. Among consulting firms and gas-cleaning equip- ment manufacturers, there has been dis- cussion of the cost-price aspect of this kind of risk-taking. One approach might be for the supplier of the equipment or service, for an annual fee, to guarantee modifica- tion of the installed system to meet legal requirements for emissions control during some meaningful equipment amortization period. 11 Appendix A Statistical Tables Section 1 — General Industry Statistics Table 1.— KEY INDUSTRY STATISTICS Secondary Nonferrous Metals Industry (SIC 3341) Value of Xo. of Capital Shipmei. \U E. 3 Census of Manufactures, Vol. II, Part 2, pp. 330-7 and 18. Table ^.-INDUSTRY EMPLOYMENT DATA Secondary Nonferrous Metals Establishments (SIC 3341) Grouped by Number of Employees 1962-1967 / 'ercentage Ann, not ' Pi strihution a metals in< lustry i metah $ 814 2.289 26 74 $3,103 1 00 % alloys $ 222 27 IVS 192 24 loys 43 59 23 1 7 2 8 lillets 14 53 7 $ 814 100'/,- Cen. sus i i/ Ci pin.fi/ Ki \isiness Manufact, ires E atterns series scric s — 1903 1962 1967 Total establishments 459 378 416 Under 20 employees 2 80 2 Hi 233 20 to 49 employees 93 83 82 50 to 99 employees 43 37 51 100 to 249 employees 38 34 36 250 to 499 employees 4 i; 12 500 or more employees 1 2 2 Source: Bureau of the Cell sus: 1963 figures are fi 'oin the 1963 Census of Manufactures, ^ ,"ol. 11. Par t 2. p. 33C-1 :>: 196 2 and 1967 figures are from a separate series derived from Social Security Administration data and published in County Business Patterns for the respective years, in which the numbers are designated as "reporting units" rather than "establishments." Table 4.— COST OF MATERIALS Secondary Nonferrous Metals Industry (SIC 3341) 1963 (millions of dollars) Materials consumed Aluminum ingot Aluminum and aluminum-base alloy- scrap (purchased scrap only) From same company From other sources Copper Refined unalloyed copper Copper and copper-base alloy sc (purchased scrap only) Bead Refined unalloyed lead Bead and lead-base alloy scrap (purchased scrap only) Zin< Tii Refined unalloyed zinc Zinc and zinc-base alloy scrap (purchased scrap only) Refined unalloyed tin Tin plate scrap (purchased scrap only) Other materials, parts and supples Cost of resales Fuels consumed Electric energy purchased Contract work Total Cost of Materials, etc. Source: Based on 1963 Census ai Manufactures, pp. 330-14 and 330-29-30. 677 64 82 4 159 27 77- 17 12 31 9 162 126 10 4 6 823 Vol. II, Part 2, Table 5.— GEOGRAPHIC DISTRIBUTION OF PLANTS Secondary Nonferrous Metals Industry (SIC 3341) 1963 Xo. of Value i. if Ski omenta .1 reti Plants ■foot) Distribution New England 35 41,025 3.9 Middle Atlantic 144 358,993 34.3 North Central 149 444,353 42.5 South 59 105,016 10.0 West 72 96,135 9.2 TOTAL 459 1.045,522 100.0% Source: 1963 Census of Manufactures, Vol. II, Part 2, pp. 33C-12 and 13. Section 2 BDSA Survey Statistics Table 6.— GEOGRAPHIC DISTRIBUTION OF PLANTS IN BSDA AIR POLLUTION SURVEY Secondary Nonferrous Metals Shipments Number of Plants and Value of Shipments (amounts in million dollars) 20 Plants Rejiortiny Shipments Data Value of Shipment Geographic \o. of Areas Plants New England 1 Middle Atlantic 8 North Central 4 South 4 West 3 11 Plant Sample Value of Shipments Percentage Xo. of Percentage Amount Distribution Plants Amount Distribution 4.0 2 85.2 51 5 54.2 58 41.(5 25 2 12.2 13 24.1 1") 2 16.7 18 11.4 7 2 10.6 11 Total 20 166.3 lOO'/r 11 93.7 100% Source: 1968 BDSA air pollution survey of plants in secondary nonferrous metals industry (SIC 3341). 12 Table 7.— INSTALLED COSTS OF GAS-CLEANING EQUIPMENT SYSTEMS, BY TYPE OF SMELTER Dollar* per euhie- foot-per-ttiimtte of caparitii to (nut smelter flue gases lli.:;<> 0.97 ft. HO . "> S '-'.it 7 y plants 8 plants J ::. in 1.2""> 2.14 Brass and bronze ingot ma kers : r> plants I .."»:! ()..'>() 0.9."> ::.()(, I.2.") •J - 1 1 7 4 plants Cupper producers 2 plants 2.s:; Aluminum ingot producer 1 plant i .:i."> Lead Smelters 2 plants 1 1 . 7 "2 O.liO i>. r> i 2.00 1.84 1.S2 Zinc alloy producer 1 plant .... Not available, not compiled separately, or not Applicable. 1 Excludes - highest and 1 lowest of 1 1 plants. Source: 1>1)SA air pollution survey. Table 8.— INSTALLED COSTS OF GAS-CLEANING EQUIPMENT SYSTEMS, BY TYPE OF EQUIPMENT Cents tier /mini, I Cents per dollar Dollar* per cubic- of annual metal of annual metal foot-per-minute of produrtion shipments capacity to lleut smelter fine oases High Lou- Average TJigh Line Average High Lou- Average Baghouses: H plants 2.011 0.50 1.07 7 plants .... .... .... .">.0S 1.2.1 2. (is 6 plants .... .... .... .... .... .... 8.:i:; 2. tilt .">.(>» Wet scrubbers : 2 plants l.:i."> 0.(t7 1.01 1 plant .... .... .... .... .... .... 2.">0 Combined baghouse and wet packed scrubber: 1 plant .... .... .... ... .... .... 4.K4 Electrostatic precipitators : 2 plants (>.7f) 0.:t:s 0..">4 .... .... 1.29 1 plant .... .... .... .... .... .... .... ... 4.09 .... Not available, not compiled separately, or not applicable. Source: 15DSA air pollution survey. Table 9.