 Economic Analysis for the Final Biotechnology Exemptions Rule for Trichoderma reesei and 
Bacillus amyloliquefaciens







October 28, 2019






-- Does not contain TSCA CBI --






Prepared for:
				Economic and Policy Analysis Branch
	Chemistry, Economics and Sustainable Strategies Division
Office of Pollution Prevention and Toxics
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue
Washington, DC 20460

Contributors
The US Environmental Protection Agency (EPA) analysts responsible for this report are Natalia Leszczyszyn, Stephanie Suazo, and Carol Rawie of the Economic and Policy Analysis Branch; Chemistry, Economics and Sustainable Strategies Division; Office of Pollution Prevention and Toxics. 

                                   Abstract
EPA is listing Trichoderma reesei (T. reesei) strain QM6a and its derivatives, and Bacillus amyloliquefaciens (B. amyloliquefaciens) subsp. amyloliquefaciens as candidates for Tier I and Tier II exemptions from full reporting for new chemicals under the Toxic Substances Control Act (TSCA). The exemptions fall under TSCA section 5(h)(4). EPA is adding the two microorganisms to the existing list at 40 Code of Federal Regulations (CFR) 725.420 of ten recipient microorganisms that are candidates for exemptions from the requirement to submit a Microbial Commercial Activity Notice (MCAN). EPA is implementing these exemptions in response to industry petitions. The candidate microorganisms and their uses will need to meet certain requirements to qualify for an exemption. Qualifying microorganisms will require an abbreviated Tier I or Tier II submission, with less lead time before commercial manufacturing, as compared to the MCAN.
T. reesei and B. amyloliquefaciens are both used in enzyme manufacturing. The use of intergeneric T. reesei has been increasing due to its use in fuel ethanol manufacturing from corn and cellulosic biomass. Other uses for the enzymes from the microorganisms include pulp and paper, textile manufacturing, laundry detergents, and specialty chemical manufacturing. 
The rule will result in costs savings for both the industry and the Agency. EPA estimates the annualized industry savings of the rule to be approximately $260 thousand over a ten-year period, with a three percent discount rate, and $252 thousand with a seven percent discount rate. Annualized agency savings are approximately $178 thousand with a three percent discount rate and $173 thousand with a seven percent discount rate over the ten-year period, for a total annualized savings to society of $438 thousand with a three percent discount rate and $424 thousand with a seven percent discount rate. This assumes that, over ten years, firms will submit 49 Tier I notices and 14 Tier II notices for T. reesei and B. amyloliquefaciens. 
Benefits of the rule include non-quantified benefits due to faster development of improved microorganisms, resulting from simpler submissions with their reduced EPA review periods. This is especially the case for Tier I submissions, which EPA expects to increase innovation in the biotechnology market. Industrial, institutional, and household consumers will benefit from more cost-effective products, such as detergent enzymes, made using new T. reesei and B. amyloliquefaciens strains. T. reesei strains modified to enhance the manufacturing of enzymes that degrade biomass could help bring down costs of manufacturing cellulosic ethanol, which may lead to lower greenhouse gas emissions and less global climate impact as compared to corn ethanol or gasoline. 
Because T. reesei strain QM6a and its derivatives, and B. amyloliquefaciens subsp. amyloliquefaciens are safe, well-characterized organisms, any increased health or environmental risk associated with the rule is not expected.   

                               Table of Contents
                                       
1.	Introduction	1
1.1	Statutory Authority	1
1.2	Regulatory History	1
1.3	Statement of Need	3
1.4	Organization of the Report	3
2.	Regulatory Requirements, Affected Entities, and Substitutes for the Modified Microorganisms	4
2.1	Overview of Regulatory Requirements	4
2.2	Microorganisms and their Uses	5
2.2.1	Trichoderma reesei	5
2.2.2	Bacillus amyloliquefaciens	6
2.3	Overview of the Regulated Community	8
2.3.1	Enzyme Manufacturers	8
2.4	Overview of Indirectly Affected Entities	10
2.4.1	Enzyme Customers	10
2.4.2	Ethanol Manufacturers and Consumers	10
2.5	Substitutes for the Modified Microorganisms	10
2.5.1	Alternatives to Intergeneric T. reesei	10
2.5.2	Alternatives to Intergeneric B. amyloliquefaciens	11
3.	Health, Safety, and Environmental Risks	12
3.1	Health, Safety, and Environmental Risks Associated with T. reesei	12
3.1.1	Rule Case: Only T. reesei QM6a Strain and Derivatives are Listed	12
3.1.2	Rule Option: All T. reesei Strains are Eligible for Exemptions	12
3.2	Impacts of Entire T. reesei Species becoming Eligible for Exemption	13
3.3	Health, Safety, and Environmental Risks Associated with B. Amyloliquefaciens	13
4.	Monetized Industry Compliance Costs	14
4.1	Method for Estimating Compliance Cost and Burden	14
4.2	Labor Costs per Hour	16
4.3	Rule Familiarization Cost per Firm	17
4.4	Report Preparation, Submission and Recordkeeping Unit Cost	18
4.4.2	Cost Reduction due to Electronic Reporting	19
4.4.3	Recordkeeping	19
4.4.4	Historic Source of Recordkeeping Estimates	19
4.4.5	Reporting and Recordkeeping Burden per Submission	20
4.5	Estimating the Number of Submissions and Submitting Companies	25
4.5.1	History of Past Submissions	25
4.5.2	Number of Submitters	26
4.5.3	Future Submissions	33
4.6	Base Case and Change in Industry Burden and Cost due to the Rule	36
4.6.1	Aggregate Rule Familiarization Burden and Cost	36
4.6.2	Aggregate Submission and Recordkeeping Burden Hours (Year 1)	36
4.6.3	Aggregate Submission and Recordkeeping Cost (Year 1)	38
4.6.4	Total Change in Industry Burden Hours (All Years)	40
4.6.5	Total Change in Industry Cost (All Years)	40
4.7	Average Cost per Company	43
4.8	Limitations of the Analysis	46
4.8.1	Uncertainties in the Number of Tier I and Tier II Submissions	46
4.8.2	Uncertainties in Cost Estimates	48
5.	Health, Environmental, Consumer and Other Benefits	50
5.1	Benefits of Reduced Delays in Bringing Products to Market and Increased Market Entry	50
5.1.1	Reduced Delays in Marketing a Product	50
5.1.2	Reduced Delays in Large Scale Testing	51
5.1.3	Effects of Submission Costs on Market Entry	51
5.1.4	Rule Case Benefits	52
5.2	Health, Environmental and Other Benefits of Improved Microbe Strains	53
5.2.1	Benefits of Improved T. reesei Strains	53
5.2.2	Benefits of Cellulosic Ethanol	53
5.2.3	Environmental and Health Impacts of Global Climate Change	54
5.2.4	Other Benefits of Cellulosic Ethanol	54
5.3	Benefits of Improved B. Amyloliquefaciens Strains	55
5.4	Uncertainties Regarding Innovation Benefits	55
6.	Agency Cost	56
6.1	Agency Cost Per Submission	56
6.2	Agency Total Cost	57
6.3	Uncertainties in Agency Cost Estimates	59
7.	Summary of Social Costs and Benefits	60
7.1	Social Costs and Benefits	60
7.1.1	Quantified Social Costs	60
7.2	Health, Safety, and Environmental Costs and Benefits	61
7.2.1	Benefits of New Intergeneric T. reesei and B. amyloliquefaciens	61
7.2.2	Benefits of Reducing the Cost of Cellulosic Ethanol	61
7.2.3	Rule Costs and Risks	61
8.	Additional Analyses	63
8.1	Regulatory Flexibility Act (RFA)	63
8.2	Unfunded Mandates Reform Act (UMRA)	65
8.3	Paperwork Reduction Act (PRA)	65
8.3.1	Industry Burden	66
8.3.2	Government Burden	66
8.4	Executive Order 13132  -  Federalism	66
8.5	Executive Order 13045  -  Children's Health	66
8.6	Executive Order 13175  -  Consultation and Coordination with Indian Tribal Governments	67
8.7	Executive Order 13211  -  Energy Supply, Distribution, or Use	67
8.8	National Technology Transfer Advancement Act (NTTAA)	67
8.9	Executive Order 13563  -  Improving Regulation and Regulatory Review	67
9.	References	69


                          List of Tables and Figures
Table 2-1: Regulatory Requirements of MCANs and Tier I/Tier II Exemptions	4
Table 4-1: Base Case and Change in Industry Cost (Year 1 Summary)	15
Table 4-2: Base Case and Change in Industry Cost (10-Year Summary)	16
Table 4-3: Derivation of Loaded Wage Rates for the Private Manufacturing Sector in $2018	17
Table 4-4: Additional Cost per Company of Rule Familiarization ($2018)	18
Table 4-5: Hours Burden per Respondent by Submission Type and Labor Category	21
Table 4-6: Total Hours Burden per Respondent by Submission Type and Cost Component	22
Table 4-7: Total Labor Costs per Respondent by Submission Type and Cost Component	23
Table 4-8: MCAN Submissions for B. amyloliquefaciens and T. reesei October 1, 1998 through September 30, 2019	27
Table 4-9: All MCAN, Tier I, and Tier II Exemption Notices, FY1998 through 2019	29
Table 4-10: All Tier I and Tier II Submissions from 1998 through 9/30/2019	31
Table 4-11: Non-confidential Submissions for Microbes Listed at § 725.420 through September 30, 2019	33
Table 4-12: Companies with Rule Familiarization Burden	33
Table 4-13: Estimated Numbers of MCAN, Tier I, and Tier II Submissions for B. amyloliquefaciens and T. reesei over a 10-Year Period	35
Table 4-14: Total Industry Burden for Rule Familiarization (Year 1)	36
Table 4-15: Base Case and Change in Industry Burden Hours (Year 1)	37
Table 4-16: Base Case and Change in Industry Cost (Year 1)	39
Table 4-17: Base Case and Change in Industry Burden Hours (All Years)	41
Table 4-18: Base Case and Change in Industry Cost in Thousands of Dollars ($2018) (All Years)	42
Table 4-19: Average Number of Submissions per Company (All Years)	44
Table 4-20: Average Cost per Company (All Years)	45
Table 4-20: Average Cost per Company (All Years)	46
Table 6-1: Agency MCAN and Tier I/Tier II Tota Cost per Submission	58
Table 6-2: Agency Cost Reduction due to Rule - Thousands of Dollars ($2018) (All Years)	59
Table 7-1: Change in Total Costs to Society Due to Rule	61
Table 8-1: Ultimate Parent NAICS codes and 2016 SBA definitions for all Companies	65
Table 8-2: Estimate of Impacts on Small Businesses	66


                               Executive Summary
The U.S. Environmental Protection Agency (EPA) is to adding Trichoderma reesei (T. reesei) strain QM6a and its derivatives, and Bacillus amyloliquefaciens (B. amyloliquefaciens) subsp. amyloliquefaciens to the list at 40 CFR 725.420 of recipient microorganisms eligible for Tier I and Tier II exemptions from Microbial Commercial Activity Notice (MCAN) Reporting under section 5(h)(4) of the Toxic Substances Control Act (TSCA). 
In 1997, under the authority of TSCA section 5, EPA promulgated a final rule, Microbial Products of Biotechnology, which described reporting requirements for microorganisms. Under this rule, EPA requires companies to submit an MCAN to EPA 90 days prior to commercial manufacturing of a "new" microorganism, unless the activity is eligible for one of the specific exemptions. A "new" microorganism is one modified with genetic material from another genus and not listed on the TSCA Inventory. The MCAN submitter must provide EPA with a description of genetic construction, phenotypic and ecological characteristics, and by-products of the microorganism, as well as production volume, worker exposure data, environmental release information, and any test data in the submitter's possession. 
For new microorganisms being manufactured for introduction to commerce, there are two exemptions from MCAN requirements: Tier I and Tier II exemptions. Ten microorganisms were listed at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions under the 1997 biotechnology rule. Under provisions of that rule, EPA has received two requests to add additional microorganisms to the list: T. reesei strain QM6a and its derivatives, and B. amyloliquefaciens subsp. amyloliquefaciens. These requests follow the procedures specified in § 725.67(iii) regarding listing under § 725.420. T. reesei is a fungus used in the manufacturing of industrial enzymes that has the capacity to manufacture large amounts of cellulase enzymes (BIO and ETA, 2010). Applications include cellulases for corn-based ethanol, textiles, pulp and paper processing, and biopolymer manufacturing. T. reesei may also have a significant role in the manufacture of cellulosic ethanol. B. amyloliquefaciens is a bacterium that is used for the manufacturing of enzymes and specialty chemicals (Novo Nordisk, 1997). B. amyloliquefaciens enzymes are used in laundry and dishwasher detergents, textile processing, and other areas (Novo Nordisk, 1997, p.2; Aehle, 2007; Uhlig, 1998). Both microorganisms have applications not subject to TSCA jurisdiction, such as food and animal feed (Genencor, 2006; Genencor, 2005, p.6). B. amyloliquefaciens is registered as a pesticide (EPA, 2000a). 
In the Tier I exemption, if certain criteria are met concerning the nature of the introduced genetic material and containment of the microorganism, manufacturers are only required to notify EPA 10 days before commencing manufacture and to keep certain records. The notice is typically two or three pages, with minimal information. A manufacturer is not required to wait for EPA approval before commencing manufacture. A manufacturer who meets all of the conditions of the Tier I exemption except for those concerning containment may submit a Tier II exemption notice. The Tier II exemption requires manufacturers to submit an exemption request with containment and other information (more data than in a Tier I notice but less than in the MCAN) at least 45 days prior to commercial manufacture. Unlike the case for Tier I certifications, under the Tier II exemption, the manufacturer may not proceed with manufacturing until EPA approves the exemption. 
To add a recipient microorganism to the 40 CFR 725.420 list, EPA must find that the microorganism does not present an unreasonable health or environmental risk. The finding must take into account environmental and public health effects, as well as economic and social consequences, including effects on the national economy, small business, and technological innovation (40 CFR 725.67). 
While the rule may increase the probability of environmental or human exposure to a modified microbe, there is no expected increase in health and safety risk associated with the rule, as both organisms are well characterized and are not pathogenic or toxigenic. Together, the lack of any known safety concerns and the inherent safety of the microorganisms indicate there is no increased environmental or health risk expected to be associated with the exemption and the reduction in EPA's regulatory requirements.
The rule will result in savings for both the industry and the Agency. EPA estimates the industry savings of the rule to be approximately $260 thousand over a ten-year period, with a three percent discount rate and $252 thousand with a seven percent discount rate. Agency savings are approximately $178 thousand with a three percent discount rate and $173 thousand with a seven percent discount rate over the ten-year period, for a total savings to society of $438 thousand with a three percent discount rate and $424 thousand with a seven percent discount rate. This assumes that, over ten years, firms will submit 49 Tier I notices and 14 Tier II notices for T. reesei and B. amyloliquefaciens in lieu of MCANs.
The addition of T. reesei strain QM6a derivatives and B. amyloliquefaciens subsp. amyloliquefaciens to the list of recipient microorganisms eligible for Tier I and Tier II exemptions will decrease the regulatory burden of both EPA and industry. EPA typically receives several MCANs per year, some of which will be replaced by Tier I and Tier II exemptions. Historically, most Tier I and Tier II submissions have been Tier I notices. Therefore, EPA estimates a net cost savings to society due to the rule. 
The rule is expected to increase the rate of innovation in industry. Presently, if a company identifies a promising strain, they must prepare and file an MCAN, and wait for EPA to make a determination before commercial use, which may include "demonstration" or "pilot" scale production. "Demonstration" or "pilot" scale production is conducted using small scale commercial volumes to test the cost effectiveness of the enzyme. Biotechnology industry groups have suggested that the burden associated with the MCAN process can make it difficult for a company to test multiple strains of a microorganism at the same time (BIO and ETA, 2010). The exemption will allow companies to expedite the full demonstration-scale testing process and bring products to market more quickly. The rate of innovation is expected to increase especially in cases of the Tier I exemption, which has only a brief notice and no requirement to wait for EPA approval before commencing commercial manufacturing once the 10 days have elapsed. The expected benefits from increased innovation were not quantified for this report. 
Some of the benefits from lower cost or better performing microorganisms may accrue to small businesses, as developers of the exempt microorganisms, as manufacturers of fermentation chemicals using the live microorganisms, or as customers for enzymes from the microorganisms. 
T. reesei may be a key component in reducing costs of manufacturing cellulosic ethanol through fermentation. Cellulosic ethanol is a second-generation biofuel that is made from cellulosic biomass that comes from feedstocks like corncobs, switchgrass, woodchips, and other inedible plant fibers. Despite recent progress, cellulosic ethanol is not a commercially viable substitute for gasoline or corn-based ethanol (Kusch, 2017). Genetically modifying the T. reesei fungus can increase the amount of cellulase and other related biotransformation enzymes produced by the organism, therefore reducing enzyme costs. In addition, modifications of the structure of the enzyme can make it more efficient, requiring less of the enzyme to produce the same amount of sugars. Native T. reesei has a limited complement of degrading enzymes, but introduction of other useful enzyme genes from intergeneric sources is a useful application for this microorganism beyond just increased cellulose production.
Because enzymes are one of the largest cost components of cellulosic ethanol manufacturing, less expensive enzymes are necessary for the commercialization of cellulosic ethanol. The rule may reduce the costs of manufacturing these enzymes and help reduce cellulosic ethanol cost. 
The manufacturing and use of cellulosic ethanol is expected to have lower greenhouse gas emissions, which contribute to global climate change, when compared to the manufacturing of gasoline and corn-based ethanol. Environmental and health benefits of reducing global climate change were not quantified for this report.
Faster introduction of intergeneric T. reesei and B. amyloliquefaciens may also reduce cost and/or improve performance of enzymes and other fermentation products made using the intergeneric microorganisms, for other areas subject to TSCA jurisdiction such as textile treatment, laundry and dishwashing detergents, and biopolymers. 
The industry application requested that all T. reesei strains be eligible for Tier I/Tier II exemptions. However, EPA is listing only the T. reesei QM6a strain and its direct derivatives. The QM6a strain was isolated in the Solomon Islands from canvas during World War II. All current industrial T. reesei strains appear to have descended from QM6a, so any loss of economic benefit from restricting the Tier I/Tier II exemption listing to QM6a derivatives is likely to be small. 
Table ES-1 contains a summary of costs and benefits associated with the rule. 
Table ES-1: Summary of Costs and Benefits of the Rule for T. reesei and B. amyloliquefaciens
Affected Entity
Direct and Indirect Costs of the Rule
Direct and Indirect Benefits of the Rule
Industry
Rule familiarization costs of approximately $10 thousand over 10 years.
Simplicity and speed of the Tiered exemptions will reduce industry cost, especially for Tier I notices for savings of $2.7 million. Simpler, faster Tier I submissions encourage development of new microorganisms, increase profits, and encourage entry into TSCA-regulated microbial markets.
EPA
None 
Decreased MCAN review costs over the first ten years of the rule of approximately $1.8 million, from reduced MCAN submissions for T. reesei and B. amyloliquefaciens 
Consumers 
None
Increased innovation in T. reesei and B. amyloliquefaciens may lead to more cost-effective products in areas such as fuel ethanol, detergents and textiles compared to the base case. 
Environment
Foregoing MCAN review increases probability that potentially harmful microorganisms could be released into the environment. However, these microorganisms have minimal risk, especially in contained use. The costs of an increase in risk, if any, are not quantified but expected to be negligible and more than offset by the indirect environmental and health benefits. 
T. reesei QM6a exemption may indirectly reduce cost of cellulosic ethanol, leading to reduced greenhouse gas emissions versus gasoline and corn ethanol (EPA, 2010a). This could help mitigate global climate change and its negative environmental impacts.
Other indirect environmental benefits include reductions in energy use, water use, wastewater, pumice stone sludge, hydrogen peroxide use; reduced harm to sewage treatment processes and aquatic life. Potential reduced fertilizer and pesticide use if increase in cellulosic biomass volume does not offset the reductions per gallon of ethanol. 
Worker, Consumer, and Public Health
Foregoing MCAN review increases the probability that workers and/or consumers could be exposed to potentially harmful microbes. However, there is minimal risk associated with these microorganisms which are intrinsically low-risk and largely deactivated before entering any downstream product. The cost associated with the increase in risks is not quantified.
The rule may indirectly improve worker and consumer health through the reduction of greenhouse gas emissions, relative to the base case. Lower GHG emissions will mitigate climate change and its public health impacts, which include increased incidents of vector borne diseases and harm from extreme weather events (EPA, 2009a).
Other
Cellulosic ethanol biomass may be grown on land currently used for food crops.
Lower cost cellulosic ethanol may help meet the goals of the EISA. The T. reesei listing could increase commercial viability of cellulosic ethanol from non-food crops produced on marginal lands, with potentially less negative impact on food crops than corn ethanol.
Note: All costs are in $2018. Benefits and costs are relative to the base case in which the rule is not promulgated.
Introduction
Statutory Authority 
The US Environmental Protection Agency (EPA) is adding Trichoderma reesei (T. reesei) strain QM6a and its derivatives, and Bacillus amyloliquefaciens (B. amyloliquefaciens) to the list at 40 CFR 725.420 of recipient microorganisms eligible for Tier I and Tier II exemptions from Microbial Commercial Activity Notice (MCAN) reporting. The exemptions are allowed under section 5(h)(4) of the Toxic Substances Control Act (TSCA). 
TSCA section 5(a)(1) requires that firms notify EPA at least 90 days before they manufacture (including import) for commercial purposes a "new" chemical substance, or manufacture or process a chemical substance for a "significant new use." TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination. TSCA defines "chemical substance" broadly and in terms that cover microorganisms as well as traditional chemicals. Premanufacture Notices (PMNs) are used to report new conventional chemicals. MCANs are used to report new microorganisms. TSCA section 5(h)(4) authorizes EPA to exempt manufacturers, importers, and processors of chemical substances from notification requirements. Granting a section 5(h)(4) exemption requires a determination that the activities will not present an unreasonable risk of injury to health or the environment (EPA, 1997b, p.17940). Ten recipient microorganisms are already listed as eligible for exemptions from full reporting for new chemicals under section 5(h)(4). This rule adds two more recipient microorganisms to the list. 
Regulatory History
On April 11, 1997, EPA promulgated a final rule, Microbial Products of Biotechnology, covering microorganisms (EPA, 1997b). The 1997 rule (codified at 40 CFR 725) establishes specific reporting requirements for manufacturers, importers, and processors of microorganisms: any manufacturer, importer, or processor of new microorganisms subject to TSCA must file an MCAN with EPA unless the activity is eligible for a specific exemption. The 1997 rule establishes Tier I and Tier II exemptions from MCAN submission requirements. The Tiered exemptions are codified at 40 CFR 725.424-470.
EPA's 1997 biotechnology rule created the MCAN as a notice distinct from the PMN, and implemented EPA's program for oversight of microbial organisms. The rule established reporting requirements under TSCA section 5 for manufacturers and processors of microorganisms subject to TSCA that are manufactured for commercial purposes, including research and development (R&D) for commercial purposes. The rule also established several mechanisms for reporting to EPA, including specific exemptions that provide an alternative reporting mechanism that reduces the amount of information to be reported.
Under the 1997 rule, manufacturers are required to report information to EPA 90 days before commencing the manufacture of intergeneric microorganisms not listed on the TSCA inventory, i.e. "new" microorganisms. Any manufacturer, importer, or processor of a living microorganism required to report to EPA under section 5 of TSCA must file an MCAN with EPA, unless the activity is eligible for one of the specific exemptions described in the rule. 
The rule established two exemptions for new microorganisms being manufactured (after the R&D and test marketing stage) for introduction to commerce: Tier I and Tier II exemptions. For both exemptions, the recipient (host) microorganism must be listed under 40 CFR 725.420, and the introduced DNA must be well-characterized, limited in size, poorly mobilizable, and free of certain sequences (EPA, 1997b, p.17912). The 1997 rule describes the toxin-encoding sequences to be avoided (EPA, 1997b, p.17952). 
In the Tier I exemption, if certain criteria are met concerning the microorganism and its containment, manufacturers are only required to submit a notice to EPA certifying that they are manufacturing a new microorganism that qualifies for this exemption and providing minimal information on waste disposal. A manufacturer is not required to wait for EPA approval, and can commence manufacture in 10 days. Manufacturers are also required to keep certain records.
A manufacturer who wishes to modify the containment restrictions but otherwise meets the conditions of the Tier I exemption may submit a Tier II exemption request. The Tier II exemption requires manufacturers to submit an abbreviated notice describing the containment method and certain other information (see Table 2-1). The rule provides for a 45-day period during which EPA reviews the proposed containment. Unlike with Tier I exemptions, where the manufacturer can proceed with manufacturing if EPA takes no action, the manufacturer submitting under a Tier II exemption may not proceed with manufacturing until EPA determines that the microorganism will not present unreasonable risk and approves the exemption (40 CFR 725.470).
After a company commences manufacture or import of a microorganism that was the subject of an MCAN, it sends EPA a Notice of Commencement (NOC). When EPA receives an NOC, it adds the microorganism to the TSCA Inventory of chemical substances. Once listed on the TSCA Inventory, the microorganism is no longer legally "new," and other firms can manufacture it without notice to EPA. 
By contrast, if a "new" microorganism is manufactured under a Tier I or Tier II exemption, no NOC is submitted and it is not listed on the TSCA Inventory. Subsequent manufacturers must follow new chemical reporting requirements. 
The 1997 rule designated 10 microbial organisms as eligible for Tier I and Tier II exemptions (40 CFR 725.420). Through September 2019, EPA received 19 Tier II submissions, 148 Tier I submissions, and 219 MCANs. Of the Tier I notices, 87 represented an unusual cluster of similar notices between November 2000 and April 2002. Not counting this unusual cluster, there were 61 "Ordinary" Tier I notices.
In 1997, Novo Nordisk (now Novozymes) applied to make B. amyloliquefaciens eligible for Tier I/Tier exemptions under § 725.67 (Novo Nordisk, 1997). Its request was based, in part, on B. amyloliquefaciens being very closely related to B. subtilis which was already eligible for the Tiered exemptions (Novo Nordisk, 1997, cover letter). 
In 2005, Genencor (now part of Danisco) applied to make T. reesei eligible for the exemptions under § 725.67. The Biotechnology Industry Organization and Enzyme Technical Association repeated the T. reesei request in 2009, providing supplementary information in a letter dated January 29, 2010. In its 2010 letter, the industry requested that all strains of T. reesei be listed, not just the commonly used derivatives of strain QM6a (BIO and ETA, 2010). The current rulemaking covers both microorganisms, but for T. reesei, only the QM6a strain and its direct derivatives are listed as candidates for Tiered exemptions. 
Under the rule evaluated in this analysis EPA will add T. reesei strain QM6a and its derivatives and B. amyloliquefaciens subsp. amyloliquefaciens to the list of recipient microorganisms eligible for exemption at 40 CFR 725.420. 
(For convenience, the T. reesei strain QM6a original isolate together with strains derived from QM6a through successive clonal modifications, are sometimes referred to in this report simply as "T. reesei" or as "T. reesei QM6a.")  
Statement of Need
This rule is intended to reduce industry and Agency costs associated with the preparation, submission, and review of MCANs for new commercial manufacturing of T. reesei QM6a and B. amyloliquefaciens. The rule will relieve industry of unnecessary reporting and promote innovation. Affected companies will have increased flexibility to develop and test multiple strains of these microorganisms at once, potentially speeding up the development of lower-cost ways to manufacture chemicals made through fermentation, including alternatives to petroleum-based fuels. The rule will also increase economic efficiency by removing unnecessary costs in the development of T. reesei and B. amyloliquefaciens. It is expected that the Agency review costs will also be reduced. 
Organization of the Report
The remainder of this report provides EPA's economic analysis in support of the rule. The regulatory requirements and companies affected are characterized in Chapter 2. Chapter 3 discusses the health, safety, and environmental risks of the rule. Chapter 4 analyzes the costs to industry, Chapter 5 discusses the benefits to industry, consumers, and the environment of the rule, and Chapter 6 presents the estimates of Agency costs savings associated with the administration of the rule. Chapter 7 summarizes the benefits of the rule and its net social costs and savings. Chapter 8 provides all additional analyses including:
       A small entity impact analysis, as required by the Regulatory Flexibility Act (RFA)
       A burden hour analysis, as required by the Paperwork Reduction Act (PRA)
       An unfunded mandates statement, as required by the Unfunded Mandates Reform Act (UMRA)
       A discussion of Federalism, as required by Executive Order 13132
       A children's health statement, as required by Executive Order 13045
       A statement of the necessity of consultation and coordination with Indian tribal governments, discussion of Federalism, as required by Executive Order 13175
       An assessment of any impacts on energy supply, distribution, or use, as required by Executive Order 13211
       A discussion of any technological standards as required by the National Technology Transfer Advancement Act (NTTAA)
       A statement of how this report meets the standards set under Executive Order 13563, Improving Regulation and Regulatory Review

