Economic Analysis of the Proposed Rule for User Fees for the Administration of the Toxic Substances Control Act, EPA-HQ-OPPT-2017-0401; RIN 2070-AK27)
                                                                               
                                                         Contract # EP-W-16-009
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                      FAR Draft
                                                                               
                                                                               
                                                                 April 30, 2017

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

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Economic Analysis of the Proposed Rule for User Fees for the Administration of the Toxic Substances Control Act, EPA-HQ-OPPT-2017-0401; RIN 2070-AK27)
Table of Contents
Tables	iv
Glossary	i
Executive Summary	ii
1.	Introduction	1-1
1.1	Statutory Authority	1-1
1.2	Regulatory Background	1-1
1.2.1	TSCA Section 4	1-1
1.2.2	TSCA Section 5	1-2
1.2.3	TSCA Section 6	1-3
1.2.4	TSCA Section 14	1-4
1.3	Statement of Need	1-4
1.4	Organization of This Report	1-5
2.	Industry Profile	2-6
2.1	Methodology	2-6
2.1.1	Universe of Affected Entities	2-6
2.1.2	Small Business Determination: For Industry Profile Analysis	2-8
2.1.3	Small Business Determination: For Proposed Rule Implementation	2-8
2.2	Chemical Manufacturers	2-8
2.3	Petroleum Refineries	2-9
2.4	Chemical and Petroleum Merchant Wholesalers	2-9
3.	Costs	3-11
3.1	Overview	3-11
3.1.1	TSCA Section 4 Actions	3-11
3.1.2	TSCA Section 5 Actions	3-11
3.1.3	TSCA Section 6 Actions	3-11
3.1.4	TSCA Section 14	3-12
3.2	Cost Estimation Method	3-12
3.2.1	Estimates of Number of Activities	3-12
3.3	Proposed Option	3-13
3.4	Total Cost of Proposed Option	3-15
3.4.1	Total Small Business Costs for Proposed Option	3-18
3.5	Baseline Costs	3-21
3.5.1	Baseline Costs for Small Businesses	3-22
3.6	Incremental Costs of Proposed Option	3-24
3.6.1	Incremental Costs for Small Businesses	3-25
3.7	Alternative Option	3-26
3.7.1	Alternative Option Fee Structure	3-26
3.7.2	Alternative Option Total Costs	3-27
3.7.3	Alternative Option Incremental Costs	3-1
4.	Benefits	4-3
4.1	Funding for Program Implementation	4-3
4.1.1	Benefits of Regulations under TSCA Section 4	4-3
4.1.2	Benefits of Regulations under TSCA Section 5	4-4
4.1.3	Benefits of Regulations under TSCA Section 6	4-4
5.	Small Entity Analysis	5-1
5.1	Regulatory Requirement for Small Business Analysis	5-1
5.1.1	Definition of Small Entities	5-1
5.2	Methodology Overview	5-3
5.3	Small Entity Analysis Calculations and Results	5-3
5.3.1	Estimating the Universe of Affected Entities	5-3
5.3.2	Estimating Annual Revenue for Affected Parent Companies	5-4
5.3.3	Estimating Small Business Cost Impacts	5-5
5.3.4	Number of Affected Small Businesses	5-8
5.4	Summary of Small Business Impacts	5-8
6.	Other Impacts	6-1
6.1	Employment Impact Analysis	6-1
6.2	Impacts on Technological Innovation and the National Economy	6-2
6.3	Paperwork Burden Analysis	6-2
6.3.1	Loaded Wages	6-4
6.3.2	Section 4 Respondent Burden and Costs	6-6
6.3.3	Section 5 Respondent Burden and Costs	6-6
6.3.4	Section 6 Respondent Burden and Costs	6-7
6.4	Agency Burden	6-8
6.5	Unfunded Mandate Reform Act	6-10
6.6	Executive Order 12898 - Environmental Justice	6-10
6.7	Executive Order 13045 - Protection of Children	6-10
6.8	Executive Order 13132 - Federalism	6-11
6.9	Executive Order 13175 - Tribal Implications	6-11
6.10	Executive Order 13211 - Energy Supply, Distribution, or Use	6-11
7.	References	7-1

Tables
Table ES-1-1: Summary of Fee Structure Options	ii
Table ES-1-2: Industries Expected to Be Impacted by Proposed Rule	iii
Table ES-1-3: Overview of Total Costs of Fee Structure Options	iv
Table ES-1-4: Comparison of Fee Structure for Regulatory Options	v
Table ES-1-5: Fee Structure Options for Manufacturer-Requested Risk Evaluation	v
Table ES-1-6: Annual Small Business Cost-Revenue Impacts for Firms Incurring Costs	vii
Table 2-1: Industries Expected to Be Affected by Proposed Rule	2-7
Table 2-2: Total Number of Parent Companies, Firms, and Employees in the Chemical Manufacturing Industry	2-9
Table 2-3: Total Number of Firms and Employees in Petroleum Refineries Industry Sectors	2-9
Table 2-4: Total Number of Firms and Employees in the Chemical and Petroleum Merchant Wholesaler Industry Sectors	2-10
Table 3-1: Fee Structure for Proposed Option	3-14
Table 3-2: Fee Structure for Manufacturer-Requested Risk Evaluation under the Proposed Option	3-14
Table 3-3: Annual Total Cost of Proposed Option	3-16
Table 3-4: Discounted Total Costs of Proposed Option	3-17
Table 3-5: Total Costs of Proposed Option Manufacturer-Requested Risk Evaluations	3-17
Table 3-6: Total Annual Small Business Costs for Proposed Option	3-20
Table 3-7: Discounted Total Small Business Costs for Proposed Option	3-21
Table 3-8: Total Baseline Costs	3-23
Table 3-9: Incremental Costs of Proposed Option	3-24
Table 3-10: Proposed Option Incremental Costs of Manufacturer-Requested Risk Evaluations	3-24
Table 3-11: Incremental Costs per Firm of Proposed Option	3-25
Table 3-12: Proposed Option Incremental Costs of Small Businesses	3-26
Table 3-13: Alternative Option Fee Structure	3-26
Table 3-14: Total Costs of the Alternative Option	3-28
Table 3-15: Discounted Total Costs of the Alternative Option	3-29
Table 3-16: Total Annual Small Business Costs for the Alternative Option	3-30
Table 3-17: Incremental Costs of the Alternative Option	3-1
Table 3-18: Alternative Option Small Business Incremental Costs	3-2
Table 5-1: SBA Small Business Definitions for Affected Sectors	5-2
Table 5-2: Section 5 Small Business Cost-Revenue Impact 1% and 3% Thresholds	5-6
Table 5-3: Fees for Section 4 and Section 6	5-6
Table 5-4: Section 4 and 6 Small Business Cost-Revenue Impact with Discount	5-7
Table 5-5: Section 4 and 6 Small Business Cost-Revenue Impact without Discount	5-7
Table 5-6: Average and Median Revenue for Small Businesses in the Industries Likely to be Affected	5-8
Table 5-7: Total Estimated Small Business Fee Payments	5-9
Table 6-1:  Industry Wage Rates	6-5
Table 6-2: Summary of Annual Total Respondent Burden Costs Associated with Section 4 Activities ($2016)	6-6
Table 6-3: Summary of Annual Total Respondent Burden Hours and Costs Associated with Section 5 Activities ($2016)	6-7
Table 6-4: Summary of Annual Total Respondent Burden and Costs Associated with Section 6 Activities ($2016)	6-8
Table 6-5 Agency Wage Rate- Section 5 (2016$)	6-9


Glossary
BLS	U.S. Bureau of Labor Statistics
CBI	Confidential Business Information
CDX	Central Data Exchange
CFR 	Code of Federal Regulations
EPA	U.S. Environmental Protection Agency 
ICR	Independent Cost Request
LVE	Low Volume Exemption
MCAN	Microbial Commercial Activity Notice
NAICS	North American Industry Classification System
NOC	Notice of Commencement
PMN	Pre-Manufacture Notice
PPI	Producer Price Index
RFA	Regulatory Flexibility Act 
SBA	Small Business Administration
SBREFA	Small Business Regulatory Enforcement Fairness Act
SNUN	Significant New Use Notice
SNUR	Significant New Use Rule
TERA	TSCA Environmental Release Application
TME	Test Marketing Exemption
TSCA	Toxic Substances Control Act


Executive Summary
The Frank R. Lautenberg Chemical Safety for the 21st Century Act amended the Toxic Substances Control Act (TSCA) and gives the Environmental Protection Agency (EPA) the authority to create a new fee structure to cover the costs of administering TSCA activities. (Section 26(b) of TSCA, 15 U.S.C. 2625). The fee structure must be designed to collect the lesser of 25 percent of EPA administration costs or $25 million.
The economic analysis for this proposed rule considers the costs and benefits of the proposed fee structure, as well as an alternative regulatory option, both of which are summarized in Table ES-1-1.
Table ES-1-1: Summary of Fee Structure Options
                             Fee Structure Option

                   Estimated Total Annualized Fee Collection
                          Difference Between Options
Proposed Option
Sections 4, 5, and 6
                                  $24,770,542
Fees calculated at 33% of Section 4, 33% of Section 5, and 50% of Section 6 administration costs.

Manufacturer-Requested Risk Evaluations
                                  $9,822,232

Alternative Option
Sections 4, 5, and 6
                                  $24,492,001
Fees calculated at 5% of Section 4, 20% of Section 5, and 70% of Section 6 administration costs.

Manufacturer-Requested Risk Evaluations
                                  $9,822,232


Affected Entities
EPA expects chemical manufacturing to be the primary industry sector affected by the proposed rule. Additionally, EPA expects the petroleum refineries industry sector and firms in the merchant wholesale sectors for chemicals and petroleum to be affected by the proposed rule. The 33 industry sectors expected to be affected by the proposed rule are presented in Table ES-1-2.


Table ES-1-2: Industries Expected to Be Impacted by Proposed Rule
NAICS Code
NAICS Name
                                    324110
Petroleum refineries
                                    325110
Petrochemical manufacturing
                                    325120
Industrial gas manufacturing
                                    325130
Synthetic organic dye and pigment manufacturing
                                    325180
All other basic inorganic chemical manufacturing
                                    325193
Ethyl Alcohol Manufacturing
                                    325194
Cyclic crude and intermediate manufacturing
                                    325199
All other basic organic chemical manufacturing
                                    325211
Plastics material and resin manufacturing
                                    325212
Synthetic Rubber Manufacturing
                                    325220
Artificial and Synthetic Fibers and Filaments Manufacturing
                                    325311
Nitrogenous Fertilizer Manufacturing
                                    325312
Phosphatic Fertilizer Manufacturing
                                    325314
Fertilizer (Mixing Only) Manufacturing
                                    325320
Pesticide and Other Agricultural Chemical Manufacturing
                                    325411
Medicinal and botanical manufacturing
                                    325412
Pharmaceutical preparation manufacturing
                                    325413
In-Vitro Diagnostic Substance Manufacturing
                                    325414
Biological Product (except Diagnostic) Manufacturing
                                    325510
Paint and Coating Manufacturing
                                    325520
Adhesive manufacturing
                                    325611
Soap and other detergent manufacturing
                                    325612
Polish and other sanitation good manufacturing
                                    325613
Surface active agent manufacturing
                                    325620
Toilet Preparation Manufacturing
                                    325910
Printing Ink Manufacturing
                                    325920
Explosives Manufacturing
                                    325991
Custom compounding of purchased resins
                                    325992
Photographic film, paper, plate, and chemical manufacturing
                                    325998
All other miscellaneous chemical product and preparation manufacturing
                                    424690
Other Chemical and Allied Products Merchant Wholesalers
                                    424710
Petroleum Bulk Stations and Terminals
                                    424720
Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
 
Costs
Overall, EPA developed seven fee categories for Sections 4, 5, and 6. Section 4 actions include Test Orders, Test Rules, and Enforceable Consent Agreements (ECAs). Section 5 actions include Pre-Manufacture Notices (PMNs), Low Volume Exemptions (LVEs); Test Marketing Exemption Applications (TMEAs); Low Release/Low Exposure Exemptions (LoREX); Microbial Commercial Activity Notices (MCANs); TSCA Experimental Release Application (TERAs), Tier II Exemptions, Film Article Exemptions, and Significant New Use Notifications (SNUNs). Finally, Section 6 comprises both Agency-initiated and manufacturer-requested risk evaluations. 
EPA estimates total industry costs of $24,770,542 per year for the proposed option. A breakdown of total costs for the regulatory options examined for this proposed rule is summarized in Table ES-1-3. Total costs were calculated by multiplying the estimated number of submissions per action by the corresponding proposed fee. Additional information can be found in Chapter 3 of this Economic Analysis.
Table ES-1-3: Overview of Total Costs of Fee Structure Options
 
                            Submission Type/Action
                        Estimated Total Annualized Fees
                      Percentage of Total Annualized Fees
Proposed Option
 
 
Section 4
                                                                   $1,540,009  
                                                                           6.2%
Section 5
                                                                    $9,897,200 
                                                                          40.0%
Section 6
                                                                   $13,333,333 
                                                                          53.8%
Manufacturer-Requested Risk Evaluations
                                                                    $9,822,232 
                                                                              *
Alternative Option
                                                                               
                                                                               
Section 4
                                                                     $231,668  
                                                                           0.9%
Section 5
                                                                    $5,927,000 
                                                                          24.2%
Section 6
                                                                   $18,333,333 
                                                                          74.9%
Manufacturer-Requested Risk Evaluations
                                                                    $9,822,232 
                                                                              *
* Manufacturer-requested risk evaluation fees are considered separately from total fee collection because these actions are not Agency driven.

Prior to the 2016 amendments to TSCA, EPA only charged fees for certain Section 5 actions, with no fees for Section 4 or Section 6 actions. A comparison of the proposed fees for the various regulatory options examined for this proposed rule is shown in Table ES-1-4 and Table ES-1-5. Further discussion can be found in Section 3.5 of this analysis.


Table ES-1-4: Comparison of Fee Structure for Regulatory Options 
                            Submission Type/Action
                               Proposed Option 
                              Alternative Option

                               General Industry
                               Small Business[1]
                               General Industry
                               Small Business[1]
Section 4
 
 
 
 
 
 
Test Order
                                                                      $120,000 
                                                                       $60,000 
                                                                       $18,000 
                                                                        $9,000 
Test Rule
                                                                      $370,000 
                                                                       $92,500 
                                                                       $56,000 
                                                                       $28,000 
ECA
                                                                      $280,000 
                                                                       $70,000 
                                                                       $43,000 
                                                                       $21,500 
Section 5
                                                                             
                                                                              
                                                                              
                                                                              
                                                                             
                                                                              
                                                                              
PMNs (including intermediates)/MCAN/SNUN
                                                                       $20,000 
                                                                        $2,000 
                                                                       $12,000 
                                                                        $2,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                        $2,000 
                                                                          $500 
                                                                        $1,000 
                                                                          $500 
Section 6
                                                                             
                                                                              
                                                                              
                                                                              
                                                                             
                                                                              
EPA-Initiated Risk Evaluation
                                                                    $2,000,000 
                                                                    $1,600,000 
                                                                    $2,750,000 
                                                                    $2,200,000 
[1] For the fee options, Section 5 actions are the only TSCA activities associated with a prescribed discounted fee for eligible small businesses. For Sections 4 and 6 actions, EPA is proposing 50% and 20% discounts, respectively, on the portion of the fee to be paid by an affected eligible small business that opts out of joining a consortium or that is the sole affected firm for an action. This means that the specific discounted fees for eligible small businesses for Sections 4 and 6 actions are dependent on the number of affected firms.