-ANNUAL OPERATING COSTS OF GAS-CLEANING EQUIPMENT SYSTEMS, BY TYPE OF SMELTER Gents per pound Dollars per euhic-foot-per- of metal production minute cleaning capacity All nonferrous smelters: 4 plants High Loir Average High Loir Average 3 plants 0.2H 0.0". 0.12 Brass and bronze ingot maker: 1 plant .... .... 1.0" <>.:»<> 0.82 Lead smelter: 1 plant Multi-product smelters : 2 plants 0.2S O.O.". 0.08 .... 1.07 0.0S 0.1 It l.o:5 O.'.iri 0.69 .... Not. available, not compiled separately, or not applicable. Source: BDSA air pollution survey. 13 Appendix B Air Pollution Control Equipment Systems Baghouse Systems The baghouse system of cleaning furnace gas emissions of their particulate load is a fabric filter system roughly equivalent to a vacuum cleaner. Properly designed, installed and oper- ated, the baghouse can efficiently remove par- ticulate matter in the sub-micron range. Bag- houses have long been popular in the smelting industry not only for controlling air pollution, but for recapturing fugitive metal-bearing dust and fume for retreatment or sale. Metallurgical fume (smokes, condensates) and dust range in size from 0.001 microns to above 1 micron, but most emissions (for ex- ample, zinc oxide fume) range in size from about 0.01 to 0.5 microns. Since the largest of such particles is about the smallest size for ef- fective fabric type filtration, the question arises as to why baghouses are such efficient collec- tors. Apparently the answer lies in the surface energy characteristics of the particles. The smaller the particles the more actively they tend to agglomerate. They stick together to form a filter mat on the fabric, the mat attract- ing and retaining smaller particles than the fabric would otherwise retain. The grain loading per cubic foot of gas and the number of cubic feet of gas to be filtered per minute determine the size of the baghouse but not its design nor the materials and auxil- iary equipment. The operating temperature is the most important single factor in selecting the kind of fabric, but the size distribution and surface energy characteristics of the particles to be filtered determine cloth weave and limit fabric choice. Temperature control is a critical feature of baghouse design. Hot furnace gases usually en- ter some kind of expansion chamber having a large heat absorbing surface area. Mechanical separators of the cyclone type are sometimes found in series with expansion chambers and heat absorbing U-tubes. Carefully controlled water sprays are sometimes used to reduce temperature, but use of water often causes clogging or blinding of the filter fabric bags if the temperature-humidity relations in the bag- house satisfy dew-point values. Permeability is thereby lowered, pressure drop across the fabric bags is increased and gas flow is restricted. For these reasons, most smelters observed during this study have completely dry systems. Instead of water quenching, automatic temper- ature sensors regulate intakes of cool, outside air to dilute the hot gases prior to their entry into the baghouse. Yet again, this method has drawbacks. Such baghouses must be designed with capacity sufficient to accommodate not only the volume of furnace flue gas but also the volume of outside air injected into the sys- tem. In addition, there is a considerable fire hazard. The hot flue gases are often deficient in free oxygen, and if the furnace charges contain oily scrap or other combustible materials, ad- mission of oxygen-rich outside air can cause low-order explosions and fire. Baghouses are structured so that dust can be shaken or blown from the bag by automatic devices and deposited in a hopper below. Unless skill and planning is use ( d, the dust can again become an air pollution problem when removed from the hopper for disposal or sale. The fine, dry dust is difficult to wet and is easily dis- persed by normal air movements. In the case of brass and bronze ingot-makers' plants, where the dust may run as high as 85% zinc oxide, it can be bagged in airtight heavy paper or plas- tic bags and shipped to customers at zinc retort plants or chemical processing plants. Bagging is too costly, however, when the baghouse dust has no sales value and is withdrawn from the hoppers for disposal. Even the enriched zinc oxide from brass and bronze furnaces is worth- 14 less and yet requires handling, storage or dis- posal in times of abundantly available primary zinc ore concentrates and low zinc metal prices. Where is this material to be disposed of ulti- mately? Clearly, problems of handling and dis- posal of baghouse dust are yet to be solved within a context of economic and anti-pollution restraints. Of the 23 plants in the sample considered in this study, eight have efficiently functioning dry baghouse systems. One has an equivalent system but uses some water as a gas cooling spray before the baghouse itself is reached. Most of these plants were brass or bronze ingot producers and lead smelters. In addition to bag- house systems, and at