Regulatory Requirements, Affected Entities, and Substitutes for the Modified Microorganisms
Overview of Regulatory Requirements 
If T. reesei strain QM6a and its derivatives, and B. amyloliquefaciens subsp. amyloliquefaciens are listed at 40 CFR 725.420, manufacturers, importers, and processors may submit a Tier I or a Tier II submission. 
Table 2-1 presents a comparison of the regulatory requirements of MCANs and Tier I/Tier II exemptions. MCANs require the most information and a 90-day advance notice to EPA. Tier I exemptions require minimal information and 10-day notice, while Tier II exemptions require more information than Tier I exemptions, and 45-day notice.
Table 2-1: Regulatory Requirements of MCANs and Tier I/Tier II Exemptions

MCAN
Tier I Exemption
Tier II Exemption
Applies to:
"New" non-exempt intergeneric microorganisms
"New" intergeneric microorganisms listed at CFR 725.420
Affected entities:
(a) Manufacturers and importers of new microorganisms
(b) Manufacturers, importers, and processors of significant new uses of microorganisms
Advance notice required:
>=90 days
>=10 days
>=45 days
Reporting requirements:
Information on:
 Description of microorganism
 Genetic construction of microorganism
 Phenotypic/ecological characteristics
 Byproducts
 Total production volume
 Use information
 Worker exposure/ environmental release
 Test data in submitter's possession
Written certification that microorganism meets requirements of Tier I exemption.
Plus information on:
 Waste disposal permit
 Name/address of manufacturer or importer
 Recipient genus/species
 Manufacturing start date
Written certification that microbe meets Tier II exemption requirements.
Plus information on:
 Waste disposal permit
 Microorganism identity
 Total production volume
 Process/containment information
Existing information showing use will not present unreasonable risk.
Characteristic requirements:
n/a
DNA introduced into the microorganism must be well-characterized, limited in size, poorly mobilizable, and free of certain toxic sequences.
Containment requirements:
n/a
Microorganism must be used in a structure designed to contain with controlled access, established safety procedure, effective microbial inactivation procedures for waste disposal and other releases, and emergency clean-up procedures.
Containment must be adequate. Specific requirements not stated, but Tier I containment criteria are to be used as guidance. EPA will review case by case. 
Restrictions on activity:
Activity cannot commence until EPA makes a determination on the notice 
Activity cannot commence until review period expires
Activity cannot commence until EPA approves exemption
Follow-on submissions required:
NOC within 30 days of commercial manufacturing
n/a
Source: US CFR, Title 40, section 725, Reporting Requirements and Review Processes for Microorganisms
Microorganisms and their Uses
Trichoderma reesei 
QM6a and its Derivatives
T. reesei is a fungus used in industrial applications that has the capacity to produce a large amount of cellulase enzymes (BIO and ETA, 2010). Novozymes called it "the world's most prodigious producer" of cellulase enzymes (DOE/JGI, 2008). It has been called a platform technology for heterologous expression, and has been the subject of many MCAN submissions (BIO and ETA, 2009). 
The research for this report did not identify any commercial use of T. reesei strains from isolates other than those derived from QM6a. Although industry requested that all of the T. reesei species be listed, its 2010 letter stated, "...the current industrial strains of T. reesei appear to have descended from the QM6a isolate..." (BIO and ETA, 2010, p.3). These "clonal" derivatives of the QM6a strain will be exempt from MCAN reporting under the rule. 
Because of its ability to produce large quantities of proteins, T. reesei is used extensively in enzyme manufacturing.
T. reesei cellulases and xylanases have been used in TSCA applications such as pulp and paper processing, detergent, textile, biopolymer, and biofuel applications (Genencor 2005, p.7; BIO and ETA, 2009, slide 10). It is said to be a dominant source of cellulases for the textile industry worldwide (DOE/JGI, 2008). Cellulase enzymes from T. reesei are often used in textile applications, such as the finishing of cotton, denim, linen, and bast fibers, because of their low cost compared to enzymes from other microorganisms (Polaina and MacCabe, 2007, p.53). Industry called it the "workhorse" in the manufacturing of biomass conversion industrial enzymes (BIO and ETA, 2010; BIO and ETA, 2009). Novozymes called it the organism of choice for manufacturing enzymes to break down biomass to fermentable sugars (DOE/JGI, 2008). T. reesei as a host can produce enzymes to convert biomass to sugars such as glucose, which in turn can be fermented to produce ethanol, acids, and other metabolites, or used directly in organic synthesis (BIO and ETA, 2010, p.7). Alpha-amylases and glucoamylases from T. reesei have applications in corn-based ethanol manufacturing (Genencor, 2008 and Danisco Patent, 2009). More information on the use of T. reesei in ethanol manufacturing is found in Appendix B.
T. reesei has also been used in food, beverage, and animal feed applications (Genencor, 2005, p.6), which are under the jurisdiction of the Food and Drug Administration. 
48 MCANs for which T. reesei was publically identified as the species were submitted to EPA from October 1, 1998 through September 30, 2019 (see Table 4-8). These 48 MCANs were approximately 25 percent of all MCANs submitted during this time period. 
Cellulosic Ethanol Manufacturing
T. reesei has a potentially significant role in the manufacturing of second generation biofuels such as cellulosic ethanol. Cellulosic ethanol is ethanol that is manufactured from cellulose biomass, which includes plant material such as woodchips, grasses, sugarcane residues, and other inedible plant fibers (NCEP, 2003; Verenium, 2010a). By contrast, ethanol from the starchy corn kernels is referred to as "corn ethanol." Cellulosic ethanol and corn ethanol are chemically the same, only differing in the feedstock and the manufacturing process.
T. reesei can be used to manufacture enzymes that help break down the cellulose and hemicellulose of biomass plant fibers into fermentable sugars. These sugars can, in turn, be used to make ethanol and other bioproducts (BIO and ETA, 2010). 
Cellulosic ethanol is believed to have many environmental benefits relative to its alternatives, but despite recent progress, it is not yet commercially viable (Kusch, 2017), in part due to high capital costs. A 2008 article identified enzymes as the major cost component in cellulosic ethanol manufacturing (Smith and Suh, 2008). Figure 1 presents where T. reesei enzymes might be used in one type of manufacturing process.
Figure 1: Simplified Cellulosic Ethanol Manufacturing Process
                             1. Biomass handling	
                             1. Biomass handling	
                     4. Fermentation (e.g. S. cerevisiae)
                     4. Fermentation (e.g. S. cerevisiae)
                            3. Enzymatic hydrolysis
                            3. Enzymatic hydrolysis
                           2. Chemical Pretreatment
                           2. Chemical Pretreatment
                              5. Ethanol recovery
                              5. Ethanol recovery
              Cellulase and hemicellulase enzymes from T. reesei
              Cellulase and hemicellulase enzymes from T. reesei
 
Bacillus amyloliquefaciens
B. amyloliquefaciens is widely used in the manufacturing of enzymes and specialty chemicals, according to the 1997 petition requesting that it be listed as a candidate for Tiered exemptions (Novo Nordisk, 1997, p.2). Primarily, it is used in microbial manufacturing of industrial alpha-amylases and has also been used in the manufacturing of amylases (enzymes that break down starches) and proteases (enzymes that break down proteins) (Novo Nordisk, 1997). 
Amylases
TSCA applications of amylases include textile desizing, starch modification for paper sizing, and ethanol manufacturing (Novo Nordisk, 1997, p.2). The 1997 petition asserted that most commercial intermediate-temperature alpha-amylases were from B. amyloliquefaciens (Novo Nordisk, 1997, p.2). Since alpha-amylases from B. amyloliquefaciens are fairly heat-stable, it is often the main microbial producer of the enzyme for use in the textile industry (Aehle, 2007 and Uhlig, 1998). Alpha-amylases from B. amyloliquefaciens and B. licheniformis are the preferred amylases for laundry detergents, because of how they catalyze degradation of starch stains (Kirk-Othmer, 1994, p.9-593). They are also used in automatic dishwashing detergents (Aehle 2007 p.186). Non-TSCA applications of amylases include use in food, brewing, and pharmaceuticals (Haq et al., 2010).
Proteases
B. amyloliquefaciens is also used for the industrial manufacturing of various proteases, which are primarily used in detergents and leather manufacturing (Novo Nordisk, 1997, p.2). Detergents are a major application for industrial enzymes (LSBU, 2004). Novozymes currently manufactures one detergent protease, a subtilisin, Savinase, which may be from B. amyloliquefaciens (LSBU, 2004). The subtilisin enzyme produced by B. amyloliquefaciens appears to have less commercial use than a different subtilisin from B. licheniformis (Rao et al., 1998). 
Non-TSCA uses 
Proteases from B. amyloliquefaciens also have non-TSCA uses in food and feed applications. B. amyloliquefaciens has minor applications in the manufacturing of neutrases, which are used for protein modifications in food (Kirk-Othmer, 1994). Genencor uses B. amyloliquefaciens to manufacture its Protex 7L enzyme, used for casein, soy, wheat, and animal protein hydrolysis at biological pHs (Genencor, 2006). 
B. amyloliquefaciens is registered as a fungicide and plant growth regulator (EPA, 2000a) and continues to be researched for pesticidal uses. It was not determined for this report whether it might be used to manufacture enzymes or other fermentation products that would themselves be pesticides. (Microorganisms used as pesticides do not fall under TSCA jurisdiction, but microorganisms used to manufacture chemicals that are then used as pesticides would fall under TSCA.) 
Extent of use
The 1997 petition to list B. amyloliquefaciens as a candidate for Tiered exemptions claims that there is broad industrial use for enzymes from B. amyloliquefaciens. However, the petition was submitted over two decades ago; evolving technology may have diminished the relative important of B. amyloliquefaciens in enzyme manufacturing for TSCA uses.
Since the 1997 petition, there has only been one MCAN submitted to EPA for B. amyloliquefaciens used in TSCA applications (Table 4-8), and therefore the microorganism does not appear to be as common a source for TSCA industrial enzymes as bacterial species such as B. subtilis or B. licheniformis. Nevertheless, B. amyloliquefaciens continues to be the subject of research and patents. For example, Novozymes applied for a patent for a strain of B. amyloliquefaciens for biofilm prevention and deodorizing (Freepatentsonline, 2010).
It possible the industry has chosen to spend more resources in developing intergeneric strains of Bacillus species already eligible for Tier I and II exemptions, such as B. subtilis and B. licheniformis, rather than submitting a full MCAN for B. amyloliquefaciens. EPA has received non-confidential Tier I submissions for both B. subtilis and B. licheniformis. 
Overview of the Regulated Community
The rule may affect both current and potential manufacturers of enzymes and other chemicals from microorganisms, as well as downstream customers. Firms are affected only if the uses are subject to TSCA jurisdiction, which excludes medical uses, cosmetics, food and beverages, animal drugs, and feed additives (EPA, 1997, p.II-3). There appear to be relatively few manufacturers of enzymes from T. reesei and B. amyloliquefaciens for commercial uses subject to TSCA jurisdiction. Information was not found on firms that use T. reesei or B. amyloliquefaciens to directly manufacture other chemicals. Ethanol manufacturers and other enzyme customers are discussed in Section 2.4.
Currently, based on EPA's non-confidential information, there are only three companies, Novozymes, Genencor (now owned by Danisco), and Xyleco, that have submitted MCANs for either T. reesei or B. amyloliquefaciens. Of the 48 MCANs submitted to EPA from 1998 through September 2019 that identified T. reesei as the non-confidential species, Novozymes and Genencor (Danisco/DuPont) accounted for all but one of the non-confidential submitters. Three MCANs had confidential submitter names (See Table 4-8). However, the 2010 industry letter states, "multiple companies are using T. reesei, each of which views T. reesei as the preferred recipient microorganism for developing second generation biofuel processes." (BIO and ETA, 2010, p.8). Those other firms may also be affected if they create new intergeneric T. reesei strains subject to reporting.
Enzyme Manufacturers 
Novozymes
Novozymes is likely the world's largest manufacturer of industrial enzymes, with approximately 48 percent of the global market in 2017 (Novozymes, 2017). The company was founded in 2000 when Novo Nordisk was split into three separate companies, one of which was Novozymes A/S. In addition to manufacturing enzymes, Novozymes manufactures microorganisms and biopharmaceutical ingredients (Novozymes, 2009). 
Novozymes supplies enzymes for a range of TSCA and non-TSCA applications. It currently supplies 2 enzyme product lines specifically for cellulosic ethanol, as well as enzymes for conventional ethanol manufacturing (Novozymes, 2010a). Through September 30, 2019, Novozymes (Novo Nordisk, prior to 2000) submitted 24 MCANs for T. reesei, or about 51 percent of all non-confidential MCANs for T. reesei (Table 4-8). Two of these Novozymes submissions identified the non-confidential use as ethanol manufacturing (EPA, 2014a, links for J09-0002 and J09-0004). 
Novozymes also submitted the sole MCAN since 1997 that publically listed B. amyloliquefaciens as the species, (EPA, 2014a), and submitted the 1997 request to list B. amyloliquefaciens as a candidate for Tiered exemptions. The company manufactures a detergent protease, Savinase, identified by some sources as being from B. amyloliquefaciens (LSBU, 2004).
Genencor (DuPont/Danisco Division)
Genencor, a subsidiary of DuPont/Danisco, is another major manufacturer of industrial enzymes. Like Novozymes, Genencor supplies enzymes for a range of TSCA and non-TSCA uses. It is another major manufacturer of T. reesei for use in the manufacturing of enzymes for cellulosic ethanol processing. 
Genencor (DuPont/Danisco) currently markets one enzyme product line for cellulosic ethanol manufacturing, as well as enzymes for conventional ethanol manufacturing (DuPont, 2014). In 2008 Danisco entered a joint venture with DuPont to "develop and commercialize" proprietary technology for cellulosic ethanol manufacturing, as a result of DuPont's acquisition of Danisco the joint venture is now fully integrated within the DuPont Industrial Biosciences (Danisco, 2009). Through September 30, 2019, Genencor/Danisco submitted 20 MCANs for T. reesei, or about 42 percent of all MCANs for T. reesei where the submitter is known from non-confidential information (Table 4-8). One of the submissions identified ethanol as the non-confidential application (EPA, 2010, link to J01-0002.)
Genencor also uses B. amyloliquefaciens. For example, a 1997 patent application assigned to Genencor covers a mannanase enzyme from B. amyloliquefaciens with use in bleaching pulp for paper manufacturing (Genencor patent, 1997). An engineered detergent protease marketed by Genencor, trade mark FNA, was manufactured in B. subtilis but originated from B. amyloliquefaciens (Maurer, 2004, p.330). Genencor uses B. amyloliquefaciens to manufacture enzymes used in the processing of soy, wheat, and animal proteins, a non-TSCA use (Danisco, 2010). 
Other Enzyme Manufacturers
Novozymes and Genencor (DuPont/Danisco) are the industry leaders in the manufacturing of enzymes for biofuel manufacturing and other applications. Novozymes in particular currently makes up 48 percent of the industrial enzyme market (Novozymes, 2017). Both companies have demonstrated their interest in manufacturing T. reesei and B. amyloliquefaciens under exemptions through their petitions (Genencor, 2005; Novo Nordisk, 1997). For that reason, the most immediate economic impacts of the rule could concentrate in these two firms. 
However, other companies also develop and manufacture enzymes and other microbial products for TSCA uses. For example, Verenium Corporation and Iogen Corporation are engaged in the development or manufacture of enzymes for use in cellulosic ethanol manufacturing (Verenium, 2010a; Iogen, 2010). Archer Daniels Midland manufactured enzymes for captive ethanol manufacturing, among other uses (Freedonia, 2004, p.227). The Enzyme Technical Association website lists additional companies that cultivate enzymes for biofuel and other applications (ETA, 2010). 
Some large companies appearing in earlier lists of enzyme manufacturers have sold part or all of their enzyme businesses and so may have little or no current role in enzyme applications subject to TSCA. Genencor bought Rhodia's brewing and enzyme business in 2003 (Genencor, 2003), Solvay's industrial enzyme business in 1996 (Solvay, 1996), and portions of Gist Brocades detergent enzymes business in 1996 (Ee, 1997). Some suppliers may be primarily in areas not subject to TSCA, such as food, feed, and therapeutics. However, even those who mainly supply non-TSCA markets could make submissions for TSCA uses. 
Other Manufacturers
Companies that in the future might use live T. reesei or live B. amyloliquefaciens in their commercial processes could be directly affected by the rule. For example, a biochemical manufacturer might grow live organisms on-site to generate enzymes as part of its own operations to degrade biomass, as opposed to purchasing the enzymes from a supplier. 
Overview of Indirectly Affected Entities 
Enzyme Customers
Fuel ethanol manufacturers; textile firms buying enzymes to treat fabric; detergent, paper, and leather manufacturers; and other industrial enzyme users may enjoy increased product performance and/or lower costs due to the rule. Some of these benefits are likely to be passed down the chain to their own customers and to the household consumer. 
Ethanol Manufacturers and Consumers
Corn ethanol manufacturers may benefit from more cost-effective enzymes. As of February 2019, the Ethanol Producers Magazine lists 204 operational ethanol plant sites, mostly with corn as the feedstock (Ethanol Producers Magazine, 2019). 
Cellulosic ethanol manufacturers are also likely to benefit from the rule. The biological approach to cellulosic ethanol manufacturing uses enzymatic hydrolysis to break down biomass to fermentable sugars. A source of such enzymes is likely to be genetically modified T. reesei, for hydrolysis of cellulose to glucose and potentially the hydrolysis of hemicellulose to xylose or other simple sugars. Thus, cellulosic ethanol companies are likely to be indirectly affected by the listing for possible MCAN exemptions, even if they do not grow the live T. reesei themselves. For example, downstream ethanol manufacturers are likely to experience some of the rule's cost savings in the form of improved enzyme performance and lower prices passed down by the enzyme suppliers. Second-order cost savings to ethanol manufacturers could then be passed down to ethanol consumers. 
Substitutes for the Modified Microorganisms 
If Tier I/II exemptions were not available (the base case), the likely alternative would be to submit an MCAN instead. Industry could also continue to use existing intergeneric strains that have already undergone MCAN review, even though they might not be as productive as the new strains. There are also other microbial and non-microbial substitutes for intergeneric T. reesei and B. amyloliquefaciens. 
Alternatives to Intergeneric T. reesei
T. reesei strains not modified in a way that makes them subject to reporting requirements under TSCA may be alternatives to new intergeneric T. reesei for the manufacturing of cellulase enzymes. 
In addition, other conventional or intergeneric microbial species can produce cellulases. For example, cellulases isolated from Aspergillus niger, Trichoderma viride, Bacillus subtilis, and Humicola insolens can substitute in some commercial applications for cellulases from T. reesei, according to Genencor's application (Genencor 2005, p.4).
Conventional T. reesei cannot provide the full range of enzymes needed to break down biomass (for example, while it secretes an exceptional quantity of cellulases, it lacks the ability to efficiently produce hemicelluloses degrading enzymes to degrade lignin, but it may be modified with genes from other microbial species to enhance its ability to degrade biomass (Maheshwari, 2008)). An alternative to such genetic modification may be to provide mixtures of enzymes from various species (DOE/JGI, 2008).
The 2010 industry letter asserts that T. reesei has significant benefits over other microorganisms "for processing and production of saccharides for biofuels and bioproducts" and that it has exceptional ability to secrete large quantities of enzymes and other products (BIO and ETA, 2010, p.8). 
In other application areas, some products that can be manufactured using enzymes can also be manufactured without using enzymes. For example, the stone-washed denim look can be achieved with enzymes, pumice stones, or perlite (Doshi, 2006). Cellulosic ethanol can be manufactured using non-biological approaches, although it is difficult to predict which emerging processes will become cost-effective (see Appendix B:). 
Alternatives to Intergeneric B. amyloliquefaciens 
B. amyloliquefaciens strains not modified in a way that makes them subject to reporting requirements under TSCA may be alternatives to new intergeneric B. amyloliquefaciens for the manufacturing of enzymes. 
In addition, other conventional or intergeneric microbial species can manufacture the types of enzymes that are manufactured using genetically modified B. amyloliquefaciens. Often these are other Bacillus species. For example, alpha-amylase manufactured commercially from B. licheniformis and B. subtilis may substitute for alpha-amylase manufactured using B. amyloliquefaciens. Currently both B. subtilis and B. licheniformis are eligible for Tier I and Tier II exemptions from MCAN reporting and Tier I submissions have been made for both microorganisms. However, because alpha-amylases from B. amyloliquefaciens are fairly heat-stable and efficient at the degradation of starch stains, enzymes from B. amyloliquefaciens may be preferred to substitutes for some uses (Aehle, 2007; Uhlig, 1998; Kirk-Othmer, 1994). 