Table ES-1-5: Fee Structure Options for Manufacturer-Requested Risk Evaluation
                            Submission Type/Action
                                Proposed Option
Work Plan Chemical
                                                                    $1,964,446 
Non-Work Plan Chemical
                                                                    $3,928,893 

Benefits
The principal benefit of the proposed rule is to provide EPA a sustainable source of funding necessary to implement TSCA as mandated under the Frank R. Lautenberg Chemical Safety for the 21st Century Act. The benefits of TSCA regulation are described broadly in Chapter 4 of this Economic Analysis with respect to Section 4, Section 5, and Section 6. Specific benefits can be found in the economic analyses on chemicals regulated under TSCA.
Small Business Impacts
For the fee options, Section 5 actions are the only TSCA activities associated with a prescribed discounted fee for eligible small businesses. For Sections 4 and 6 actions, EPA is proposing 50% and 20% discounts, respectively, on the portion of the fee to be paid by an affected eligible small business that opts out of joining a consortium or that is the sole affected firm for an action. This means that the specific discounted fees for eligible small businesses for Sections 4 and 6 actions are dependent on the number of affected firms.
Affected small businesses examined in this analysis are defined by the Small Business Administration (SBA). For the purposes of setting fees, small businesses eligible for discounted fees are defined as firms with average annual sales in the preceding three years of less than $91 million. Using Census revenue data on the universe of affected entities from the chemical manufacturing (NAICS code 325), petroleum refinery (NAICS code 324110), chemical merchant wholesalers (NAICS code 424690), and petroleum merchant wholesalers (NAICS codes 424710 and 424720) sectors, EPA determines that only the fees associated with risk evaluations under Section 6 may represent significant impacts for small businesses. However, only a small proportion and small number of small businesses are likely to experience these impacts. 
EPA estimates the median annual sales for small businesses likely to be affected by Section 4 and Section 6 actions to be $5,445,250; and $3,475,263 for small businesses likely to be affected by Section 5 actions. Table ES-1-6, presents the number and proportion of small businesses that are expected to experience costs as a result of the proposed rule. More details can be found in Chapter 5 of this Economic Analysis. Overall, of the 307 small businesses that are expected to incur costs each year, about 95.4% of small businesses within the NAICS codes expected to be affected by Sections 4, 5, and 6 actions may pay fees equivalent to less than 1% of the average sales. About 4.6% of small businesses affected by the proposed rule may pay fees greater than 3% of average sales. Total estimated fee payments from small businesses amount to $6,245,002, with $385,002 from Section 4 actions, $500,000 from Section 5 actions, and $5,360,000 from Section 6 actions. EPA estimates that total fees paid by small businesses will account for about 25% of the $25 million maximum fees to be collected for Sections 4, 5, and 6 actions. EPA also estimates that total discounted fees paid by small businesses account for 14% of the total annual cost of the proposed rule.


Table ES-1-6: Annual Small Business Cost-Revenue Impacts for Firms Incurring Costs
Submission Type/Action
                      General Fee Paid per Small Business
                    Small Business Discounted Fee per Firm
                   Number of small businesses with impacts 
                              < 1% and > 0%
                   Number of small businesses with impacts 
                              < 3% and > 1%
                    Number of small businesses with impacts
                                    > 3%
Section 4

 
 
 
 
Test Order
                                                                        $4,286 
                                                                               
                                                                     70 (22.8%)
                                                                       0 (0.0%)
                                                                       0 (0.0%)
Test Rule
                                                                       $13,214 
                                                                               
                                                                       7 (2.3%)
                                                                       0 (0.0%)
                                                                       0 (0.0%)
ECA
                                                                       $10,000 
                                                                               
                                                                       7 (2.3%)
                                                                       0 (0.0%)
                                                                       0 (0.0%)
Section 5

 
 
 
 
PMNs (including intermediates)/MCAN/SNUN
                                                                       $20,000 
                                                                        $2,000 
                                                                     96 (31.3%)
                                                                       0 (0.0%)
                                                                       0 (0.0%)
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                        $2,000 
                                                                          $500 
                                                                    106 (34.5%)
                                                                       0 (0.0%)
                                                                       0 (0.0%)
Section 6

 
 
 
 
Risk Evaluation
                                                                      $285,714 
                                                                               
                                                                       7 (2.3%)
                                                                       0 (0.0%)
                                                                      14 (4.6%)

                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                          Total
                                                                               
                                                                               
                                                                    293 (95.4%)
                                                                       0 (0.0%)
                                                                      14 (4.6%)
Note:
Fees paid by small businesses are a combination of discounted fees (for firms designated as eligible small businesses by the EPA definition of average sales over preceding three years averaging less than $91 million) and general fees paid by SBA-defined small businesses with average sales over the preceding three years averaging $91 million or more. Discounted fees for Section 5 actions are prescribed. The discounted Sections 4 and Section 6 fees are estimated by dividing the general fee per action by the estimated average number of firms for each chemical involved in each action, then applying a 50% discount for Section 4 actions or 20% discount for Section 6 actions. Once the portion of the Section 4 and Section 6 fee for small businesses eligible for discounts is excluded, the general fee paid by a small business not eligible for a discount is determined by dividing the remainder by the number of other affected firms for the respective action. EPA assumes that seven chemicals are involved in each Section 4 action and estimates that four firms are impacted by each chemical involved in a Section 4 action, with one of the four affected entities being a small business not eligible for a discounted fee. For Section 6, EPA estimates an average of seven firms are manufacturers of each chemical under a risk evaluation, with three affected entities being small businesses and two of the three small businesses eligible for the discounted fee.

Introduction
The U.S. Environmental Protection Agency (EPA) must develop and finalize a rule establishing a fees framework before collecting fees to defray some of the costs associated with the requirements of the Toxic Substances Control Act (TSCA), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act. This chapter presents an overview of the economic justifications for the proposed rule. Section 1.1 describes the statutory authority for the proposed rule. Section 1.2 provides the regulatory background of this proposed rule, summarizing the regulations under TSCA sections associated with the proposed rule and the Agency's burden. Section 1.3 explains the economic justifications for the proposed rule. Section 1.4 describes the organization of the remainder of this Economic Analysis. 
--------------------------------------------------------------------------------
Statutory Authority
The Toxic Substances Control Act (TSCA), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, provides EPA authority to collect fees to defray the costs associated with administering TSCA Sections 4, 5, and 6, as well as the costs of collecting, processing, reviewing, and providing access to and protecting chemical substances from disclosure as appropriate under Section 14. This rule is proposed under Section 26(b) of TSCA, 15 U.S.C. 2625.
TSCA was enacted in 1976 to regulate the manufacture, import, processing, distribution, use, and disposal of chemical substances in the United States. On June 22, 2016, the President signed into law the Frank R. Lautenberg Chemical Safety for the 21st Century Act, amending TSCA. Among other provisions, the Lautenberg Act provides for EPA to collect up to 25 percent of the costs to carry out Sections 4, 5, 6 and 14 (or $25 million, whichever is lower) in user fees. Previously, TSCA capped individual user fees at $2,500 and provided more limited fee collection authority (EPA, 2016a). 
Regulatory Background
Currently, fees are only collected for certain submissions under Section 5 of TSCA. These fees are established in 40 CFR §700.45. Under the Lautenberg Act's amendments to TSCA, EPA has authority to collect fees from manufacturers and processors who:
 Are required to submit test data (TSCA Section 4);
 Submit notification of or information related to intent to manufacture a new chemical or new use of a chemical (TSCA Section 5);
 Manufacture or process a chemical substance that is subject to a risk evaluation (TSCA Section 6); or
 Request EPA to conduct risk evaluation on an existing chemical (TSCA Section 6). (EPA, 2016a)
These fees are intended to defray some of the costs associated with administering these Sections, as well as the costs of collecting, processing, reviewing, and providing access to and protecting chemical substances from disclosure as appropriate under TSCA Section 14  (EPA, 2016a). An overview of each of these TSCA Sections is provided below.  
TSCA Section 4
TSCA Section 4, Testing of Chemical Substances and Mixtures, gives EPA the authority to require, by rule, order, or consent agreement, manufacturers and processors to conduct testing of identified chemical substances or mixtures. This testing is required to develop information on health or environmental effects when there is insufficient information for EPA risk assessors to be able to determine whether a chemical substance or mixture presents an unreasonable risk to health or the environment. 
The current respondent (industry) burden,  as reported in the TSCA Section 4 Information Collection Request (ICR) supporting statement, associated with Section 4 activities include submission of reports and study plans; new Central Data Exchange (CDX) registration; exemption application; and arranging for studies. EPA expects that, as in the past, multiple manufacturers/processors will be subject to each future Section 4 activity and allows for regulated companies to form consortia for each Section 4 action. The consortium would be responsible for providing the requested information and paying the fee for the Section 4 action.
EPA's activities associated with the administration of TSCA Section 4 include: 
 Rule/order development;
 Test plan review
 Compliance review
 Data analysis
 Data management
 Transparency
 Management of Confidential Business Information (EPA, 2016a).
Currently, manufacturers and processors subject to rules promulgated under TSCA Section 4 are not required to pay a fee associated with these activities.
TSCA Section 5
TSCA Section 5, Manufacturing and Processing Notices, requires that manufacturers and processors provide EPA with notice before initiating the manufacture (or import) of a new chemical substance or initiating the significant new use of a chemical substance. EPA is required to take risk management action as needed to address any unreasonable risk identified during pre-manufacture review. 
Examples of the notices or other information that manufacturers and processors are required to submit under TSCA Section 5 are Pre-Manufacture Notices (PMNs), Low Volume Exemptions (LVEs); Test Marketing Exemption Applications (TMEAs); Low Release/Low Exposure Exemptions (LoREX); Microbial Commercial Activity Notices (MCANs); TSCA Experimental Release Applications (TERAs); Notices of Commencement (NOCs), and Significant New Use Notifications (SNUNs).
Current respondent burden activities for Section 5 activities include reporting hours, recordkeeping, and CDX registration.
The amendments to TSCA now require EPA to provide affirmative determinations for all notices that EPA reviews. EPA's activities associated with the administration of TSCA Section 5 include: 
 Notice review/data analysis
 Development/refinement of analytical tools
 Order/rule development/risk reduction
 Affirmative determination for notices reviewed
 Data management
 Transparency
 Management of Confidential Business Information (EPA, 2016a) 
Under 40 CFR 700.45(b)(1), small business concerns currently must pay a fee of $100 for each Section 5 notice submitted. EPA is authorized under §700.45(b)(2) to request fees from other manufacturers and processors as follows:
       PMNs and consolidated PMNs: $2,500
       Intermediate PMNs: $1,000
       SNUNs: $2,500.
       Exemption applications:  $2,500 
       Exemption notices: $2,500 
       MCAN and consolidated MCAN: $2,500  
However, EPA did not require fees for Section 5 exemptions.
TSCA Section 6
TSCA Section 6, Prioritization, Risk Evaluation, and Regulation of Chemical Substances and Mixtures, provides EPA with the authority to regulate chemicals if the manufacture, processing, distribution in commerce, use, or disposal presents an unreasonable risk of injury to human health or the environment. Under the Lautenberg Act's amendments to TSCA, Section 6 also requires EPA to perform risk evaluations: EPA must establish a risk-based screening process, including criteria for designating chemical substances as high-priority substances for risk evaluations or low-priority substances for which risk evaluations are not warranted at the time. Under Section 6, EPA can require the submission of relevant information on a chemical substance in order to perform the risk evaluation.
Under the amendments to TSCA, EPA must be conducting at least 20 EPA-initiated risk evaluations at all times by the year 2020. In addition, manufacturers may request a risk evaluation on a chemical substance; TSCA establishes that these requests are subject to the payment of a fee sufficient to defray 50% of the costs associated with conducting a risk evaluation on a chemical in the 2014 Work Plan and the full cost of conducting the risk evaluation for all other chemicals. EPA expects that multiple manufacturers/processors will be subject to each future Section 6 activity and allows affected manufacturers (including importers) and processors to form a consortium for the payment of fees associated with each Section 6 action. 
EPA's activities associated with the administration of TSCA Section 6 include: 
 Risk-based prioritization 
 Risk Evaluation  -  data gathering, data analysis, unreasonable risk determination
 Data management
 Transparency
 Confidential Business Information management
 Development/refinement of analytical tools
 Peer review, as appropriate 
 Development of risk management actions
Currently, manufacturers and processors of chemicals undergoing EPA risk-screening processes are not required to pay a fee associated with risk evaluations under Section 6.
TSCA Section 14
TSCA Section 14, Confidential Information, prevents EPA from disclosing certain Confidential Business Information (CBI), as determined to be protected under the statute. Under the amended TSCA, EPA is required to review all CBI claims for chemical identity and make a determination of whether such claims are substantiated, within 90 days of receipt, and review a representative 25 percent of other CBI substantiation claims within 90 days of receipt. Information will be considered CBI for a period of 10 years, unless the claim is reasserted. 
EPA's activities associated with the administration of TSCA Section 14 include: 
 CBI docket management
 Data Management specifically for receiving and managing CBI data
 Tracking and notification for reassertion of claims
 Claims Reviews
 Transparency, as appropriate
 Disclosure to authorized persons, including States
 Clearance and security procedures (EPA, 2016a)  
Currently, manufacturers (including importers) and processors of chemicals are not required to pay a fee associated with the maintenance of CBI. EPA plans to continue this practice.
Statement of Need
The authority for EPA to collect fees to defray some of the costs associated with administering TSCA is a method of privatization of finance, as opposed to general taxation. Governments use this method to require specific "customers" to pay for the services they receive. While regulations under Sections 4, 5, and 6 of TSCA provide health and environmental benefits to society as a whole (as described in Chapter 3.7), it must also be understood that the chemical manufacturer/processor profits financially by being able to sell a chemical that has been determined to not present an unreasonable risk. Therefore, it is appropriate that the manufacturer/processor share in the cost for this evaluation.  
Mikesell (2013) identifies four general advantages of user charges (e.g., fees): to register and record public demand for a service; to improve financing equity for the services; to improve the agency's operating efficiency; and to correct cost-and-price signals in the private market. The advantages most relevant to this proposed rule are that fees can help improve financing equity, and to correct the cost-and-price signals.
Improved financing equity. Mikesell (2013) notes that "If the service is of a chargeable nature, its provision by general tax revenues will undoubtedly subsidize the service recipient group at the expense of the general taxpaying public." The proposed rule increases social equity in that for a chemical company to profit from the goods that it produces, the company must share in the cost to implement the rules that gather and disseminate information about the chemical's risk. 
Correct cost-and-price signals. The implementation of a fee associated with TSCA Sections 4, 5, and 6 may correct cost-and-price signals in the private market, in that the cost to the consumer of the regulated chemicals may include these costs. Therefore, the fee makes the consumer recognize and respond to the true social cost.	
Organization of This Report
The remainder of this report provides EPA's economic analysis in support of this proposed rule. Potentially affected entities are characterized in Chapter 2. Chapter 3 estimates the cost of the proposed rule. Chapter 4 qualitatively addresses the benefits of the proposed rule. Chapter 5 provides the small entity impact analysis for the proposed rule, as mandated by the Regulatory Flexibility Act (RFA), and amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). Several additional impact analyses are presented in Chapter 6. 
Note that all dollar amounts in this analysis are reported in 2016 dollars.
Industry Profile
This chapter presents the number of entities that EPA estimates may be affected by the proposed rule. EPA estimates that chemical manufacturers, petroleum refineries, and chemical and petroleum wholesalers may be affected by the proposed rule, based on their engagement in TSCA activities. Therefore, the affected entities analyzed in this chapter include chemical manufacturers, petroleum manufacturers, and chemical and petroleum merchant wholesalers that may be subject to TSCA Sections 4, 5 and 6 actions.   
In order to estimate the scale and impact of the proposed rule, EPA has identified the types and number of firms that may potentially be subject to fees as a result of this proposed rulemaking. Section 2.1 presents the methodology for defining, counting, and identifying the sizes of the entities which may be affected by the proposed rule. Section 2.2 describes the chemical manufacturing industry sector; Section 2.3 describes the petroleum refineries industry sector; and Section 2.4 describes the chemical and petroleum merchant wholesaler industry sector.
Methodology
In order to estimate the scale and impact of the proposed rule, EPA has estimated the number of entities that will potentially be affected by this proposed rule and the size of these entities. Section 2.1.1 presents the list of affected industries and EPA's methods for determining this list. 
For the purpose of this analysis, EPA used the Small Business Administration's (SBA) size determination (see Section 2.1.2). 
Universe of Affected Entities
EPA expects chemical manufacturing to be the primary industry sector affected by the proposed rule. EPA also expects that firms from the petroleum refining industry sector and the chemical and petroleum merchant wholesale industry sectors are likely to be affected by the proposed rule. The petroleum refining sector frequently engages in activities regulated under TSCA  -  in particular, Section 5 significant new use applications.  
Table 2-1 shows the NAICS codes for all 33 industry sectors that EPA estimates will be affected by the proposed rule. The list comprises all 29 6-digit NAICS code for the Chemical Manufacturing sector (NAICS code 325), the Petroleum Refinery sector (one NAICS code: 324110), and three 6-digit NAICS codes (424690, 424710, and 424720) from the Wholesale Trade sector (42) for chemical and petroleum wholesalers. 
Table 2-1: Industries Expected to Be Affected by Proposed Rule
                                  NAICS Code
                               NAICS Description
                                    324110
Petroleum refineries
                                    325110
Petrochemical manufacturing
                                    325120
Industrial gas manufacturing
                                    325130
Synthetic organic dye and pigment manufacturing
                                    325180
All other basic inorganic chemical manufacturing
                                    325193
Ethyl Alcohol Manufacturing
                                    325194
Cyclic crude and intermediate manufacturing
                                    325199
All other basic organic chemical manufacturing
                                    325211
Plastics material and resin manufacturing
                                    325212
Synthetic Rubber Manufacturing
                                    325220
Artificial and Synthetic Fibers and Filaments Manufacturing
                                    325311
Nitrogenous Fertilizer Manufacturing
                                    325312
Phosphatic Fertilizer Manufacturing
                                    325314
Fertilizer (Mixing Only) Manufacturing
                                    325320
Pesticide and Other Agricultural Chemical Manufacturing
                                    325411
Medicinal and botanical manufacturing
                                    325412
Pharmaceutical preparation manufacturing
                                    325413
In-Vitro Diagnostic Substance Manufacturing
                                    325414
Biological Product (except Diagnostic) Manufacturing
                                    325510
Paint and Coating Manufacturing
                                    325520
Adhesive manufacturing
                                    325611
Soap and other detergent manufacturing
                                    325612
Polish and other sanitation good manufacturing
                                    325613
Surface active agent manufacturing
                                    325620
Toilet Preparation Manufacturing
                                    325910
Printing Ink Manufacturing
                                    325920
Explosives Manufacturing
                                    325991
Custom compounding of purchased resins
                                    325992
Photographic film, paper, plate, and chemical manufacturing
                                    325998
All other miscellaneous chemical product and preparation manufacturing
                                    424690
Other Chemical and Allied Products Merchant Wholesalers
                                    424710
Petroleum Bulk Stations and Terminals
                                    424720
Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
Source: EPA, 2007 and 2008; Census, 2015
 