other plants, small modular baghouses of simple design are used to filter gases and in-plant air from ducted hoods over kettles, furnace charging doors, open hearths, and slag and melt draw points. Characteristically, the eight baghouse sys- tems are operated at a baghouse gas tempera- ture of 270 degrees Fahrenheit with tolerable temperature ranges from 250 to near 300 de- grees. Pressure drop across the fabric from the dirty to clean side is from 3 to 6 inches of water. Ratio of square feet of fabric to cubic feet of gas per minute passing through bags ranges from IV2 to 2V2 to 1. Orion or Dacron seem to be the most popular fabrics, but most of the bags are stitched with Teflon thread. No data were collected on many important techni- cal factors relating to type of weave, thread count, diameter of bags as a function of length of bags, and related permeability. The baghouse system is quite capable of col- lection efficiencies of practically 100% if prop- erly designed, but efficiency drops markedly with only slight deterioration of the fabric. A ruptured bag will greatly depress efficiency, but a single ruptured bag is immediately made evi- dent by a visible change in the flue stack emission. Design of a baghouse system for flue gases is a highly technical affair requiring sophisticated engineering measurements. Each system needs to be custom tailored for the plant requiring it. Electrostatic Precipitator Systems Two of the smelters of the 23 from which data for the study was collected have electro- static precipitators as the main unit for clean- ing furnace flue gases. None of the other 21 smelters use electrostatic precipitators in any size or form. Typically the precipitator is composed of multiple electrodes consisting of vertically hanging pipes (or plates) each with a wire, weighted on its ends, and suspended down through the middle of the pipe. High voltage, low-current electricity is applied to the central hanging wires giving them a negative charge. The pipes, connected to ground but isolated from the wires, thus assume a positive charge, and in this manner a strong electrostatic field is maintained between the wires and the pipes. When properly conditioned particulate mat- ter in the furnace gas stream enters the set of parallel pipes (collecting electrodes) they as- sume negative electrical charges from the field maintained about the central wires (emitting electrodes) and consequently migrate to the positively charged pipe walls. Automatic peri- odic mechanical rapping of the pipes makes the clinging particles migrate under gravity down the pipe walls to a collecting hopper below. Like the baghouse system, the electrostatic precipitator system of gas cleaning is efficient when properly designed and engineered for the individual plant having compatible processes and products. Collection efficiencies can ap- proach nearly 100% under ideal conditions, but ideal conditions never obtain, and many vari- ables often frustrate efficient dust collection. Least of the difficulties concern electrical con- trol. Usually low-voltage alternating current is put through transformers, rectified, and moni- tored automatically to arc across the electrodes of the high-voltage electrostatic field at a rate appropriate for maintaining an optimum volt- age for collection. Electrical properties of the dust particles in the flue gas is another matter. High resistivity results in low collection efficiency. Resistivity can be lowered by introducing water vapor or acid into the smoke stream, but in doing so cor- rosion problems often result. The efficiency of the electrostatic precipitator relates to how long the dust particle is allowed to remain in the electrostatic field. Thus, the velocity of the flue gas stream and the length of the electrodes are critical. For a dust particle of a given resistivity and size, there is a known 15 residence time measured in seconds, necessary to assure migration of the particle to the col- lecting electrode wall under a given field strength. Collection efficiency drops remarkably when residence time is insufficient. Surges in fur- nace flue gas volume can easily cause too short a residence time unless equipment is designed for capacity to accommodate peak volumes and peak loading of flue gases. Efficiency is also temperature sensitive owing to the relation of temperature to resistivity. Wet Scrubber Systems Of the 23 plants which constituted the sample for the study, five have a wet scrubber as the major component of their furnace flue gas cleaning system. Three of these are aluminum alloy ingot producers, one is a zinc remelt alloy shop, and one produces standard brass and bronze ingots. Wet scrubbers, as the name implies, are devices designed to bring the particulates and gaseous contaminants of the furnace flue gases into intimate contact with water, or an aqueous solution, so as to entrain or dissolve and re- move the contaminants from the gas stream. To accomplish this, impingement and compaction are the primary mechanisms. Size