Health, Safety, and Environmental Risks
One of the main potential costs to society of the rule would be the increased probability that humans or the environment may be exposed to a harmful microorganism. The MCAN review process was designed to ensure that EPA can adequately identify and regulate risk associated with microbial products of biotechnology. Under the rule, EPA will no longer conduct a full MCAN review for modified strains of T. reesei QM6a or B. amyloliquefaciens, but rather a less extensive review for Tier II submissions and no review for Tier I submissions. However, EPA expects the health and environmental risks associated with the contained use of these microbes to be minimal. Submitters must comply with either Tier I or Tier II requirements, including controls on releases, containment, and the introduced genetic material. In addition, T. reesei QM6a and B. amyloliquefaciens are intrinsically low-risk, well characterized, and have a history of safe use. 
Therefore, EPA expects the risk associated with the rule to be negligible. 
Health, Safety, and Environmental Risks Associated with T. reesei 
Rule Case: Only T. reesei QM6a Strain and Derivatives are Listed
The industry application requested that all T. reesei strains be eligible for Tiered exemptions (BIO and ETA, 2010). However, under the final rule only the T. reesei QM6a strain and its direct descendent derivatives be listed as eligible for exemption under the rule. The QM6a strain is well defined; all QM6a derivatives came from the same ancestor, originally isolated in the Solomon Islands in 1944, where it degraded US army tent canvas. By contrast, in recent years, many new isolates have been called T. reesei and equated with Hypocrea jecorina (H. jecorina). However, T. reesei and its corresponding teleomorph H. jecorina are part of a current, incomplete, taxonomic revision of the genus Trichoderma, and thus there is potential taxonomic confusion. Strains previously referred to as T. reesei, but which are not derived from strain QM6a, may be more properly described as H. jecorina. T. reesei strains may be only a subset of H. jecorina and other strains previously considered as H. jecorina may be moved to additional new genera that do not contain T. reesei strains (Druzhinina et al., 2010; Atnasova et al., 2010). Thus, T. reesei sensu lato is not well defined. 
There has been sufficient experience with QM6a derivatives to demonstrate their safety. All T. reesei strains used industrially for commercial manufacturing appear to be QM6a derivatives (BIO and ETA, 2010). According to the risk analysis prepared for this rulemaking, QM6a derivatives have a long history of safe use in industry, with lack of pathogenicity, toxicity, or when contained, ecological harm. 
Rule Option: All T. reesei Strains are Eligible for Exemptions
The January 29, 2010 industry letter requested that all T. reesei strains be eligible for Tier I/ Tier II exemption without limitation as to isolate. It cited lack of documented safety concerns in the published literature for T. reesei or for the closely related H. jecorina. (Page 3 of the industry letter described T. reesei as the asexual form of H. jecorina.). It asserted that there is no risk basis for restricting the listing of T. reesei to QM6a derivatives only (BIO and ETA, 2010, p.3). However, the taxonomic status of strains previously regarded as T. reesei or H. jecorina and confusion over the taxonomic status of, especially, H. jecorina prevents EPA from listing all T. reesei species. 
Impacts of Entire T. reesei Species becoming Eligible for Exemption
T. reesei strains in commercial use all appear to be derivatives of the QM6a strain, so that extending the eligibility for exemption beyond the QM6a derivatives might have very little commercial effect in the near future. In the longer run, limiting Tiered exemptions to only the QM6a derivatives may limit future innovation with other strains of T. reesei. For example, it is possible that another T. reesei strain might turn out to be more economical as a manufacturing organism in some situations. If so, some longer term benefits might be lost by limiting the immediate exemptions to QM6a derivatives. However, industry can still submit MCANs for new intergeneric non-QM6a strains, which mitigates the loss of benefits. Resources were not available for this report to explore possible benefits of faster development of T. reesei strains other than QM6a derivatives. 
Listing all T. reesei strains as eligible for exemptions might lead to the exemption being applied by industry to strains that are not clearly in the T. reesei species (for example, some that might be classified as H. jecorina or related new species currently in the process of being described) and that have not been evaluated by EPA for risk. At present, taxonomic questions have not been settled within the scientific community as to which strains belong in T. reesei, and which belong in H. jecorina (or related new species) but not in T. reesei. It is possible that in several years, after taxonomic issues are resolved, all of H. jecorina will be listed as eligible for exemption after appropriate consideration of risks and benefits. At present, since the only T. reesei with industrial use is QM6a derivatives, society is likely to benefit more from early availability of exemptions limited to T. reesei QM6a derived strains, rather than waiting several years for a broader listing that may or may not encompass all of H. jecorina.
Health, Safety, and Environmental Risks Associated with B. Amyloliquefaciens 
The application to place B. amyloliquefaciens on the list of recipient microorganisms eligible for exemption from MCAN reporting asserts that B. amyloliquefaciens has a long history of safe use in enzyme and specialty chemical industries and that a literature search had found no literature citing B. amyloliquefaciens as infectious (Novo Nordisk, 1997). According to the risk analysis for this rulemaking, the potential risk associated with using B. amyloliquefaciens in fermentation facilities is low, and EPA therefore is placing the both subspecies of the microorganism on the list under 40 CFR 725.420.
Monetized Industry Compliance Costs
This chapter discusses the industry compliance costs of the rule. 
Method for Estimating Compliance Cost and Burden 
This section analyzes the changes in industry compliance burden and cost associated with listing T. reesei QM6a derivatives and B. amyloliquefaciens subs. amyloliquefaciens at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions. EPA calculates the incremental burden and costs of the rule by comparing the burden and cost of the current regulatory requirements (base case) with the burden and cost of the new requirements (rule case). 
       Base Case. This is the current regulatory situation, in which T. reesei and B. amyloliquefaciens do not qualify for the Tier I or Tier II exemptions. Firms may submit MCANs for new intergeneric strains, restrict use to contained R&D, or avoid intergeneric modifications of those species for TSCA uses. The main analysis in this report assumes firms will submit MCANs in the absence of the rule. 
       Rule Case. In the rule, T. reesei strain QM6a and B. amyloliquefaciens will be added to the list of microorganisms eligible for Tier I and Tier II exemptions, at 40 CFR 725.420. Some firms may submit a Tier I or Tier II notice in lieu of an MCAN. Other firms may submit Tier I or Tier II notices in lieu of avoiding the TSCA market altogether. The main analysis in this report assumes that firms will submit a Tier I or Tier II notice in lieu of an MCAN. 
The methodology for estimating the change in industry burden and cost can be summarized as follows:
       Unit labor costs. Estimate loaded labor costs per hour for managerial, technical, and clerical staff involved in regulatory compliance.
       Rule familiarization costs per firm. Estimate cost per firm for rule familiarization, based on managerial labor requirements and current wage rates. In the base case, industry staff considering MCAN submissions for T. reesei or B. amyloliquefaciens must familiarize themselves with the requirements of the 1997 biotechnology rule in general, but do not necessarily need detailed understanding of Tier I and Tier II exemptions requirements, since their microorganisms do not qualify for the exemptions. In the rule case, companies must also become familiar with the Tier I and Tier II requirements of the 1997 rule, as well as with the two new microbial listings. Companies new to reporting must become familiar with all requirements. This activity entails reading the rule, understanding the various reporting and administrative requirements, and determining the manner in which the reporting requirements will be met. These estimates include the change in costs of becoming familiar with the 1997 biotechnology rule as supplemented by the listing of T. reesei and B. amyloliquefaciens as candidates for exemptions, since implications of the new listings cannot be understood without some understanding of the overall rule.  
       Submission costs. Estimate cost per firm to submit an MCAN, Tier I notice, or Tier II notice, based on labor requirements for managerial, technical, and clerical staff, current wage rates, and the MCAN and Tier II submission fees. Once a company has determined what type of report it must submit, the required information must be collected and an MCAN, Tier I or Tier II submission must be completed, reviewed, and submitted to EPA. This task involves any research necessary to identify the correct information to report, the act of completing the MCAN, Tier I or Tier II submission (technical burden), managerial review, clerical preparation and any submission fee. Companies proceeding to commercial manufacturing or import after filing an MCAN must also submit an NOC. Tier I and Tier II submissions are not followed by NOCs. 
       Recordkeeping costs. Companies must keep records supporting their submissions or contained R&D activities. 
       Delay Costs. Qualitatively describe costs that may result from the postponement of large scale testing (pilot or demonstration scale) or commercialization of a product due to the submission preparation and regulatory review period. Under the base case, the review period and time it takes EPA to make a determination for an MCAN submission could create additional costs for submitters or affect research and development strategies. Under the rule case, the shorter review periods (45 days for the Tier II exemption and 10 days for the Tier I exemption) reduce delay costs.
       Numbers of submissions. Estimate the expected number of MCAN submissions under the current microbial reporting requirements and the number of Tier I and Tier II submissions under the requirements.
       Aggregate costs. Multiply the burden and cost per submission and per company by the number of submissions and companies, respectively, to determine the estimated total burden and cost of compliance for the current requirements and under the requirements.
       Incremental costs compared to base case. Subtract the compliance burden and cost under the rule from the burden and cost under the current requirements to calculate the incremental additional burden and cost or savings attributable to the requirements. 
Table 4-1 and Table 4-2 below summarize the industry costs and cost savings for the first year and the first ten years, respectively. The remaining sections show how these cost were derived, and provide estimates for the ten-year period following rule promulgation. 
Table 4-1: Base Case and Change in Industry Cost (Year 1 Summary)
Item
Base Case
Rule Case
Change

(a)
(b)
(c)=(b)-(a)
Number of firms and submissions (T. reesei and B. amyloliquefaciens only)
MCANs
4
0
-4
Tier I notices
0
3
3
Tier II notices
0
1
1
Firms with rule familiarization costs
0
4
4
Cost type
Rule familiarization cost
$0 
$6,408 
$6,408 
Submissions (reporting and recordkeeping)
$193,999 
$29,881 
-$164,118
Total industry cost
$193,999 
$36,289
-$157,710
   Notes: Delay costs were not quantified but are discussed in Section 5.1 All costs are in 2018 dollars. Values may not sum due to rounding.
   Source: Table 4-16
Table 4-2: Base Case and Change in Industry Cost (10-Year Summary)
Item
Base Case
Rule Case
Change

(a)
(b)
(c)=(b)-(a)
Number of firms and submissions (T. reesei and B. amyloliquefaciens only)
MCANs
63
0
-63
Tier I notices
0
49
49
Tier II notices
0
14
14
Firms with rule familiarization costs
0
6
6
Cost type
Rule familiarization cost
$0 
$9,611 
$9,611 
Submissions (reporting and recordkeeping)
$3,088,482 
$413,770 
-$2,674,711
Total industry cost
$3,088,482 
$423,382 
-$2,665,100
   Notes: Delay costs were not quantified (see Section 5.1 for qualitative discussion). All costs are in 2018 dollars and are before discounting. Values may not sum due to rounding.
   Source: Table 4-18

The next sections describe the remaining steps used to estimate the change in industry burden and cost. Sections 4.2, 4.3, and 4.4, present the industry unit burden and cost as described in Step 2. The number of expected submissions, Step 3, is presented in Section 4.5. Steps 4 and 5 are presented in Section 4.6.
Labor Costs per Hour
Standard wage rates for managerial, technical, and clerical levels are developed from information published by the Bureau of Labor Statistics (BLS) and a method outlined in the document Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b). Average wage data for the three major occupational groups are published quarterly by the BLS in the Employer Costs for Employer Compensation (ECEC) reports. Managerial, technical, and clerical wage rates are taken from the "Management, Business, and Financial", "Professional and Related", and "Office and Administrative Support" occupational groups respectively. Wage data for the three occupational categories for December 2018 was gathered for manufacturing industries is obtained from Employer Costs for Employee Compensation: Historical Supplementary Tables, US Bureau of Labor Statistics (BLS, 2019a).
The cost of fringe benefits, such as health insurance and vacation, are taken for each labor category from the same ECEC series and shown as a percent of wages for each category. An additional 17 percent of wages in each category accounts for overhead, based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b) and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2002a). The wages for each of the three categories are then multiplied by benefits and overhead factors to estimate loaded hourly rates in year 2018 dollars. Table 4-3 contains the loaded wage rates for the managerial, technical, and clerical occupation categories. 
Table 4-3: Derivation of Loaded Wage Rates for the Private Manufacturing Sector in $2018

Wage[1]
Fringe Benefits[1]
Fringes as % Wage
Overhead % Wage[2]
Fringe + Overhead Factor
Loaded Wages

(a)
(b)
(c) = (b)/(a)
(d)
(e)=(1)+(c)+(d)
(f) = (a) x (e)
Managerial
$48.73
$23.08
47.36%
17%
1.64
$80.09
Technical
$44.35
$23.43
52.83%
17%
1.70
$75.32
Clerical
$20.77
$10.20
49.11%
17%
1.66
$34.50
Notes:
[1] Employer Costs for Employee Compensation Historical Supplementary Tables, US Bureau of Labor Statistics (BLS, 2019a).
[2] An overhead rate of 17% is used based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2002a).
Rule Familiarization Cost per Firm
Rule familiarization costs for firms making submissions are incurred at the company level, when either the company is a first-time submitter under the biotechnology rule or a new staff member must become familiar with the rule requirement. 
In the base case for this analysis, companies submitting an MCAN for T. reesei or B. amyloliquefaciens will have to familiarize themselves with the 1997 biotechnology rule if they had not previously submitted an MCAN. 
Most submitters are likely to have had experience with the 1997 rule. However, there may be some companies new to TSCA biotechnology regulation who will not make submissions under the base case, because of the burden associated with an MCAN, but who will enter the TSCA regulated market under the rule case. These companies may have to review the entire biotechnology rule as well as requirements specific to the Tier I or Tier II submissions under the rule, increasing their rule familiarization costs attributable to the rule.
Conversely, some companies new to TSCA biotechnology regulation might have reduced familiarization costs under the rule case, as compared to the base case. This could happen if they file a Tier I or Tier II notice instead of an MCAN. Under the base case, they will have to learn about the 1997 rule in general as well as details of the MCAN process. Under the rule case, they will have to learn about the 1997 rule in general, but will not have to delve into details of the MCAN process. Instead, they need only to understand the simpler Tier I/Tier II processes, which is likely to take less time.
Even companies with some MCAN or Tier I experience may still need to review Tier II exemption requirements. This is because historically EPA has received very few Tier II submissions. The 1997 biotechnology rule listed ten microorganisms at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions. For these microorganisms as a group, EPA has received numerous Tier I certifications but only 18 Tier II requests, indicating that most companies have never filed a Tier II exemption request (See Table 4-9). 
For simplicity, this analysis uses the same rule familiarization costs for all submitters. The rule familiarization costs are those that are attributable to the rule; they do not include any rule familiarization costs that might be born under both the base case and rule case. This will reflect the likely situation in which all submitters over the next ten years had previous experience with the 1997 biotechnology rule. 
In the 1997 Regulatory Impact Analysis (RIA) of the biotechnology rule (EPA, 1997a, p.IV-26) the burden for rule familiarization was estimated to be between 20 and 40 hours of senior professional time per company. For the purposes of this analysis, the lower bound estimate of 20 hours of managerial time is used because EPA assumes that for the rule case, companies filing a Tier I or Tier II notice will need to review the Tier I and Tier II exemption requirements as they apply to T. reesei and B. amyloliquefaciens, but not the entire biotechnology rule. 
Table 4-4 below shows the estimated additional burden and cost per company of rule familiarization in the rule case, as compared to the base case. EPA estimates an added per-company burden of 20 hours of managerial time and a cost of approximately $1,602. 
Table 4-4: Additional Cost per Company of Rule Familiarization ($2018)
Hours Burden
Loaded Hourly Managerial Wage Rate
Cost per Company
20
$80.09
$1,602 
Source: Hours are from EPA, 1997a, p IV-26. Wage rates are from Table 4-3 in this report.
Report Preparation, Submission and Recordkeeping Unit Cost 
Report Preparation and Submission 
As shown in Table 4-7, filing a Tier I notice instead of an MCAN will dramatically reduce submission costs, from $55,100 and 41,900 for large and small businesses respectively for an MCAN to $1,497 for the Tier I notice. This includes only quantified submission costs and does not reflect additional benefits from the reduced delay costs associated with a Tier I notice (see Section 5.1). 
Report preparation and submission burdens for MCANs, Tier I, and Tier II submissions are based on costs in the 1997 RIA for the final biotechnology rule (EPA, 1997a). Costs were updated for inflation and adjusted to reflect electronic submission savings, but were not otherwise revised. The hours per submission in Table 4-6 also come from the 1997 RIA with the exception of clerical hours, which were reduced to reflect electronic reporting.
The 1997 RIA estimated relatively low submission costs for MCAN microorganisms intended for release into the environment, since they likely would have been preceded by a TSCA Experimental Release Application (TERA), and higher costs for MCANs for microorganisms used in a containment structure, since they would not have been preceded by any type of submission (EPA, 1997a, p.IV-20).  
For the present rulemaking economic analysis, under the base case, MCAN submissions are for contained T. reesei and B. amyloliquefaciens microorganisms, since only contained microorganisms are eligible for Tier I and Tier II exemptions. Therefore, the high burden estimates from the 1997 RIA for closed system MCANs are used in this analysis (EPA, 2014a). High estimates of Tier I and Tier II burdens are also used to be consistent with the MCAN burden estimates. 
Cost Reduction due to Electronic Reporting 
The contained microorganism burden hours estimates from the 1997 RIA have been adjusted to reflect burden hours reductions resulting from the 2009 final PMN Electronic Reporting (ePMN) Rule that requires the electronic submission of MCANs, Tier I, and Tier II reports, as well as traditional-chemical PMNs. Only clerical hours were affected. Electronic submission of MCAN and Tier II submissions is expected to reduce the clerical burden associated with preparing these submissions by 14 hours, and create an additional 0.18 hours of burden associated with completing the email address and user fee payment identification number data element, reducing the total clerical burden from 20 hours to 6.18 hours (EPA, 2009b). The reduction in clerical burden does not affect Tier I submissions, because no clerical burden is assigned to Tier I preparation and submission in the 1997 report (EPA, 1997a, p.IV-22). In reality, it is likely there is some clerical time associated with Tier I submissions, however because Tier I notices are so simple, the clerical burden is negligible. 
The ePMN economic report (EPA, 2009b) was primarily concerned with the many hundreds of annual submissions for traditional chemicals, e.g. PMNs, and did not separately estimate the cost savings for biotechnology submissions, which affect only a handful of notices each year. Instead, the biotechnology notice savings were based on the PMN notice savings. An analysis specific to biotech submissions might show that ePMN savings are different from those estimated in the ePMN economic analysis. Unlike PMN submissions, biotech submissions make little use of EPA forms, and MCAN submissions are often far longer than PMN submissions. In the absence of data specific to biotechnology submissions, the ePMN estimates for MCANs, Tier I, and Tier II submissions are used in this report.
Recordkeeping
EPA assumes a recordkeeping burden of two hours per MCAN, Tier I, and Tier II submission before counting the savings from electronic submission (EPA, 2007). This burden is reduced by 50 percent, to reflect assumed savings due to electronic submission (EPA, 2009b). The resulting recordkeeping burden is 1 hour for each MCAN, Tier I, and Tier II notice. 
Historic Source of Recordkeeping Estimates
The 1997 biotechnology rule economic analysis estimated recordkeeping for contained R&D, but did not present separate recordkeeping costs for MCANs, Tier II, and Tier I notices. Lacking more specific data, earlier EPA reports  --  both the ePMN rule analysis and the 2007 New Chemicals Information Collection Request (ICR) (EPA 2007, Sect.6, Table 2)  --  assumed that biotech notices would have the same recordkeeping costs as PMNs: one technical hour and one clerical hour per submission. The PMN recordkeeping hours themselves were taken from recordkeeping burden estimates for polymer exemptions presented in the Regulatory Impact Analysis of Amendments to Regulation for TSCA section 5 Premanufacture Notification (EPA, 1994). The polymer exemption burden may have been used as an estimate of PMN recordkeeping costs because normal PMN recordkeeping costs were not broken out in the 1994 RIA, but rather were included in the PMN submission costs (EPA, 1994, Ch. III, Sect.2b, Ch.E., Sect. 3c, and Table III-3). By contrast, polymer exemption recordkeeping hours were broken out, for both the pre-amendment base case (EPA, 1994, Table III-4, 1 to 4 hours) and the post-amendment case (EPA, 1994, Table IV-2, 2 to 5 hours). The post-PMN-amendment low case of 2 hours for polymer exemptions matched the one used in the 2007 new chemicals ICR (EPA, 2007), and the ePMN analysis (EPA, 2009b) "before" case. The ePMN report estimated recordkeeping savings of 50 percent of burden hours for all types of submissions, resulting in 1 hour of recordkeeping after the ePMN rule. 
Reporting and Recordkeeping Burden per Submission
Table 4-5 presents the burden hour estimates for recordkeeping and report preparation by submission type and activity. Table 4-5 contains the burden hour estimates by labor category while Table 4-6 contains the total burden by activity and a description of the requirements under each submission type. The per-submission burden is estimated to be 19 hours for a Tier I submission, approximately 276 hours for a Tier II submission, and approximately 520 hours for an MCAN submission. 
Table 4-7 contains the labor cost by submission type and activity as well as the total cost by submission. Costs are calculated by multiplying the burden estimates found in Table 4-5 with the corresponding wage rate found in Table 4-3 and summing the costs of all labor categories. In addition to labor costs, there is an EPA submission fee for MCAN and Tier II submissions. The Fees for the Administration of the Toxic Substances Control Act Final Rule, effective October 18, 2018, established a $16,000 MCAN submission fee and a $4,700 Tier II exemption submission fee (EPA, 2018). The rule also established reduced fees for companies qualifying as small businesses.
Submission costs are estimated to be approximately $1,497 for a Tier I submission, $25,391 for a Tier II submission and $55,100 for an MCAN submission. The MCAN cost includes the $16,000 EPA submission fee, and the Tier II cost includes the $4,700 EPA submission fee. For small businesses, submission costs are reduced for Tier II and MCAN submissions to approximately $21,631 for a Tier II submission and $41,900 for an MCAN submission.
Table 4-5: Hours Burden per Respondent by Submission Type and Labor Category
Activity
Hours Burden by Submission Type

MCAN
Tier II
Tier I

Clerical
Technical
Managerial
Total
Clerical
Technical
Managerial
Total
Clerical
Technical
Managerial
Total
Recordkeeping[1] 
Recordkeeping
0.5
0.5
0.0
1.0
0.5
0.5
0.0
1.0
0.5
0.5
0.0
1.0
Submission Preparation and Submission to EPA[2]
Description of microorganism, including verification of taxonomy
0.0
189.6
6.4
196.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Information about behavior in the environment of microorganism and parental strain
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Manufacturing process information, including worker exposure and volume
0.0
38.4
10.8
49.2
0.0
38.4
10.8
49.2
0.0
0.0
0.0
0.0
Conditions of activity; human and environmental exposure
0.0
48.0
0.0
48.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Clerical preparation[3]
6.18
0.0
0.0
6.18
6.18
0.0
0.0
6.18
0.0
0.0
0.0
0.0
Managerial review
0.0
0.0
20.0
20.0
0.0
0.0
20.0
20.0
0.0
0.0
18.0
18.0
Submission write-up
0.0
200.0
0.0
200.0
0.0
200.0
0.0
200.0
0.0
0.0
0.0
0.0
Total
6.68
476.5
37.2
520.38
6.68
238.9
30.8
276.38
0.5
0.5
18.0
19.0
Sources:
[1]Recordkeeping hours come from EPA, 2009b, p.13. 
[2]MCAN, Tier II, and Tier I estimates are based on EPA, 1997a. MCAN estimates are from EPA, 1997a, Tables D-5 and D-6, p.D-16-19. Tier II estimates are from EPA, 1997a, p.IV-22-23. Tier I estimates are from EPA, 1997a, p.IV-22. Estimates are adjusted for ePMN burden reductions using methods described in EPA, 2009b. 
[3]MCAN and Tier II clerical preparation required 20 hours per EPA, 1997a, Table D-6. Following the method in EPA, 2009b, 14 clerical hours for preparing MCANs and Tier II forms are removed. An additional 0.18 clerical hours are added for MCAN and Tier II notices for completing the User Fee Payment Identification Number (MCAN only) and Email Address data elements on the electronic forms (EPA, 2009b, p.15). 
Table 4-6: Total Hours Burden per Respondent by Submission Type and Cost Component
Activity
Submission Type