Small Business Determination: For Industry Profile Analysis
To identify small businesses that may be impacted by the proposed rule, EPA used the 2012 U.S. Census data and the 2016 SBA small business size standards (Census, 2015; SBA, 2016). The SBA size determinations are industry-specific and represent revenue or employee thresholds that a parent company within the industry must be below in order for the entity to be classified as a small business by the SBA and federal contracting programs. These size thresholds are determined for 6-digit NAICS codes. All 33 NAICS codes affected by this proposed rule have employment-based thresholds, ranging from 150 to 1,500 employees (SBA, 2016). EPA relied on 2012 U.S. Census data for employment information (Census, 2015). 
Small Business Determination: For Proposed Rule Implementation
The proposed rule prescribes a discounted fee for eligible small businesses submitting under TSCA Section 5, as well as for eligible small businesses subject to a Section 4 or Section 6 action.  EPA is proposing that in order to be eligible for the small business discount, the parent company's average revenue over the preceding three years must be less than $91 million.  Therefore, for the purpose of estimating costs in this analysis, EPA identified small parent companies as those reporting average annual sales below $91 million over the three years preceding the submission or action. To estimate annual revenue for affected parent companies, EPA used firm-level 2012 U.S. Census Statistics of the U.S. Business (SUSB) data to obtain reported revenue figures for parent entities in the affected universe. The U.S. Census reports total receipts for each NAICS code/revenue size combination. EPA divided the average of total receipts reported for each NAICS code/revenue size classification by the total number of firms in that category to estimate the average revenue for firms in each NAICS code/revenue size combination.
In a couple of instances, Census receipt data were not reported. The Census does not report annual receipts for some NAICS code/revenue size combinations in order to avoid disclosing individual firm information. Therefore, it was not possible to include these firms in this analysis using this data. Additionally, SUSB data do not report the total receipts for NAICS/revenue size classifications that are comprised of too few enterprises in order to avoid disclosing financial information that may be readily disaggregated to the individual firm level. In many cases, where possible, EPA uses the average percent difference of the adjacent revenue size classes to estimate the value of the unreported total revenue.
Chemical Manufacturers 
As shown in Table 2-2, 13,309 establishments reported Chemical Manufacturing as their primary NAICS code in the 2012 Census. These 13,309 establishments belong to a total of 10,451 parent companies and employ a total of 727,993 employees (Census, 2015). To present a general characterization of the structure of this industry, about 91% of chemical manufacturing firms are identified as small businesses based on the SBA employee-based definitions for the applicable NAICS codes. 
Table 2-2: Total Number of Parent Companies, Firms, and Employees in the Chemical Manufacturing Industry
                                   Industry 
                                 (NAICS Code)
                                   Firm Size
                               Parent Companies
                                     Firms
                                   Employees


                                     Total
                                    Percent
                                     Total
                                    Percent
                                     Total
                                    Percent
Chemical Manufacturing (325)
Large
                                                                            876
                                                                             8%
                                                                          2,785
                                                                            21%
                                                                        461,858
                                                                            63%

Small
                                                                          9,575
                                                                            91%
                                                                         10,524
                                                                            79%
                                                                        266,135
                                                                            37%

Total
                                                                         10,451
                                                                           100%
                                                                         13,309
                                                                           100%
                                                                        727,993
                                                                           100%
Source: Census, 2015; SBA, 2016   

Petroleum Refineries 
Table 2-3 presents the number of parent companies, establishments, and employees in the petroleum refinery industry sector (NAICS code 324110). This industry comprises establishments primarily engaged in refining crude petroleum into refined petroleum. This industry sector is the primary resource for many petrochemical products and feedstock. A total of 68 parent companies, 152 establishments, and 59,388 employees are reported for the petroleum refineries industry sector, according to the 2012 U.S. Census data (Census, 2015). About 56% of petroleum refineries are classified as small businesses based on the SBA definition: firms with less than 1,500 employees.
Table 2-3: Total Number of Firms and Employees in Petroleum Refineries Industry Sectors  
                                   Industry 
                                 (NAICS Code)
                                   Firm Size
                               Parent Companies
                                     Firms
                                   Employees
                                       
                                       
                                     Total
                                    Percent
                                     Total
                                    Percent
                                     Total
                                    Percent
324110
Large
                                                                             30
                                                                            44%
                                                                            109
                                                                            72%
                                                                         57,605
                                                                            97%

Small
                                                                             38
                                                                            56%
                                                                             43
                                                                            28%
                                                                          1,783
                                                                             3%

Total
                                                                             68
                                                                           100%
                                                                            152
                                                                           100%
                                                                         59,388
                                                                           100%
Source: Census, 2015; SBA, 2016  

Chemical and Petroleum Merchant Wholesalers  
As shown in Table 2-4, 16,667 establishments reported chemical or petroleum merchant wholesaler sectors as their primary industry (NAICS codes 424690, 424710, and 424720) in the 2012 Census. The Other Chemical and Allied Products Merchant Wholesalers industry (NAICS code 424690) comprises establishments primarily engaged in the merchant wholesale distribution of chemicals and allied products (except agricultural and medicinal chemicals, paints and varnishes, fireworks, and plastics materials and basic forms and shapes). Firms reporting NAICS codes 424710 and 424720 include establishments with bulk liquid storage facilities, primarily engaged in the merchant wholesale distribution of crude petroleum, petroleum, and petroleum products, including liquefied petroleum. The 16,667 establishments within this sector belong to a total of 11,145 parent companies and employ a total of 221,170 employees (Census, 2015). About 94% of firms in this sector are classified as small businesses with less than 100 employees (for NAICS code 424690) and less than 200 employees (for NAICS codes 424710 and 424720). 
Table 2-4: Total Number of Firms and Employees in the Chemical and Petroleum Merchant Wholesaler Industry Sectors
                             Industry (NAICS Code)
                                   Firm Size
                               Parent Companies
                                     Firms
                                   Employees
                                       
                                       
                                     Total
                                    Percent
                                     Total
                                    Percent
                                     Total
                                    Percent
424690,
424710,
424720
                                     Large
                                                                            675
                                                                             6%
                                                                          4,954
                                                                            30%
                                                                        108,059
                                                                            49%

                                     Small
                                                                         10,470
                                                                            94%
                                                                         11,723
                                                                            70%
                                                                        113,111
                                                                            51%

                                     Total
                                                                         11,145
                                                                           100%
                                                                         16,677
                                                                           100%
                                                                        221,170
                                                                           100%
Source:   Census, 2015; SBA, 2016  



Costs
Overview 
Under the Frank R. Lautenberg Chemical Safety for the 21st Century Act, for the first three years, EPA is granted authority to collect fees to offset the cost to implement TSCA Sections 4, 5, 6 and 14, up to the lesser of 25 percent of total TSCA administrative costs or $25 million. After three years, EPA can collect up to 25% of the TSCA administrative costs annually. Based on the estimated cost of and number of submissions under the new law, EPA estimated the total regulatory implementation costs during the first three years to be over $100 million. Thus, EPA has designed the fee structure to capture the statutory maximum of $25 million. Appendix A of this Economic Analysis presents a discussion of EPA's methodology for estimating Agency costs to administer TSCA Sections, 4, 5, 6, and 14.
Sections 3.1.1, 3.1.2, 3.1.3, and 3.1.4 outline the TSCA action categories considered in the proposed fee structure. Section 3.2 describes the methodology used to estimate the cost of the proposed rule. Section 3.3 presents the fee structure for the Proposed Option. This chapter also addresses the total fees to be collected under the Proposed Option in Section 3.4. Baseline costs are presented in Section 3.5. The incremental costs for the Proposed Option for general industry and small businesses are presented in Section 3.6. Section 3.7 presents similar discussions for the Alternative Option examined for this proposed rule.
TSCA Section 4 Actions
Under TSCA Section 4, there are three types of actions that for which EPA is proposing to require the payment of fees:
 Test Orders
 Test Rules
 Enforceable Consent Agreements (ECAs)
TSCA Section 5 Actions
Under TSCA Section 5, EPA proposes two fee categories that include the following submissions:
 Pre-manufacture Notice (PMNs) (including intermediates and consolidated cases), Microbial Commercial Activity Notice (MCAN) (including consolidated cases), and Significant New Use Notice (SNUN)
 Test Market Exemption Applications (TMEAs), TSCA Environmental Release Applications (TERAs), Low Volume Exemptions (LVEs), Low Release and Low Exposure Exemptions (LoREXs), Tier II, and Film Article exemptions
The cost of administering Notices of Commencement (NOCs) are incorporated in the fee for PMNs, MCANs, and SNUNs and thus not included as a separate fee category for those actions.
TSCA Section 6 Actions
Risk evaluations are the only activity under TSCA Section 6 that will be assessed a fee. There are two main types of risk evaluations: those initiated by EPA and those requested by manufacturers. For manufacturer-requested risk evaluations, two categories of fees may be collected: for Work Plan chemicals (i.e., those included on the TSCA Work Plan for Chemical Assessments: 2014 Update) and for chemicals not on the Work Plan. Fees from manufacturer-requested risk evaluations are not subject to the cap of the lesser of 25% of total agency costs or $25M.
TSCA Section 14
The costs of TSCA Section 14, which covers CBI, have been incorporated into the overall estimate of defrayable costs that are used to calculate the statutory caps on annual collections.  No fees are being proposed for TSCA Section 14 activities, thus, TSCA Section 14 activities are not represented as an individual category in this analysis.
Cost Estimation Method
Total cost for a regulatory option is calculated by determining (1) the number of submissions per fee category and (2) the fee amount for the category. 
For the baseline, EPA used the average number of submissions per year from 2013 to 2016 for each Section 5 action as the estimate of the number of annual submissions per fee category for the next three years. Section 4 Test Orders are new under TSCA and the average number of such actions expected per year represents an EPA estimate. For the other Section 4 actions (Test Rules and Consent Agreements), EPA also estimated the expected average number of such actions per year. For Section 6, the amended TSCA requirements specify the number of risk evaluations EPA must have ongoing over the next three years. EPA uses the mandated number of risk evaluations to estimate the cost of the proposed rule for Section 6 activities. Under the recent amendments to TSCA, EPA assumes that Section 4 activities (test rules and ECAs) would change from the baseline, Section 5 activities would decrease as a result of higher fees and the new statutory requirement for affirmative determination, and Section 6 actions initiated would increase in accordance with statutory requirements.
Estimates of Number of Activities
EPA estimates the cost of this proposed rule by multiplying the proposed fees with the number of expected activities under full implementation for each Section of TSCA. For Section 4, Test Orders are a new activity stemming from the amendments to TSCA. For Test Rules and ECAs, EPA has not promulgated any test rules or entered into any enforceable consent agreements in the recent past and therefore has estimated the number of activities that will be achievable. However, EPA used data from the most recent High Production Volume (HPV) Section 4 actions to develop assumptions for estimates of the proportion of small firms impacted per action.
EPA based the estimates of future number of Section 5 submissions on the historical number of submissions for all Section 5 notices and exemptions. EPA further assumes that the number of each category of Section 5 activities will decline by approximately 10% as a result of higher fees on PMNs (including Intermediates), MCANs, and SNUNs, and new fees for exemptions.
Section 6 risk evaluations are a new activity under the amended TSCA. In the past, EPA developed risk assessments. This risk assessment process has been replaced by risk evaluations and EPA uses data from the 2012 TSCA Chemical Data Reporting for the first 10 chemicals identified for risk evaluations to estimate the expected average number of affected manufacturers per chemical and number of affected small businesses. For manufacturer-requested risk evaluations, EPA estimated the number of activities for Work Plan and non-Work Plan chemicals based on a historical average of 2014 and 2015 submissions (EPA 2017).
EPA estimates the cost of this proposed rule using the full implementation levels for Sections 4, 5, and 6 activities. Similarly, the full implementation level of manufacturer-requested risk evaluations is used in estimating the industry cost of these actions. As a result, the fee amounts and estimated number of submissions (on average) do not change from year to year and annual total costs are the same as annualized costs. Three-year discounted total costs are shown to represent the total cost of the proposed rule over the three-year period, as EPA is mandated to review and revise fees at the end of three years. 
Proposed Option
This section presents the proposed fee structure identified by EPA for this proposed rule. EPA has also developed an alternative option, which is described in Sections 3.7.1. Each of the fee structures examined for this economic analysis recovers no more than the $25 million statutory maximum in total annual revenue (as the total annual Agency cost to administer the chemical review program at full implementation is estimated to be about $114 million), but differ in the distribution of burden among the TSCA Sections. Table 3-1 shows the Proposed Fee Structure for TSCA Sections 4, 5, and 6 and Table 3-2  presents the proposed fees for manufacturer-requested risk evaluations for the Proposed Option. Detail on EPA's cost to administer TSCA Sections 4, 5, 6, and 14 and the reasoning for the proposed fee structure are included in Appendix A.
Table 3-1: Fee Structure for Proposed Option
                            Submission Type/Action
                  EPA Annual Cost per Submission/ Action [a]
              Total Estimated Actions/year & Submissions [b]
                                 Proposed Fee
                        Proposed Small Business Fee [c]
Section 4
 
 
 
 
Test Order
                                                                      $368,985 
                                                                             10
                                                                      $120,000 
                                                                       $60,000 
Test Rule
                                                                    $1,114,507 
                                                                              1
                                                                      $370,000 
                                                                      $185,000 
ECA
                                                                      $860,725 
                                                                              1
                                                                      $280,000 
                                                                      $140,000 
Section 5
                                                                              
                                                                              
                                                                              
                                                                              
PMNs (including intermediates)/MCAN/SNUN
                                                                       $59,524 
                                                                            519
                                                                       $20,000 
                                                                        $2,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                        $5,974 
                                                                            575
                                                                        $2,000 
                                                                          $500 
Section 6
                                                                              
                                                                              
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                    $3,928,893 
                                                                           6.67
                                                                    $2,000,000 
                                                                    $1,600,000 
[a] Appendix A presents the estimation of EPA costs to Administer these activities.
[b] For the number of submissions per Section 5 action, EPA used the average number of annual submissions from 2013 to 2016 for each Section 5 action, reduced by 10% to account for expected manufacturer response to the increased fees. Section 4 Test Orders are new under TSCA and the average number of such actions expected per year represents an EPA target amount. For the other Section 4 actions (Test Rules and ECAs), EPA uses forecasts of the average number of such actions as an indicator of future activity. EPA assumes that Section 6 risk assessments initiated at full implantation will be seven per year due to statutory requirements and an estimated timeframe of three years to complete a risk evaluation.
[c] EPA expects industry to form consortia to divide fee payments to reach the proposed fee amount for each of the TSCA actions under Sections 4 and 6. While an exact discount is not specified, EPA will mandate that small businesses receive a discount in fee contributions. The small business fee will also be applied if the sole firm affected is an eligible small business.