and designs of wet scrubbers vary wide- ly. Some are as simple as a water spray in a compartment intermediate between the furnace and the stack. However, in this report "wet scrubbers" refers to the carefully engineered, technically sophisticated relatively high energy devices together with what auxiliary equipment is necessary to condition the gas stream, adjust stream flow characteristics and adjust particle energy content. Efficiency of a wet scrubber is a function of the size of the particles to be entrained and the solubility of the gases to be dissolved. Particle shape, density and chemical composition also affect efficiency. In general, for the low and medium pressure loss wet scrubbers, efficiency drops off very sharply for particles less than 1 micron in size. They are inefficient in remov- ing non-wetable and non-soluble dusts and fume, such as lead and zinc oxides, and are best applicable to cleaning furnace gases with low particulate grain loading but high loading of soluble gases and mists such as hydrochloric and sulphuric acids. The energy content of the furnace gas stream is extremely important. The greater the velocity of travel, the larger the probability of contact between any given increment of gas or dust particle with a water film or droplet. In the Venturi type scrubber the furnace gases are forced through a constriction, or throat, to increase gas flow velocity and to cause turbulency. The water, or other liquid, is ad- mitted under high pressure in the area imme- diately after the throat. The resulting thor- oughly mixed contaminants, plus water, plus gas, enter into an expansion chamber where the cleaned gas at lower pressure separates (or is separated mechanically) from the liquid por- tion containing the contaminants. Pressure drop through such a system is in the order of ten times that through a baghouse system. Horsepower requirement is a major operating cost item. The packed tower is a popular wet scrubber design in use in the secondary non-ferrous metals industry, particularly in aluminum plants where chlorine is used to purge mag- nesium from the furnace melt. In its elements, the tower is a structural steel shell suitably lined with one or more materials (rubber, acid-resistant brick, etc.) to isolate the shell from the highly corrosive gases. Water enters the top of the tower, and the furnace gases enter the bottom. A suitable packing medium is supported loosely or tightly, depending on the particulate gas burden, throughout the height of the tower. The downward migrating liquid and the upward rising gases are forced to flow through the packing in a constantly changing direction, and with changing velocity, thereby maximizing the probability of impinge- ment of the two. The contaminated liquid is tapped from the bottom and sent to neutraliz- ing and water reclamation tanks. The cleaned furnace gases are vented through the top to a stack. The wet scrubber is particularly suitable for the aluminum smelter. Spray quenching of the hot furnace gases creates steam which reacts with aluminum chloride gas to form soluble hydrated aluminum oxide and hydrochloric acid both of which are relatively easy to re- move in an appropriately designed and oper- ated scrubber. 16 Opinion varies widely as to the effectiveness of the wet scrubbers. Most aluminum smelter- men look to the wet scrubbers for an ultimate answer to their pollution problems. But there is a general feeling that more precise operat- ing controls need to be developed and methods need to be found to adapt the wet scrubber to the peak chlorine "burn-off" cycle when the temperature of the aluminum furnace is raised to volatilize all residual chlorine from the sys- tem. Perhaps exhibiting more individuality than even the baghouse or electrostatic precip- itator, the wet scrubber must be tailored to the plant it serves. Average efficiencies and average costs have little meaning. Combination System One large multi-product smelter visited dur- ing this study had a modern, efficient, fully integrated single system of duct work, mani- folds, dampers and valve doors connecting fur- naces, incinerators, hoods, baghouses, and a wet scrubber. This smelter is located in an area of stringent control, and the manage- ment is justifiably proud of their accomplish- ment. No System Seven of the plants visited to collect infor- mation for this study had no clearly recog- nizable furnace gas-cleaning system, although several had some poorly functioning mechani- cal gas-cleaning devices usually venting their discharge through roof flues. It would be inaccurate to characterize these seven smelters in any single way. Size does not seem to be a factor. Geographical location definitely has influenced their deferral of in- vestment. Their product and the technical aspects of their pollution problems have been other determinants. Of the seven having no system, five are in an advanced state of planning, some at their own initiative and others under pressure of local authority. Of the remaining two, one is economically marginal and cannot afford any new investment. 