MCAN
Tier II
Tier I

Requirement Description
Hours Burden
Requirement Description
Hours Burden
Requirement Description
Hours Burden
Recordkeeping 
Recordkeeping
Clerical and technical time to keep records of the submission
1.0
Clerical and technical time to keep records of the submission
1.0
Clerical and technical time to keep records of the submission
1.0
Submission Preparation and Submission to EPA 
Description of microorganism, including verification of taxonomy
Description of morphological and physiological traits of microorganism; verification of taxonomy; phenotypic and ecological characteristics of parental strains and microorganisms
196.0
Microorganism identity information including type of modification and function of introduced DNA
Negligible
Certification of Compliance with requirements regarding recipient microorganism and introduced genetic material
Negligible
Information about behavior in the environment of microorganism and parental strain[,]
Description of traits selected for and developed; modification process
0.0
Type of modification; function of introduced DNA
Negligible
None
-
Manufacturing process information, including worker exposure and volume
Information on equipment used to minimize dispersion; procedures for disposal/inactivation; manufacturing process; worker. human, and environmental exposure; intended manufacturing volume, transport
49.2
Information on equipment used to minimize dispersion; procedures for disposal/inactivation; manufacturing process; worker, human, and environmental exposure; intended manufacturing volume, transport. Certification of compliance; site of waste disposal 
49.2
Certification of compliance; site of waste disposal 
Negligible
Conditions of activity; human and environmental effects
Description of intended use of microorganism; summary of health and environmental effects data of parental strains and microorganism
48
None
-
None
-
Clerical preparation
Clerical time to prepare documents
6.18
Clerical time to prepare documents
6.18
Clerical time to prepare documents
0.0
Managerial review
Managerial time to review documents
20.0
Managerial time to review documents
20.0
Managerial time to review documents
18.0
Submission write -up
Technical time to write the submission
200.0
Technical time to write the submission
200.0
Technical time to write the submission
0.0
Total
-
520.38
-
276.38
-
19.0
Percent of MCAN Burden

100%

53%

4%
Source: Hours are from Table 4-5. Requirement descriptions are mostly from EPA, 1997a, Table IV-4. Tier I/Tier II compliance certifications and waste disposal items were added to the Manufacturing Process element based on requirements at EPA, 1997b, § 725.424(b)2 and § 725.4255(e) and (f).
Table 4-7: Total Labor Costs per Respondent by Submission Type and Cost Component
Cost Component
Submission Type

MCAN
Tier II
Tier I

Requirement Description
Cost
($2018)
Requirement Description
Cost
($2018)
Requirement Description
Cost
($2018)
Recordkeeping 
Recordkeeping
-
$54.91 
 
$54.91 
 
$54.91 
Submission Preparation and Submission to EPA 
Description of microorganism including verification of taxonomy
Description of morphological and physiological traits of microorganism; verification of taxonomy; phenotypic and ecological characteristics of parental strains and microorganisms
$14,793 
Microorganism identity information including type of modification and function of introduced DNA
Negligible
Certification of Compliance with requirements regarding recipient microorganism and introduced genetic material
Negligible
Information about behavior in the environment of microorganism and parental strain
Description of traits selected for and developed; modification process
$0 
Type of modification; function of introduced DNA
Negligible
None
-
Manufacturing process information, including worker exposure and volume
Information on equipment used to minimize dispersion; procedures for disposal/inactivation; manufacturing process; worker human, and environmental exposure; intended manufacturing volume, transport
$3,757 
Information on equipment used to minimize dispersion; procedures for disposal/inactivation; manufacturing process; worker, human, and environmental exposure; intended manufacturing volume, transport. Certification of compliance; site of waste disposal
$3,757 
Certification of compliance; site of waste disposal
Negligible
Conditions of activity; human and environmental exposure
Description of intended use of microorganism; summary of health and environmental effects data of parental strains and microorganism
$3,615 
None
- 
None
-
Clerical preparation
Clerical time to prepare documents
$213 
Clerical time to prepare documents
$213 
Clerical time to prepare documents
N/A
Managerial review
Managerial time to review documents 
$1,602 
Managerial time to review documents 
$1,602 
Managerial time to review documents 
$1,442 
Submission write-up
Technical time to write the submission 
$15,064 
Technical time to write the submission 
$15,064 
Technical time to write the submission 
 N/A 
Total labor costs
-
$39,100 
-
$20,691 
- 
$1,497 
 
Cost Component
Submission Type

MCAN
Tier II
Tier I

Requirement Description
Cost
($2018)
Requirement Description
Cost
($2018)
Requirement Description
Cost
($2018)
Total labor costs
-
$39,100 
-
$20,691
-
$1,497 
Submission Fee
Submission fee  -  large business
-
$16,000 
-
$4,700 
-
$0 
Submission fee  -  small business
-
$2,800 
-
$940 
-
$0 
Total cost  -  large business
-
$55,100 

$25,391 
-
$1,497 
Total cost  -  small business
-
$41,900 
-
$21,631 
-
$1,497 
Labor cost as % of MCAN labor cost  -  large business
-
100%
-
46%
-
3%
Labor cost as % of MCAN labor cost  - small business
-
100%
-
52%
-
4%
Sources: Calculated by multiplying hours for each labor type in Table 4-5 and wage rates for that labor type in Table 4-3, and summing for each cost component. Requirement descriptions are from Table 4-6. Total costs displayed in the table are rounded to the nearest dollar. 
                                       
 Estimating the Number of Submissions and Submitting Companies
This section estimates the annual number of MCAN, Tier I, and Tier II submissions relevant to the rule, and the number of submitting companies. 
       The number of companies making submissions affects total rule familiarization costs, which are assumed in this economic analysis to be one-time costs per company. Two companies, Genencor (Danisco) and Novozymes respectively, submitted the requests to list T. reesei and B. amyloliquefaciens as candidates for Tiered exemptions. These companies, at least, are likely to submit exemption notifications. However, the T. reesei industry letter of January, 2010 implied that "multiple companies" were interested. There has also been interest from the Enzyme Technical Association, who represents manufacturers and distributors of enzyme products in North, Central, and South America. Novozymes and Danisco are two of the trade association's 25 current member firms (ETA, 2018). As explained in the sections below, this economic analysis assumes that two more (unidentified) companies will make submissions in the first year after the rule is promulgated, and that another two (unidentified) companies will make submissions in later years for a total of six firms making Tier I or Tier II submissions for T. reesei and B. amyloliquefaciens over ten years. Therefore, EPA estimates a total of 6 firms will be subject to the rule. 
       The number of relevant submissions for T. reesei QM6a and B. amyloliquefaciens is assumed to be four in the first year, rising by roughly 10 percent per year to 9 submissions in Year 10. For the base case, the submissions would all be MCANs. For the rule case, the submissions are split between Tier I and Tier II submissions, with more companies submitting Tier I than Tier II submissions. 
The method for arriving at these assumptions is explained below.
History of Past Submissions
The assumed number of submissions for T. reesei and B. amyloliquefaciens in future years is based on the number of past MCAN submissions for T. reesei and B. amyloliquefaciens, past Tier I and Tier II submissions for all microorganisms, and the number of near term T. reesei submissions predicted by two trade associations in a presentation to EPA (BIO and ETA, 2009, slide 12). 
Table 4-8 shows the number of MCAN submissions and submitting companies for both T. reesei and B. amyloliquefaciens for a 21-year period through September 30, 2019. Table 4-8 covers only submissions in which the species was not claimed as TSCA Confidential Business Information. MCANs for which the species was confidential are not considered in estimating future base case submissions. Table 4-9 shows the number of all MCANs received, including MCANs for other species or for which the species was confidential, along with the numbers of all Tier I and Tier II exemptions.
During the period of 21 years (October 1, 1998 through September 30, 2019), EPA received a total of 49 MCAN submissions for T. reesei and B. amyloliquefaciens for which the species was non-confidential. Only one submission was made for B. amyloliquefaciens, by Novo Nordisk, now Novozymes (EPA, 2014a). Forty-eight MCANs have been submitted for T. reesei. Based on the non-confidential data, no MCANs were submitted for T. reesei prior to October 2002. Since then, roughly 20 percent of all MCANs have been for T. reesei (Tables 4-8 and 4-9). 
During that same period, EPA received 61 Tier I notices that might have otherwise been submitted as MCANs, had eligibility for exemptions not been in place. Excluding outliers year 2002 and 2012, there were two Tier I notices in a typical year. EPA received 19 Tier II notices in that entire period. There was also an unusual cluster of Tier I notices from November 2000 through April 2002, totaling 87 notices, that appeared on their face to have minimal or speculative TSCA uses and to not be relevant in estimating potential Tier I and Tier II submissions concerning T. reesei or B. amyloliquefaciens. Furthermore, there was an additional cluster of Tier I submissions in 2012. It is also presumed that this cluster bears little relevance with respect to estimating expected Tier I and Tier II submissions concerning T. reesei or B. amyloliquefaciens, as many of the submissions appeared to be for the same or very similar microorganisms used to produce ethanol. 
Number of Submitters
Of the 48 MCANs for which the non-confidential species was T. reesei or B. amyloliquefaciens, three to six companies have submitted MCANs (Table 4-8). For three submissions, the company name was claimed as CBI. The remaining 45 were submitted by Danisco (which bought Genencor in 2005 and in turn Genencor was purchased by DuPont in 2011), Novozymes (formally Novo Nordisk), and Xyleco. Depending on the identity of the submitters whose identities were confidential, as many as six companies might have submitted MCANs for T. reesei. 
For this analysis, EPA assumes that four of the companies will make a relevant biotech submission in the first year. To calculate the number of companies making submissions in future years, EPA uses an industry growth rate of four percent, as assumed in the 1997 RIA for closed system MCANs (EPA, 1997a, Table IV-8, p.IV-40). This growth rate is conservative for a developing industry (EPA, 1997a, p.IV-7). 
Based on the historical data in Table 4-8, three named companies and three unidentified companies submitted MCANs for T. reesei or B. amyloliquefaciens. Two of the three named companies, Novozymes and Xyleco, qualify as small businesses under the new thresholds for fees. One or more of the unidentified firms could also be a small business. For purposes of this analysis, EPA assumes that 45 percent of all MCAN, Tier I, and Tier II submissions are from small businesses and will therefore incur the reduced submission fee.
Table 4-8: MCAN Submissions for B. amyloliquefaciens and T. reesei October 1, 1998 through September 30, 2019
Count
MCAN Number
Submission Date
Full Microorganism Name[1]
Submitter[2]
Bacillus amyloliquefaciens
1)
J-98-0001
3/16/1998
Bacillus amyloliquefaciens strain MOL1350
Novo Nordisk
Trichoderma reesei
1)
J-03-0001
6/25/2003
Trichoderma reesei strain CBI
CBI
2)
J-03-0002
6/25/2003
Trichoderma reesei strain CBI
CBI
3)
J-04-0001
1/2/2003
Trichoderma reesei strain 34-6
Genencor 
4)
J-04-0005
9/28/2004
Trichoderma reesei strain 23-1
Genencor
5)
J-05-0001
1/24/2005
Trichoderma reesei strain 3236
Genencor
6)
J-05-0002
9/12/2005
Trichoderma reesei strain 3243
Genencor
7)
J-06-0001
3/24/2006
Trichoderma reesei strain 3260
Genencor
8)
J-07-0001
12/1/2006
Trichoderma reesei strain CBI
Novozymes 
9)
J-07-0002
5/28/2007
Trichoderma reesei strain 3277
Danisco/Genencor
10)
J-09-0001
2/25/2009
Trichoderma reesei strain 3309
Danisco/Genencor
11)
J-09-0002
2/27/2009
Trichoderma reesei strain CBI
Novozymes 
12)
J-09-0004
9/3/2009
Trichoderma reesei strain CBI
Novozymes 
13)
J-10-0002
11/2/2009
Trichoderma reesei strain CBI
Danisco/Genencor
14)
J-10-0003
6/03/2010
Trichoderma reesei strain 3408
Danisco/Genencor
15)
J-11-0004
4/14/2011
Trichoderma reesei strain 3417
Danisco/Genencor/DuPont
16)
J-11-0005
8/4/2011
Trichoderma reesei strain CBI
Novozymes
17)
J-11-0006
8/15/2011
Trichoderma reesei strain CBI
Novozymes
18)
J-13-0050
6/21/2013
Trichoderma reesei strain CBI
Danisco/Genencor/DuPont
19)
J-14-0010
02/28/14
Trichoderma reesei strain CBI
Danisco/Genencor/DuPont
20)
J-14-0011  -  -0015
03/10/14
Trichoderma reesei strain CBI
Novozymes
21)
J-14-0018
06/03/14
Trichoderma reesei strain CBI
Novozymes
22)
J-14-0019
07/05/14
Trichoderma reesei strain CBI
Danisco/Genencor/DuPont
23)
J-15-0003-0006
1/23/15
Trichoderma reesei strain CBI
Novozymes
24)
J-15-0024
4/30/15
Trichoderma reesei strain CBI
Novozymes
25)
J-15-0025
4/30/15
Trichoderma reesei strain CBI
Novozymes
26)
J-15-0026
5/1/15
Trichoderma reesei strain CBI
Danisco
27)
J-15-0032
7/18/15
Trichoderma reesei strain CBI
Danisco
28)
J-15-0033
7/21/15
Trichoderma reesei strain CBI
Danisco
29)
J-16-0001
12/14/15
Trichoderma reesei strain CBI
Novozymes
30)
J-16-0002
12/14/15
Trichoderma reesei strain CBI
Novozymes
31)
J-16-0006
6/22/16
Trichoderma reesei strain CBI
Danisco
32)
J-16-0019
6/29/16
Trichoderma reesei strain CBI
Novozymes
33)
J-16-0020
6/29/16
Trichoderma reesei strain CBI
Novozymes
34)
J-16-0021
7/15/16
Trichoderma reesei strain CBI
Novozymes
35)
J-16-0022
7/15/16
Trichoderma reesei strain CBI
Novozymes
36)
J-16-0023
7/16/16
Trichoderma reesei strain CBI
Danisco
37)
J-16-0024
7/28/16
Trichoderma reesei strain CBI
Danisco
38)
J-16-0025
7/29/16
Trichoderma reesei strain CBI
Novozymes
39)
J-16-0026
8/9/16
Trichoderma reesei strain CBI
Danisco
40)
J-17-0022
9/26/17[4]
Trichoderma reesei strain CBI
CBI
41)
J-19-0001
10/05/18[5]
Trichoderma reesei 3CH-3
Xyleco





Notes:
[1] "Strain CBI" means the species was non-confidential but the strain was confidential. Only MCANs with non-confidential species were counted.
2 Danisco bought Genencor in 2005, Danisco in turn was acquired by DuPont in 2011 (DuPont, 2012). In 2000, Novo Nordisk was split into three companies, one of which was Novozymes (Novozymes, 2009). 
Source: EPA internal list of MCANs submitted, and EPA's collection of Tier I and Tier II submission documents. Only MCANs for which the species is not confidential are included.
[3]For the purposes of this analysis MCANs J14-0011 and J14-0015 are counted as one submission.
[4]J-17-0022 was initially received on 9/26/17 but the submission was not considered complete until 10/9/17, which is considered Day 1 of the review period.
 [5]J-19-0001 was initially received on 10/5/18 but the submission was not considered complete until 10/2/19, which is considered Day 1 of the review period.
  
Table 4-9: All MCAN, Tier I, and Tier II Exemption Notices, FY1998 through 2019
Fiscal Year ending Sept. 30[1]
MCANs
Tier II notices
All Tier I Notices
"Ordinary" Tier I Notices
1998
3
0
1
1
1999
1
0
0
0
2000
0
1
5
5
2001
1
0
42[2]
3[2]
2002
1
0
48[2]
0[2]
2003
1
0
1
1
2004
5
0
3
3
2005
2
3
3
3
2006
1
1
3
3
2007
8
0
0
0
2008
3
0
3
3
2009
4
0
2
2
2010
3
0
3
3
2011
6
0
0
0
2012
7
1
22[3]
22[3]
2013
14
0
2
2
2014
21
1
0
0
2015
34
6
0
0
2016
28
3
3
3
2017
23
2
2
2
2018
29
1
4
4
2019
24
0
1
1
Totals
219
19
148
61
Notes:
1 EPA numbers submissions by Federal fiscal year, which begins October 1 of the prior calendar year. For example, the first MCAN of FY2010 was received in calendar year 2009, but was numbered J10-01.
[2] Tier I notices include clusters of 39 in FY2001 and 48 in FY2002 that appear to cover minimal or speculative TSCA uses, and seem unlikely to be relevant in estimating Tier I submissions in lieu of MCANs for the current rule. These notices are not considered "ordinary" for the purposes of this analysis. 
Source: EPA internal list of MCANs submitted, and EPA's collection of Tier I and Tier II submission documents.
[3]The cluster of Tier I notices submitted in FY2012 included many submissions describing the use of the same or very similar microorganisms in ethanol production at numerous sites.
Table 4-10 shows species and submitter of Tier I and Tier II notices in cases where the submission was not claimed as TSCA Confidential Business Information. The table excludes a cluster of 87 unusual submissions from November 2000 through April 2002 that seemed likely to cover TSCA uses that were minor or uncertain. Table 4-11 shows the number of non-confidential Tier I/II submissions for each of the 10 microbial species currently listed at 40 CFR 725.420 as candidates for exemption. 
Most microorganisms listed as candidates for Tiered exemptions in the 1997 biotechnology rule had either no Tier I or Tier II notices at all, or only a few notices each. This suggests that listing a microbe as a candidate for exemption does not necessarily imply that there will be surge of exemption notices. 
The confidential and non-confidential Tier I submissions history indicates that additional notices or notice amendments may be submitted if a firm decides to expand its manufacturing to more sites. Manufacturing may be by the submitter, a toll manufacturer, or a partner or customer firm. This may have implications for small business involvement, since a toll manufacturer or customer could be a small business even if the submitter is a large business. (See RFA discussion in Section 8.1 of this report.)

Table 4-10: All Tier I and Tier II Submissions from 1998 through 9/30/2019
Fiscal Year
Submission count
Microorganism Name
Submitter[2]
Tier I Notices
1998
1
Bacillus licheniformis
Novo Nordisk, Franklinton NC
1999
0


2000
5
Confidential (3 submissions)
E. coli strain K-12
E. coli strain K-12
Confidential (3 submissions)
 Prolume
Aureozyme
2001
3[3]
Confidential (2 submissions)
B. subtilis
Confidential (2 submissions)
Enzyme Biosystems
2002
0[3]
-
-
2003
1
E. coli strain K-12
Submitter: DuPont, Wilmington DE 
Manufacturer: A. E. Staley, Decatur IL 
2004
3 
(plus one amend.)
E. coli strain K-12
Novozymes Biologicals, Salem VA
(Amend. added 3 mfr sites in Salem VA)


Bacillus licheniformis
Genencor, Beloit WI


Confidential
Confidential
2005
3
E. coli strain K-12
Genencor, Rochester NY


E. coli strain K-12
Eden Bioscience Corporation


E. coli strain K-12
Confidential
2006
3
E. coli strain K-12
DuPont Tate & Lyle, Loudon TN


E. coli strain K-12
Confidential


Confidential
Confidential
2007
0
-
-
2008
3
Bacillus subtilis
Novozymes North America, 
Franklinton NC


Saccharomyces cerevisiae
Avoca Bioprocessing


Saccharomyces cerevisiae
Avoca Bioprocessing
2009
2
Saccharomyces cerevisiae
Avoca Bioprocessing


Saccharomyces cerevisiae
Avoca Bioprocessing
2010 
3 
Saccharomyces cerevisiae
E. coli strain K-12
E. coli strain K-12
Avoca Bioprocessing
Wacker Chemical Corporation
Wacker Chemical Corporation
2011
0
-
-
2012
22[4]
Saccharomyces cerevisiae
UWGP, Highwater Ethanol LLC, Nesika Energy LLC, Illinois River Energy LLC, Golden Grain Energy LLC, Valero Energy Corporation, American Process Inc, Lallemand Ethanol Technology, DSM Innovation Company, POET Research Center Inc, Confidential


Bacillus subtilis
Danisco US Inc.


Aspergillus niger
Novozymes North America, 
Franklinton NC
2013
0
-
-
2014
0
-
-
2015
0
-
-
2016
3
Saccharomyces cerevisiae

DSM BioProducts & Services



E. coli strain K-12

REG Okeechobee, LLC



Bacillus licheniformis
Novozymes
2017
2
Saccharomyces cerevisiae

DSM BioProducts & Services


E. coli strain K-12
REG Okeechobee, LLC
2018
4
E. coli strain K-12
REG Okeechobee, LLC


Aspergillis oryzae
Confidential


Saccharomyces cerevisiae
Ergon Biofuels, LLC


Saccharomyces cerevisiae
Adkins Energy, LLC
2019
1
Bacillus subtilis
Elemental Enzymes Ag and Turf, LLC
Tier II Notices
2005
1 
(plus 2 amends.) 
Confidential
Confidential
2012
1
Saccharomyces cerevisiae
Confidential
2014
3
Saccharomyces cerevisiae
Confidential
2015
6
Confidential
Confidential
2016
3
Confidential
Confidential
2017
2
Confidential
Confidential
2018
1
Confidential
Confidential
Notes:
[1] EPA receipt date. 
[2] Danisco bought Genencor in 2005 (www.genencor.com). Novozymes demerged from Novo Nordisk in 2000, and the two companies are both held by Novo Group (www.novozymes.com). DuPont Tate & Lyle Bio Products is a joint venture between DuPont and Tate & Lyle (www.duponttateandlyle.com).
3 The Tier I notices do not include 39 in FY2001 and 48 in FY2002 that appear on their face to have minimal or speculative TSCA uses, and are judged unlikely to be relevant in estimating Tier I submissions in lieu of MCANs for the current rule.
[4]Of these submissions, many were for the same microbe. It appeared that one submitter may have submitted a Tier II exemption notice and had customers submit Tier I exemption notices, causing an uptick in Tier I notices.
Sources: EPA, Office of Pollution Prevention and Toxics, files of Tier I and Tier II notices. 
Table 4-11: Non-confidential Submissions for Microbes Listed at § 725.420 through September 30, 2019
Host Microorganism Name
Non-confidential
Tier I Notices
Non-confidential
Tier II Notices
Acetobacter aceti
none
none
Aspergillus niger
1
none
Aspergillus oryzae
1
none
Bacillus licheniformis
1
none
Bacillus subtilis
3
none
Clostridium acetobutylicum
none
none
E. coli strain K-12
11
none
Penicillium roqueforti
none
none
Saccharomyces cerevisiae
18
none
Saccharomyces uvarum
none
none
Source: The list of potentially exempt strains is from 40 CFR § 725.420. The host species are from Tier I non-confidential submissions in EPA files, listed in Table 4-10.  