Table 3-2: Fee Structure for Manufacturer-Requested Risk Evaluation under the Proposed Option
                            Submission Type/Action
                Total Estimated Actions/year & Submissions
                              Risk Evaluation Fee
Work Plan Chemical
                                                                           0.67
                                                                    $1,964,446 
Non-Work Plan Chemical
                                                                           2.67
                                                                    $3,928,893 

Total Cost of Proposed Option
The annualized total industry cost for the Proposed Option is shown in Table 3-3. Total fee collection from the Proposed Option is $24,770,542.  For the Proposed Option, Section 4 fees account for 6.2% of the total fee revenue, Section 5 fees for 40.0%, and Section 6 fees for 53.8%. 
For small businesses, EPA assumes that 16% of Section 5 submissions will come from small businesses (based on the average percentage of small business firms that reported Section 5 activity between 2012 and 2016) that will pay discounted fees. Thus, the estimated number of small business submissions with a discounted fee is 83 for PMNs, SNUNs and MCANs, and 92 for exemptions. Total annualized costs for Section 5 fees paid by small businesses paying the discounted fees are estimated to be $212,000. Table 3-4 shows the estimated discounted three-year total costs for the Proposed Option using 3 percent and 7 percent discount rates, corresponding to the statutory timeframe allowed for EPA to review and revise the fees.
Annualized total industry costs for manufacturer-requested risk evaluations are listed in Table 3-5. For the Proposed Option, the annualized total industry cost for Work Plan chemical risk evaluations is estimated to be $1,964,446 and the annualized industry cost for non-Work Plan chemical risk evaluations is estimated to be $7,857,786. EPA also estimates the total industry cost of manufacturer-requested risk evaluations using 3 percent and 7 percent discount rates over a three-year period. 
Table 3-3: Annual Total Cost of Proposed Option
                            Submission Type/Action
                   Total Estimated Actions & Submissions
                       Estimated Regular Fee Submissions
                                      (A)
                  General Industry Fee per Sub/Action     (B)
                Estimated Annual Fee Recovery        (C= A x B)
                Small Business Estimated Subs & Actions (D)
                 Small Business Fee per Subs & Actions (E)
       Small Business Estimated Annual Fee Recovery          (F = D x E)
           Total General Industry & Small Business Cost (C + F)
Section 4
Test Order
                                                                             10
                                                                             10
                                                                      $120,000 
                                                                    $1,200,000 
                                                                               
                                                                               
                                                                               
                                                                    $1,200,000 
Test Rule [a]
                                                                              1
                                                                              1
                                                                      $370,000 
                                                                      $246,703 
                                                                               
                                                                               
                                                                               
                                                                      $246,703 
ECA[a]
                                                                              1
                                                                              1
                                                                      $280,000 
                                                                       $93,306 
                                                                               
                                                                               
                                                                               
                                                                       $93,306 
Section 5
PMNs (including intermediates)/MCAN/SNUN
                                                                            519
                                                                            436
                                                                       $20,000 
                                                                    $8,719,200 
                                                                             83
                                                                        $2,000 
                                                                      $166,000 
                                                                    $8,885,200 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            575
                                                                            483
                                                                        $2,000 
                                                                      $966,000 
                                                                             92
                                                                          $500 
                                                                       $46,000 
                                                                    $1,012,000 
Section 6
EPA-Initiated Risk Evaluation
                                                                           6.67
                                                                           6.67
                                                                    $2,000,000 
                                                                   $13,333,333 
                                                                               
                                                                               
                                                                               
                                                                   $13,333,333 
                                       
TOTAL
                                                                          1,113
                                                                            938
                                                                               
                                                                    $24,558,542
                                                                            175
                                                                               
                                                                      $212,000 
                                                                    $24,770,542
[a] Test Rules and ECAs are estimated to have one new action every 2 years. Thus, annualized costs are calculated accounting for the timing of the fee collected over a 3-year period.  EPA assumes that a Test Rule will be initiated in the first and third years of this analysis and one ECA will be initiated in the second year of this analysis.






Table 3-4: Discounted Total Costs of Proposed Option  
                            Submission Type/Action
                                  Total Costs
                      3-Year Total Cost with 3% Discount
                       3-Year Total Cost with 7% Discount
Section 4
 
 
 
Test Order
                                                                    $1,200,000 
                                                                    $3,496,164 
                                                                    $3,369,622 
Test Rule
                                                                      $246,703 
                                                                      $718,760 
                                                                      $692,745 
ECA
                                                                       $93,306 
                                                                      $271,845 
                                                                      $262,005 
Section 5
 
                                                                              
                                                                              
PMNs (including intermediates)/MCAN/SNUN
                                                                    $8,885,200 
                                                                   $25,886,761 
                                                                   $24,949,803 
TME/TERA/LVE/LoREX/Tier II
                                                                    $1,012,000 
                                                                    $2,948,431 
                                                                    $2,841,714 
Section 6
 
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                   $13,333,333 
                                                                   $38,846,263 
                                                                   $37,440,242 
 
                                                                               
                                                                               
                                                                               
TOTAL
                                                                   $24,770,542 
                                                                   $72,168,224 
                                                                   $69,556,132 

Table 3-5: Total Costs of Proposed Option Manufacturer-Requested Risk Evaluations
                            Submission Type/Action
                       Total Estimated Risk Evaluations
                                 Proposed Fee
                                  Total Cost
                      3-Year Total Cost with 3% Discount
                       3-Year Total Cost with 7% Discount
Work Plan Chemical
                                                                              1
                                                                    $1,964,446 
                                                                    $1,964,446 
                                                                    $5,723,354 
                                                                    $5,516,200 
Non-Work Plan Chemical
                                                                              2
                                                                    $3,928,893 
                                                                    $7,857,786 
                                                                   $22,893,421 
                                                                   $22,064,806 
Total
                                                                              3
                                                                              
                                                                    $9,822,232 
                                                                   $28,616,775 
                                                                   $27,581,006 

 Total Small Business Costs for Proposed Option
On average, EPA estimates that 1,476 firms will be affected by this proposed rule each year. Of the firms affected by the proposed rule each year, 307 (21%) are expected to be small businesses as defined by the SBA. EPA estimates that 16% (202) of Section 5 submissions will be from small businesses and 175 of these 202 submissions will be from small businesses with average annual sales less than $91 million in the three preceding years, so are eligible to pay discounted fees. 
For Sections 4 and 6, discounted fees for eligible small businesses and fees for all other affected firms may differ over the three years, since the fee paid by each firm is dependent on the number of affected firms. The total fee collected per action has to sum to the specified fee per action. As a result, if multiple firms are subject to fees and the small business(es) eligible for a discount decide to forgo associating with a consortium, EPA will determine fees using the number and type of affected firms per action. The general fee paid by each affected firm will be related to the total number of affected firms per action (or chemical) and taking into account lower fees for eligible small businesses:
 

Where:
Ps = the portion of the applicable fee to be collected from a small business that qualifies for a discount.
Po = the portion of the applicable fee to be collected from each other affected business. 
F = the total applicable fee to be collected per action.
Mt = the total number of affected firms for the chemical.
Ms = the number of affected small businesses for the chemical that qualify for a discount.

For Section 4 actions, based on the recent Section 4 actions for High Production Volume (HPV) chemicals, EPA estimates that each action involves an average of seven chemicals and that an average of four firms will be impacted per chemical. EPA further estimates that one of the four firms is a small business, none of which will be eligible for discounted fees. As a result, EPA estimates that 84 small businesses ((10 test orders + 1 test rule + 1 ECA) x 7 chemicals per Section 4 action x 1 small business impacted per chemical) will be involved in Section 4 actions each year. However, for Test Rules, EPA expects one action in the first and third years; and for ECAs, one action in the second year of the analysis. Since EPA does not expect any small businesses to be eligible for a discounted fee (based on the firms affected by the past HPV rules), the average fee per affected firm for Section 4 activities are estimated as followed: $4,286 ($120,000/28 firms) for Test Orders; $8,811 ($246,703/28 firms) for Test Rules; and $3,332 ($93,306/28 firms) for ECAs.  
Finally, for Section 6 actions, based on the average number of manufacturers per the initial 10 chemicals identified by EPA for risk evaluations, EPA estimates that seven manufacturers will be affected by each Section 6 action. Of these seven manufacturers, three are expected to be small businesses; two of the small businesses will be eligible for discounted fees based on their average annual sales for the previous three years. With seven Section 6 actions expected to be initiated each year at full implementation levels, EPA estimates that 21 small businesses will be affected by Section 6 actions each year. The average fees per affected firm for a Section 6 activity are as follows: $228,571 (0.8 x $2,000,000/7 firms) for two eligible small businesses and $308,571 ([$2,000,000  -  2 x $228,571]/5 firms) for other affected firms (including small businesses not eligible for the small business discount).   
For each of the three years to be covered by this proposed rule, EPA estimates that total fees paid by small businesses will account for about 25% of the $25 million maximum fees to be collected for Sections 4, 5 and 6 actions. Table 3-6 presents the estimated total small business annual costs for each action.

Table 3-6: Total Annual Small Business Costs for Proposed Option


                            Submission Type/Action
                  Small Business Firms paying Regular Fee (A)
                    Regular Fee per Subs & Actions 
(B)
                Small Business Firms paying Discounted Fee (C)
                         Discounted Fee per Submission
                                      (D)
       Small Business Estimated Annual Fee Recovery 
(E = A x B + C x D)
Section 4
 
 

                                                                               
 
Test Order
                                                                             70
                                                                        $4,286 
                                                                              0
                                                                        $2,143 
                                                                      $300,000 
Test Rule [a]
                                                                              7
                                                                        $8,811 
                                                                              0
                                                                        $4,405 
                                                                        $61,676
ECA [a]
                                                                              7
                                                                        $3,332 
                                                                              0
                                                                        $1,666 
                                                                        $23,327
Section 5
                                                                              
                                                                              
                                                                               
                                                                               
                                                                              
PMN/MCAN/SNUN
                                                                             13
                                                                       $20,000 
                                                                             83
                                                                        $2,000 
                                                                      $426,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                             14
                                                                        $2,000 
                                                                             92
                                                                          $500 
                                                                       $74,000 
Section 6
                                                                              
                                                                              
                                                                               
                                                                               
                                                                              
EPA-Initiated Risk Evaluation
                                                                              7
                                                                      $308,571 
                                                                             14
                                                                       $228,571
                                                                     $5,360,000
                                       
                                                                               
                                                                               
                                                                               
                                                                               
                                                                              
TOTAL
                                                                            118
                                                                               
                                                                            189
                                                                               
                                                                     $6,245,002
Note:
Number may not add up due to rounding.

[a] Test Rules and ECAs are estimated to have one new action every 2 years. Thus, annualized costs are calculated accounting for the timing of the fee collected over a 3-year period.  EPA assumes that a Test Rule will be initiated in the first and third years of this analysis and one ECA will be initiated in the second year of this analysis.


Over the three-year period covered by this proposed rule, EPA estimates that the discounted total fees paid by affected small businesses will be about $7 million per year. Table 3-7 presents the estimated discounted total fees (with 3% and 7% discount rates) expected to be paid by small businesses affected by this proposed rule.  
Table 3-7: Discounted Total Small Business Costs for Proposed Option
                            Submission Type/Action
                          Total Small Business Costs
                      3-Year Total Cost with 3% Discount
                      3-Year Total Cost with 7% Discount
Section 4
 
 
 
Test Order
                                                                      $300,000 
                                                                      $874,041 
                                                                      $842,405 
Test Rule
                                                                       $61,676 
                                                                      $179,690 
                                                                      $173,186 
ECA
                                                                       $23,327 
                                                                       $67,961 
                                                                       $65,501 
Section 5
 
 
 
PMN/MCAN/SNUN
                                                                      $426,000 
                                                                    $1,241,138 
                                                                    $1,196,216 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                       $74,000 
                                                                      $215,597 
                                                                      $207,793 
Section 6
                                                                               
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                    $5,360,000 
                                                                   $15,616,198 
                                                                   $15,050,977 
                                       

                                                                               
                                                                              
TOTAL
                                                                    $6,245,002 
                                                                   $18,194,625 
                                                                   $17,536,080 

Baseline Costs
Before the 2016 amendment to TSCA, EPA was authorized to collect fees for only select TSCA Section 5 and Section 4 actions. However, EPA only ever collected fees for certain Section 5 activities. As mentioned in Section 1.2 of this document, under TSCA Section 6, there were formerly no fee costs for firms. Baseline costs for this proposed rule are based on the fees that EPA actually collected under TSCA before the 2016 amendment. Baseline costs do not include fees that EPA was authorized to collect but never implemented.
The submission fees for the various Section 5 actions before the 2016 amendment were limited to not be greater than the following amounts: 
       PMNs and consolidated PMNs: $2,500
       Intermediate PMNs: $1,000
       SNUNs: $2,500.
       Exemption applications:  $2,500 
       Exemption notices: $2,500 
       MCANs and consolidated MCANs: $2,500  
EPA does not collect fees for exemptions. As a result, EPA has not included the fees for exemptions in the baseline cost estimates.
Baseline Costs for Small Businesses
Firms determined to be small businesses based on EPA's 1988 definition of $40 million were charged fees capped by statute at $100 for any of the Section 5 submissions. For the purposes of TSCA Section 5 submissions, EPA defined small businesses eligible to pay a discounted fee as firms with average annual sales less than $40 million. This means that it was likely for some firms designated as small businesses by SBA standards not to be considered eligible small businesses to pay the discounted fee by the EPA definition and, therefore, be required to pay the general fee for Section 5 submissions. EPA estimated the number of small businesses that pay the general fee using the relationship between the number of firms in the affected NAICS codes that are small businesses by the EPA and SBA definitions. Using this procedure, EPA estimates that 14 small businesses currently pay the general fee for PMN/SNUN/MCAN submissions. Using historical averages of TSCA submissions, total baseline costs for all Sections are shown in Table 3-8. Under Section 5, total baseline annualized costs are estimated at $1,203,700, with small businesses comprising 0.76 percent of the total collection.

Table 3-8: Total Baseline Costs
                            Submission Type/Action
                   Total Estimated Actions & Submissions
                     Estimated Regular Fee Submissions (A)
                  General Industry Fee per Sub/Action     (B)
                Estimated Annual Fee Recovery        (C= A x B)
                Small Business Estimated Subs & Actions (D)
                 Small Business Fee per Subs & Actions (E)
       Small Business Estimated Annual Fee Recovery          (F = D x E)
           Total General Industry & Small Business Cost (C + F)
Section 4
Test Order [a]
                                                                               
                                                                               
                                                                            $0 
                                                                            $0 
                                                                               
                                                                            $0 
                                                                            $0 
                                                                            $0 
Test Rule [b]
                                                                               
                                                                               
                                                                            $0 
                                                                            $0 
                                                                               
                                                                            $0 
                                                                            $0 
                                                                            $0 
ECA [b]
                                                                               
                                                                               
                                                                            $0 
                                                                            $0 
                                                                               
                                                                            $0 
                                                                            $0 
                                                                            $0 
Section 5
PMNs/MCAN/SNUN
                                                                            563
                                                                            473
                                                                        $2,500 
                                                                    $1,182,500 
                                                                             90
                                                                          $100 
                                                                        $9,000 
                                                                    $1,191,500 
Intermediate PMNs
                                                                             14
                                                                             12
                                                                        $1,000 
                                                                       $12,000 
                                                                              2
                                                                          $100 
                                                                          $200 
                                                                       $12,200 
TME/TERA/LVE/LoREX/Tier II
                                                                            639
                                                                            537
                                                                            $0 
                                                                            $0 
                                                                            102
                                                                            $0 
                                                                            $0 
                                                                            $0 
5(h)(2) Exemptions [c]
                                                                              0
                                                                              0
                                                                        $2,500 
                                                                            $0 
                                                                              0
                                                                          $100 
                                                                            $0 
                                                                            $0 
Film Articles [c]
                                                                              0
                                                                              0
                                                                        $2,500 
                                                                            $0 
                                                                              0
                                                                          $100 
                                                                            $0 
                                                                            $0 
Section 6
EPA-Initiated Risk Evaluation [d]
                                                                               
                                                                               
                                                                            $0 
                                                                            $0 
                                                                               
                                                                            $0 
                                                                            $0 
                                                                            $0 
                                                                              
TOTAL
                                                                               
                                                                               
                                                                               
                                                                   $1,194,500  
                                                                               
                                                                               
                                                                        $9,200 
                                                                   $1,203,700  
a Test Orders are a new action under TSCA, as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act.
[b] EPA has not proposed any Section 4 Test Rules or entered into ECAs in the recent past. Since no fees are currently required for these actions, the baseline industry cost for these actions is $0.
[c] EPA has historically not collected any fees associated with these exemptions.
[d] Risk Evaluations are new Sections 6 actions so the baseline cost for these Section 6 actions is $0.   


