By Lynn L. Bergeson and Margaret R. Graham
On February 8, 2018, the U.S. Environmental Protection Agency (EPA) issued the prepublication version of its long-anticipated fees rule under amended Toxic Substances Control Act (TSCA) Section 26(b) entitled User Fees for the Administration of the Toxic Substances Control Act. EPA states that the proposed rule will set user fees applicable to any person required to submit information to EPA under TSCA Section 4 or a notice, including an exemption or other information, to be reviewed by the Administrator under TSCA Section 5, or who manufactures (including imports) a chemical substance that is the subject of a risk evaluation under TSCA Section 6(b).
EPA’s notice of proposed rulemaking provides a description of proposed TSCA fees and fee categories for fiscal years 2019, 2020, and 2021, and explains the methodology by which the proposed TSCA user fees were determined and would be determined for subsequent fiscal years. In proposing these new TSCA user fees, the Agency also proposes amending long standing user fee regulations governing the review of premanufacture notices, exemption applications and notices, and significant new use notices.
EPA states the proposed fees on certain chemical manufacturers, including importers, would go towards developing risk evaluations for existing chemicals; collecting and reviewing toxicity and exposure data and information; reviewing Confidential Business Information (CBI); and making determinations regarding the safety of new chemicals before they enter the marketplace.
Comments on the proposed rule will be due 60 days after its publication in the Federal Register.
An in-depth analysis prepared by Bergeson & Campbell, P.C. (B&C®) will soon be available on our Regulatory Developments webpage.
By Lynn L. Bergeson and Margaret R. Graham
On January 31, 2018, the U.S. Environmental Protection Agency (EPA) announced the release of its 2018 Annual Report on Risk Evaluations. Pursuant to Section 26(n)(2) of the amended Toxic Substances Control Act (TSCA), EPA is directed to publish an annual plan at the beginning of each calendar year identifying the chemical substances that will undergo risk evaluations during that year. The plan is to include both risk evaluations that will be initiated and that will be completed, the resources necessary for completion, and the status and schedule for ongoing evaluations. The 2018 annual plan identifies the next steps for the first ten chemical reviews currently underway and describes EPA’s work in 2018 to prepare for future risk evaluations.
EPA issued scoping documents on the first ten chemical reviews in June 2017. The plan states that in early calendar year 2018, EPA will be making refinements to these scope documents in the form of “problem formulation documents” that will include additional elements such as conceptual models. EPA will publish a notice in the Federal Register announcing the release of these problem formulation documents and will invite comments for 45 days.
The plan also states that EPA will initiate prioritization for 40 chemicals (at least 20 Low-Priority and 20 High-Priority candidates) by the end of calendar year 2018. By December 22, 2019, EPA plans to have designated 20 substances as Low-Priority and initiated risk evaluations on 20 High-Priority substances. Further, EPA will be proposing the much-anticipated TSCA Fees Rule in early-mid fiscal year (FY) 2018, and anticipates issuing a final rule in late FY2018.
Information on EPA’s 2017 Annual Report is available in our blog item EPA Publishes 2017 Annual Report on Chemical Risk Evaluations.
By Lynn L. Bergeson and Margaret R. Graham
On December 22, 2017, the U.S. Environmental Protection Agency (EPA) sent to the Office of Management and Budget (OMB) a proposed rule establishing fees on certain submissions under amended Toxic Substances Control Act (TSCA) Sections 4, 5, and 6. EPA has indicated that it expects to propose the rule in the early part of the New Year: EPA’s regulatory agenda lists February 2018 for the proposed rule and September 2018 for the final rule.
More information on the TSCA fees rulemaking and requirements is available in our blog item “EPA Hosts August 11, 2016, Public Meeting on Proposed Rule for Revised TSCA Fees,” in our memorandum “TSCA Reform: An Analysis of Key Provisions and Fundamental Shifts in the Amended TSCA,” and in our September 20, 2016, webinar “‘The New TSCA’ Webinar 4: Administration of the Act, Preemption, Fees, and Green Chemistry.”
By Zameer Qureshi
On October 4, 2016, Bergeson & Campbell, P.C. (B&C®) hosted its fourth and final webinar in its series of webinars on the new Toxic Substances Control Act (TSCA) in collaboration with Chemical Watch. The webinar addressed numerous important issues for a wide array of stakeholders. The webinar was moderated by Lynn L. Bergeson, Managing Partner at B&C, and the expert panel included Charles M. Auer, Richard E. Engler, Ph.D., Lisa R. Burchi, and Sheryl L. Dolan.
Mr. Auer, Senior Regulatory and Policy Advisor at B&C, addressed “Administration of the Act” and described important changes between old and new TSCA. Mr. Auer’s presentation consisted of three segments: (1) “Section 26 Science Requirements”; (2) “Section 26 Information and Guidance”; and (3) “Section 26 ‘Savings’ Provision.”