Table 4-12 shows the number of companies assumed to be making submissions as a result of the rule. Each submitter must become familiar with the rule the first year they make a submission.
Table 4-12: Companies with Rule Familiarization Burden

                                    Year 1
                                    Year 2
                                    Year 3
                                    Year 4
                                    Year 5
                                    Year 6
                                    Year 7
                                    Year 8
                                    Year 9
                                    Year 10
Companies submitting Tier I and Tier II Notifications 
                                       4
                                       0
                                       0
                                       0
                                       1
                                       0
                                       0
                                       0
                                       0
                                       1
Total
                                       6
                                       
Source: EPA assumption, based on past MCAN submissions found in Table 4-8. Assumes roughly 4% annual growth in Tier I and Tier II companies, as in 1997 RIA (EPA, 1997a, Table IV-8, p.IV-40).
Future Submissions
The number of future relevant submissions is very uncertain, but it is likely to be a small number. In the past 10 years, the number of annual MCAN submissions for T. reesei has ranged between zero and eleven, with an average of 3.6 submissions per year. Over the last ten years there has only been one submission for B. amyloliquefaciens. Due to the very small numbers involved, this analysis does not differentiate the submission count between T. reesei and B. amyloliquefaciens. 
This analysis assumes a total of four MCAN submissions for T. reesei and B. amyloliquefaciens during the first year, under the base case. In addition, this analysis assumes that under the rule, all baseline MCAN submissions will qualify for a Tier I or Tier II exemption and that all submitters will choose to submit either a Tier I or Tier II notice instead of an MCAN. Based on MCAN history, it seems likely that most will be T. reesei submissions.
These estimates are very uncertain, since it is uncertain to what extent future T. reesei and B. amyloliquefaciens submissions will meet the requirements for either a Tier I or Tier II exemption. For example, a company may submit an MCAN for a microorganism if they believe the use will not meet the containment requirements for either exemption. 
In the absence of additional information, this analysis assumes that there will be more Tier I submissions than Tier II submissions. The actual split between Tier I and Tier II is unknown, especially since some companies contemplating a Tier II submission may instead opt to submit the full MCAN. There have been 19 Tier II submissions over a 20-year period since the 1997 rule promulgation. These 19 Tier II submissions make up 23 percent of the total Tier I and Tier II submission since rule promulgation. This analysis assumes, arbitrarily, that 23 percent of submissions each year will be Tier II submissions while the remainder will be Tier I. The actual pattern of submissions depends heavily on decisions of a few firms, and could be quite different from the assumed pattern. To calculate an assumed number of submissions in the future years, this report uses an annual growth rate of roughly 10 percent for total submissions, as estimated in the 1997 RIA for new closed system MCANs (EPA, 1997a, Table IV-8, p.IV-40).
In addition, as described above, EPA assumes that 45 percent of all submission will be from small businesses. Table 4-13 presents the estimated number of MCAN, Tier I, and Tier II submissions over a ten-year period.
Table 4-13: Estimated Numbers of MCAN, Tier I, and Tier II Submissions for B. amyloliquefaciens and T. reesei over a 10-Year Period

Submission Type
Number of Submission per Year


Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Baseline
MCAN
Submissions for B. amyloliquefaciens and T. Reesei  -  large business
2
2
3
3
3
3
4
4
5
5


Submissions for B. amyloliquefaciens and T. Reesei  -  small business
2
2
2
2
3
3
3
4
4
4


Total
4
4
5
5
6
6
7
8
9
9

Tier I & II
0
0
0
0
0
0
0
0
0
0
Rule Case
MCAN
Submissions for B. amyloliquefaciens and T. Reesei
0
0
0
0
0
0
0
0
0
0

Tier I
3
3
4
4
5
5
5
6
7
7

Tier II  -  large business
1
1
1
1
1
1
1
1
1
1

Tier II  -  small business
0
0
0
0
0
0
1
1
1
1

Total
4
4
5
5
6
6
7
8
9
9

Source: MCAN numbers are based on past MCAN submissions in Table 4-8. EPA assumed 4 submission in Year 1 with a roughly 10 percent annual growth in submissions, as in the 1997 RIA (Table EPA, 1997a, IV-8, p.IV-40). Counts only submissions that will qualify for Tier I or Tier II under the rule. The Tier I:Tier II ratio was assumed based in part on Table 4-9 history. 

Base Case and Change in Industry Burden and Cost due to the Rule 
Aggregate Rule Familiarization Burden and Cost 
In the first year after rule promulgation, the total industry rule familiarization cost is expected to be approximately $6,407, if four companies make submissions in the first year. 
As stated in Section 4.5, rule familiarization costs are incurred at the company level and it is assumed that four companies will make a relevant biotechnology submission in the first year under both the baseline and rule (see Table 4-12). As discussed in Section 4.5, this analysis assumes all companies have made a previous biotechnology submission and therefore are familiar with the 1997 biotechnology rule. It assumes that under the rule case, each company will need to become familiar with the Tier I and II exemption requirements as they apply to T. reesei and B. amyloliquefaciens, and will incur a rule familiarization burden of 20 hours per company and a cost of approximately $1,602 per company (see Section 4.3). Table 4-14 contains the total industry burden and cost estimates for rule familiarization in Year 1, after the rule is promulgated. In the first year the total industry burden is expected to be approximately 80 hours in Year 1 and the cost is expected to be approximately $6,407.
EPA assumes that one additional company will make a relevant submission in Year 5 and one in Year 10, and that in the rule case, each company will spend 20 hours more for rule familiarization than in the base case (see Table 4-14). 
Table 4-14: Total Industry Burden for Rule Familiarization (Year 1)

Number of Companies with Rule Familiarization Burden
Rule Familiarization Burden per Company
(hours)
Total Industry Burden
(hours)
Rule Familiarization Cost per Company
($2018)
Total Industry Cost
($2018)
Base Case
0
0
0
$0.00 
$0.00 
Rule Case
4
20
80
$1,602
$6,408 
Change in Burden
4
20
80
$1,602 
$6,408 
Source: The number of submitting companies is taken from Table 4-12 and the per company rule familiarization burden is from Table 4-4. Total industry cost is calculated using unrounded numbers. 
Aggregate Submission and Recordkeeping Burden Hours (Year 1)
Submission preparation, submission, and recordkeeping burden hours are incurred at the per-submission level and not the per-company level. Under the base case, EPA assumes a total of four MCANs (Table 4-13) will be submitted in the first year after the rule takes effect. Using the burden of 520.38 hours per MCAN submission (see Table 4-6), the total baseline burden is calculated to be 2,082 hours. 
Under the rule case, EPA expects three Tier I submissions and one Tier II submissions for T. reesei and B. amyloliquefaciens in the first year and estimates a burden of 19 hours per Tier I submission and a burden per Tier II submission of 276.38 hours. 
As shown in Table 4-15 below, EPA expects a total industry burden of 413.38 hours in the first year of the rule, resulting from rule familiarization, submission preparation and recordkeeping. Industry will experience a burden decrease of approximately 1,668 hours in the first year resulting from the changes. 

Table 4-15: Base Case and Change in Industry Burden Hours (Year 1)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       2
                                      520
                                     1,041
                                       0
                                      520
                                       0
                                    -1,041
                            MCAN  -  small business
                                       2
                                      520
                                     1,041
                                       0
                                      520
                                       0
                                    -1,041
                          TIER II  -  large business
                                       0
                                      276
                                       0
                                       1
                                      276
                                      276
                                      276
                          TIER II  -  small business
                                       0
                                      276
                                       0
                                       0
                                      276
                                       0
                                       0
                                    TIER I
                                       0
                                      19
                                       0
                                       3
                                      19
                                      57
                                      57
                                     Total
                                       4
                                       -
                                     2,082
                                       4
                                       -
                                      333
                                    -1,748
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       4
                                      20
                                      80
                                      80
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                     2,082
                                       -
                                       
                                      413
                                    -1,668

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-6 contains the burden per MCAN, Tier I, and Tier II submission. Calculations are with the unrounded Table 4-6 numbers. Table 4-14 contains the total industry rule familiarization burden. Rule case assumes 4 different submitters at 20 hours/organization.

Aggregate Submission and Recordkeeping Cost (Year 1)
Table 4-16 presents the total industry costs of the rule in the first year. As shown in Table 4-7, the estimated cost of submitting one MCAN is $55,100 by a large business and $41,900 by a small business. Therefore, the first year industry cost is approximately $193,999 in the base case. The cost of submitting one Tier II submission is approximately $25,391 by a large business and $21,631 by a small business, and the cost of submitting a Tier I submission is approximately $1,497 (see Table 4-7). 
Under the rule, EPA expects 1 Tier II, 3 Tier I submissions, and zero MCAN submissions resulting in a total industry cost of approximately $36,288.53 resulting from rule familiarization, recordkeeping, and submission preparation. The rule will generate an incremental savings of approximately $157,710.30 to the industry in the first year. Table-16 displays the total industry costs rounded to the nearest dollar after using unrounded cost estimates. 


Table 4-16: Base Case and Change in Industry Cost (Year 1)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2014)


                            Cost per Report ($2014)
                              Total Cost ($2014)

                            Cost per Report ($2014)
                              Total Cost ($2014)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       2
                                  $55,099.71
                                  $110,199.42
                                       0
                                  $55,099.71
                                     $0.00
                                 -$110,199.42
                            MCAN  -  small business
                                       2
                                  $41,899.71
                                  $83,799.42
                                       0
                                  $41,899.71
                                     $0.00
                                  -$83,799.42
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       3
                                   $1,496.60
                                   $4,489.81
                                   $4,489.81
                                     Total
                                       4
                                       -
                                  $193,998.83
                                       4
                                       -
                                  $29,881.00
                                 -$164,117.83
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       4
                                   $1,601.88
                                   $6,407.53
                                   $6,407.53
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $193,998.83
                                       -
                                       -
                                  $36,288.53
                                 -$157,710.30
Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Calculations are with the unrounded 4-7 numbers. Values may not sum due to rounding.
Total Change in Industry Burden Hours (All Years) 
Table 4-17 presents the total industry burden hours under the base case and the rule case as well as the change in burden as the result of the rule over a ten-year period. Industry burdens for Years 2 through 10 are calculated using the same method as was used to calculate the burden for Year 1; the per-submission burden found in Table 4-15.
Table 4-6 is multiplied by the number of submissions for a given year found in Table 4-13, and the rule familiarization burden is added to the total. 
As shown in Table 4-12, one additional company is expected to make a submission in Years 5 and 10 under both the base case and the rule case. Like the Year 1 submitters, these companies will incur no additional rule familiarization burden in the base case and a 20-hour burden for rule familiarization in the rule case (see Table 4-4). 
EPA assumes that most companies will send Tier I submissions instead of Tier II submissions, for T. reesei and B. amyloliquefaciens. This analysis assumes, arbitrarily, that 23 percent of all Tier I and Tier II submissions each year will be Tier II submissions. More detail on the derivation of the burden and cost estimates for Years 2 through 10 is presented in Appendix A. 
As shown in Table 4-17, EPA estimates a total industry burden of 32,784 hours in the base case over the ten-year period, and a total burden of 4,920 hours under the rule. Over the ten-year period the industry is expected to subtract a total of 27,864 hours at an average of 2,786 hours per year. 
Total Change in Industry Cost (All Years) 
The total cost to the industry over the ten-year period is presented in Table 4-18. The calculations for the industry cost are derived in Appendix A and Chapter 4 of this report. Total industry cost is estimated to be approximately $3.09 million over the ten-year period in the base case and approximately $423 thousand over the ten-year period in the rule case (before discounting). Total savings to the industry are approximately $2.7 million (before discounting) over the ten-year period. There is expected to be annualized savings to industry ranging from $260 thousand under a three percent discount rate, to $252 thousand under a seven percent discount rate. 
 

Table 4-17: Base Case and Change in Industry Burden Hours (All Years)
                                     Year
                                 Baseline Case
                                   Rule Case
                        Total Change in Industry Burden

                               MCAN Submissions
                          Tier I & II Submissions
                          Rule Familiarization Burden
         Submission Preparation, Submission, and Recordkeeping Burden
                             Total Industry Burden
                               MCAN Submissions
                          Tier I & II Submissions
                          Rule Familiarization Burden
         Submission Preparation, Submission, and Recordkeeping Burden
                             Total Industry Burden

                                       1
                                       4
                                       0
                                       0
                                     2,082
                                     2,082
                                       0
                                       4
                                      80
                                      333
                                      413
                                    -1,668
                                       2
                                       4
                                       0
                                       0
                                     2,082
                                     2,082
                                       0
                                       4
                                       0
                                      333
                                      333
                                    -1,748
                                       3
                                       5
                                       0
                                       0
                                     2,602
                                     2,602
                                       0
                                       5
                                       0
                                      352
                                      352
                                    -2,250
                                       4
                                       5
                                       0
                                       0
                                     2,602
                                     2,602
                                       0
                                       5
                                       0
                                      352
                                      352
                                    -2,250
                                       5
                                       6
                                       0
                                       0
                                     3,122
                                     3,122
                                       0
                                       6
                                      20
                                      371
                                      391
                                    -2,731
                                       6
                                       6
                                       0
                                       0
                                     3,122
                                     3,122
                                       0
                                       6
                                       0
                                      371
                                      371
                                    -2,751
                                       7
                                       7
                                       0
                                       0
                                     3,643
                                     3,643
                                       0
                                       7
                                       0
                                      648
                                      648
                                    -2,995
                                       8
                                       8
                                       0
                                       0
                                     4,163
                                     4,163
                                       0
                                       8
                                       0
                                      667
                                      667
                                    -3,496
                                       9
                                       9
                                       0
                                       0
                                     4,683
                                     4,683
                                       0
                                       9
                                       0
                                      686
                                      686
                                    -3,998
                                      10
                                       9
                                       0
                                       0
                                     4,683
                                     4,683
                                       0
                                       9
                                      20
                                      686
                                      706
                                    -3,978
                                     Total
                                      63
                                       0
                                       0
                                    32,784
                                    32,784
                                       0
                                      63
                                      120
                                     4,800
                                     4,920
                                    -27,864
                                    Average
                                       6
                                       0
                                       0
                                     3,278
                                     3,278
                                       0
                                       6
                                      12
                                      480
                                      492
                                    -2,786

Sources: The industry burden in Year 1 is derived in Table 4-15. Values may not sum due to rounding. Appendix A derives the burdens for all other years and displays unrounded estimates. 

Table 4-18: Base Case and Change in Industry Cost in Thousands of Dollars ($2018) (All Years)
                                     Year
                                 Baseline Case
                                   Rule Case
                         Total Change Industry in Cost

                               MCAN Submissions
                          TIER I & II Submissions
                           Rule Familiarization Cost
            Report Preparation, Submission, and Recordkeeping Cost 
                             Total Industry Cost 
                               MCAN Submissions
                          TIER I & II Submissions
                          Rule Familiarization Cost 
            Report Preparation, Submission, and Recordkeeping  Cost
                             Total Industry Cost 

                                       1
                                       4
                                       0
                                      $0 
                                     $194 
                                     $194 
                                       0
                                       4
                                      $6 
                                     $30 
                                     $36 
                                     -$158
                                       2
                                       4
                                       0
                                      $0 
                                     $194 
                                     $194 
                                       0
                                       4
                                      $0 
                                     $30 
                                     $30 
                                     -$164
                                       3
                                       5
                                       0
                                      $0 
                                     $249 
                                     $249 
                                       0
                                       5
                                      $0 
                                     $31 
                                     $31 
                                     -$218
                                       4
                                       5
                                       0
                                      $0 
                                     $249 
                                     $249 
                                       0
                                       5
                                      $0 
                                     $31 
                                     $31 
                                     -$218
                                       5
                                       6
                                       0
                                      $0 
                                     $291 
                                     $291 
                                       0
                                       6
                                      $2 
                                     $33 
                                     $34 
                                     -$257
                                       6
                                       6
                                       0
                                      $0 
                                     $291 
                                     $291 
                                       0
                                       6
                                      $0 
                                     $33 
                                     $33 
                                     -$258
                                       7
                                       7
                                       0
                                      $0 
                                     $346 
                                     $346 
                                       0
                                       7
                                      $0 
                                     $55 
                                     $55 
                                     -$292
                                       8
                                       8
                                       0
                                      $0 
                                     $388 
                                     $388 
                                       0
                                       8
                                      $0 
                                     $56 
                                     $56 
                                     -$332
                                       9
                                       9
                                       0
                                      $0 
                                     $443 
                                     $443 
                                       0
                                       9
                                      $0 
                                     $57 
                                     $57 
                                     -$386
                                      10
                                       9
                                       0
                                      $0 
                                     $443 
                                     $443 
                                       0
                                       9
                                      $2 
                                     $57 
                                     $59 
                                     -$384
                                     Total
                                      63
                                       0
                                      $0 
                                    $3,088 
                                    $3,088 
                                       0
                                      63
                                     $10 
                                     $414 
                                     $423 
                                    -$2,665
                                Annualized 3%*
                                       -
                                       -
                                    $0.00 
                                     $302 
                                     $302 
                                       -
                                       -
                                      $1 
                                     $40 
                                     $41 
                                     -$260
                                Annualized 7%*
                                       -
                                       -
                                    $0.00 
                                     $292 
                                     $292 
                                       -
                                       -
                                      $1 
                                     $39 
                                     $40 
                                     -$252

Sources: The industry burden in Year 1 is derived in Table 4-16. Calculations are with the unrounded numbers Appendix A: derive the burden for all other years and displays unrounded estimates
Note: Yearly, total, and average costs are calculated before discounting. Values may not sum due to rounding.
Average Cost per Company 
To estimate the average cost per company, EPA first calculated the average number of submissions per company under both the baseline and the rule cases. To do this, EPA divided the total number of submissions expected each year as listed in Table 4-13 with the estimated number of companies submitting a biotechnological notice to EPA as presented in Table 4-12. Table 4-19 presents the average number of submission per company for the first ten years of the potential regulation.
Table 4-20 presents the average cost per company annualized over the ten year period. To calculate this cost, EPA divided total industry costs, which can be found in Table 4-16 and Tables A-10 to A-18, by six, which is the number of companies anticipated to report each year during the ten-year period. Overall, EPA estimates the annualized average savings per company to be $43,344 thousand with a three percent discount rate and $41,983 thousand with a seven percent discount rate. 


Table 4-19: Average Number of Submissions per Company (All Years)
                                     Year
                           Total Number of Companies
                                 Baseline Case
                                   Rule Case


                                     MCANs
                               MCANs Per Company
                             Rule Familiarizations
                       Rule Familiarization per Company
                              Tier I Submissions
                              Tier II Submissions
                        Tier I Submissions per Company
                        Tier II Submissions per Company
                             Rule Familiarizations
                       Rule Familiarization per Company
                                       1
                                       6
                                       4
                                     0.67
                                       0
                                       0
                                       3
                                       1
                                      0.5
                                     0.17
                                       4
                                     0.67
                                       2
                                       6
                                       4
                                     0.67
                                       0
                                       0
                                       3
                                       1
                                     0.50
                                     0.17
                                       0
                                       0
                                       3
                                       6
                                       5
                                     0.83
                                       0
                                       0
                                       4
                                       1
                                     0.67
                                     0.17
                                       0
                                       0
                                       4
                                       6
                                       5
                                     0.83
                                       0
                                       0
                                       4
                                       1
                                     0.67
                                     0.17
                                       0
                                       0
                                       5
                                       6
                                       6
                                     1.00
                                       0
                                       0
                                       5
                                       1
                                     0.83
                                     0.17
                                       1
                                     0.17
                                       6
                                       6
                                       6
                                     1.00
                                       0
                                       0
                                       5
                                       1
                                     0.83
                                     0.17
                                       0
                                       0
                                       7
                                       6
                                       7
                                     1.17
                                       0
                                       0
                                       5
                                       2
                                     0.83
                                     0.33
                                       0
                                       0
                                       8
                                       6
                                       8
                                     1.33
                                       0
                                       0
                                       6
                                       2
                                     1.00
                                     0.33
                                       0
                                       0
                                       9
                                       6
                                       9
                                     1.50
                                       0
                                       0
                                       7
                                       2
                                     1.17
                                     0.33
                                       0
                                       0
                                      10
                                       6
                                       9
                                     1.50
                                       0
                                       0
                                       7
                                       2
                                     1.17
                                     0.33
                                       1
                                     0.17
Note: Assumes 44 percent of companies are small businesses, and 44 percent of submissions are from small businesses.

Table 4-20: Average Cost per Company (All Years)
                                     Year
                           Total Number of Companies
                        Base Case Total Industry Costs
                        Base Case Average Cost Per Firm
                         Rule Case Total Industry Cost
                        Rule Case Average Cost Per Firm
                            Average Change in Cost

                                      (a)
                                      (b)
                                    (c=b/a)
                                      (d)
                                    (e=d/a)
                                    (f=c-e)
                                       1
                                       6
                                   $193,999 
                                   $32,333 
                                   $36,289 
                                    $6,048 
                                   -$26,285
                                       2
                                       6
                                   $193,999 
                                   $32,333 
                                   $29,881 
                                    $4,980 
                                   -$27,353
                                       3
                                       6
                                   $249,099 
                                   $41,516 
                                   $31,378 
                                    $5,230 
                                   -$36,287
                                       4
                                       6
                                   $249,099 
                                   $41,516 
                                   $31,378 
                                    $5,230 
                                   -$36,287
                                       5
                                       6
                                   $290,998 
                                   $48,500 
                                   $34,476 
                                    $5,746 
                                   -$42,754
                                       6
                                       6
                                   $290,998 
                                   $48,500 
                                   $32,874 
                                    $5,479 
                                   -$43,021
                                       7
                                       6
                                   $346,098 
                                   $57,683 
                                   $54,505 
                                    $9,084 
                                   -$48,599
                                       8
                                       6
                                   $387,998 
                                   $64,666 
                                   $56,002 
                                    $9,334 
                                   -$55,333
                                       9
                                       6
                                   $443,097 
                                   $73,850 
                                   $57,499 
                                    $9,583 
                                   -$64,266
                                      10
                                       6
                                   $443,097 
                                   $73,850 
                                   $59,100 
                                    $9,850 
                                   -$63,999
                                     Total
                                       -
                                  $3,088,482 
                                   $514,747 
                                   $423,382 
                                   $70,564 
                                   -$444,183
                                 Annualized 3%
                                       -
                                   $301,542 
                                   $50,257 
                                   $41,480 
                                    $6,913 
                                   -$43,344
                                 Annualized 7%
                                       -
                                   $292,319 
                                   $48,720 
                                   $40,422 
                                    $6,737 
                                   -$41,983
Source: Column (a) from Table 4-19. Columns (b) and (d) from Table 4-18. 
Note: Values may not sum due to rounding.
Limitations of the Analysis 
Estimates of the number of potentially affected companies, the numbers of submissions, the cost per submission, and rule familiarization costs are very uncertain. In some cases, a more extensive analysis would not be able to remove much uncertainty. For example, impacts on the pace and type of innovation, and the health and environmental benefits of enhanced innovation, are extremely difficult to predict. In other cases, such as per-submission costs or numbers of submissions, a larger study might reduce uncertainty, but it is unlikely that the added information would have changed the rule decision. For example, an industry survey might show that per submission costs are higher or that there might be more submissions than estimated here. However, Tier I/Tier II per-submission costs will almost certainly continue to be lower than per submission costs for MCANs. Any change in submission numbers might be large percentage-wise but will be small absolutely, as will the change in quantified rule costs. 
Uncertainties in the Number of Tier I and Tier II Submissions 
Growth in Submissions 
The analysis assumes that the number of submissions will be relatively small for the foreseeable future: several submissions per year for the 2 microorganisms combined, rather than dozens or hundreds. However, it is difficult to forecast future submissions for intergeneric T. reesei and B. amyloliquefaciens, especially beyond the first few years. The year-to-year innovative activity leading to submissions depends on business decisions of a handful of firms, and can be affected by both internal technical success and external economic factors. Errors in assumed submission numbers would tend to affect benefits and costs in the same direction. 
Rule Case versus Base Case Total Submissions 
This analysis assumes that total T. reesei and B. amyloliquefaciens submissions will not be affected by the rule, and that the rule will merely result in some MCANs being replaced by Tier I/Tier II submissions, for a savings in submission costs. However, this might not be true. Instead, the lower Tier I/II submission costs could increase the total number of submissions for T. reesei and B. amyloliquefaciens. 
The number of Tier I submissions could be higher than estimated if companies are encouraged to submit a large number of low-cost Tier I notices, including companies who might not have submitted an MCAN in the base case. A review of past submitters of Tier I/Tier II notices reveals that while many Tier I/Tier II submissions are by past MCAN submitters, some have been submitted by companies that have never submitted an MCAN. It is not known whether any companies have been deterred from developing or using intergeneric T. reesei or B. amyloliquefaciens for TSCA applications because of the MCAN cost, but if so, they could enter some TSCA markets because of the rule. 
For large markets, such as T. reesei enzymes for ethanol manufacturing, it is unlikely that the MCAN cost will deter entry. However, it is possible that the rule will create a surge of Tier I submissions for small markets where it might not be profitable to submit MCANs. For example, a firm may develop a microorganism for non-TSCA uses, but there might also be potential TSCA uses. The firm might consider the profits from minor TSCA uses to be too low to justify an MCAN, but high enough to justify the simpler Tier I notice. Industry and agency costs for the extra submissions will be low on a per-submission basis. A surge of Tier I notices could increase submission costs, but will tend to increase the innovation benefits even more. 
The total number of notices could also be higher for the rule case than for the base case because companies must submit a new Tier I or Tier II notice (or amendment) for each new site using the same microorganism, while they submit only one MCAN per microorganism. These supplementary notices will be relatively inexpensive but will slightly increase rule case submission costs. 
For example, there may be potential T. reesei applications which are so different from historic uses of other microorganisms eligible for Tier I/Tier II exemptions that EPA's history of receiving only one Tier II submission is irrelevant. For example, a company might wish to provide the eligible microorganisms to toll manufacturers (for example, firms that manufacture the enzymes under contract with the submitter) or to customer sites that may not meet the Tier I containment requirements, and use a Tier II exemption for each site. This could increase both the Tier II exemptions and total exemption notices beyond the number assumed in the analysis. 
Rule Case MCAN Mix
The analysis assumes that if the intergeneric microorganism qualifies for an exemption, manufacturers will submit a Tier I or a Tier II notice, not an MCAN. However, it is possible that firms would make an MCAN submission even though the microorganism itself would qualify for an exemption. This could happen, for example, if the submitter believes that manufacturing conditions may not always meet the containment requirements for either exemption. 
For example, in one case, an MCAN submitter believed that the microorganism itself would qualify for a Tier I exemption, but did not know whether customer sites receiving the live microbe would meet Tier I containment criteria. The submitter stated that it would be burdensome to make this determination on a site-by-site basis. They also thought that Tier I regulatory requirements might make the commercial use less attractive to customers. As a result, they did not want to impose containment requirements beyond the normal for customer facilities (MCAN, 2010, p.7). 
In addition, microorganisms associated with Tier I or Tier II exemptions are not added to the TSCA inventory, so they remain "new." A company might decide to submit an MCAN once rather than repeatedly submit a Tier I or Tier II notification for each site where the organism is used. By contrast with exemption notices, with MCANs, once the company begins commercial manufacturing and submits an NOC, the specific microbial strain would be added to the TSCA inventory. At that point, the microorganism would be no longer "new" and would not require a submission if more sites manufacture the microorganism or the method of containment changes (unless the organism is subject to a Consent Order under TSCA section 5(e) or to a SNUR). 
Tier II Submissions
The analysis assumes that firms not meeting Tier I containment requirements will prefer a Tier II submission to an MCAN. However, some firms may perceive the cost of a Tier II submission to be only slightly lower than the cost of an MCAN. Because there is more flexibility post-EPA review with MCAN submissions, a company may believe the cost savings from submitting a Tier II rather than an MCAN do not justify the future costs of repeated Tier II submissions. This will tend to reduce quantified cost savings from the Rule.
EPA has received 19 Tier II submission (with amendments) since 1998.The analysis assumes that there will be 14 Tier II notices over a ten-year period. However, the actual number and timing of Tier II notices could be quite different. As with the Tier I assumptions, the assumed number of Tier II submissions may be too high or too low. 
 