Incremental Costs of Proposed Option
Compared to the baseline, the total annualized incremental cost of the Proposed Option is $23,567,642, with $1,540,009 from Section 4 fees, $8,694,300 from Section 5 fees, and $13,333,000 from Section 6 fees, as shown in Table 3-9. Total incremental costs have been discounted at a 3 percent and 7 percent rate over a 3-year period.
Table 3-9: Incremental Costs of Proposed Option
                            Submission Type/Action
                                Baseline Costs
                        Total Costs of Proposed Option
                     Incremental Costs of Proposed Option
                   3-Year Incremental Cost with 3% Discount
                   3-Year Incremental Cost with 7% Discount
Section 4
 
 
 
 
 
Test Order
                                                                            $0 
                                                                    $1,200,000 
                                                                    $1,200,000 
                                                                    $3,496,164 
                                                                    $3,369,622 
Test Rule
                                                                            $0 
                                                                      $246,703 
                                                                      $246,703 
                                                                      $718,760 
                                                                      $692,745 
ECA
                                                                            $0 
                                                                       $93,306 
                                                                       $93,306 
                                                                      $271,845 
                                                                      $262,005 
Section 4 Total
                                                                            $0 
                                                                    $1,540,009 
                                                                    $1,540,009 
                                                                    $4,486,769 
                                                                    $4,324,373 
Section 5
 
 
 
                                                                              
                                                                              
PMNs (including intermediates)/MCAN/SNUN
                                                                    $1,203,700 
                                                                    $8,886,000 
                                                                    $7,682,300 
                                                                   $22,382,148 
                                                                   $21,572,038 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            $0 
                                                                    $1,012,000 
                                                                    $1,012,000 
                                                                    $2,948,431 
                                                                    $2,841,714 
Section 5 Total
                                                                    $1,203,700 
                                                                    $9,898,000 
                                                                    $8,694,300 
                                                                   $25,330,580 
                                                                   $24,413,752 
Section 6
 
 
 
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                            $0 
                                                                   $13,333,333 
                                                                   $13,333,333 
                                                                   $38,846,263 
                                                                   $37,440,242 
Total
                                                                    $1,203,700 
                                                                   $24,771,342 
                                                                   $23,567,642 
                                                                   $68,663,611 
                                                                   $66,178,367 

The total annualized incremental cost of manufacturer-requested risk evaluations under the Proposed Option is $9,822,000, as shown in Table 3-10. Total annualized incremental costs for manufacturer-requested risk evaluations have also been discounted at 3 percent and 7 percent over a three-year period.
Table 3-10: Proposed Option Incremental Costs of Manufacturer-Requested Risk Evaluations
                            Submission Type/Action
                                Baseline Costs
                        Total Costs of Proposed Option
                     Incremental Costs of Proposed Option
                   3-Year Incremental Cost with 3% Discount
                   3-Year Incremental Cost with 7% Discount
Work Plan Chemical
                                                                            $0 
                                                                    $1,964,446 
                                                                    $1,964,446 
                                                                    $5,723,354 
                                                                    $5,516,200 
Non-Work Plan Chemical
                                                                            $0 
                                                                    $7,857,786 
                                                                    $7,857,786 
                                                                   $22,893,421 
                                                                   $22,064,806 
Total
                                                                             $0
                                                                    $9,822,232 
                                                                    $9,822,232 
                                                                   $28,616,775 
                                                                   $27,581,006 

Incremental costs per firm are shown in Table 3-11. To determine the number of firms per action under Section 4, EPA used historical averages of the number of affected manufacturers per chemical from the three recent Test Rules for HPV chemicals and assumed an average of 7 chemicals involved per Section 4 action and 4 affected firms per chemical. Section 5 activities involve one firm per action and Section 6 activities use the average number of affected manufacturers per chemical for the first ten chemicals for review under TSCA as amended by the Frank R. Lautenberg Chemical Safety for the 21[st] Century Act. It should be noted that EPA expects each firm to incur these costs once during the three-year period of the proposed rule; these are not annual recurring costs.
Table 3-11: Incremental Costs per Firm of Proposed Option
                            Submission Type/Action
                 Total Estimated Actions & Submissions (A)
                      Number of Firms per Action     (B)
               Total Number of Firms per Action      (C = A x B)
                       Incremental Cost of Proposed Fee
                                      (D)
                 Incremental Cost Per Firm           (E = D/C)
Section 4
 
 
 
 
 
Test Order
                                                                             10
                                                                             28
                                                                            280
                                                                    $1,200,000 
                                                                        $4,286 
Test Rule
                                                                              1
                                                                             28
                                                                             28
                                                                      $246,703 
                                                                        $8,811 
ECA
                                                                              1
                                                                             28
                                                                             28
                                                                       $93,306 
                                                                        $3,332 
Section 5
 
 
 
 
 
PMNs (including intermediates)/MCAN/SNUN
                                                                            519
                                                                              1
                                                                            519
                                                                    $7,682,300 
                                                                       $14,802 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            575
                                                                              1
                                                                            575
                                                                    $1,012,000 
                                                                        $1,760 
Section 6
 
 
 
 
 
EPA-Initiated Risk Evaluation
                                                                           7[a]
                                                                              7
                                                                             49
                                                                   $13,333,333 
                                                                      $285,714 
[a] Amount is rounded

Incremental Costs for Small Businesses
Compared to the baseline, the total annualized small business incremental cost for the Proposed Option is $6,235,802 as shown in Table 3-12. Total small business incremental costs have been discounted over a three-year period at 3 and 7 percent discount rates, respectively. EPA provides a more specific analysis of small business impacts in Section 5.4. 

Table 3-12: Proposed Option Incremental Costs of Small Businesses
                            Submission Type/Action
                                Baseline Costs
                          Total Costs of Proposed Fee
                       Incremental Costs of Proposed Fee
                   3-Year Incremental Cost with 3% Discount
                   3-Year Incremental Cost with 7% Discount
Section 4
 
 
 
 
 
Test Orders
                                                                            $0 
                                                                      $300,000 
                                                                      $300,000 
                                                                      $874,041 
                                                                      $842,405 
Test Rules
                                                                            $0 
                                                                       $61,676 
                                                                       $61,676 
                                                                      $179,690 
                                                                      $173,186 
ECAs
                                                                            $0 
                                                                       $23,327 
                                                                       $23,327 
                                                                       $67,961 
                                                                       $65,501 
Section 5
 
 
 
 
 
PMNs (including intermediates)/MCAN/SNUN
                                                                        $9,200 
                                                                      $426,000 
                                                                      $416,800 
                                                                    $1,214,334 
                                                                    $1,170,382 
TME/TERA/LVE/LoREX/Tier II
                                                                            $0 
                                                                       $74,000 
                                                                       $74,000 
                                                                      $215,597 
                                                                      $207,793 
Section 6
                                                                              
                                                                               
                                                                              
                                                                               
                                                                               
EPA-Initiated Risk Evaluations
                                                                            $0 
                                                                    $5,360,000 
                                                                     $5,360,000
                                                                   $15,616,198 
                                                                   $15,050,977 
Total
                                                                        $9,200 
                                                                    $6,245,002 
                                                                    $6,235,802 
                                                                   $18,167,821 
                                                                   $17,510,246 

Alternative Option
This section describes the alternative fee structure examined by EPA and the corresponding total cost and incremental cost for this alternative option under the proposed rule. Section 3.7.1 presents the fee structure for the Alternative Option while Section 3.7.2 and 3.7.3 cover the total and incremental cost of the Alternative Option, respectively.
Alternative Option Fee Structure
Table 3-13 shows the fee structure under the Alternative Option. The Alternative Option fees for Section 4 and Section 5 activities are significantly lower than the Proposed Option. Section 5 small business fees remain the same as the Proposed Option as do the fees for manufacturer-requested risk evaluations. The difference lies in the fee for Section 6 EPA-initiated risk evaluations, which is increased to subsidize the fees for Section 4 and 5 actions.
Table 3-13: Alternative Option Fee Structure
                            Submission Type/Action
                  Total Annual Estimated Actions/Submissions
                                 Proposed Fee
                          Proposed Small Business Fee
Section 4
 
 
 
Test Order
                                                                             10
                                                                       $18,000 
                                                                        $9,000 
Test Rule
                                                                              1
                                                                       $56,000 
                                                                       $28,000 
ECA
                                                                              1
                                                                       $43,000 
                                                                       $21,500 
Section 5
 
 
 
PMNs (including intermediates)/MCAN/SNUN
                                                                            519
                                                                       $12,000 
                                                                        $2,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            575
                                                                        $1,000 
                                                                          $500 
Section 6
 
 
 
EPA-Initiated Risk Evaluation
                                                                              7
                                                                    $2,750,000 
                                                                    $2,200,000 

Alternative Option Total Costs
Total annualized costs for the Alternative Option sum to $24,492,001as shown in Table 3-14. For the Alternative Option, Section 5 fees account for 24.2 percent of total fee revenue and Section 6 fees make up 74.9 percent, compared to 40.0 percent and 53.8 percent, respectively, in the Proposed Option. Section 4 fees comprise a small share of the total fee revenue in both options, at 6.2 percent and 1.1 percent for the Proposed Option and the Alternative Option, respectively. In Table 3-15, 3-year total costs are discounted by 3 and 7 percent.
Table 3-14: Total Costs of the Alternative Option
                            Submission Type/Action
                   Total Estimated Actions & Submissions
                     Estimated Regular Fee Submissions (A)
                  General Industry Fee per Sub/Action     (B)
                Estimated Annual Fee Recovery        (C= A x B)
                Small Business Estimated Subs & Actions (D)
                 Small Business Fee per Subs & Actions (E)
       Small Business Estimated Annual Fee Recovery          (F = D x E)
           Total General Industry & Small Business Cost (C + F)
Section 4
Test Order
                                                                             10
                                                                             10
                                                                       $18,000 
                                                                      $180,000 
                                                                               
                                                                               
                                                                               
                                                                      $180,000 
Test Rule [a]
                                                                              1
                                                                              1
                                                                       $56,000 
                                                                       $37,339 
                                                                               
                                                                               
                                                                               
                                                                       $37,339 
ECA [a]
                                                                              1
                                                                              1
                                                                       $43,000 
                                                                       $14,329 
                                                                               
                                                                               
                                                                               
                                                                       $14,329 
Section 5
PMNs (including intermediates)/MCAN/SNUN
                                                                            519
                                                                            436
                                                                       $12,000 
                                                                    $5,232,000 
                                                                             83
                                                                        $2,000 
                                                                      $166,000 
                                                                    $5,398,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            575
                                                                            483
                                                                        $1,000 
                                                                      $483,000 
                                                                             92
                                                                          $500 
                                                                       $46,000 
                                                                      $529,000 
Section 6
EPA-Initiated Risk Evaluation
                                                                          7 [b]
                                                                          7 [b]
                                                                    $2,750,000 
                                                                    $18,333,333
                                                                               
                                                                               
                                                                               
                                                                  $18,333,333  
                                       
TOTAL
                                                                          1,113
                                                                            938
                                                                               
                                                                    $24,280,001
                                                                               
                                                                               
                                                                      $212,000 
                                                                    $24,492,001
[a] Test Rules and ECAs are estimated to have one new action every 2 years. Thus annualized costs are calculated accounting for the timing of the fee collected over a 3-year period.
[b] Amount is rounded

Table 3-15: Discounted Total Costs of the Alternative Option  
                            Submission Type/Action
                                  Total Costs
                       3-Year Total Cost with 3% Discount
                      3-Year Total Cost with 7% Discount
Section 4
 
 
 
Test Order
                                                                      $180,000 
                                                                      $524,425 
                                                                      $505,443 
Test Rule
                                                                       $37,339 
                                                                      $108,785 
                                                                      $104,848 
ECA
                                                                       $14,329 
                                                                       $41,748 
                                                                       $40,237 
Section 5
 
                                                                               
                                                                               
PMNs (including intermediates)/MCAN/SNUN
                                                                    $5,398,000 
                                                                   $15,726,909 
                                                                   $15,157,682 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                      $529,000 
                                                                    $1,541,225 
                                                                    $1,485,442 
Section 6
 
                                                                               
                                                                               
EPA-Initiated Risk Evaluation
                                                                   $18,333,333 
                                                                   $53,413,611 
                                                                   $51,480,333 
 
                                                                               
                                                                               
                                                                               
TOTAL
                                                                   $24,492,001 
                                                                   $71,356,703 
                                                                   $68,773,985 

Total Small Business Costs for the Alternative Option
As explained in section 3.7.1, the difference between fees to be paid under the Proposed Option and the Alternative Option are in Section 4 and Section 5 fees being lowered with an increase in the fees for EPA-initiated risk evaluations under Section 6. However, the small business fees for Section 5 activities remain unchanged from the Proposed Option. As a result, the costs for small businesses differ for the small businesses that will pay the general fee and those that will be involved in the seven risk evaluations. As a result, the estimated total annual fee burden paid by small businesses is $8,689,917, compared with $6,892,003 for the Proposed Option. 
Table 3-16: Total Annual Small Business Costs for the Alternative Option


                            Submission Type/Action
                   Small Business Firms paying Regular Fee 
                                      (A)
                    Regular Fee per Subs & Actions 
(B)
                Small Business Firms paying Discounted Fee (C)
                         Discounted Fee per Submission
                                      (D)
       Small Business Estimated Annual Fee Recovery 
(E = A x B + C x D)
Section 4
 
 

                                                                               
 
Test Order
                                                                             70
                                                                          $643 
                                                                               
                                                                               
                                                                       $45,000 
Test Rule
                                                                              7
                                                                        $2,000 
                                                                               
                                                                               
                                                                        $9,335 
ECA
                                                                              7
                                                                        $1,536 
                                                                               
                                                                               
                                                                        $3,582 
Section 5
 
 
                                                                               
                                                                               
 
PMN/MCAN/SNUN
                                                                             13
                                                                       $12,000 
                                                                             83
                                                                        $2,000 
                                                                      $322,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                             14
                                                                        $1,000 
                                                                             92
                                                                          $500 
                                                                       $60,000 
Section 6
 
 
                                                                               
                                                                               
 
EPA-Initiated Risk Evaluation
                                                                             21
                                                                      $392,857 
                                                                               
                                                                               
                                                                    $8,250,000 
                                       
                                       
                                       
                                                                               
                                                                               
                                       
TOTAL
                                                                            125

                                                                            175
                                                                               
                                                                     $8,689,917

Alternative Option Incremental Costs
For the Alternative Option, the total annualized incremental costs of Section 4 and 5 actions decrease to $231,700 and $4,723,300, respectively, while the total incremental cost for Section 6 actions increases to $18,333,300 compared to the Proposed Option.  The overall total annualized incremental cost of the Alternative Option is $23,288,300, with discounted values at 3 and 7 percent over a 3-year time span, as shown in Table 3-17.
Table 3-17: Incremental Costs of the Alternative Option
                            Submission Type/Action
                                Baseline Costs
                          Total Costs of Proposed Fee
                       Incremental Costs of Proposed Fee
                   3-Year Incremental Cost with 3% Discount
                   3-Year Incremental Cost with 7% Discount
Section 4
 
 
 
 
 
Test Order
                                                                            $0 
                                                                      $180,000 
                                                                      $180,000 
                                                                      $524,425 
                                                                      $505,443 
Test Rule
                                                                            $0 
                                                                       $37,339 
                                                                       $37,339 
                                                                      $108,785 
                                                                      $104,848 
ECA
                                                                            $0 
                                                                       $14,329 
                                                                       $14,329 
                                                                       $41,748 
                                                                       $40,237 
Section 5
 
 
 
 
 
PMN/MCAN/SNUN
                                                                    $1,203,700 
                                                                    $5,398,000 
                                                                    $4,194,300 
                                                                   $12,219,966 
                                                                   $11,777,671 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                            $0 
                                                                      $529,000 
                                                                      $529,000 
                                                                    $1,541,225 
                                                                    $1,485,442 
Section 6
 
                                                                               
                                                                               
                                                                               
                                                                               
EPA-Initiated Risk Evaluation
                                                                            $0 
                                                                   $18,333,333 
                                                                   $18,333,333 
                                                                   $53,413,611 
                                                                   $51,480,333 
Total
                                                                    $1,203,700 
                                                                   $24,492,001 
                                                                   $23,288,301 
                                                                   $67,849,760 
                                                                   $65,393,973 

Small Business Incremental Costs
Compared with the Proposed Option, small business incremental costs are higher overall for the Alternative Option, due to the increased fee for Section 6 actions. However, under the Alternative Option, the small business incremental costs for Section 4 and Section 5 activities separately, are lower than their counterparts in the Proposed Option. Table 3-18 presents the annual small business incremental cost and the corresponding discounted costs over the three-year period of analysis for this proposed rule.
Table 3-18: Alternative Option Small Business Incremental Costs
                            Submission Type/Action
                                Baseline Costs
                          Total Costs of Proposed Fee
                       Incremental Costs of Proposed Fee
                   3-Year Incremental Cost with 3% Discount
                   3-Year Incremental Cost with 7% Discount
Section 4
 