17 Appendix C Technology of the Industry Furnaces The reverberatory furnace is by far the most prevalent kind used in the secondary nonferrous metals industry. It is relatively inexpensive when judged on the basis of its customarily large capacity. There is consider- able flexibility in choice of sizes, but best economy favors large capacity units. The reverberatory with puddling chamber is used almost exclusively by secondary alumi- num smelters according to the sample of in- formation collected during this study, but of the brass and bronze ingot makers plants vis- ited, most prefer a rotary type furnace. Sev- eral small "reverbs" were being used for sweat- ing furnaces in early 1968, and several large ones were in operation for various metal smelting procedures such as treatment of refinery drosses and contaminated intermedi- ate smelter products. Massive melting opera- tions with need for only small slagging re- quirement prior to casting is suited to use of reverberatory furnaces. Among the plants visited, the horizontal shaft rotary furnace of small intermediate capacity is the most-used for brass and bronze ingot making. According to some users the rotary furnace is easier to charge, slag and blow. This apparent preference among the plants visited casts some doubt as to appropri- ate representation since several published sources state the reverberatory type furnace is the kind preferred by brass and bronze in- got makers. Hooded crucibles, or kettles, of various sizes are universally used for many operations but are most commonly used for more simple charge melting and for composing alloys such as zinc diecast metal, antimonial lead and white metal alloys. Drossing of small size melts is often done in kettles. For more rigid specification alloys which present metallurgi- cal problems associated with the atmospheric gases and with fuel components, some second- ary smelters use electric arc and electric in- duction furnaces. These are of small capacity. Blast furnaces are invariably used in sec- ondary smelting of lead storage battery plates. In addition, one smelter recently visited uses a small blast furnace to smelt lead drosses and another smelter uses a blast furnace to smelt copper scrap to a "black copper" for charging into converters. Furnace Fuels Coke is the universal fuel for blast furnaces, being used both for its heat content and for generation of required reducing gases. Num- ber 4 fuel oil is the most used fuel for firing the reverberatory furnaces according to the sample of information collected for this study. In most cases the fuel oil is residual, but in some areas the fuel oil is a distillate processed to remove sulfur to legally tolerable levels. The' more viscous fuel oils, numbered 5 and 6, are also used but to a more limited degree. These have relatively high flash points and require more attention to furnace burners. The low-viscosity, low-flash-point, relatively expensive number 2 fuel oil is used in a few smelters, often with natural gas as an optional fuel. Where available, natural gas is often used as standby fuel and in some smelters nat- ural gas is the primary fuel. In addition to fuel oil, natural gas, and coke, electricity was used in several large plants to supply energy to small special alloy induction furnaces. In the small plant, electricity was used to heat alloy and melt kettles. In most geographical areas contracts can be made between smelters and fuel suppliers such that one fuel may be substituted for another 18 at the most economically opportune times. In- terruptible natural gas service is an example. Other than economic and technical factors, local availability and legal requirements on sulfur content condition the smelter's choice of fuel. Incinerators and Afterburners Most grades of scrap metal require incinera- tion of attached foreign nonmetallic constitu- ents before smelting and refining. Oil and grease are common contaminants on turnings and borings resulting from metal-working machines in fabricating plants. Paints and lacquers are also contaminants. Insulation on wire is a major contaminant which is usually removed by incineration. There are others. The temperature at which the refuse is in- cinerated must reflect the characteristics of the scrap metal material as well. Generally the incinerator operating temperature must be maintained high enough to either burn or volatilize the contaminant and low enough to prevent excessive oxidation of the metal. In some combinations of scrap and contaminant the operating temperature is a compromise tolerating a considerable loss of metal in favor of more complete elimination of the con- taminant. Incinerators are varied. For oily aluminum cuttings, a rotating shaft furnace whose axis is slightly inclined to the horizontal is a popu- lar kind. Carefully controlled temperature volatilizes, rather than burns, the oil from the metal surfaces and the hot effluent moves to a