If the total number of exemption notices stays the same, but more Tier I notices and fewer Tier II notices are submitted, the cost savings generated by the rule may be higher than estimated here, because Tier I submissions have much lower costs than Tier II submissions. Conversely, if more Tier II notices are submitted, the relatively small burden difference between MCANs and Tier II submissions will yield a smaller but still positive cost savings.
Firms Incurring Rule Familiarization Costs
The analysis assumes that a few firms will incur rule familiarization costs over ten years, and that the numbers of submitting firms will be the same in the base and rule cases. However, the advantages of Tier I and Tier II exemptions could induce firms to make T. reesei or B. amyloliquefaciens submissions under the rule case that would not have done so under the base case. For firms who would not have submitted MCANs under the base case, there will be rule familiarization costs associated with the Tier I or Tier II submission under the rule case. However, the expected profits should outweigh the costs associated with the additional Tier I and Tier II submissions -- otherwise firms will not make the additional submissions.
Uncertainties in Cost Estimates
The analysis assumes that the costs estimated for the 1997 biotechnology rule are a good basis for estimating costs of current submissions, after updating for inflation and the advent of electronic submissions. Resources were not available to update the 1997 MCAN submission costs, except to reflect inflation and electronic reporting. There is therefore uncertainty surrounding the cost estimates associated with MCAN, Tier I, and Tier II submissions. However, it is highly likely that at least some firms will find the cost savings sufficient to take advantage of the Tier I and possibly also the Tier II exemptions, resulting in a cost savings associated with the rule. 
Submission Costs
MCAN burden estimates may be underestimates if preparing a submission requires the development of more new information than was assumed in the original 1997 RIA, or if existing information was more difficult to compile than was originally estimated. 
In addition, these cost estimates may be understated if they do not adequately reflect pre-notice consultations with EPA, as well as phone calls with EPA and responding to EPA inquiries during submission review. EPA encourages, but does not require, pre-notice consultations. An industry consultant has recommended such consultations well in advance of the expected commercial start date (Glass, 2010), and firms have often availed themselves of this opportunity. Some consultations involve travel by senior staff to EPA's headquarters in Washington DC. In addition, industry staff may spend time compiling additional information to respond to inquiries by EPA staff during the review period. 
If costs of planning and preparing MCANs are higher than those estimated, it is unclear how this will affect cost savings due to the Tier II exemption, since the Tier II costs might also be higher than estimated. Compared to the Tier I exemption, however, higher MCAN costs will likely increase the cost savings from the rule. 
On the other hand, MCAN submission costs may be lower than those estimated, if firms make more than one submission for the same species. If the firm and EPA are familiar with the species, the firm may save time preparing the submission, have less need to consult with EPA, and spend less time answering EPA questions. This could reduce the advantages of a Tier II or Tier I exemption compared to an MCAN. 
In addition to the cost savings from electronic submissions to EPA, advances in information technology may have reduced the costs of some steps in preparing a submission.
The analysis assumes that the cost of determining whether containment qualifies for the Tier I exemption is negligible. This may not be true for some firms, such as those supplying live microorganisms to customers. Higher Tier I costs will tend to somewhat reduce the net benefits of the rule.
The analysis assumes that cost savings to industry and the Agency from electronic reporting are similar to savings estimated by EPA for conventional chemicals. However, biotechnology submissions are quite different from submissions for conventional chemicals, with less reliance on EPA forms and more pages in a typical submission. It is not clear whether the savings associated with electronic biotechnology submissions will be higher or lower than for conventional chemical submissions.
Recordkeeping and Rule Familiarization
The analysis assumes that MCAN recordkeeping costs are the same as Tier I and Tier II recordkeeping costs (1 hour). However, because MCANs are far larger and more complex than Tier I notices, and somewhat more complex than Tier II submissions, it is unlikely that the recordkeeping burden is truly the same for all types of notices. A more tailored estimate of MCAN, Tier I and Tier II recordkeeping costs may slightly increase the cost-savings from the rule. 
The rule familiarization cost of 20 hours per firm may be an over- or underestimate. Such costs will be company-specific. For example, instead of a cost, there might be a cost savings (negative rule familiarization cost) for Tier I/II submitters who otherwise would have had to learn about the more complex MCANs. The rule familiarization cost may be an overestimate for Danisco/Genencor and Novozymes since they are likely to be familiar with the rule concepts as a result of their roles as submitters of the applications that triggered the current rulemaking. By contrast, if firms enter the TSCA biotechnology market with Tier I notices solely due to the potential T. reesei or B. amyloliquefaciens exemptions, their rule familiarization costs attributable to the rule could be higher, since they might have to learn about TSCA biotechnology regulation in general as well as about the rule. In any case, even if rule familiarization costs are somewhat different than estimated, they are low, one-time costs and unlikely to be major costs for any submitter. 
The analysis assumes that only firms making submissions have rule familiarization costs. It is possible that some firms working with T. reesei or B. amyloliquefaciens for non-TSCA uses will consider making a submission as a result of the rule, learn about the rule, and then decide not to make a submission of any kind. If such firms exist, it will increase rule familiarization costs without the subsequent benefits of a submission. 
Industry Overhead Rates
The industry cost estimates rely on loaded wage rates. The wages and fringe benefits are based on Bureau of Labor Statistics data and should be reasonably accurate. However, the authors of this analysis are not aware of any similarly reliable data for industry overhead rates. This analysis assumes that the overhead for General and Administrative costs is 17 percent of wages, which is consistent with the overhead rate used in other economic reports supporting TSCA rules. The actual overhead rate may vary by industry, by company, by the process within the company, and by accounting methods; no single rate will be correct for all submitters. 
Health, Environmental, Consumer and Other Benefits
The rule will decrease the burden to industry of developing new intergeneric strains of T. reesei and B. amyloliquefaciens. However, the main benefits of the rule could well be the reduced delay in developing and bringing to market products from the modified T. reesei and B. amyloliquefaciens organisms (which may be the organisms themselves), and the environmental and consumer benefits that are generated by the use of these products. Some of these benefits will be captured by industry through revenues, some will be enjoyed by consumers in the form of reduced prices or enhanced product performance, and some will accrue to the general public in the form of improved health or environmental quality, relative to the situation in the absence of the rule.
It was not feasible to quantify these innovation and environmental benefits for this analysis, but they could very well be greater in magnitude than the quantified cost savings. Section 5.1 qualitatively describes the potential benefits to industry and consumers of increases in innovation and reduced delays of bringing a product to market. The potential environmental, health, and consumer benefits of new intergeneric strains are described in Sections 5.2 and 5.3. 
Benefits of Reduced Delays in Bringing Products to Market and Increased Market Entry
The rule is expected to reduce delays and costs resulting from the MCAN submission lead time and cost. The most dramatic differences are between the MCAN and the Tier I notice, due to differences in advance notification (90 days for the MCAN versus 10 days for the Tier I) and submission content (often just 2-3 simple pages for a Tier I notice, compared to possibly hundreds of pages for the MCAN, many of them containing scientific and engineering information tailored to the microorganism and its specific use). 
Reduced Delays in Marketing a Product 
Under the base case, if a company identifies a promising strain of an organism, it must prepare an MCAN, file it, and wait for the review period and determination before it can commercialize the new strain or, in some cases, before it begins full pilot-scale testing in a bio-refinery. The actual review period for an MCAN can take more than 90 days, if the submitter voluntarily suspends the review clock and/or if EPA extends the review period. EPA may extend the review period for up to 90 days for an MCAN and 45 days for a Tier II notice (EPA, 1997b, § 725.54 and § 725.56).
Because of the shorter regulatory review period for a Tier I or Tier II notice, compared to an MCAN, industry may avoid costs in the form of lost or delayed profits that result from the postponement of product commercialization under the base case. If companies can plan well ahead, they may build the MCAN lead times into product development schedules, and their delay may be less than the review time (however, there may be costs to such planning, such as more internal coordination and more pre-notice consultations with EPA which may involve time and travel for submitter senior staff). Some markets for microbial products may be seasonal, so that a 90-day review period or an unexpected extension of the review period may delay manufacturing by several additional months if the submitter misses a seasonal market. Decreasing the delays in manufacturing and profit-making increases the company's incentive to develop new intergeneric strains. 
Industry trade associations called the current MCAN system "an obstacle to innovation and implementation" for bio-based products and biofuels (BIO and EPA, 2009, slide 8). The 2010 industry letter supporting the T. reesei application described the current process as cumbersome and emphasized that the eligibility for exemption will allow companies to test multiple strains in parallel. It asserted that listing T. reesei as a candidate for exemption "will enhance the rate of innovation by allowing companies to create and test a number of strains in parallel rather than the current, cumbersome, step-by-step process in which a company assembles a promising candidate strain, prepares and then files an MCAN, waits for the 90-day notification period/`dropped from review' status, and then goes for full-scale, in-biorefinery testing. The ability to test multiple candidates will allow the industry to reach full potential in shorter time..." (BIO and ETA, 2010, p.7). 
Use of Tiered exemptions could expedite the process of identifying the best strains. The industry letter stated that the Tiered exemptions would reduce the time interval from innovation to implementation, and allow for smoother project planning and execution (BIO and ETA, 2010, p.7). 
Reduced Delays in Large Scale Testing
As indicated in the 2010 industry letter (BIO and ETA, 2010), the MCAN review period may delay not only bringing a product to market, but also large scale testing before commercialization. Microorganisms often must be tested in larger fermentation facilities, often called "pilot scale" or "demonstration scale" plants, to determine whether they will be cost-competitive at commercial scale. TSCA section 5(h)(3) provides an exemption from notification for R&D uses. However, such a use would have to meet the requirements in the 1997 biotechnology rule, section 725.234, to qualify for the R&D exemption. For example, the use must be "solely for R&D" and must be contained within a structure. Microorganism modifications not meeting the requirements must go through the submission process for a commercial product even though, for the purpose of determining commercial viability, they are still in a testing stage.
In the absence of the rule, a company could opt to file multiple MCANs simultaneously, thereby incurring the costs of multiple MCANs but minimizing delays of manufacturing, since it will be clear within one review period whether one or more of the genetic modifications being submitted are commercially viable. Alternatively, the company could file only one MCAN at a time. This will reduce the potential costs of submission, since the company will be able to stop submitting MCANs as soon as a viable intergeneric product was found, but it could slow down innovation, since the company might not file the next MCAN until they know the results of large scale testing of the prior MCAN microorganism (BIO and ETA, 2010). 
Effects of Submission Costs on Market Entry
Some potential TSCA markets may be too small or uncertain to justify the expense of an MCAN. In some cases, in the absence of Tier I/Tier II exemptions, biotechnology companies may choose to not develop an intergeneric product due to the burden associated with preparing an MCAN. For example, a company may choose to use a naturally-occurring microorganism or a company may modify how it develops and applies a microorganism (EPA, 1997a). 
In some cases, firms may focus intergeneric research on other host microbes that are already listed as candidates for Tiered exemptions. For example, it is possible that companies have chosen to emphasize developing intergeneric strains of the B. amyloliquefaciens substitutes, B. licheniformis and B. subtilis, which are currently eligible for Tier I and Tier II exemptions, instead of B. amyloliquefaciens. This may have slowed industry development of intergeneric B. amyloliquefaciens below what it otherwise might have been. Tier I certifications have been submitted for both B. licheniformis, and B. subtilis in recent years. However, no MCAN has been submitted for B. amyloliquefaciens since FY1998.
Any benefits of new intergeneric T. reesei or B. amyloliquefaciens are likely to come sooner if the organism qualifies for an exemption, especially a Tier I exemption. In addition, it is possible that, due to the exemptions, some improved microorganisms would be developed that otherwise would not be developed at all. 
Rule Case Benefits
Under the rule case, the shorter review periods (45 days for the Tier II exemption and 10 days for the Tier I exemption) could have reduced delay costs. This is especially true for Tier I notices which, unlike MCAN and Tier II notices, are not subject to suspensions or extensions of the review period. 
The eligibility for Tier I/Tier II exemptions shortens the notice period for T. reesei QM6a and B. amyloliquefaciens. The Tier I notice requires only a 10-day advance notification and does not require EPA approval before commercial manufacturing. Using the Tier I exemption will potentially allow companies to test multiple strains at once, expediting the testing process and allowing for the product to enter the market more quickly. The Tier II notice also decreases the review period, to 45 days (extendable to 90 days), but requires EPA approval prior to commercial manufacturing. Thus, the Tier II exemption may be somewhat less important than the Tier I option in encouraging innovation.
Although the Tier II exemption has seldom been used historically (see Table 4-9), this exemption still has a role in encouraging innovation, if the microorganisms are likely to be used in containment that does not meet the Tier I conditions. Overall, due to shorter notice or review periods, and simpler submissions, the rule is expected to increase the rate of innovation in the industry. 
Innovation delay costs are not quantified for this report. The 1997 RIA stated that it was not feasible to quantify the impact of these costs as part of aggregate industry costs (EPA, 1997a). The 2007 New Chemical ICR (EPA, 2007) presents a cost for delayed receipt of profits, but this cost was based on calculations for conventional chemicals originally made in 1983 (ICF, 1983), and may be quite different for microorganisms. 
Benefits to Consumers
Reduced delays in the marketing of products, and increased innovation will positively impact both downstream users and end consumers of the genetically modified microbes and products manufactured using these microbes. Reduced delays in bringing products to market bring value to potential consumers. Consumers will be able to start using the improved products sooner, and potentially start sooner to reap the direct and indirect environmental and health benefits of the rule discussed in Sections 5.2 and 5.3. The lower costs and reduced lead times for Tier I/Tier II exemptions are expected to encourage the development of new intergeneric microbe strains. Successful innovation will lead to reduced cost and/or improved performance of enzymes and other products made using the microbes, relative to the base case. Ultimately there will be relatively lower prices and/or improved performance for end products such as fuel ethanol, textiles, and detergents. 
Health, Environmental and Other Benefits of Improved Microbe Strains
Benefits of Improved T. reesei Strains
The rule could lead to more cost-effective manufacturing of enzymes by T. reesei hosts, including manufacturing of enzymes native to other microbial genera. In cases where enzyme costs are reduced, the industry may realize some of the savings in the form of profits and some savings may be passed on to industrial customers, and to institutional, and household consumers. 
Reduced enzyme cost would tend to expand the use of enzymes and thus their environmental and other benefits. Depending on the application, enzymes may replace harsher chemicals, allow use of lower temperatures (less energy), allow recycling of waste biomass, and have other environmental benefits. For example, cellulases from T. reesei are used in the pretreatment and finishing of textiles. The use of enzymes in textile pretreatment may reduce the amount of wastewater generated, and the amount of energy and water used by textile plants that use traditional methods of treating garments (Blackburn, 2009). Cellulases may be used instead of sludge-producing pumice stones in denim finishing to create a stonewashed affect. The enzymes may also be used as substitutes for hydrogen peroxide in bleach clean-up, reducing the amount of wastewater produced, and/or the amount of energy and water used in fabric pretreatment (Blackburn, 2009). 
The 2010 industry letter supplementing the original T. reesei petition highlights the conversion of biomass to sugars as an area of innovation. "One can ferment these saccharides/oligosaccharides to ethanol, acids and other metabolites or use them directly in organic synthesis" (BIO and ETA, 2010, p.7). Faster development of new T. reesei strains due to the Tiered exemptions -- especially Tier I -- could reduce the costs of enzymes used to degrade biomass, and thus promote use of biomass as a feedstock for the manufacturing of ethanol and other chemicals. The cost reductions will result from increases in enzyme yields and development of more effective enzyme complexes using genetically modified T. reesei strains (BIO and ETA, 2010, p.8).
An important use for T. reesei enzymes is in ethanol manufacturing. Other things being equal, more cost-effective enzymes from T. reesei may reduce the cost of manufacturing corn-based and cellulosic ethanol. The benefits of cellulosic ethanol are discussed in the next section. 
Benefits of Cellulosic Ethanol
T. reesei enzymes are used in the manufacturing of cellulosic ethanol. For example, Genencor's Accelerase(R) 1500 enzyme complex hydrolyzes biomass into fermentable sugars (Genencor, 2009). 
Cellulosic ethanol is a second-generation biofuel that is made from cellulosic biomass that comes from feedstocks like corncobs, switch grass, woodchips, and other inedible plant fibers. Tiered exemptions for T. reesei are expected to encourage the development of new T. reesei strains and thus indirectly reduce the costs of manufacturing cellulosic ethanol and expand manufacturing, compared to the current biotechnology regulations. Use of cellulosic ethanol in place of gasoline and corn-based ethanol is expected to lead to relatively lower greenhouse gas emissions. (As elsewhere in this analysis, the benefits of the rule case are relative to the base case in which T. reesei is not listed as a candidate for exemption. Other factors could overwhelm the effects of changed EPA biotechnology regulations on cellulosic ethanol manufacturing volume or price.) 
A US Department of Energy life cycle assessment found that greenhouse gas emissions from the use of cellulosic ethanol are 87 percent lower than emissions from gasoline (DOE, 2007). In comparison, corn-based ethanol has emissions reduction between 18 and 28 percent when compared to gasoline (DOE, 2007). A 2010 US EPA report expects a 21 percent reduction greenhouse gas emissions if corn-based ethanol is used as opposed to gasoline (EPA, 2010a). The same report estimates a 72 to 110 percent reduction if switchgrass-based ethanol is used instead of gasoline and a 92 to 129 percent reduction in greenhouse gas emissions if corn stover (stalks, leaves etc.) is used (EPA, 2010a). Increased use of cellulosic ethanol is expected to result in benefits, since greenhouse gas emissions are known to contribute to global climate change, which has many potential environmental and health risks. 
It was not feasible for this report to quantify the extent to which greenhouse gas emissions might be abated by the commercial use of cellulosic ethanol, and the associated risk reduction. However, some potential health and environmental benefits are discussed qualitatively in the next section. Other benefits of substituting cellulosic ethanol for other fuels are mentioned in section 7.
Environmental and Health Impacts of Global Climate Change
If innovations in T. reesei strains used in cellulosic ethanol manufacturing lead indirectly to a reduction in greenhouse gas emissions, relative to the base case, this would tend to mitigate global climate change and thus reduce the environmental and health impacts associated with global climate change. 
A significant benefit of the Tier I/Tier II exemptions to health and safety could occur if innovations in T. reesei strains used in ethanol manufacturing lead indirectly to a reduction in greenhouse gas emissions. The relative reduction in greenhouse gas emissions would be due to increased replacement of conventional gasoline and corn-based ethanol by cellulosic ethanol. Many factors other than biotechnology regulation affect energy markets, and it is not possible to forecast the extent to which making T. reesei QM6a eligible for the exemptions might lead to greater use of cellulosic ethanol, compared to the base case. However, the summary below indicates the potential importance of health and environmental benefits if cellulosic ethanol does become more competitive in part as a result of Tier I/Tier II exemptions.
It is difficult to assess the human health and environmental risks associated with global warming because of the interdependency and complexity of the associated factors. However, the following text briefly summarizes information found in the October 2018 report from the International Panel on Climate Change (IPCC) concerning the environmental impacts of climate change. Warming from anthropogenic emissions up to the present will persist for centuries to millennia to come, leading to long-term changes in the climate system (IPCC, 2018). Risks include sea level rise, droughts and precipitation deficits, species loss, extreme weather events, and ocean acidification. Populations with a higher likelihood of experiencing negative effects include disadvantaged and vulnerable populations, some indigenous peoples, and localities that depend on agricultural or coastal livelihoods (IPCC, 2018).
Other Benefits of Cellulosic Ethanol
Domestic cellulosic ethanol manufacturing may decrease US dependency on foreign oil supplies. Unlike corn ethanol, the feedstocks used in cellulosic ethanol manufacturing (for example corncobs, or crops grown for specifically for ethanol manufacturing, such as grasses or wood) are not human food crops (DOE, 2009b), so increased demand for cellulosic ethanol feedstock may put less upward pressure on food prices. These crops may be grown on land that is unsuitable for growing other crops and it generally takes less energy to manufacture cellulosic ethanol biomass than sugar and starch based biomass (DOE, 2009b). In addition, the rule may contribute to US progress toward meeting the goals of the Energy Independence & Security Act (EISA) of 2007 which include US consumption of 17 million gallons of cellulosic ethanol in 2014 and 3 billion gallons of cellulosic ethanol in 2015 (EPA, 2013 and EPA, 2010b).
Benefits of Improved B. Amyloliquefaciens Strains
As with T. reesei, the lower costs and reduced lead times for Tier I/Tier II exemptions are expected to encourage the development of new intergeneric B. amyloliquefaciens strains. The Rule could lead to more cost-effective manufacturing of enzymes by B. amyloliquefaciens hosts, including the manufacturing of enzymes native to other microbial genera. Ultimately there could be relatively lower prices and/or improved performance for end products such as laundry detergents. There could also be indirect benefits to health and the environment. For example, B. amyloliquefaciens is used to manufacture amylases and proteases for commercial laundry detergents (LSBU, 2004; Aehle, 2007, p.186). Novozymes asserts that the use of enzymes in laundry detergents as opposed to traditional chemicals (such as surfactants) has several environmental benefits including energy savings by enabling lower wash temperatures and the compaction of the product, reducing the amount of packaging used (Novozymes, 2010b). It also asserts that enzymes are biodegradable, have no negative environmental impact on sewage treatment processes, and do not present a risk to aquatic life (Novozymes, 2010b).
Uncertainties Regarding Innovation Benefits
The analysis does not quantify innovation benefits, but does suggest that they will be significant. However, technological change is also advancing in competing biotechnology and non-biotechnology areas. It is possible that other technical progress will make genetically modified T. reesei and B. amyloliquefaciens commercially less important than is implied in this analysis. For example, advances in non-biological ways of converting biomass to fuel or in the use of algae to manufacture biofuels might make T. reesei use in ethanol manufacturing less important. On the other hand, the 2 microorganisms might find uses in areas not explored for this analysis. In an uncertain world, the rule opens the door to faster development of new technologies but does not guarantee technical or commercial success.