Mr. Auer addressed the “Scientific Standards” requirements of new TSCA Section 26(h), the “Weight of Scientific Evidence” requirements of Section 26(i), and the Section 26(o) provisions of new TSCA relating to Consultation with the Science Advisory Committee on Chemicals (SACC). Mr. Auer addressed a number of additional rules and requirements in Section 26, including the U.S. Environmental Protection Agency’s (EPA) obligation to submit a report to Congress and issue an Annual Plan under Sections 26(m)-(n).
Ms. Burchi, Of Counsel at B&C, discussed “Preemption” under Section 18 of new TSCA. Ms. Burchi described preemption as “one of the most debated subjects in [the TSCA reform] debate” and stated that she had heard it referred to as a “linchpin” in terms of reaching agreement on provisions for TSCA reform to occur. Ms. Burchi stated “Everything in the new Section 18 is new or very significantly changed from what we were used to with regard to preemption … The final provisions are fairly complicated … It will remain to be seen whether states continue to act with regard to chemical substances in the way that they have been.”
Ms. Burchi addressed the three “main” provisions related to preemption under new TSCA Sections 18(a)(1)(A)-(C), and analyzed more specific issues (e.g., pause preemption) and the related exceptions. Ms. Burchi described the TSCA Section 18(d)-(e) provisions relating to “Exceptions” and “Preservation of Certain Laws.” Ms. Burchi also addressed new TSCA’s Section 18(f) “Waivers” provisions and concluded her segment of the presentation with the following statement: “It remains to be seen whether states are going to be jumping in to [take action] when EPA has already identified a chemical for prioritization and review … [There will be some interesting provisions and interplay] to be seen as we move forward under new TSCA.”
Ms. Dolan, Senior Regulatory Consultant at B&C, analyzed “Fees” under new TSCA and addressed EPA’s obligations to: (1) set lower fees for small business concerns; (2) consider balance between manufacturers and processors; and (3) consult with the regulated community. Ms. Dolan stated “new TSCA directs EPA to review its fee program on a three-year cycle and revise it as needed to raise the target fees … While new TSCA did not set a deadline for developing the fees program, it really didn’t have to -- EPA, of course, has every incentive to knock this rulemaking out quickly.”
Ms. Dolan indicated that a final rule is expected on fees under new TSCA by June 2017, and provided an overview of comments received on the proposed rule. Ms. Dolan stated that “overarching themes” in the comments included that: (1) fees should be tied to the level of required effort; (2) fees should encourage innovation; and (3) fees should not be overly complex or difficult to administer. In relation to (3), Ms. Dolan quoted a commenter that stated “don’t give us the [Internal Revenue Service (IRS)] Code.”
Ms. Dolan stated “everyone seems to want to know how much will a [pre-manufacture notice (PMN)] cost in the future … I think the answer to that [will come with a big red bow] in December. Specifically, EPA states that it will send a proposal to [the Office of Management and Budget (OMB)] in mid-October … EPA may well set a comment period of at least 60 days for this proposed rule.”
Dr. Engler, Senior Chemist at B&C, discussed Sustainable Chemistry (i.e., Green Chemistry) under new TSCA. Dr. Engler stated “new TSCA is largely silent on sustainability” and indicated that the “primary benefit” to Sustainable Chemistry under new TSCA is the abbreviated review period when EPA determines that a new chemical is “not likely to present” an unreasonable risk (i.e., 90-day period waived and manufacturers can commence manufacturing immediately). Dr. Engler addressed chemicals that EPA considers to present low hazard for health and ecotoxicity (“low/low” chemicals) and stated that new TSCA could be “more of a driver for Sustainable Chemistry,” if only low/low chemicals escape regulation.
Dr. Engler addressed “Relative Risk under New TSCA” and EPA’s “Safer Choice Program” (SCP). Dr. Engler discussed the Senate Report on S. 697, which suggested that EPA should consider “private sector voluntary consensus standards as an alternative” to SCP. Dr. Engler indicated that as the relevant section of the Senate report concerns Section 23, the Sustainable Chemistry Section that was not included in the enacted new TSCA, it is unclear how it applies to new TSCA as enacted. Dr. Engler stated that EPA is proceeding with SCP and hosting a summit in November on this topic.
The webinar concluded with a Questions and Discussion (Q&D) session, and B&C’s expert panel provided useful answers and analyses in response to attendees’ questions. Ms. Bergeson moderated the Q&D session, which was organized by topic.
In the Q&D session, Ms. Bergeson stated and asked Ms. Dolan: “Fees are super important … [small businesses and startups] might have a hard time mustering any type of financial liquidity to get their notifications through the gauntlet of EPA -- so how would you expect EPA to be defining lower fees for purposes of small business provision?”