 
 
 
 
Test Orders
                                                                            $0 
                                                                       $45,000 
                                                                       $45,000 
                                                                      $131,106 
                                                                      $126,361 
Test Rules
                                                                            $0 
                                                                        $9,335 
                                                                        $9,335 
                                                                       $27,196 
                                                                       $26,212 
ECAs
                                                                            $0 
                                                                        $3,582 
                                                                        $3,582 
                                                                       $10,437 
                                                                       $10,059 
Section 5
 
                                                                               
 
 
 
PMNs (including intermediates)/MCAN/SNUN
                                                                        $9,200 
                                                                      $322,000 
                                                                      $312,800 
                                                                      $911,333 
                                                                      $878,348 
TME/TERA/LVE/LoREX/Tier II
                                                                            $0 
                                                                       $60,000 
                                                                       $60,000 
                                                                      $174,808 
                                                                      $168,481 
Section 6
                                                                              
                                                                               
                                                                              
                                                                               
                                                                               
EPA-Initiated Risk Evaluations
                                                                            $0 
                                                                    $8,250,000 
                                                                    $8,250,000 
                                                                   $24,036,125 
                                                                   $23,166,150 
Total
                                                                        $9,200 
                                                                    $8,689,917 
                                                                     $8,680,717
                                                                   $25,291,006 
                                                                   $24,375,611 

Benefits
The proposed rule would require manufacturers (including importers) and processors of chemical substances subject to TSCA Sections 4, 5, and 6 to pay designated fees applicable to certain information, notices and data submitted to the Agency. These fees will be deposited in the U.S. Treasury's TSCA Service Fees Fund and used to defray the costs of administering TSCA Sections 4, 5, 6, and 14. Thus, the main benefit of this proposed rule is to provide EPA with a sustainable source of funding. This chapter describes the benefits of the proposed rule.
Funding for Program Implementation 
In developing the Lautenberg Act, Senator Udall noted the importance of providing EPA with a "sustained source of funding for implementation." (161 Cong. Rec. S8872, 2015). Accordingly, the intent, and main benefit, of this proposed rule is to defray the costs of administering TSCA Sections 4, 5, and 6, and collecting, processing, reviewing, providing access to, and protecting from disclosure as appropriate, the information collected under those programs. 
As described in this Economic Analysis, EPA is authorized to collect $25 million per year for the next 3 years in fees established under this proposed rule. This represents less than 25% of the total cost for implementing regulations under TSCA Sections 4, 5, 6, and 14 (see Appendix A). This sustained source of funding allows EPA to ensure that the appropriate amount of staff time and other resources (including contractor costs) are allocated to implementing these programs.
The benefits to society of regulations under TSCA Sections 4, 5, and 6 are described in detail in the Economic Analyses associated with each of the rules promulgated for specific chemicals. They are described in general terms in the following sections.
Benefits of Regulations under TSCA Section 4 
Under TSCA Section 4, EPA promulgates regulations requiring the testing of chemical substances and mixtures. The testing is required to provide information on health or environmental effects when there is insufficient information for EPA risk assessors to be able to determine whether a chemical substance or mixture presents an unreasonable risk to health or the environment. The benefits of testing requirements result from the development of a basic set of hazard information on the regulated chemical substances, and the use of this information by the public, industry, and government. The information developed as a result of Section 4 rules is made publicly available and yields benefits resulting from the direct use of the information. That is, publicly available information on a chemical's risks is likely to result in (a) a reduction in the costs of risk-based decisions about the chemical, and (b) an improvement in the expected outcome of the decisions.
The specific tests required under a Section 4 test rule provide screening-level hazard and environmental fate information, used to determine whether more research is warranted to completely characterize the hazards and risks associated with the chemical. Screening-level tests that provide information on the toxicity of a chemical (e.g., aquatic toxicity, mammalian toxicity) provide information on the health and environmental effects of the chemical, and can be used to help assess how hazardous the chemical is to the populations exposed. Results of these screening-level tests  -  and any further research as necessary  -  may help reveal the need for special containers and storage procedures, engineering controls, and personal protective equipment in the workplace to adequately control health and environmental risks associated with manufacture, processing, and/or use of the chemicals. A risk evaluation is not complete without an estimation of the level of population exposure, which is why physical/chemical properties and environmental fate and pathways tests are needed. These tests show how the chemical may interact with the environment or the body, and the methods by which it may be dispersed. The information developed from these tests benefits workers, consumers, or persons living in locations impacted by chemical emissions, as government regulation and response to long-term and emergency releases can be more targeted and effective. In particular, the tests help agencies prioritize the regulation of chemical emissions based on the level of exposure.
Benefits of Regulations under TSCA Section 5 
TSCA Section 5 requires that any person who proposes to manufacture (which includes import) a "new chemical" (i.e., a chemical not listed on the TSCA Section 8(b) Inventory) must provide a pre-manufacture notice (PMN) or an exemption application to EPA at least 90 days prior to commencing manufacture of that chemical. Under TSCA Section 5, EPA is authorized to determine that a use of a chemical substance is a significant new use and promulgate a significant new use rule (SNUR). In certain instances, persons may opt to pursue that use, in which case they must submit a notice and undergo a review. For such circumstances, TSCA Section 5 requires a significant new use notice (SNUN) from any person who proposes to manufacture or process a chemical for a use that is determined by EPA to be a "significant new use."
The benefit of PMN and SNUN submissions is that they provide EPA with the opportunity to evaluate the intended use of a chemical and, if necessary, to prohibit or limit that activity before it occurs. They allow the Agency to take immediate action to mitigate an activity that the Agency deems harmful to the environment or human health. The specific benefit of each action depends on the characteristics and risk associated with the regulated chemical(s).
Benefits of Regulations under TSCA Section 6 
Under TSCA Section 6, EPA may issue rulemaking to ban or place limitations on manufacturing, processing or use of a chemical if EPA finds that there is a reasonable basis to conclude that a chemical's manufacture, processing, distribution, use or disposal presents an unreasonable risk. Specifically, Section 6(a) authorizes EPA to:
 Prohibit or limit manufacture, processing, or distribution in commerce;
 Prohibit or limit the manufacture, processing, or distribution in commerce of the chemical substance above a specified concentration;
 Require adequate warnings and instructions with respect to use, distribution, or disposal;
 Require manufacturers or processors to make and retain records;
 Prohibit or regulate any manner of commercial use;
 Prohibit or regulate any manner of disposal; and/or
 Require manufacturers or processors to give notice of the unreasonable risk of injury, and to recall products if required.
The benefits of regulations under TSCA Section 6 (and the risk evaluations that may precede these regulations) can be measured in terms of the illness or deaths avoided by reduction in exposure to the chemical(s). Benefit analyses for such regulations use information on chemical releases, exposure, health and ecological risk, and provide the monetized value of risk reduction. 

Small Entity Analysis
This chapter addresses the potential impacts of the proposed rule on small entities. Section 5.1 discusses the regulatory requirement for this analysis. Section 5.2 describes the methodology used to determine the impacts on small entities. Section 5.3 presents the data and calculations used in the small entity analysis. Section 5.4 summarizes the results of the small entity analysis. 
 Regulatory Requirement for Small Business Analysis
The Regulatory Flexibility Act (RFA) of 1980, amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities including businesses, nonprofit organizations, and governments. In some instances, agencies are also required to examine regulatory alternatives that may reduce adverse economic effects on significantly impacted 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. The RFA, however, does not specifically define "a significant economic impact on a substantial number" of small entities. Sections 603 and 604 of the RFA require that regulatory flexibility analyses identify the types and estimate the numbers of small entities to which the rule will apply; and describe the rule requirements to which small entities will be subject and any regulatory alternatives, including exemptions and deferral, which would lessen the rule's burden on small entities. 
This analysis considers the impacts of the proposed rule on small entities in the affected industry sectors. The impact of this proposed rule is the fee that firms will be expected to pay for all TSCA Section 4, Section 5, and Section 6 actions identified by EPA. Affected firms with average annual sales for the preceding three years less than $91 million will pay discounted fees compared with affected firms with average annual revenues of $91 million or more.
PMN/MCAN/SNUN submitters and TME/TERA/LVE/LoREX/Tier II/Film Article exemption submitters with average sales less than $91 million will pay reduced fees of $2,000 and $500, respectively.  
EPA expects multiple manufacturers/processors to be subject to each Section 4 and 6 action and intends to allow consortia to be formed to determine how the fees will be split amongst the affected entities subject to the fees. While the proposed rule encourages a discount be given to eligible small businesses, it is up to the consortia to determine the actual discount amount for each eligible small business. In the event that only one company is subject to the fee for a particular Section 4 or Section 6 activity and that company qualifies as a small business as defined by the proposed rule (i.e., annual average sales less than $91 million), EPA proposes providing a fee reduction of 50 percent for a Section 4 activity or 20 percent for a Section 6 activity. 
       Definition of Small Entities
Small entities include small businesses, small organizations, and small governmental jurisdictions. However, small entities to be affected by this proposed rule are not expected to be small organizations or government jurisdictions. SBA provides the authoritative standard on what constitutes a "small" business in the United States. Federal programs and regulations concerning small businesses generally adhere to SBA's size standards. SBA's size standards can be found in the Code of Federal Regulations (CFR) Part 121. The SBA determines the definition of small businesses based on either annual firm revenue or the number of firm employees, depending on the industry sector. Table 5-1 presents the list NIACS codes will most likely contain affected firms.
Table 5-1: SBA Small Business Definitions for Affected Sectors
 
                                  NAICS Code
                               NAICS Description
                              Employee Threshold
                                    324110
Petroleum refineries
                                     1,500
                                    325110
Petrochemical manufacturing
                                     1,000
                                    325120
Industrial gas manufacturing
                                     1,000
                                    325130
Synthetic organic dye and pigment manufacturing
                                     1,000
                                    325180
All other basic inorganic chemical manufacturing
                                     1,000
                                    325193
Ethyl Alcohol Manufacturing
                                     1,000
                                    325194
Cyclic crude and intermediate manufacturing
                                     1,250
                                    325199
All other basic organic chemical manufacturing
                                     1,250
                                    325211
Plastics material and resin manufacturing
                                     1,250
                                    325212
Synthetic Rubber Manufacturing
                                     1,000
                                    325220
Artificial and Synthetic Fibers and Filaments Manufacturing
                                     1,000
                                    325311
Nitrogenous Fertilizer Manufacturing
                                     1,000
                                    325312
Phosphatic Fertilizer Manufacturing
                                      750
                                    325314
Fertilizer (Mixing Only) Manufacturing
                                      500
                                    325320
Pesticide and Other Agricultural Chemical Manufacturing
                                     1,000
                                    325411
Medicinal and botanical manufacturing
                                     1,000
                                    325412
Pharmaceutical preparation manufacturing
                                     1,250
                                    325413
In-Vitro Diagnostic Substance Manufacturing
                                     1,250
                                    325414
Biological Product (except Diagnostic) Manufacturing
                                     1,250
                                    325510
Paint and Coating Manufacturing
                                     1,000
                                    325520
Adhesive manufacturing
                                      500
                                    325611
Soap and other detergent manufacturing
                                     1,000
                                    325612
Polish and other sanitation good manufacturing
                                      750
                                    325613
Surface active agent manufacturing
                                      750
                                    325620
Toilet Preparation Manufacturing
                                     1,250
                                    325910
Printing Ink Manufacturing
                                      500
                                    325920
Explosives Manufacturing
                                      750
                                    325991
Custom compounding of purchased resins
                                      500
                                    325992
Photographic film, paper, plate, and chemical manufacturing
                                     1,500
                                    325998
All other miscellaneous chemical product and preparation manufacturing
                                      500
                                    424690
Other Chemical and Allied Products Merchant Wholesalers
                                      150
                                    424710
Petroleum Bulk Stations and Terminals
                                      200
                                    424720
Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
                                      200
Source: EPA, 2007 and 2008; Census, 2015
 
 

Note that the SBA definitions of small are different than the definition of "small business" eligible for fee discounts in the proposed rule (i.e., firms with annual average sales in the preceding three years less than $91 million); therefore, only some SBA-defined small businesses would pay the discounted fees. SBA-defined small businesses with annual average sales for the preceding three years averaging $91 million or more will pay the general proposed fees.
 Methodology Overview
As mentioned above, the RFA considers whether a rule would have a significant economic impact on a substantial number of small entities (SISNOSE). This analysis establishes that only 307 small businesses, as defined by the SBA size standards, are expected to be affected by this proposed rule each year, and the cost impacts are estimated to be significant for only 14 of those small businesses. 
The SBA size standards are measured at the firm or parent company level. This analysis also estimates a potential impact on small businesses at the highest level of corporate structure, known as a parent company, which incorporates the enterprise with its affiliates. The cost impact is assessed at the parent company level rather than at the facility level because parent companies are ultimately responsible for the compliance costs of individual facilities. Therefore, both costs and revenue figures are estimated at the parent company level. To estimate parent company (or entity) annual cost, EPA did not have to aggregate costs of individual facilities to their parent companies because data used in this analysis is presented as parent company-level submissions. Similarly, the revenue data reported by the Census were obtained at the firm level, which is an equivalent of a parent company.
Ideally, EPA would conduct a detailed small entity analysis at the parent company level as follows: 
 Identify parent companies (and their revenues) of affected entities using databases such as Dun & Bradstreet (D&B);
 Estimate annual compliance costs (amount of fees to be paid per year) at the parent company level; 
 Estimate cost impacts for individual parent companies. 
However, while EPA may have a list of names of parent companies that have been subject to TSCA Sections 4, 5, and 6 actions in past years, the information provided may not be sufficient to identify each individual parent company. In addition, a firm that was previously subject to a TSCA action will not necessarily be subject to a future action. As a result, the Agency conducted a small entity analysis at the industry sector level as follows:
 Identify NAICS codes for the affected companies (six-digit NAICS codes for chemical manufacturers, petroleum refineries, and chemical and petroleum wholesalers.).
 Obtain the annual average revenue distribution for parent entities in the affected NAICS codes using U.S. Census data (revenue data at the firm level were used as an equivalent for parent-level sales data). 
 Within the affected NAICS code categories, identify the percentage of small businesses based on the SBA definitions and the EPA threshold for parent entities eligible for discounted fees.
 Estimate the annual cost impact and the percentage of small parent entities expected to experience an impact of less than 1 percent, between 1 percent and 3 percent, and more than 3 percent.
 Small Entity Analysis Calculations and Results 
       Estimating the Universe of Affected Entities
EPA did not have data on the full universe of affected entities that might be subject to fees under TSCA Sections 4, 5, and/or 6. EPA expects that entities potentially affected by the proposed rule will be chemical manufacturers and processors, petroleum refineries, and chemical and petroleum wholesalers. EPA included the six-digit NAICS codes within the Chemical Manufacturing sector (with the 325 three-digit NAICS Code), the six-digit NAICS code denoting Petroleum Refineries (324110), and the three 6-digit NAICS codes representing Chemical and Petroleum Merchant Wholesalers (424690, 424710, and 424720). This resulted in 33 six-digit NAICS codes (see Table 2-1 above for full list). 
EPA used these 33 NAICS categories as a basis for estimating the universe of potentially affected entities. The set of affected entities is likely to change from year to year, so new firms are likely to enter the universe in the future. However, EPA believes that the core industry sector categories associated with companies subject to the TSCA Sections affected by this proposed rule are likely to stay the same. Therefore, the number of entities within the identified NAICS codes would serve as an appropriate measure of the affected universe. It is important to note that some entities within the affected NAICS codes would never need to pay fees under any one of the TSCA Sections subject to this proposed rule. Therefore, this method is likely to overestimate the total number of potentially affected entities. 
       Estimating Annual Revenue for Affected Parent Companies
To identify the small parent entities in the universe, EPA used the entities within the 33 identified NAICS codes that meet the SBA small business definition standards. For small entities that may be subject to a discounted fee under this proposed rule, EPA used entities with annual sales of less than $91 million.
EPA used U.S. Census data at the firm level to obtain revenue figures for parent entities in the potentially affected universe. The U.S. Census Statistics of U.S. Business (SUSB) data include the total annual receipts (defined as the revenue for goods produced, distributed, or services provided) for each NAICS by employment size. EPA divided total annual revenue reported in SUSB for each NAICS/ employee size category by the number of firms to determine the average revenue for each NAICS/ employment size class combination.
In some instances, total revenue for specific employment size classes was not reported by the SUSB because it would disclose the operations of individual firms within the NAICS category. EPA estimated average revenue figures for those NAICS/employment size class combinations based on the available data. The following method was used to estimate average revenue:
 Calculate the percent difference between the average revenue figures in adjacent employment size classes based on all NAICS codes affected by this proposed rule that are populated with revenue information.
 For the NAICS/employment size class combination with missing revenue data, multiply the average revenue of the adjacent employment size class in that NAICS code by the average percent difference between the two employment size classes, estimated in Step 1.
 Where the revenue figures are available for both adjacent employment size classes, Step 2 is performed twice: (1) using the revenue figure from the employment category on one side of the missing value, multiplied by the corresponding percent difference, then (2) using the revenue figure from the employment category on the other side of the missing value multiplied by the corresponding percent difference. The average between the two is the estimated revenue for the missing value for a NAICS/employment size class combination.
In total, 20,083 small businesses in NAICS/employment size classes where the number of employees is less than the SBA small business definition were included in this analysis. EPA also estimates that 18,688 small businesses in the selected NAICS codes may be eligible for a discounted fee if they are affected by the proposed rule. 
       Estimating Small Business Cost Impacts
EPA is proposing that firms with annual sales over a three-year period averaging less than $91 million are subject to discounted Section 5 fees when they submit a notice or exemption application seeking to manufacture a new chemical or use a chemical in a new way. The proposed fee for these eligible small businesses submitting a PMN, SNUN, or MCAN is $2,000. To experience an impact of greater than 1% or greater than 3% of annual sales (significant impact), a discounted fee-paying small business submitting one of these types of notices would have to have annual sales of less than $200,000 or $67,000, respectively. The proposed fee for a discounted-fee paying small business submitting exemptions such as Test Marketing Exemption Application (TME), TSCA Experimental Release Application (TERA), Low Volume Exemption (LVE), Low Release/Low Exposure Exemption (LoREX), Tier II, or Film Article exemption would be $500. To experience an impact of greater than 1% or greater than 3% of annual sales, a discounted fee-paying small business submitting one of these types of notices would have to have annual sales less than $50,000 or $17,000, respectively. 
Other businesses that qualify as small under SBA standards, but that have annual sales over a three-year period averaging $91 million or more, will not qualify for the small business discount and will be required to pay the general industry fee. The highest proposed industry fee for Section 5 submissions is $20,000. To experience an impact of greater than 1% or greater than 3% of annual sales, a small business submitting a Section 5 notice or exemption and paying the general fee (not qualifying for the discounted fee) would have to have annual sales of less than $2 million. By the proposed rule definition, those businesses have annual sales of $91 million or more (although are still considered small by SBA definition) and thus will have minimal cost impacts (< 1 percent of annual sales).
Based on the low level of the fee amounts proposed for small business, annual sales would have to be quite low to trigger a significant impact from the fee associated with a Section 5 submission. Total fee amounts for a small business would be a multiple of the number of submissions from that business, but EPA expects that most small businesses would only have one submission per year. The small business fees and the minimum sales for fees that would trigger an impact of greater than 1 % and 3% for small businesses under Section 5 are presented in Table 5-2 below.
Table 5-2: Section 5 Small Business Cost-Revenue Impact 1% and 3% Thresholds
                            Submission Type/Action
                          Small Business Fee per Firm
               Annual Sales Threshold to Trigger a >1% Impact
               Annual Sales Threshold to Trigger a >3% Impact
Section 5
 