second chamber afterburner where a higher temperature and excess of oxygen burn the oil to a gas consisting of carbon dioxide and water vapor. Copper electrical scrap with its various kinds of insulation, sometimes presents large in- cinerator problems. Mechanical stripping of fine gauge wire is being done at one or more plants thereby obviating the need for incinera- tion. But the process is expensive, and most smeltermen believe the economics of treating most wire scrap favors efficient nonpolluting incineration. Burning of copper wire to free the copper from insulation sheathes of polyethylene, poly- propopylene, other plastics, rubber and paper is most efficiently done in a two-stage incinera- tor. In the primary chamber the temperature is maintained hot enough to support combus- tion of the insulation but low enough to pre- vent excessive oxidation of copper. The only partly burned hydrocarbons escape in a sooty gas stream into a secondary chamber equipped with an afterburner. Very hot temperatures and excess of oxygen convert the flue gas to innocuous carbon dioxide and water vapor. The hard problem for copper insulation burning relates to polyvinyl chloride sheath- ing. Similar to other plastic insulation, poly- vinyl chloride results from chlorination of polyethylene to render it fire resistant. Conse- quently, after its useful service life and its re- turn to a secondary smelter, it resists normal methods of incineration. More importantly with respect to air pollution problems, com- bustion of polyvinyl chloride liberates chlorine ions which combine either with water vapor to form corrosive hydrochloric acid or with metallic elements in the scrap to form equally harmful metal chlorides which unattended es- cape through the incinerator flue. Phthalic anhydride is also generated by burning poly- vinyl chloride. To prevent effectively the es- cape of noxious gases through the flue, gases must pass from the afterburner chamber through a packed wet scrubber and the result- ing effluent neutralized with sodium hydroxide or other chemical base. Obviously, disposition of the scrubber effluent could cause water pol- lution problems. Some synthetic and natural rubber coatings on scrap metal have compositions that require special caution during incineration. Teflon con- tains fluorine, and unregulated burning of Teflon-coated scrap releases hydrofluoric acid. If sulfur was used as a vulcanizing agent in the rubber manufacture, rubber coatings on scrap release some quantity of sulfur dioxide. Primary incineration followed by afterburner incineration plus treatment in a suitable wet scrubber appears to be the answer for proc- essing these materials. Another solution may be careful avoidance of scrap contaminated by these things. However, sorting problems and costs are great. Other than the horizontal shaft rotating kilns used in aluminum smelters, some small 19 and old reverberatory furnaces are used for incineration and sweating. Many smelters have dryers and incinerators of their own original design. Some smelters have no in- cinerators and operate their furnaces at tem- peratures designed to incinerate during the charging and melting cycle of their major furnaces. One of the most apparent deficiencies of air pollution control equipment in secondary non- ferrous metals plants is in the afterburner units on incinerators. Many do not have the precise temperature control needed for com- plete combustion, and it seems doubtful the design features insure adequate mixing of the hot gases with proper quantities of oxygen from the air. Another possible fault in many afterburner designs is the failure to provide sufficient retention time of the hot gases for combustion in the area of appropriate tem- perature and oxygen availability. 20 Appendix D Factors Causing Cost of Production Variations Many variations in cost among different producers of the same metal are tied to the physical location of the smelter. All scrap metal smelters require land more appropriate- ly measured in acres than in square feet. This space is required for expanses of floor or yard in which to sort and inventory large quantities of low density scrap of many different kinds and origins needed to blend and assemble fur- nace charges of more or less precise composi- tions. Value of the ground varies from as little as $100 per acre in certain rural areas to per- haps as much as $100,000 in selected urban areas. Similarly, the property tax base varies. Transportation cost is also associated with the smelter's physical location. The smelter in a rural area on a railroad siding has a cost structure entirely different from the urban smelter who receives and ships by truck; the latter often bogs down in the ambient urban traffic. Most importantly, production cost variations are related to the skills and energies of man- agement. This is more so for the smaller firm and less so for the larger producer. Many men of the secondary non-ferrous industry are of the "rugged individual" type earning