Agency Cost 
This chapter analyzes the changes in Agency processing cost associated with listing T. reesei QM6a derivatives and B. amyloliquefaciens at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions. EPA calculates the incremental cost, or savings, of the exemptions by comparing the cost of processing a Tier I or Tier II submission with the cost of processing an MCAN.
Agency Cost per Submission 
EPA utilizes estimates of the change in Agency cost from the Fees for the Administration of the Toxic Substances Control Act Rule. Specifically, EPA's cost to review and process MCAN, Tier I, and Tier II submissions is assumed to be represented by its costs for a larger category of similar TSCA section 5 notices that includes these three submission types. EPA estimated its total annual costs for processing, reviewing, and making determinations under TSCA section 5 between fiscal years 2019 and 2021. 
EPA estimated its direct and indirect costs for reviewing PMNs, SNUNs, and MCANs to be $18,934,659 (2016$) per year during this period, and assumed that an average of 462 PMNs, SNUNs, and MCANs will be submitted per year (EPA, 2017). This yields an average Agency cost of approximately $41,000 apiece for reviewing and processing PMNs, SNUNs and MCANs. EPA estimated its direct and indirect cost for reviewing section 5 Exemptions, including Tier I and Tier II submissions, as $3,148,566 ($2016) over the same period. During this period, EPA assumed an average of 560 exemptions notices would be submitted per annum, yielding a cost of $5,622 ($2016) per exemption. 
This analysis updates these figures to $2018 using an employment cost index from BLS for professional and related occupations (BLS, 2019b). After indexing, EPA estimates the agency cost of processing and reviewing an MCAN to be approximately $44,000 ($2018) and the cost of processing and reviewing Tier I and Tier II Exemptions to be approximately $6,000 ($2018).
Table 6-1 presents the average agency cost per submission for MCAN, Tier I, and Tier II submissions as the estimated cost of processing and reviewing less the user fee paid by industry for submission. 
Table 6-1: Agency MCAN and Tier I/Tier II Total Cost per Submission
                              Type of Submission
                          Agency Cost Per Submission
                                User Fee Income
                           Total Cost per Submission
                            MCAN - Large Businesses
                                   $44,000 
                                   $16,000 
                                   $28,000 
                            MCAN - Small Businesses
                                   $44,000 
                                    $2,800 
                                   $41,200 
                          Tier II - Large Businesses
                                    $6,000 
                                    $4,700 
                                    $1,300 
                          Tier II - Small Businesses
                                    $6,000 
                                     $940 
                                    $5,060 
                                    Tier I
                                    $6,000 
                                      $0 
                                    $6,000 

Agency Total Cost
This analysis estimates total agency cost by combining the agency cost per submission figures presented in the previous section with the figures estimating number of anticipated submissions presented in Chapter 4 (specifically in Table 4-13) for the baseline and rule cases, respectively.  
As discussed in Section 4.5.3 and presented in Table 4-13, EPA anticipated a total of 63 MCAN/Tier I/Tier II submissions will be filed over the next 10 years. In the baseline scenario, EPA anticipates 34 MCAN submissions from large businesses and 29 MCAN submissions from small businesses for T. reesei QM6a derivatives and B. amyloliquefaciens. In the rule scenario, EPA anticipates 49 Tier I submissions, 10 Tier II submissions from large businesses and 4 Tier II submissions from small businesses. As detailed in Section 4.5, these projections reflect a 10 percent assumed annual increase in the combined total of MCAN, Tier I, and Tier II submissions. 
Table 6-2 gives the expected number of submissions and agency cost associated with both the baseline (no rule) and rule scenarios, projected over ten years. The total ten-year savings to Agency attributable to the rule is estimated to be $1.8 million before discounting. Annualized cost savings range from $178 thousand with a three percent discount rate to $173 thousand with a seven percent discount rate. 


Table 6-2: Agency Cost Reduction due to Rule - Thousands of Dollars ($2018) (All Years)
                                     Year
                                   Base Case
                                   Rule Case
                          Total Change in Agency Cost

                               MCAN Sub-missions
                          Tier I & II Submissions
                                   MCAN Cost
                             Tier I & II Cost
                               Total Agency Cost
                               MCAN Sub-missions
                          Tier I & II Submissions
                                   MCAN Cost
                             Tier I & II Cost
                               Total Agency Cost

                                       1
                                       4
                                       0
                                     $138 
                                      $0 
                                     $138 
                                       0
                                       4
                                      $0 
                                     $19 
                                     $19 
                                     -$119
                                       2
                                       4
                                       0
                                     $138 
                                      $0 
                                     $138 
                                       0
                                       4
                                      $0 
                                     $19 
                                     $19 
                                     -$119
                                       3
                                       5
                                       0
                                     $166 
                                      $0 
                                     $166 
                                       0
                                       5
                                      $0 
                                     $25 
                                     $25 
                                     -$141
                                       4
                                       5
                                       0
                                     $166 
                                      $0 
                                     $166 
                                       0
                                       5
                                      $0 
                                     $25 
                                     $25 
                                     -$141
                                       5
                                       6
                                       0
                                     $208 
                                      $0 
                                     $208 
                                       0
                                       6
                                      $0 
                                     $31 
                                     $31 
                                     -$176
                                       6
                                       6
                                       0
                                     $208 
                                      $0 
                                     $208 
                                       0
                                       6
                                      $0 
                                     $31 
                                     $31 
                                     -$176
                                       7
                                       7
                                       0
                                     $236 
                                      $0 
                                     $236 
                                       0
                                       7
                                      $0 
                                     $36 
                                     $36 
                                     -$199
                                       8
                                       8
                                       0
                                     $277 
                                      $0 
                                     $277 
                                       0
                                       8
                                      $0 
                                     $42 
                                     $42 
                                     -$234
                                       9
                                       9
                                       0
                                     $305 
                                      $0 
                                     $305 
                                       0
                                       9
                                      $0 
                                     $48 
                                     $48 
                                     -$256
                                      10
                                       9
                                       0
                                     $305 
                                      $0 
                                     $305 
                                       0
                                       9
                                      $0 
                                     $48 
                                     $48 
                                     -$256
                                     Total
                                      63
                                       0
                                    $2,147 
                                      $0 
                                    $2,147 
                                       0
                                      63
                                       0
                                     $327 
                                     $327 
                                    -$1,820
                                 Annualized 3%
                                       -
                                       -
                                     $210 
                                      $0 
                                     $210 
                                       -
                                       -
                                      $0 
                                     $32 
                                    $31.87 
                                     -$178
                                 Annualized 7%
                                       -
                                       -
                                     $203 
                                      $0 
                                     $203 
                                       -
                                       -
                                      $0 
                                     $31 
                                    $30.78 
                                     -$173

Source: Number of submissions, Number of submissions Table 4-13. Dollars per submission, Table 6-1. 
Note: Yearly, total, and average costs are calculated before discounting


Uncertainties in Agency Cost Estimates
Uncertainties about the number and mix of future submissions were discussed in 4.8.1. Changes in estimated submissions could cause year-to-year Agency cost-savings to be higher or lower than estimated here.
Cost estimates associated with the administration of TSCA section 5 are based on administrative cost estimates from the Fees for the Administration of the Toxic Substances Control Act Rule and on best professional judgement. To the extent that the Agency could pull data from its various systems to help inform cost estimates, the Agency did so. However, it is possible that future time burden and labor costs may not align with the agency's projections. 
But, given that MCANs will be replaced by exemption notices, which are for low-risk, relatively familiar organisms; these MCANs are likely to have below-average review costs. Depending on the mix of future submission, the Agency cost-savings could be lower than estimated, especially for MCANs as compared to Tier I notices. 

Summary of Social Costs and Benefits
Social Costs and Benefits 
This chapter summarizes the social costs and benefits generated by the rule that will list T. reesei QM6a derivatives and B. amyloliquefaciens at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions. The rule is expected to generate a cost savings for organizations that, in the absence of the rule, would submit MCANs for new intergeneric T. reesei or B. amyloliquefaciens strains. 
As was shown in Table 4-17 and Table 4-18, EPA expects the rule to result in a reduced industry burden of  27,864 hours but a cost savings of $2.7 million (before discounting) over the ten-year period. In addition to the immediate cost savings from submitting a Tier I or Tier II notice as opposed to an MCAN, the reduced cost and review times may increase innovation in the biotechnology industry. Ways in which reporting costs and lead times may affect the industry R&D process and the potential benefits of enhanced innovation are discussed in Chapter 5 of this report. There may also be environmental and health benefits resulting from improved innovation affecting areas such as cellulosic ethanol manufacturing. As discussed in Section 2.4 of this report, costs savings generated by the rule may be passed on to customers, reducing the cost of end products. The rule is expected to reduce Agency cost by $1.8 million (before discounting) over the ten-year period, as calculated in Chapter 6.
Quantified Social Costs 
This section summarizes the quantified costs savings to society. 
As detailed in Table 7-1, over the ten-year period the total burden to both industry and EPA under the baseline scenario would be $5.2 million. In the rule scenario, total burden would be $751 thousand, leading to $4.5 million in cost savings to society. The annualized cost savings to society are estimated to be approximately $438 thousand and $424 thousand per year at three percent and seven percent discount rates, respectively. 
Table 7-1: Change in Total Costs to Society Due to Rule
Year
Base Case Burden
(Thousands of $2018)
Rule Case Burden
(Thousands of $2018)
Change from Base Case 
(Thousands of $2018)
Year 1
$332 
$56 
-$277
Year 2
$332 
$49 
-$283
Year 3
$415 
$57 
-$359
Year 4
$415 
$57 
-$359
Year 5
$499 
$66 
-$433
Year 6
$499 
$64 
-$434
Year 7
$582 
$91 
-$491
Year 8
$665 
$98 
-$566
Year 9
$748 
$106 
-$642
Year 10
$748 
$107 
-$640
Total
$5,235 
$751 
-$4,485
Annualized at 3%
$511 
$73 
-$438
Annualized at 7%
$493
$71 
-$424
   Source: Table 4-18 and Table 6-2
   Note: Annual, total and average costs are taken before discounting
   
   
   
   
   
Health, Safety, and Environmental Costs and Benefits
Benefits of New Intergeneric T. reesei and B. amyloliquefaciens
Increased market entry and reduced delays in bringing products to market are expected to reduce the costs and/or improve the performance of enzymes made using intergeneric T. reesei and B. amyloliquefaciens, in areas such as ethanol manufacturing, the pretreatment and finishing of textiles, and in detergents. As stated in Section 5.2, there are several environmental benefits to using enzymes in these applications as opposed to traditional chemicals. The use of cellulose T. reesei enzymes in textile pretreatment may reduce the amount of waste water generated, and the amount of energy and water used by textile plants that use traditional methods of treating garments (Blackburn, 2009). The use of enzymes from B. amyloliquefaciens in laundry detergents as opposed to traditional chemicals (such as surfactants) has several environmental benefits including energy savings by enabling lower wash temperatures and the compaction of the product reducing the amount of packaging used (Novozymes, 2010b). In addition, enzymes are biodegradable, and are said by their suppliers to have no negative environmental impact on sewage treatment processes and to present no risk to aquatic life (Novozymes, 2010b). To the extent that intergeneric T. reesei and B. amyloliquefaciens are more efficient at producing certain enzymes than other microorganisms, the cost of some enzymes will decrease. Decreased cost and/or enhanced enzyme performance make it more likely that companies will use enzymes as opposed to more environmentally harmful substitutes. T. reesei has particular promise in the area of cellulosic ethanol manufacturing, discussed below.
Benefits of Reducing the Cost of Cellulosic Ethanol 
Innovation resulting from the rule is likely to decrease the cost of enzymes manufactured with T. reesei, and therefore reduce the cost of cellulosic ethanol, compared to the base case. Because cellulosic ethanol has lower greenhouse gas emissions than gasoline and corn-based ethanol, more use of cellulosic ethanol may lead to a reduction in greenhouse gas emissions relative to the base case. The potential negative environmental and health impacts of global warming are discussed in detail in Section 5.2. While it is well beyond the scope of this report to quantify the potential benefits of greenhouse gas reductions as a result of the rule, manufacturing and use of cellulosic ethanol appears to generate significantly less greenhouse gas emissions than manufacturing and use of gasoline and corn-based ethanol. Cellulosic ethanol is also thought to have additional benefits to society compared to both gasoline and corn-based ethanol, such as possibly decreased dependence on foreign oil, and less pressure on food prices versus corn ethanol. 
Rule Costs and Risks
There is not expected to be any increase in health or environmental risk associated with the rule, as discussed in Chapter 3. EPA's risk assessments show that both T. reesei strain QM6a and its derivatives and B. Amyloliquefaciens microorganisms are not pathogenic or toxigenic and that they pose little risk to human health or the environment. On the contrary, as discussed earlier in this chapter, there may be health and environmental benefits from faster development of these microorganisms to better manufacture enzymes and other chemicals. 
There are no net quantified rule costs because the rule is expected to be cost-savings for both industry and EPA, as described earlier in this chapter.
Additional Analyses
Regulatory Flexibility Act (RFA)
The RFA of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities. The RFA requires agencies to prepare an initial and final regulatory flexibility analysis for each rule unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.
The RFA relies on the definition of "small business" found in the Small Business Act, which authorizes the Small Business Administration (SBA) to develop definitions for "small business" for industries in each North American Industry Classification System (NAICS) code. These definitions can be based either on a company's number of employees or its sales, depending on SBA's criteria for that industry. For this analysis, EPA used the SBA definitions published in February 2016.
To identify the potential universe of companies that may be impacted by this rule, EPA included any firm that has made a non-confidential MCAN, Tier I, or Tier II submission as listed in Table 4-10 and on EPA's website, for a list of 22 unique firms. From this list, EPA relied on Dunn and Bradstreet's Hoover's database to identify the ultimate parent company of each firm, as well as the parent company's revenue and the number of workers employed by the ultimate parent. These 20 companies had a total of 17 unique parent companies in 13 unique NAICS codes.  Table 8-1 presents the 13 NAICS codes and the SBA size thresholds for a small business.
Table 8-1: Ultimate Parent NAICS codes and 2016 SBA definitions for all Companies 
                          Ultimate Parent NAICS Code
                                  Description
                                Number of Firms
                           Small Business Threshold 
                         (Sales, Millions of Dollars)
                           Small Business Threshold
                             (Number of Employees)
                                    311221
                               Wet Corn Milling
                                       1
                                       
                                     1,250
                                    311999
                  All Other Miscellaneous Food Manufacturing
                                       2
                                       
                                      500
                                    325193
                          Ethyl Alcohol Manufacturing
                                       1
                                       
                                     1,000
                                    325199
               All Other Basic Organic Chemical Manufacturing  
                                       2
                                       
                                     1,250
                                    325320
            Pesticide and Other Agricultural Chemical Manufacturing
                                       1
                                       
                                     1,000
                                    325411
                     Medicinal and Botanical Manufacturing
                                       1
                                       
                                     1,000
                                    325412
                   Pharmaceutical Preparation Manufacturing
                                       2
                                       
                                     1,250
                                    325520
                            Adhesive Manufacturing
                                       1
                                       
                                      500
                                    334510
         Electromedical and Electrotherapeutic Apparatus Manufacturing
                                       1
                                       
                                     1,250
                                    334511
Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
                                       1
                                       
                                     1,250
                                    541611
     Administrative Management and General Management Consulting Services
                                       1
                                      15
                                       
                                    541711
                   Research and Development in Biotechnology
                                       2
                                       
                                     1,000
                                    551112
                      Offices of Other Holding Companies
                                       1
                                     20.5
                                       
 
To size the 17 parent companies, EPA compared the revenue and employment data in Hoovers with the SBA small business definitions for each company's respective NAICS code. Of the 17 firms, a total of 9 (53%) were found to be small.   
The rule is expected to result in an overall cost-savings to industry. Small businesses that are able to submit one Tier II notice instead of an MCAN will realize a cost savings. MCANs for small businesses are anticipated to cost $41,900 while Tier II notices for small businesses are anticipated to cost $21,631. These savings are expected to exceed additional rule familiarization costs associated with this rulemaking ($1,602 per firm). Savings are larger for small businesses that can submit a Tier I notice ($1,497) in lieu of an MCAN. Therefore, EPA does not anticipate any small businesses will face any net increases in costs from the rule.  
Table 8-2 summarizes the estimated cost impacts on the 9 small firms anticipated to be affected by the rule. Since EPA does not anticipate any small businesses will face any net increases in costs from the rule, there are no impacts that exceed 1 percent of sales.   
Table 8-2: Estimate of Impacts on Small Businesses 
                             Economic Impact Type
                           Cost-to-Sales Percentage
                               3% Discount Rate
                               7% Discount Rate
                                       
                                       
                                    Number
                                    Percent
                                    Number
                                    Percent
                                 Higher Impact
                                    > 3%
                                       0
                                      0%
                                       0
                                      0%
                                 Lower Impact
                                   1% to 3%
                                       0
                                      0%
                                       0
                                      0%
                              Less than 1% Impact
                                    < 1%
                                       9
                                     100%
                                       9
                                     100%
                                     Total
                                      --
                                       9
                                    100% 
                                       9
                                    100% 

 Unfunded Mandates Reform Act (UMRA) 
Federal agencies are required to assess the effects of federal regulations on state, local, or tribal governments, and on the private sector under Title II of the UMRA of 1995. In particular, UMRA requires that agencies prepare a written statement to accompany any rulemaking that "includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more (annually adjusted for inflation) in any one year" (Section 202(a)). 
This report estimates that the rule will not cost the private or public sectors $100 million or more in any one year. As shown in Table 4-18, this report estimates that a total saving to industry of $2.67 million (before discounting) will be generated by the rule over a ten year period. Assuming a seven percent discount rate, the annualized saving for industry over the ten years is approximately $252 thousand per year. 
Furthermore, a search of submissions received by EPA through September 30, 2019, demonstrated that state, local, or tribal governments have never submitted an MCAN, Tier I or Tier II notification. However, in the future such governments might make submissions or use live microorganisms covered by the rule. An example could be used in cellulosic ethanol manufacturing. In such case, the rule will benefit the governments by improving the cost/effectiveness of the microorganisms. 
Paperwork Reduction Act (PRA) 
According to the PRA, 44 USC 3501 et seq., an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information that requires Office of Management and Budget (OMB) approval under the PRA, unless it has been approved by OMB and displays a valid OMB control number. The information collection requirements related to the submission of Tier I and Tier II notices are already approved by OMB under the PRA, 44 USC. 3501 et seq. Those ICR documents have been assigned OMB control numbers 2070-0012 and 2070-0038, according to information on the EPA Biotech Form used for electronic submissions (EPA, 2009c). This rule will not impose any new requirements. Rather, it reduces the amount of required reporting by allowing firms to submit less information for qualifying microorganisms. 
The PRA mandates that federal agencies estimate the recordkeeping and submitting burden of a rule. In this context, the term "burden" is interpreted as the total time, effort, or financial resources expended by people to generate, maintain, retain, disclose, or provide information to or for a federal agency. This includes the time needed by regulated entities to review instructions and to develop, acquire, install, and use technology and systems to collect, validate, verify, and disclose information. Time taken to adjust existing ways to comply with any previously applicable instructions and requirements and to train personnel to respond to the information collection task is also included. In this section, burden hours for both industry respondents and the government are estimated.
Industry Burden
In this report, total industry burden hours represent the sum of time spent on preparing submissions and on other administrative activities. Industry respondents will spend time on the following activities associated with the biotechnology rule: rule familiarization, preparation and submission of certifications, and recordkeeping.
As derived in Chapter 4 of this report, the rule will result in a reduction of industry burden by 2,362 hours over ten years.
Government Burden
The government will also spend time processing, reviewing, and analyzing the information that will be collected. As derived in Chapter 6 of this report, the rule will cause a total incremental Agency savings of $1.8 million before discounting.
Executive Order 13132  -  Federalism
Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure "meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications." "Policies that have federalism implications" are defined in the Executive Order to include regulations that have "substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government." 
EPA has no information to indicate that any state or local government commercially manufactures or processes the microorganisms covered by this action. No MCANs, Tier I, or Tier II notifications have been submitted by state or local governments. If a state or local government were to use live microorganisms covered by this rule, they will likely benefit from reduced submission cost and/or improved cost-effectiveness of the microorganisms. 
Executive Order 13045  -  Children's Health
Executive Order 13045, "Protection of Children from Environmental Health Risks and Safety Risks" (62 FR 19885, April 23, 1997), requires that federal agencies examine the impacts of each regulatory action on children for any economically significant regulation that the Agency has reason to believe may disproportionately affect children.
The rule is not "economically significant;" it does not establish an environmental standard intended to mitigate health or safety risks and will not have an annual effect on the economy of $100 million or more. It is not expected to have any direct environmental or health impacts, and any indirect effects are expected to be beneficial. 
Executive Order 13175  -  Consultation and Coordination with Indian Tribal Governments
In the development of Federal policies that may have tribal implications, Agencies must establish regular and meaningful consultation and collaboration with tribal officials to strengthen the US government-to-government relationships with Indian tribes, and to reduce the imposition of unfunded mandates upon Indian tribes.
A search of past submissions to EPA demonstrated that tribal governments have never submitted an MCAN, Tier I or Tier II notification. Thus, EPA has no information to indicate that any tribal government commercially manufactures the microorganisms covered by this action. If in the future tribal organizations use intergeneric microorganisms covered by the rule, or their enzyme products, to manufacture ethanol, the rule is likely to provide benefits in the form of more cost-effective microorganisms or enzymes. 
Executive Order 13211  -  Energy Supply, Distribution, or Use
Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) requires Agencies to prepare a Statement of Energy Effects for any action that is likely to have a significant adverse effect on the supply, distribution, or use of energy.
The Agency expects that if there is any effect of this rule on the Nation's energy supply, distribution, and use, it will be modest and positive; the rule may encourage development of more cost-effective technologies for fuel ethanol manufacturing. 
National Technology Transfer Advancement Act (NTTAA)
Section 12(d) of the NTTAA of 1995, Public Law No. 104-113, 12(d) (15 USC. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. 
This action does not involve any technical standards that will require Agency consideration of voluntary consensus standards pursuant to the NTTAA. It does not add any new regulatory requirements. Rather, it lists additional microorganisms eligible for exemptions under an existing biotechnology rule promulgated in 1997.
Executive Order 13563  -  Improving Regulation and Regulatory Review
Executive Order 13563, Improving Regulation and Regulatory Review (76 FR 3821, January 21, 2011), requires EPA to base regulations on the best available science, allow for public participation and the open exchange of ideas, promote predictability and reduce uncertainty, identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends, consider both the costs and benefits qualitatively and quantitatively and ensure regulations are accessible, consistent, written in plain language, and easy to understand.  
The rule establishes reporting and recordkeeping requirements that apply to manufacturers (including importers) of certain genetically modified microorganisms. Consistent with Executive Order 13563, this document qualitatively and quantitatively describes both the costs and benefits of the rule as well as the underlying data used in the analyses. EPA chose the best available data to analyze the costs and benefits described in this document and the best analytic approaches given the available data and other constraints.
References
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Industry Burden and Cost in Years Two through Ten
Industry Burden Hours
This appendix contains tables that derive the industry burden for years 2 through 10 of the rule. (The Year 1 burden is presented in Table 4-15.) Burden estimates are calculated following the method outlined for year 1 in Section 4.6 of this report. EPA assumed that companies will send more Tier I submissions than Tier II submissions, as well as 29 MCANs in year 1 and year 2. This analysis assumed 23 percent of Tier I and Tier II submissions each year for T. reesei and B. amyloliquefaciens will be Tier II submissions. It assumes that there will be four new Tier I and Tier II submissions for T. reesei and B. amyloliquefaciens in year 1, and that the rate of annual submissions will grow at 10 percent per year. Table 4-17 presented the change in burden hours for all ten years. Table A -1 through Table A- 9 present the change in burden hours for years 2 through 10. 