 
 
Impact triggers for small businesses that pay discounted fees
                                                                               
                                                                               
                                                                               
PMNs (including intermediates)/MCAN/SNUN
                                                                        $2,000 
                                                                      $200,000 
                                                                       $67,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                          $500 
                                                                       $50,000 
                                                                       $17,000 
Impact triggers for small businesses that pay general industry fees
                                                                               
                                                                               
                                                                               
PMNs (including intermediates)/MCAN/SNUN
                                                                       $20,000 
                                                                    $2,000,000 
                                                                      $667,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                        $2,000 
                                                                      $200,000 
                                                                       $67,000 

Small businesses would become subject to Section 4 or Section 6 fees if they manufacture or import a chemical that EPA selects for generation of information under Section 4 or selects for risk evaluation under Section 6. The impact on small businesses would depend on the fee imposed, the total number of entities subject to the action, and the procedures that a consortium of affected entities adopts for splitting the fee among affected firms (if a consortium is formed). A small business with average sales over the previous three years less than $91 million will be eligible for a 50% discount of the Section 4 fee and a 20% discount of the Section 6 fee per affected firm. The remainder of the collected fees will be the responsibility of the other affected firms. For this analysis, EPA assumes that the remaining fee (after the discounted fees to be collected from eligible small businesses) will be split equally among the other affected firms. Table 5-3 presents the proposed fees for Section 4 and Section 6 actions.
Table 5-3: Fees for Section 4 and Section 6
 
 
 
Section 4 Activities
                                 Proposed Fee
                  Discounted Fee Paid by Each Small Business
                 General Fee Paid by Each Other Small Business
Test Order
                                                                      $120,000 
                                                                        $2,143 
                                                                        $4,286 
Test Rule
                                                                      $370,000 
                                                                        $6,607 
                                                                       $13,214 
ECA
                                                                      $280,000 
                                                                        $5,000 
                                                                       $10,000 
Section 6 Activity
                                                                              
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                    $2,000,000 
                                                                      $228,571 
                                                                      $308,571 

Assuming 28 firms per Section 4 action, seven firms per Section 6 action, and an even split of the fee among affected firms with the applicable discount to the eligible small businesses, Table 5-4 indicates the sales threshold that would trigger an impact of greater than 1% or greater than 3% for a small business paying the discounted fees.  For Section 4 Test Orders, in order to experience impacts greater than 1% or greater than 3%, a small business paying the discounted fee would have to have annual sales of less than $210,000 and $70,000, respectively. For Test Rules, the sales thresholds that would trigger an impact greater than 1% or greater than 3% are $660,000 and $220,000, respectively. For an ECA, a small business paying the discounted fee would experience impacts greater than 1% or greater than 3% if their annual sales were below $500,000 and $167,000, respectively. For Section 6 activities, a small business paying the discounted fee would experience impacts greater than 1% or greater than 3% if their annual sales were below $22,857,000 and $7,619,000, respectively. 
Table 5-4: Section 4 and 6 Small Business Cost-Revenue Impact with Discount
Submission Type/Action
                        Small Business Fee per Firm[a]
                Annual Sales Threshold to Trigger >1% Impact
                Annual Sales Threshold to Trigger >3% Impact
Section 4
 
 
 
Test Order
                                                                        $2,143 
                                                                      $214,300 
                                                                       $71,433 
Test Rule
                                                                        $6,607 
                                                                      $660,700 
                                                                      $220,233 
ECA
                                                                        $5,000 
                                                                      $500,000 
                                                                      $166,667 
Section 6
                                                                              
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                      $228,571 
                                                                   $22,857,100 
                                                                    $7,619,033 
[a] This analysis assumes an average of 28 firms per Section 4 activity, and 7 firms per Section 6 activity, based on an average number of manufacturers affected by the High Production Volume (HPV) chemicals Test Rules under Section 4 and the first ten chemicals identified for Section 6 review under TSCA as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, respectively.

Table 5-5 presents similar information for businesses with average annual sales of $91 million or more for the previous three years.
Table 5-5: Section 4 and 6 Small Business Cost-Revenue Impact without Discount
 
 
 
                            Submission Type/Action
                         General Industry Fee per Firm
                            Sales for >1% Impact
                            Sales for >3% Impact
Section 4
 
 
 
Test Order
                                                                        $4,286 
                                                                      $428,600 
                                                                      $142,867 
Test Rule
                                                                       $13,214 
                                                                    $1,321,400 
                                                                      $440,467 
ECA
                                                                       $10,000 
                                                                    $1,000,000 
                                                                      $333,333 
Section 6
                                                                              
                                                                              
                                                                              
EPA-Initiated Risk Evaluation
                                                                      $308,571 
                                                                   $30,857,100 
                                                                   $10,285,700 

To provide some context for the sales amounts that would lead to impacts greater than 1% or greater than 3% of sales, the average and median firm-level revenues for small businesses likely to have submissions for Sections 4, 5, and 6 actions are shown in the table below. EPA used the median revenues of the NAICS codes impacted by each Section as an estimate of the revenue of a typical affected small business. Thus, the median revenue for all small business firms likely to be affected by Sections 4 and 6 actions is $5,445,000, and the median revenue for small business firms likely to be affected by Section 5 actions is $3,475,000.  Compared to the small business fees per firm in Table 5-2 and Table 5-4, the largest cost-revenue impact for the typical discounted fee-paying small business affected by a Section 5 action is 0.06% ($2,000/$3,475,000), 0.12% ($6,607/$5,445,000) for a Section 4 action, and 4.20% ($228,571/$5,445,000) for a Section 6 action. For small businesses that do not pay the discounted fee, the largest cost-revenue impact for a firm affected by a Section 5 action is 0.02% ($20,000/$91,000,000), 0.01% ($13,214/$91,000,000) for a Section 4 action, and 0.34% ($308,571/$91,000,000) for a Section 6 action.
Table 5-6: Average and Median Revenue for Small Businesses in the Industries Likely to be Affected
                Submission Type/Action (Applicable NIACS codes)
                                    Average
                                    Median
Sections 4 and 6 (324110, 325, 424690, 424710,and  424720)
                                                                    $33,162,236
                                                                     $5,445,250
Section 5 (324110 and 325)
                                                                    $18,890,122
                                                                     $3,475,263
 
       Number of Affected Small Businesses
Since the number of small businesses affected by the proposed rule is dependent on the specific action (i.e., manufacturer decision for Section 5 actions, EPA decision based on ongoing data collection activities under Section 4 and risk evaluations under Section 6), EPA estimates a number of affected small businesses by looking at historical actions as well as using best professional judgement. Section 3.4.1 of this document presents in more detail the assumptions used by EPA to estimate the number of small businesses likely to be affected by Sections 4, 5, and 6 in this analysis. 
EPA estimates that 84 small businesses (based on 12 actions per year, seven chemicals per action, and one small business affected per chemical) may be affected annually by Section 4 actions; 202 small businesses may be affected by Section 5 actions (175 may pay discounted fees and the remaining 27 would pay the general industry fee); and 21 small businesses may be affected by Section 6 actions. As a result, EPA estimates that, of the 307 small businesses paying fees every year, a total of 293 (95.4%) may have annual cost-revenue impacts less than 1%, and a total of 14 firms (4.6%) may have annual cost-revenue impacts greater than 3%.
 Summary of Small Business Impacts 
EPA estimates that, of the 307 small businesses paying fees every year, a total of 293 (95.4%) may have annual cost-revenue impacts less than 1% and a total of 14 (4.6%) may have annual cost-revenue impacts greater than 3%.
Given the expected pace of 12 Section 4 and seven Section 6 actions per year, it is unlikely that substantial numbers of small businesses would be affected. However, the impact on any particular small businesses subject to Section 6 fees could be significant. Table 5-7 shows the total expected annual fee payments from all small businesses under the Proposed Option. Total estimated annual fee collections are calculated as the sum of the fee per firm, multiplied by the number of small business firms affected per action in a year. Overall, small businesses are estimated to account for over $6 million of total fee collections, with about $385,000 from Section 4 actions, $500,000 from Section 5 actions, and over $5 million from Section 6 actions. Small businesses eligible for small business discounts are estimated to account for over $3 million or 54% of the total small business annual fee collection and 14% of the total annual cost of the proposed rule.

Table 5-7: Total Estimated Small Business Fee Payments
                            Submission Type/Action
           Estimated Number of Small Business Eligible for Discount
                    Discounted Small Business Fee Per Firm
             Total Discounted Fee Paid by Eligible Small Business
                   Estimated Number of Other Small Business
                           General Fee Paid Per Firm
                Total General Fee Paid by Other Small Business
                       Total Fee Paid by Small Business
Section 4
 
 
 
 
 
 
 
Test Order
                                                                              0
                                                                        $2,143 
                                                                            $0 
                                                                             70
                                                                        $4,286 
                                                                      $300,000 
                                                                      $300,000 
Test Rule
                                                                              0
                                                                        $4,405 
                                                                            $0 
                                                                              7
                                                                        $8,811 
                                                                       $61,676 
                                                                       $61,676 
ECA
                                                                              0
                                                                        $1,666 
                                                                            $0 
                                                                              7
                                                                        $3,332 
                                                                       $23,327 
                                                                       $23,327 
Total
                                                                              0
                                                                              
                                                                            $0 
                                                                             84
                                                                               
                                                                      $385,002 
                                                                      $385,002 
Section 5
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
PMNs (including intermediates)/MCAN/SNUN
                                                                             83
                                                                        $2,000 
                                                                      $166,000 
                                                                             13
                                                                       $20,000 
                                                                      $260,000 
                                                                      $426,000 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                                                             92
                                                                          $500 
                                                                       $46,000 
                                                                             14
                                                                        $2,000 
                                                                       $28,000 
                                                                       $74,000 
Total
                                                                            175
                                                                               
                                                                      $212,000 
                                                                             27
                                                                               
                                                                      $288,000 
                                                                      $500,000 
Section 6
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
Risk Evaluation
                                                                             14
                                                                      $228,571 
                                                                    $3,200,000 
                                                                              7
                                                                      $308,571 
                                                                    $2,160,000 
                                                                    $5,360,000 
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
Total
                                                                            189
                                                                               
                                                                    $3,412,000 
                                                                            118
                                                                               
                                                                    $2,833,002 
                                                                    $6,245,002 
Note:
Annual fee per affected small business reported for Test Rules and ECAs differ from the value used to estimate the cost impact to a specific small business. The value reported in this table represents the annualized fee, after accounting for the timing of these actions (i.e., one Test Rule in first and third year and one ECA in the second year for this proposed rule).    