their living from primarily entrepreneur skills. For these people the difference between an annual profit or loss often resides in specialized knowl- edge of scrap markets from which the raw material is purchased. Small fractions of a cent in buying a scrap of an anticipated com- position can make or break a low-volume smelter who lacks the ability to "blend out" a shipment of low quality or contaminated scrap. Although the process metallurgy is rather uniform in application, the degree of sophisti- cation of the equipment used in the process greatly affects cost and cost structure. Most of the large non-ferrous metals smelters are modern, efficient plants. Spectrometers give direct readouts of compositions of a furnace melt several minutes after a button sample is withdrawn, electronic sensors and control devices sense changes in exhaust gas tempera- tures and activate cooling devices. Automated casting and ingot cooling and handling lines are common. And so on. These smelters may be termed capital intensive as contrasted with the labor intensive, often smaller, and some- times obsolete smelters. The ratio of operating cost to fixed cost varies remarkably between the two. However, as pointed out elsewhere in this report no sweeping generalization is war- ranted. Some low-cost labor intensive and obsolete small plants do exist, and there are some high-cost, capital intensive, technologi- cally sophisticated large plants. This kind of inversion is often the reflection of plant loca- tion and company efficiency. Raw materials supply assurance is another factor in differential cost. Some smelters have assured supply of scrap whose composition and purity is well known. Sometimes contracts exist between the scrap generating plant (such as the manufacturer of airplanes, automobile or electrical equipment) and the secondary metals smelter. Sometimes contracts exist for delivery of the smelter's newly generated metals to the same manufacturers who pro- duce the scrap on which the smelter depends. This degree of assured raw materials supply and metal product sales gives stability to the smelter and normally assures a modest profit. In extreme contrast is the secondary non-fer- rous metal producer who is constantly sam- pling and entering the scrap metal market, buying and selling great varieties of car-lot scrap and carrying large inventories to hedge his desirably constant level of production of metal of rigid purity specifications. Often 21 such a smelter has an unstable customer popu- lation for its product. For these smelters, the increased uncertainty of economic performance manifests itself in wide ranges of costs and profits. These kinds of smelters are in part those who lie along the economic margin and in part the ones who show the greatest rate of return on invested capital. One other very noticeable factor that deter- mines cost differences between smelters of the same size who produce the same products is the extent to which they lean toward capacity operation. Operating at or near capacity allows the fixed costs, such as invested capital, in- surance, property tax and the like, to be dis- tributed over a larger number of units of pro- duction and thereby lower the cost per unit. Conversely, an operation which is "locked-in" to a low ratio of production-to-capacity, owing to lack of scrap supply or other reasons, must sustain an inordinately large fixed cost per unit of output. 22 Appendix E Federal Law and Regulations The Air Quality Act of 1967 (81 Stat. 485) is designed to enhance air quality in order to promote public health, welfare and productive capacity, to foster research and development in air pollution control, to assist State and local governments with their control programs and to encourage regional control programs. 1 The Secretary of Health, Education and Wel- fare shall "as soon as practicable, develop and issue to the States criteria of air quality" and "information on those recommended pollution control techniques the application of which is necessary to achieve levels of air quality set forth in criteria." - If, as a result, the State enacts a control program which the Secretary of HEW determines to be consistent with the criteria and recommended control techniques, such program will represent the air quality standards applicable to the State. If the State does not enact such a program, the Secretary is authorized to promulgate standards for the State. 5 Considerable emphasis is placed on consulta- tion among Federal, State, local and regional authorities, and private industry. Any State or local jurisdiction is free to adopt air quality standards higher than those of the Secretary of HEW. 4 1 Sec. 101 (bi 2 Sec. 107 (b) and (c). : ' Sec. 108 Id. ' Sec. 109. The statute mentions economic aspects of air pollution control at several points. The recommended pollution control techniques which accompany the criteria "shall include such data as are available on the latest avail- able technology and economic feasibility of al- ternative methods of prevention and control of air contamination including cost-effectiveness analyses." 