Table A- 1: Base Case and Change in Industry Burden Hours (Year 2)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       2
                                    520.38
                                   1,040.76
                                       0
                                    520.38
                                       0
                                   1,040.76
                            MCAN  -  small business
                                       2
                                    520.38
                                   1,040.76
                                       0
                                    520.38
                                       0
                                   1,040.76
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       0
                                    276.38
                                       0
                                       0
                                    TIER I
                                       0
                                     19.00
                                       0
                                       3
                                     19.00
                                     57.00
                                     57.00
                                     Total
                                       4
                                       -
                                   2,081.52
                                       4
                                       -
                                    333.38
                                   -1,748.14
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   2,081.52
                                       -
                                       
                                    333.38
                                   -1,748.14

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.
Table A- 2: Base Case and Change in Industry Burden Hours (Year 3)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                            MCAN  -  small business
                                       2
                                    520.38
                                   1,040.76
                                       0
                                    520.38
                                       0
                                   -1,040.76
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       0
                                    276.38
                                       0
                                       0
                                    TIER I
                                       0
                                     19.00
                                       0
                                       4
                                     19.00
                                     76.00
                                     76.00
                                     Total
                                       5
                                       -
                                   2,601.90
                                       5
                                       -
                                    352.38
                                   -2,249.52
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   2,601.90
                                       -
                                       
                                    352.38
                                   -2,249.52

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.



Table A- 3: Base Case and Change in Industry Burden Hours (Year 4)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                            MCAN  -  small business
                                       2
                                    520.38
                                   1,040.76
                                       0
                                    520.38
                                       0
                                   -1,040.76
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       0
                                    276.38
                                       0
                                       0
                                    TIER I
                                       0
                                     19.00
                                       0
                                       4
                                     19.00
                                     76.00
                                     76.00
                                     Total
                                       5
                                       -
                                    2,601.9
                                       5
                                       -
                                    352.38
                                   -2,249.52
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   2,601.90
                                       -
                                       
                                    352.38
                                   -2,249.52

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.

Table A- 4: Base Case and Change in Industry Burden Hours (Year 5)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                            MCAN  -  small business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       0
                                    276.38
                                       0
                                       0
                                    TIER I
                                       0
                                     19.00
                                       0
                                       5
                                     19.00
                                     95.00
                                     95.00
                                     Total
                                       6
                                       -
                                   3,122.28
                                       6
                                       -
                                    371.38
                                   -2,750.90
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       1
                                      20
                                      20
                                      20
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   3,122.28
                                       -
                                       
                                    391.38
                                   -2,730.90

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6


Table A- 5: Base Case and Change in Industry Burden Hours (Year 6)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours))

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                            MCAN  -  small business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       0
                                    276.38
                                       0
                                       0
                                    TIER I
                                       0
                                     19.00
                                       0
                                       5
                                     19.00
                                     95.00
                                     95.00
                                     Total
                                       6
                                       -
                                   3,122.28
                                       6
                                       -
                                    371.38
                                   -2,750.90
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   3,122.28
                                       -
                                       
                                    371.38
                                   -2,750.90

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.


Table A- 6: Base Case and Change in Industry Burden Hours (Year 7)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       4
                                    520.38
                                   2,082.52
                                       0
                                    520.38
                                       0
                                   -2,082.52
                            MCAN  -  small business
                                       3
                                    520.38
                                   1,561.14
                                       0
                                    520.38
                                       0
                                   -1,561.14
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                                    TIER I
                                       0
                                     19.00
                                       0
                                       5
                                     19.00
                                     95.00
                                     95.00
                                     Total
                                       7
                                       -
                                   3,642.66
                                       7
                                       -
                                    647.76
                                   -2,994.90
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   3,643.66
                                       -
                                       
                                    647.76
                                   -2,994.90

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.


Table A- 7: Base Case and Change in Industry Burden Hours (Year 8)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       4
                                    520.38
                                   2,082.52
                                       0
                                    520.38
                                       0
                                   -2,082.52
                            MCAN  -  small business
                                       4
                                    520.38
                                   2,082.52
                                       0
                                    520.38
                                       0
                                   -2,082.52
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                                    TIER I
                                       0
                                     19.00
                                       0
                                       6
                                     19.00
                                    114.00
                                    114.00
                                     Total
                                       8
                                       -
                                   4,163.04
                                       8
                                       -
                                    666.76
                                   -3,496.28
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   4,163.04
                                       -
                                       
                                    666.76
                                   -3,496.28

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.




Table A- 8: Base Case and Change in Industry Burden Hours (Year 9)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       5
                                    520.38
                                   2,601.90
                                       0
                                    520.38
                                       0
                                   -2,601.90
                            MCAN  -  small business
                                       4
                                    520.38
                                   2,082.52
                                       0
                                    520.38
                                       0
                                   -2,082.52
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                                    TIER I
                                       0
                                     19.00
                                       0
                                       7
                                     19.00
                                    133.00
                                    133.00
                                     Total
                                       9
                                       -
                                   4,683.42
                                       9
                                       -
                                    685.76
                                   -3,997.66
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       0
                                      20
                                       0
                                       0
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   4,683.42
                                       -
                                       
                                    685.76
                                   -3,997.66

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.





Table A- 9: Base Case and Change in Industry Burden Hours (Year 10)
                                Submission Type
                     Baseline Number of Annual Submissions
                                Baseline Burden
                  Post Exemption Number of Annual Submissions
                        Post Exemption Industry Burden
                        Total Change in Industry Burden


                           Burden per Report (Hours)
                             Total Burden (hours)

                           Burden per Report (Hours)
                             Total Burden (hours)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       5
                                    520.38
                                   2,601.90
                                       0
                                    520.38
                                       0
                                   -2,601.90
                            MCAN  -  small business
                                       4
                                    520.38
                                   2,082.52
                                       0
                                    520.38
                                       0
                                   -2,082.52
                          TIER II  -  large business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                          TIER II  -  small business
                                       0
                                    276.38
                                       0
                                       1
                                    276.38
                                    276.38
                                    276.38
                                    TIER I
                                       0
                                     19.00
                                       0
                                       7
                                     19.00
                                    133.00
                                    133.00
                                     Total
                                       9
                                       -
                                   4,683.42
                                       9
                                       -
                                    685.76
                                   -3,997.66
                           Rule Familiarization Cost
                                     Total
                                       0
                                      20
                                       0
                                       1
                                      20
                                      20
                                      20
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                   4,683.42
                                       -
                                       
                                    705.76
                                   -3,977.66

Source: Number of submissions Table 4-13. Hours per submission, Table 4-6.

. 


Industry Cost
This section contains tables that derive the industry cost for years 2 through 10 of the rule. (The Year 1 cost was presented in Table 4-16.) Cost estimates are calculated following the method outlined for Year 1 in Section 4.6 of this report. This analysis assumed 23 percent of Tier I and Tier II submissions each year for T. reesei and B. amyloliquefaciens will be Tier II submissions. It assumes that there will be four new Tier I and Tier II submissions for T. reesei and B. amyloliquefaciens in year 1, and that the rate of annual submissions will grow at 10 percent per year. Table 4-18 presents the change in industry cost for all ten years. Table A- 10  through Table A- 18 present the change in industry cost for years 2 through 10. 


Table A- 10: Base Case and Change in Industry Cost (Year 2)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       2
                                  $55,099.71
                                  $110,199.42
                                       0
                                  $55,099.71
                                     $0.00
                                 -$110,199.42
                            MCAN  -  small business
                                       2
                                  $41,899.71
                                  $83,799.42
                                       0
                                  $41,899.71
                                     $0.00
                                  -$83,799.42
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       3
                                   $1,496.60
                                   $4,489.81
                                   $4,489.81
                                     Total
                                       4
                                       -
                                  $193,998.83
                                       4
                                       -
                                  $29,881.00
                                 -$164,117.83
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $193,998.83
                                       -
                                       -
                                  $29,881.00
                                 -$164,117.83
Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.


Table A- 11: Base Case and Change in Industry Cost (Year 3)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                  $55,099.71
                                  $165,299.12
                                       0
                                  $55,099.71
                                     $0.00
                                 -$165,299.12
                            MCAN  -  small business
                                       2
                                  $41,899.71
                                  $83,799.42
                                       0
                                  $41,899.71
                                     $0.00
                                  -$83,799.42
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       4
                                   $1,496.60
                                   $5,986.42
                                   $5,986.42
                                     Total
                                       5
                                       -
                                  $249,098.54
                                       5
                                       -
                                  $31,377.61
                                 -$217,720.93
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $249,098.54
                                       -
                                       -
                                  $31,377.61
                                 -$217,720.93
Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.


Table A- 12: Base Case and Change in Industry Cost (Year 4)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                  $55,099.71
                                  $165,299.12
                                       0
                                  $55,099.71
                                     $0.00
                                 -$165,299.12
                            MCAN  -  small business
                                       2
                                  $41,899.71
                                  $83,799.42
                                       0
                                  $41,899.71
                                     $0.00
                                  -$83,799.42
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       4
                                   $1,496.60
                                   $5,986.42
                                   $5,986.42
                                     Total
                                       5
                                       -
                                  $249,098.54
                                       5
                                       -
                                  $31,377.61
                                 -$217,720.93
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $249,098.54
                                       -
                                       -
                                  $31,377.61
                                 -$217,720.93

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.

Table A- 13: Base Case and Change in Industry Cost (Year 5)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                  $55,099.71
                                  $165,299.12
                                       0
                                  $55,099.71
                                     $0.00
                                 -$165,299.12
                            MCAN  -  small business
                                       3
                                  $41,899.71
                                  $125,699.12
                                       0
                                  $41,899.71
                                     $0.00
                                 -$125,699.12
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       5
                                   $1,496.60
                                   $7,483.02
                                   $7,483.02
                                     Total
                                       6
                                       -
                                  $290,998.25
                                       6
                                       -
                                  $32,874.21
                                 -$258,124.04
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       1
                                   $1,601.88
                                   $1,601.88
                                   $1,601.88
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $290,998.25
                                       -
                                       -
                                  $34,476.09
                                 -$256,522.15
Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.

Table A- 14: Base Case and Change in Industry Cost (Year 6)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       3
                                  $55,099.71
                                  $165,299.12
                                       0
                                  $55,099.71
                                     $0.00
                                 -$165,299.12
                            MCAN  -  small business
                                       3
                                  $41,899.71
                                  $125,699.12
                                       0
                                  $41,899.71
                                     $0.00
                                 -$125,699.12
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       0
                                  $21,631.19
                                     $0.00
                                     $0.00
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       5
                                   $1,496.60
                                   $7,483.02
                                   $7,483.02
                                     Total
                                       6
                                       -
                                  $290,998.25
                                       6
                                       -
                                  $32,874.21
                                 -$258,124.04
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $290,998.25
                                       -
                                       -
                                  $32,874.21
                                 -$258,124.04
Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.

Table A- 15: Base Case and Change in Industry Cost (Year 7)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       4
                                  $55,099.71
                                  $220,398.83
                                       0
                                  $55,099.71
                                     $0.00
                                 -$220,398.83
                            MCAN  -  small business
                                       3
                                  $41,899.71
                                  $125,699.12
                                       0
                                  $41,899.71
                                     $0.00
                                 -$125,699.12
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       1
                                  $21,631.19
                                  $21,631.19
                                  $21,631.19
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       5
                                   $1,496.60
                                   $7,483.02
                                   $7,483.02
                                     Total
                                       7
                                       -
                                  $346,097.96
                                       7
                                       -
                                  $54,505.41
                                 -$291,592.55
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $346,097.96
                                       -
                                       -
                                  $54,505.41
                                 -$291,592.55

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.

Table A- 16: Base Case and Change in Industry Cost (Year 8)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       4
                                  $55,099.71
                                  $220,398.83
                                       0
                                  $55,099.71
                                     $0.00
                                 -$220,398.83
                            MCAN  -  small business
                                       4
                                  $41,899.71
                                  $167,598.83
                                       0
                                  $41,899.71
                                     $0.00
                                 -$167,598.83
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       1
                                  $21,631.19
                                  $21,631.19
                                  $21,631.19
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       6
                                   $1,496.60
                                   $8,979.62
                                   $8,979.62
                                     Total
                                       8
                                       -
                                  $387,997.67
                                       8
                                       -
                                  $56,002.01
                                 -$331,995.66
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $387,997.67
                                       -
                                       -
                                  $56,002.01
                                 -$331,995.66

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding. 
Table A- 17: Base Case and Change in Industry Cost (Year 9)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       5
                                  $55,099.71
                                  $275,498.54
                                       0
                                  $55,099.71
                                     $0.00
                                 -$275,498.54
                            MCAN  -  small business
                                       4
                                  $41,899.71
                                  $167,598.83
                                       0
                                  $41,899.71
                                     $0.00
                                 -$167,598.83
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       1
                                  $21,631.19
                                  $21,631.19
                                  $21,631.19
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       7
                                   $1,496.60
                                  $10,476.23
                                  $10,476.23
                                     Total
                                       9
                                       -
                                  $443,097.37
                                       9
                                       -
                                  $57,498.61
                                 -$385,598.76
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       0
                                   $1,601.88
                                     $0.00
                                     $0.00
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $443,097.37
                                       -
                                       -
                                  $57,498.61
                                 -$385,598.76

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding.
Table A- 18: Base Case and Change in Industry Cost (Year 10)
                                Submission Type
                     Baseline Number of Annual Submissions
                                 Baseline Cost
                  Post Exemption Number of Annual Submissions
                         Post Exemption Industry Cost
                     Total Change in Industry Cost ($2018)


                            Cost per Report ($2018)
                              Total Cost ($2018)

                            Cost per Report ($2018)
                              Total Cost ($2018)

                         Submissions and Recordkeeping
                            MCAN  -  large business
                                       5
                                  $55,099.71
                                  $275,498.54
                                       0
                                  $55,099.71
                                     $0.00
                                 -$275,498.54
                            MCAN  -  small business
                                       4
                                  $41,899.71
                                  $167,598.83
                                       0
                                  $41,899.71
                                     $0.00
                                 -$167,598.83
                          TIER II  -  large business
                                       0
                                  $25,391.19
                                     $0.00
                                       1
                                  $25,391.19
                                  $25,391.19
                                  $25,391.19
                          TIER II  -  small business
                                       0
                                  $21,631.19
                                     $0.00
                                       1
                                  $21,631.19
                                  $21,631.19
                                  $21,631.19
                                    TIER I
                                       0
                                   $1,496.60
                                     $0.00
                                       7
                                   $1,496.60
                                  $10,476.23
                                  $10,476.23
                                     Total
                                       9
                                       -
                                  $443,097.37
                                       9
                                       -
                                  $57,498.61
                                 -$385,598.76
                           Rule Familiarization Cost
                                     Total
                                       0
                                   $1,601.88
                                     $0.00
                                       1
                                   $1,601.88
                                   $1,601.88
                                   $1,601.88
                              Total Industry Cost
                                     Total
                                       -
                                       -
                                  $443,097.37
                                       -
                                       -
                                  $59,100.50
                                 -$383,996.88

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier II submission. Table 4-14 contains the total industry rule familiarization cost. Rule case assumes 4 different submitters at 20 hours/organization. Values may not sum due to rounding. 


	
Manufacturing and Substitute Information for Cellulosic and Corn-Based Ethanol
This appendix briefly discusses the manufacturing and use of T. reesei in cellulosic and corn-based ethanol, as well as the commercial substitutes for ethanol from both corn and cellulosic biomass. 
Corn-Based Ethanol Manufacturing
Corn-based ethanol is manufactured from the corn kernels, the starchy part of the corn plant. T. reesei is used in the commercial manufacturing of corn-based fuel ethanol. Fuel ethanol is mostly manufactured using a dry mill process. In the dry mill process the corn is first ground into "meal." The meal is moved into a slurry tank where it is mixed with water and other ingredients including the hydrolyzing enzyme, a thermostable alpha-amylase (Kwiatkowski et al., 2005). This enzyme has been commercially manufactured using Bacillus licheniformis (Peckous, 1999) and T. reesei (Genencor, 2008). The slurry is then liquefied using heat and the alpha-amylase enzyme, which breaks the corn starch into olosaccharides known as dextrins. 
The dextrins are then moved into the saccharification tank where the glucoamylase enzymes are added to further hydrolyze the dextrins into fermentable sugars (Kwiatkowski et al., 2005). Glucoamylase enzymes used in corn-based ethanol manufacturing have been manufactured commercially using A. niger (Genencor, 2008). However, patents have been issued for the use of T. reesei in the manufacturing of the glucoamylase enzymes (Danisco Patent, 2009). 
As described by Kwiatkowski et al, the slurry with glucose is then moved into the fermentation tanks where it is fermented using yeast, and creates "beer." This beer is moved into the beer column where the ethanol is recovered. In the final step, the recovered ethanol moved into a new tank where it is mixed with about 5 percent gasoline (denaturant) to create fuel ethanol (Kwiatkowski et al., 2005). 
Figure 2: Simplified Corn-Based Ethanol Dry Mill Manufacturing Process
                                      5.
                       Ethanol recovery from "beer"
                                      5.
                       Ethanol recovery from "beer"
                                      1.
                                  Corn Grind
                                      1.
                                  Corn Grind
                                      2. 
                      Liquefaction with Enzymes and Heat
                                      2. 
                      Liquefaction with Enzymes and Heat
                                      4. 
                                 Fermentation 
                                      4. 
                                 Fermentation 
                                      3. 
Saccharification 
                                      3. 
Saccharification 
Glucoamylase enzymes from A. niger or other microbes 
Alpha-amylase enzymes from B. licheniformis T. reesei, or other microbes	
                                     Yeast
Glucoamylase enzymes from A. niger or other microbes 
Alpha-amylase enzymes from B. licheniformis T. reesei, or other microbes	
                                     Yeast

Cellulosic Ethanol Manufacturing Steps
Cellulosic ethanol is manufactured from the non-starchy portions of corn plants, such as cornstalks, and from other inedible biomass such as wood chips, sugarcane waste, and grass. 
In cellulosic ethanol manufacturing, the hard cell wall of the feedstock is fermented into ethanol. The cell wall consists of chain polymers known as microfibrils. These microfibrils are composed of three main parts: (1) the hard cellulose, (2) the soft hemicellulose, and (3) irregular lignin. 
Both the five-carbon sugars (pentoses) from the hemicellulose and the six-carbon sugars from the cellulose are fermented into ethanol. The lignin is discarded or used to generate steam for the ethanol process. The main steps in converting the cellulosic biomass into ethanol via biochemical manufacturing are discussed below.
The process described below is a generic process that may not apply to every situation, and some practices may be replaced by newer technologies: 
   Step 1: Biomass Handling - The biomass feedstock (wood, switchgrass, cornstalks, etc.) is reduced in size for more efficient processing (DOE, 2009c). 
   Step 2: Biomass Pretreatment - The biomass is then pretreated to open up the lignocellulose, making hemicellulose and cellulose more accessible to being broken down later by enzymes (Knauf and Moniruzzaman, 2004). A common process known as the dilute acid process hydrolyzes much of the hemicellulose  -- but not the cellulose -- into sugars (Knauf and Moniruzzaman, 2004). 
   Step 3: Enzymatic hydrolysis - Cellulase enzymes, typically from T. reesei, catalyze the degradation of cellulose into glucose, a 6-carbon sugar. This enzymatic hydrolysis reaction is also known as cellulose saccharification (DOE, 2009c). Cellulose is made up of units of the simple sugar, glucose. A number of enzymes are needed to degrade cellulose to glucose, including endogluconases, exogluconases, cellobiohydrolases which release cellobiose (disaccharides of two glucoses) from crystalline cellulose, and beta-glucosidases (which cleave cellobiose to glucose) (Knauf and Moniruzzaman, 2004, p.148).
   Enzymes also break down the complex sugars of the hemicellulose into simple sugars. Hemicellulose from agricultural wastes such as corn stover is predominately made up of the five-carbon sugar, xylose, but also includes arabinose [five-carbon], galactose [six carbon], and mannose [six carbon]. Xylanases and other hemicellulases break down hemicellulose to xylose and other sugars. (Moller, 2006, p.11). 
   Cellulase enzymes are grown in-house or purchased from a commercial enzyme company (DOE, 2009c)
   Step 4: Fermentation - After enzymatic hydrolysis, the six-carbon glucose is converted to ethanol and CO2 through fermentation. Commonly this uses a yeast, Saccharomyces cerevisiae.
   The five-carbon (pentose) sugars such as xylase that were released from hemicellulose can also be fermented to ethanol. The conventional fermentation organism, S. cerevisiae, can use only the six-carbon sugar, glucose. However, genetically modified bacteria such as Z. mobilis or E. coli or a genetically modified Saccharomyces (yeast) can ferment both five-carbon and six-carbon sugars (Knauf and Moniruzzaman, 2004; DOE, 2009a; Purdue, 2004). 
   The hydrolysis of amorphous cellulose into glucose (saccharification) and fermentation to ethanol can be combined in one process (Knauf and Moniruzzaman, 2004, p.149). 
   Step 5: Ethanol Recovery - The ethanol-CO2 mixture from fermentation is sent to a distiller. Impurities such as lignin and residual ligninocellulosic biomass are removed from the ethanol broth and may be used to manufacture energy for the ethanol plant. Any bacterial organisms in the ethanol are heated and killed during this process. All water is also removed from the mixture, recovering only the ethanol (DOE, 2009c).
Non-biological Alternatives for Manufacturing Cellulosic Ethanol
In addition to enzymatic hydrolysis, other methods for manufacturing cellulosic ethanol from biomass include acid hydrolysis and gasification. Acid hydrolysis uses an acid bath to break the hemicellulose and cellulose in biomass into simple xylose and glucose sugars, which are subsequently fermented into ethanol. Gasification uses wood chips as feedstock and uses pressure "to create a synthesis gas ... that is passed over a catalyst to make ethanol" (CEN, 2009). None of these technologies are currently considered cost-competitive with corn ethanol or gasoline (CEN, 2009).
Those supporting the T. reesei application asserted the following:
    [T]here simply is no viable chemical alternative to enzymes for a commercially feasible process to obtain quality saccharides in sufficient yields. Mineral acids such as hydrochloric and sulfuric acids have been tried for years, but the quality and the yields of products is simply far too low using this route to be commercially feasible. In addition, a "chemical" approach adds an environmental burden through the generation of chemical waste and the significant costs associated with disposal" (BIO and ETA, 2010, p.9).
However, as with cellulosic ethanol, it is possible that non-biological technologies could become competitive in the future. In 2007, the US Department of Energy (DOE) awarded grants to six cellulosic ethanol manufacturers to develop and test these ethanol manufacturing methods (CEN, 2009). Range Fuels, one of the grant recipients, is constructing a large-scale gasification plant for operation in 2010, and BlueFire Ethanol, another recipient, is negotiating for a permit to build an acid hydrolysis plant in the near future (CEN, 2009). 
Substitutes for Fuel Ethanol 
Gasoline is the fuel alternative to ethanol. Gasoline has more energy per unit than ethanol, can be transported in current pipelines, and can be used in current engines. At present gasoline is less expensive per mile, although this can change with fluctuations in gas prices. Due to its chemical makeup, ethanol cannot be transported in current pipelines nor used in conventional auto engines beyond a certain percentage of the gasoline/ethanol mix. On the other hand, ethanol provides an octane boost to gasoline. In this function, it replaces Methyl tert-Butyl Ether (MTBE), which has raised concerns when found in drinking water supplies. 
From a societal viewpoint, cellulosic ethanol is thought to have environmental advantages over corn ethanol and gasoline, especially lower greenhouse gas emissions. Compared to corn ethanol, depending on the feedstock, it is also likely to use less fertilizer (see Section 5.2). 
Domestic cellulosic ethanol manufacturing may decrease US dependency on foreign oil supplies. Unlike corn ethanol, the feedstocks used in cellulosic ethanol manufacturing (corncobs, or crops grown for specifically for ethanol manufacturing , such as grasses or wood) are not human food crops (DOE, 2009b), so increased demand for cellulosic ethanol feedstock may put less upward pressure on food prices. These crops may be grown on land that is unsuitable for growing other crops and it generally takes less energy to manufacture cellulosic ethanol biomass than sugar- and starch-based biomass (DOE, 2009b).  