Other Impacts
In addition to the cost analysis presented in Chapter 3 and the small business analysis presented in Chapter 5, several other types of impacts are important to consider in evaluating the effects of a regulation. This chapter presents the incremental impact of the proposed rule on:
Employment;
Technological innovation and the national economy;
Paperwork burden, as required by the Paperwork Reduction Act (PRA);
Agency Burden;
State and Local Governments, as required by the Unfunded Mandates Reform Act (UMRA);
Environmental Justice, as required by Executive Order 12898 - Environmental Justice;
The environmental health risk or safety risk to children due to the regulation, as required by Executive Order 13045 - Protection of Children from Environmental Health & Safety Risks.
Federalism, as required by Executive Order 13132 - Federalism;
Tribal governments, as required by Executive Order 13175 - Consultation and Coordination with Indian Tribal Governments; and
Energy supply, as required by Executive Oder 13211.
Employment Impact Analysis 
In addition to a cost-benefit analysis, EPA also examines the employment impacts of regulations promulgated under TSCA. Executive Order 13563, states, "Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation" (emphasis added). For this proposed rule, EPA presents a qualitative assessment of possible employment impacts in the short- and long-term for firms which might be directly affected by the proposed rule. Due to the fees' relatively low cost and one-time nature, EPA estimates there will be no short- or long-term employment impacts associated with the proposed rule.
First, due to the relatively low cost of the fees in comparison with firm revenue, EPA does not expect any short-term employment impacts. For Section 5 activities, the highest fee assessed for an individual firm is approximately $20,000. This fee will only be incurred by those firms that are not considered to be small businesses. This analysis determines the small business threshold to be $91 million in annual sales averaged over the three years preceding the Section 5 submission. The highest fee incurred by small businesses under Section 5 will be $2,000. EPA does not expect these fees to be high enough in proportion to the annual sales of small firms expecting to submit PMNs, MCANs, or SNUNs in any given year to create short-term or long-term employment impacts. For Sections 4, and 6, EPA expects that an affected firm will most likely have to pay a fee once in a given 3-year period. Even with the highest estimated fee per firm, about $284,000, which corresponds to about 5% of the estimated annual sales for a typical small business firm likely to be affected by this rule EPA estimates that this cost impact is not high enough to result in long-term employment impacts, as only a few firms will incur the cost each year. 
Secondly, due to the nature of the proposed rule, EPA employs a simplifying assumption that an affected entity will not pay fees for Sections 4, 5, and 6 more than once over the three-year period of the proposed rule. Section 4 fees will be assessed once with the submission of test data. EPA estimates affected firms will incur a one-time cost associated with the risk-screening process under Section 6. A one-time cost is incurred for review of a chemical under Section 5. EPA assumes this format will continue under the promulgation of the proposed rule. Because fees associated with Section 4, 5, and 6 activities are only likely to be incurred once over the 3-year time period for any given firm, EPA assumes that there will be no short-term or long-term employment impacts.
Due to the relatively low cost of Sections 4 and 5 actions, the singular nature of fees associated with Section 4, 5, and 6 activities, and the low number of firms that will be affected by this proposed rule, EPA assumes no short-term or long-term employment effects. Estimated cost impacts for Sections 4 and 5 actions are less than 1% of annual sales for the affected firms. EPA estimates that only 14 affected firms (4.6% of small businesses paying fees) may have cost impacts greater than 3% of annual sales each year.  
Impacts on Technological Innovation and the National Economy 
The proposed rule is expected to have some impacts on technological innovation or the national economy. However, guidance issued by the Office of Management and Budget (OMB) indicates that the economic impact of a regulation on the national economy becomes measurable only if the economic impact of the regulation reaches 0.25 percent to 0.5 percent of Gross Domestic Product (GDP) (See Memorandum from Sally Katzen, "Guidance for Implementing Title II of [UMRA]," March 31, 1995). Given the current GDP, this is equivalent to a cost of $40 billion to $80 billion. EPA assumes that there will be, on average, a 10% reduction in innovations (under TSCA Section 5 actions) as a result of the proposed rule and the affirmative determination for new chemicals under the new law. EPA does not expect the cost of the reduction in innovations to amount to $40 billion, as proposed fees are insignificant compared with the $40 billion revenue. Therefore, EPA has concluded that this rule is highly unlikely to have any measurable effect on the national economy.
Paperwork Burden Analysis
This section presents a summary of the respondent burden and costs associated with the proposed rule for the following respondent activities: rule familiarization, small business determination, informing EPA of participation in consortia, and fee payment requirements. EPA estimates the respondent burden by multiplying the estimated number of annual responses (base number of firms expected to be affected and annual number of actions) by the estimated additional time the proposed rule will require per response. EPA estimates the total number of annual actions by the average number of responses of the preceding three years presented in the Section 5 information collect request (ICR). EPA assumes the respondent burden for rule familiarization and fee payment to be 0.5 hours each for all respondents and that a portion of respondents will spend an additional 0.5 hours reviewing the "small business concern" size definition to determine their eligibility for the small business discount.
The respondent labor wage rate calculation is presented in 6.3.1. Section 6.3.2 presents the respondent burden and costs for TSCA Section 4 activities; Section 6.3.3 presents the burden and costs for TSCA Section 5 activities; and Section 6.3.4 presents the respondent burden for TSCA Section 6 activities. The detailed paperwork burden analysis is presented in the (ICR) supporting statement for this proposed rulemaking. 
The paperwork burden and associated costs include the activity types listed below. Note that not all entities incur burden or costs for all of these activities. EPA assumes that only a portion of affected entities with annual revenues close to the revenue-based small business threshold established by this proposed rule will spend time determining if they qualify for the small business discount. 
Rule Familiarization: Respondents are assumed to spend 0.5 hours to familiarize themselves with the requirements of the proposed rule and develop an understanding of the necessary actions to comply with the fee payment requirements. This burden is assessed once on the first time a firm is a respondent to an action.
Discount Fee Eligibility Determination: The proposed rule specifies discounts for affected firms with annual sales of less than $91 million in average over the three years preceding the submission. EPA estimates a burden of 0.5 hours of a manager's time to review the proposed rule's small business determination threshold and compare it to the firm's sales figures over the past three years to determine eligibility for the discount. EPA estimates that small businesses account for one in four entities affected by Section 4 actions, 18.5% of entities affected by Section 5 activities, and three in seven entities affected by Section 6 actions (see Section 3.4.1 for further details). EPA assumes that the proportion of firms that will incur this cost is roughly equivalent to the proportion of affected entities that are small. This estimate may be an over estimate as some small businesses with annual sales far below the threshold will not spend the time to confirm eligibility for the discount, while other firms with annual sales that far exceed the threshold also may not spend the time to determine if they qualify for the discount. Affected entities incur this cost once over the three-year period of the proposed rule.
Participation in Consortium:  For Section 4 and Section 6 fees, firms are allowed to form a consortium for paying the specified fees and must submit a form to EPA, detailing the members of the consortium and the amount the firm is paying. A form for providing information to EPA about joining a consortium will be available online from EPA and must be submitted electronically through EPA's Central Data Exchange (CDX). EPA estimates that affected firms will spend 15 minutes (0.25 hours) to fill the form and a total of 1.46 hours to register to use CDX. To simplify the analysis, EPA assumes that, over the 3 years of the proposed rule, firms that will be required to submit the form over CDX will be first-time users. As a result, affected entities incur this cost once over the three-year period of the proposed rule.  
Fee Payment: Firms would be required to make fee payments electronically using Pay.gov or Fedwire. Firms will need to spend time gathering the necessary information required by the two-page payment form. This information will include: Company contact information, payment amount and method information. For Pay.gov, acceptable forms of payment include bank account (Automated Clearing House), debit card, and credit card. EPA estimates a burden of 0.5 hours per year of a technical worker's time to collect requisite information and fill out the Pay.gov form or initiate a Fedwire payment.
       Loaded Wages
To estimate burden costs, EPA obtained wage rates from the Bureau of Labor Statistics' (BLS) Occupational Employment Statistics data series (BLS, 2017) and Employer Costs for Employee Compensation (ECEC) Supplementary Tables (BLS, 2017). EPA used the wage rate for Professional/Technical workers and Managers in private manufacturing industries.
EPA calculated loaded wage rates, which include fringe and overhead. Fringe benefits are calculated based on the ratio of benefits to total compensation from the 2016 BLS Employer Costs for Employee Compensation data series (BLS, 2017). An overhead rate of 17 percent is used based on assumptions in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (Rice, 2002) and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2001). The loaded industry wage rates used to determine the paperwork burden are presented in Table 6-1.


Table 6-1:  Industry Wage Rates
                                  Labor Type
                                 Data Sources
                                     Date
                                     Wage
                               Fringes as % Wage
                              Over-head % wage a
                           Fringe + Overhead Factor
                                 Loaded Wages
                                       
                                       
                                       
                                      (a)
                                      (b)
                                      (c)
                                 (d)=(b)+(c)+1
                                   (a)x(d)
Technical Worker
Wage and Fringe Benefits: ECEC: "Professional and related: Private Manufacturing industries"
                                    16-Dec
                                    $46.90
                                      55%
                                      17%
                                     1.71
                                    $78.40
Manager
Wage: OES: (11-0000), "Chemical Manufacturing (Sectors 325): Management Occupations"
                                    16-May
                                    $66.00
                                      53%
                                      17%
                                     1.70
                                    $111.87

Fringe Benefits: ECEC: "Management, Professional, and Related: Private Manufacturing Industries"
                                    16-Dec





Sources:
Occupational Employment Statistics (OES), May 2016 (BLS, 2017)
Employer Costs for Employee Compensation (ECEC) Supplementary Tables: December 2016 (BLS, 2017)
Notes:
a. An overhead rate of 17% is used based on assumptions in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (Rice, 2002) and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2001). 
b. This analysis assumes an industrial hygienist technician will perform the quantitative exam. While OSHA does not require that an industrial hygienist technician perform the exam, it does require that the administrator has been trained in how to administer the test.

       Section 4 Respondent Burden and Costs
Table 6-2 presents the estimated total burden costs for respondents subject to Section 4 fees. Based on the second, third, and fourth HPV chemical Section 4 rules, EPA expects an average of 7 chemicals per Section 4 activity and an average of 4 firms per chemical, totaling an estimated 28 respondents per Section 4 activity. As EPA is expecting to initiate 12 Section 4 actions, we estimate a total of 336 respondents each year. Respondents submitting fees for Section 4 actions are estimated to incur costs associated with rule familiarization, determining eligibility for the discounted fee, submit information on joining a consortium on CDX, and fee payment once over the three years of the proposed rule. The estimated total respondent burden cost per year is about $25,000.
Table 6-2: Summary of Annual Total Respondent Burden Costs Associated with Section 4 Activities ($2016)  
                                  Burden Type
                             Number of Respondents
                        Burden Per Respondent per year
                                 Total Burden
                              Cost Per Respondent
                                  Total Cost
Rule Familiarization
                                      336
                                     0.167
                                     56.0
                                    $13.07 
                                    $4,390 
Discount Fee Eligibility
                                      84
                                     0.167
                                     14.0
                                    $18.65 
                                    $1,566 
CDX Submission
                                      336
                                     0.57
                                     191.5
                                    $44.69 
                                   $15,015 
Fee Payment
                                      336
                                     0.167
                                      56
                                    $13.07 
                                    $4,390 
                                              Total Section 4 Respondent Burden
                                    $25,362

       Section 5 Respondent Burden and Costs
Table 6-3 presents the average annual total cost burden for respondents subject to Section 5 fees. EPA estimates Section 5 respondents will incur costs associated with rule familiarization and fee payment. Additionally, a proportion of Section 5 respondents will incur the costs associated with discounted fee eligibility determination. The annual number of Section 5 respondents is estimated based on Section 5 submissions between 2012 and 2016. The estimated total paperwork burden cost per year for Section 5 respondents is about $32,000.

Table 6-3: Summary of Annual Total Respondent Burden Hours and Costs Associated with Section 5 Activities ($2016)  
                                Respondent Type
                             Number of Respondents
                        Burden Per Respondent per year
                                 Total Burden
                              Cost Per Respondent
                                  Total Cost
                             Rule Familiarization
PMNs (including intermediates)/MCAN/SNUN
                                      519
                                     0.167
                                     86.5
                                    $13.07 
                                    $6,781 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                      575
                                     0.167
                                     95.8
                                    $13.07 
                                    $7,513 
Total
                                     1094
                                       
                                     182.3
                                       
                                   $14,295 
                           Discount Fee Eligibility
PMNs (including intermediates)/MCAN/SNUN
                                      96
                                     0.167
                                     16.0
                                    $18.65 
                                    $1,790 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                      106
                                     0.167
                                     17.7
                                    $18.65 
                                    $1,976 
Total
                                      202
 
                                     33.7
 
                                    $3,766 
                                  Fee Payment
PMNs (including intermediates)/MCAN/SNUN
                                      519
                                     0.167
                                     86.5
                                    $13.07 
                                    $6,781 
TME/TERA/LVE/LoREX/Tier II/Film Article
                                      575
                                     0.167
                                     95.8
                                    $13.07 
                                    $7,513 
Total
                                     1094
 
                                      182
 
                                   $14,295 
                            Total Paperwork Burden
                                       PMNs (including intermediates)/MCAN/SNUN
                                   $15,353 
                                        TME/TERA/LVE/LoREX/Tier II/Film Article
                                   $17,003 
      Estimated Total Paperwork Burden Cost per Year for All Affected Entities 
                                   $32,356 

       Section 6 Respondent Burden and Costs
Table 6-4 presents the estimated total costs for respondents subject to Section 6 fees under the proposed rule. Based on the average number of manufacturers of the first ten priority chemicals identified for Section 6 review under TSCA as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, EPA estimates an average of 7 firms will be affected per chemical and at full implementation and a Section 6 action will be initiated for about 7 chemicals each year, for a total of 49 respondents. Based on these assumptions, the total estimated respondent burden cost for Section 6 actions is about $4,000 per year.


Table 6-4: Summary of Annual Total Respondent Burden and Costs Associated with Section 6 Activities ($2016)  
                                  Burden Type
                             Number of Respondents
                        Burden Per Respondent per year
                                 Total Burden
                              Cost Per Respondent
                                  Total Cost
Rule Familiarization
                                      49
                                     0.167
                                      8.2
                                    $13.07 
                                     $640 
Discount Fee Eligibility
                                      21
                                     0.167
                                      3.5
                                    $18.65 
                                     $392 
CDX Submission
                                      49
                                     0.57
                                     27.9
                                    $44.69 
                                    $2,190 
Fee Payment
                                      49
                                     0.167
                                      8.2
                                    $13.07 
                                     $640 
                                               Total Section 6 Respondent Costs
                                    $3,862

Agency Burden
EPA estimates the Agency burden to be limited to the collection of information about firms submitting fees under the proposed rule. Agency activities will include data collection, management and end-of-year summarization for review in order to continue refining the estimated number of annual submissions and the costs of administering the proposed rule. EPA anticipates focusing on data management for fees associated with Section 4 and Section 6, as data has not previously been collected for actions under these Sections of TSCA. EPA estimates this data management will require one day of work per year for a GS-13 Step 5 employee in the Washington D.C. area.
To calculate the loaded wage rate, EPA uses the wage rate for a GS-13, Step 5 employee in the Washington D.C. area, loaded with a combined fringe and overhead factor of 60% to obtain a loaded wage rate of $167,093 per year. Dividing this wage rate over 2,080 hours  -  the annual labor hours of a full time employee  -  produces an hourly wage rate of $80.33 (See Table 6-5). 
EPA estimates the data management will require one day of work per year for a GS-13, Step 5 employee in the Washington D.C. area, which will amount to an annual Agency cost associated with the proposed rule of $642.64 ($80.33 x 8 = $642.64).

Table 6-5 Agency Wage Rate- Section 5 (2016$)
                                Labor Category
                       Data Source for Wage Information
                                 Wage ($/year)
                                Fringe Benefit
                               Fringes as % wage
                              Overhead as % wage
                           Fringe + Overhead Factor
                                  Loaded Wage
                                      ($)
                           Yearly Labor (hrs./year)
                                  Hourly Wage
                                       
                                       
                                      (a)
                                      (b)
                                (c) = (b) / (a)
                                      (d)
                              (e) = (c) + (d) + 1
                                (f) = (a) * (e)
                                      (g)
                                (h) = (f) / (g)
EPA staff
Annual federal staff cost: OPM Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV area, GS 13, step 5
                                   $104,433 
Included in 60% overhead
                                      N/A
                                    60% [b]
                                      1.6
                                   $167,093 
                                     2,080
                                    $80.33 
Source: U.S. Office of Personnel Management. (2015). Salary Table 2015-DCB. Retrieved August 18,  2016 from Pay & Leave: Salaries & Wages: https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2016/DCB.pdf
Note: The fringe and overhead rates are included as per an EPA guide, Instructions for Preparing ICRs (US EPA, 2009).



Unfunded Mandate Reform Act
Title II of the Unfunded Mandates Reform Act (UMRA) of 1995, Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, Local, and Tribal governments, and the private sector. Under Section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with "Federal mandates" that might result in expenditures by State, Local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (when adjusted annually for inflation) in any one year.  The proposed rule is not expected to affect state or Tribal governments, and this proposed rule will not result in annual expenditures of $100 million or more for the private sector. As such, EPA has determined that this proposed rule does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments, and that the requirements of Sections 202, 203, 204, or 205 of UMRA, 2 U.S.C. 1531 - 1538, do not apply to this proposed rule.
Executive Order 12898 - Environmental Justice
Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations (59 FR 7629, February 16, 1994) establishes Federal executive policy on Environmental Justice (EJ). Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make EJ part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.
The Agency believes that the fees collected under this proposed rule, if finalized, will assist EPA and others in determining the potential hazards and risks associated with various chemicals manufactured and used in the United States. Therefore, although not directly affecting environmental justice-related concerns, these proposed fees will enable the Agency to better protect human health and the environment, including in low-income and minority communities.
The proposed rule is directed at all manufacturers and producers of chemical substances subject to actions under TSCA Sections 4, 5, and 6. As described in Chapter 4, all consumers of these chemicals and the products made from them, as well as all workers who come into contact with these chemicals, could benefit if data regarding the chemicals' health and environmental effects were developed. Therefore, it does not appear that the costs and the benefits of the proposed rule will be disproportionately distributed across different geographic regions or among different categories of individuals.
Executive Order 13045 - Protection of Children
Under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), a regulation must be reviewed if the regulatory action is economically significant and concerns an environmental health risk or safety risk that may disproportionately affect children. EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children such that the analysis required under Section 5-501 of the EO has the potential to influence the regulation. The proposed rule 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, nor does it otherwise have a disproportionate effect on children.
Executive Order 13132 - Federalism
Executive Order 13132, Federalism (64 FR 43255, August 10, 1999), directs federal agencies to consider whether a rule has federalism implications (i.e., whether it has 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, as specified in Executive Order 13132). 
This proposed action does not have federalism implications. It will not 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. 
Executive Order 13175 - Tribal Implications
Executive Order 13175, Consultation and Coordination with Indian Tribal Governments (59 FR 22951, November 6, 2000), directs federal agencies to consider whether a rule has tribal implications (i.e., whether it has substantial direct effects on tribal governments, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes). EPA has determined that this proposed rule does not have tribal implications because it will not have any effect on tribal governments, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes. Thus, EO 13175 does not apply to the proposed rule.
Executive Order 13211 - Energy Supply, Distribution, or Use
This proposed rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), because it is not an economically significant regulatory action under Executive Order 12866.

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