5 In any suit to enforce Federal standards the court is to give "due considera- tion to the practicability and to the technologi- cal and economic feasibility of complying with such standards." 1 ' A report which the Secre- tary of HEW was to file with the Congress early in 1969 would include "a comprehensive study of the economic impact of air quality standards on the Nation's industries, commu- nities and other contributing sources of pollu- tion, including an analysis of the national requirements for and the cost of controlling emissions to attain such standards of air qual- ity as may be established pursuant to this Act or applicable state law." 7 In January 1969, HEW issued four reports, as follows: "Air Quality Criteria for Particu- late Matter"; "Air Quality Criteria for Sulfur Oxides"; "Control Techniques for Particulate Air Pollutants"; "Control Techniques for Sul- fur Oxide Air Pollutants." 6 Sec. 107 Ic) " Sec 10S (c) i4). T Sec. 305 (a) 23 Appendix F Variations in Local Enforcement In this study no attempt was made to com- pile documentary data relating to local air pollution control authority. But it seems ap- propriate to discuss some aspects of local en- forcement variations, as the differential appli- cation of local air pollution controls could be a factor in investment decisions. While local law enforcement varies from no enforcement to fastidious enforcement of rela- tively rigorous laws, most localities in indus- trial areas apparently fall in between these ex- tremes and are well on the way to evolving effective emission monitoring methods and equitable control procedures. A factor which retards progress is the extreme shortage of technical personnel in local regulatory agencies who are trained in air pollution abatement and control problems. More rare is the local inspector who also has technical knowledge of the industrial processes over which his agency has regulatory author- ity. To the extent trained people are available they are in responsible positions, but person- nel shortages have resulted in some local in- spectors having poor qualifications, and en- forcement sometimes suffers. A vigorous and extensive training program tailored toward anticipated future needs may be an answer to the shortage of responsible and qualified air pollution control officers for local jurisdictions. Socially motivated and tech- nically oriented high school graduates could possibly be the feedstock for such a training program. In one industrial urban area a certain small smelter, according to its owner, is under the control authority of three jurisdictions having unlike regulations — reportedly, one is lacka- daisical, one seems reasonable and responsible, and one is arbitrary. Because the responsible authority gave specific guidelines as to what is required, the smelter developed plans to satisfy that authority. However, before equipment was installed, the plant manager received a citation for local code violations under an- other jurisdiction. He was summoned to a hearing to explain his position, but according to him, the hearing was but a stage for the local officials to make speeches before a bat- tery of news reporters and TV cameramen. Plants in some localities are suffering at least some social coercion. One such plant is on the border between an old decaying resi- dential area and an equally old zone of heavy industry. Reportedly, persons living in the neighborhood enter the plant manager's office to solicit money for charities of doubtful exist- ence using an implied threat of an air pollu- tion nuisance charge to further their position. Reportedly, in this community the legal defini- tion of a "public nuisance" is so vague and subjective that any citizen may bring charges and cause embarrassment without evidence other than his own opinions. The labor force at the same smelter also has access to this added weapon against the employer. In considering alternate investment oppor- tunities to expand capacity and replace plant facilities, differences in local air pollution con- trol regulations would appear to be a relevant factor in the investment decisions of certain firms. If the degree of restriction were gen- erally proportional to the severity of the pollu- tion problem in all areas of the United States any resulting capital migration could be a net good, slowly dispersing industrial concentra- tions, reducing urban air pollution and creat- ing jobs in small communities. But if localities with equally severe air pollution problems do not apply equal remedies through enforce- ment of abatement regulations, then pollution havens will grow. Such havens would tend to concentrate, rather than diminish, the indus- trial, economic and social problems associated with polluted air. Hopefully, the Federal authority under the Air Quality Act of 1967 will prevent growth of pollution havens. But time lags in administering the law may occur. 24 ipifir