Ms. Dolan responded by stating “[currently, the ratio is $2,500 and $100 for small businesses. I would imagine there will be some kind of comparable proportionality and currently there are other submissions (e.g., Low Volume Exemptions) that don’t require any fees. EPA has got to raise the money somewhere -- the more they put it on something else or the more they try to avoid charging fees for things, the more it’s going to jack up the cost and other things. I would imagine that they are going to charge something for everything. Whether they maintain that proportionality of 100:2500 remains to be seen. Another consideration is what constitutes a small business. There is a lot of conversation about that and the fact that definition hasn’t been updated in quite a while … This might be something that is the focus of a lot of attention in the proposed rule.]”
Ms. Bergeson drew on Mr. Auer’s extensive experience with EPA on several occasions during the Q&D session, starting questions with “If you were back at EPA,” and Mr. Auer’s responses were comprehensive. Dr. Engler responded to questions regarding Green Chemistry and discussed Persistent, Bioaccumulative, and Toxic (PBT) substances under new TSCA, and Ms. Burchi answered questions on California’s Safer Consumer Products Regulation (SCPR) and preemption under new TSCA.
More information on TSCA reform and B&C’s “The New TSCA: What You Need to Know” webinar series is available online.
By Sheryl L. Dolan and Kathleen M. Roberts
In anticipation of the second meeting, EPA shared its general observations as to a way forward for fee assessment under TSCA Sections 4, 5, 6, and 14 and some of EPA’s key take aways from the comments submitted to the docket. In its meeting presentation, EPA outlined its estimated annual costs by 2019 (i.e., once the Section 6 risk evaluation schedule is ramped up). While no specific fee proposals emerged from the meeting discussions, the following information was discussed, which provides some insight into EPA’s ongoing process:
- EPA’s projected annual cost for implementing TSCA Sections 4, 5, 6 and 14 includes both direct and indirect/overhead costs, with a 22.75 percent adjustment to cover overhead, consistent with EPA’s overall budget practice.
- In estimating the anticipated number of Section 5 submissions, EPA stated that based on industry comments regarding the effect of fees, it assumed a 30 percent reduction from recent years. EPA essentially stated that 30 percent is an educated guess, noting that Notices of Commencement (NOC) are only filed on approximately 50 percent of premanufacture notices (PMN).
- EPA stated that, consistent with industry’s comments, it most likely will not propose to charge separately for individual confidential business information (CBI) claims, but instead will incorporate that into overhead costs.
- EPA stated that it is implementing a time accounting system, which may support future refinements of its cost estimates; EPA is required to review its fee program every three years under TSCA Section 26(b)(4)(F).
- EPA stated that it is pursuing consultation with the Small Business Administration regarding revisiting the applicable definition of a small business concern. While clarifying that this is not a proposal, EPA noted that if the producer price index is applied to the small business concern definition in 40 C.F.R. § 700.43, the $40 million revenue cap in the definition would increase to $91 million. As reflected in the circulated spreadsheet, EPA plans to propose reduced fees for small businesses as required by TSCA Section 26(b)(4)(A). EPA also stated that approximately 14 percent of TSCA submissions are made by small businesses.
- Section 6 risk evaluation fees remain one of the greater uncertainties. During the September 13, 2016, meeting, suggestions were made that these fees should be assessed incrementally, perhaps tied to milestones, with a schedule that perhaps could allow tying the fees to actual costs. In response, EPA noted that OMB requirements preclude federal agencies from seeking fees in reimbursement for completed activities.
Based on its projected costs, EPA will seek to raise the $25 million annual maximum allowed by new TSCA. Regardless of how these costs are distributed among Sections 4, 5, and 6 (assuming EPA’s proposal does not separately charge for Section 14 activities), it is clear that the proposed rule will be a significant change from the $2,500 PMN fee in place since the 1980’s.
By Sheryl L. Dolan, Kathleen M. Roberts, James V. Aidala, and Lynn L. Bergeson
On August 11, 2016, the U.S. Environmental Protection Agency (EPA) convened a public meeting to solicit comments prior to development of a proposed rule to implement the revised Section 26 fees provision under the new Toxic Substances Control Act (TSCA). Public comments may be submitted through regulations.gov in docket EPA-HQ-OPPT-2016-0401 until August 24, 2016.
During the meeting, EPA solicited public comment in particular on the following five issues:
- To be able to defray 25 percent of costs of administering Sections 4, 5 and 6, and Confidential Business Information (CBI), does industry have considerations of weight amongst the three areas of fee collection?
- Does industry have thoughts on the types of factors (types of submissions, numbers of submissions, level of difficulty, etc.) that EPA should consider when structuring the fees?
- Has industry considered how to distribute payment amongst multiple manufacturers and/or processors?
- Does industry have thoughts on how to identify the whole universe of manufacturers, including importers and processors affected?
- Does industry have thoughts on how to arrive at an appropriate balance between manufacturers and processors?
In its presentation, EPA stated that it intends to publish a proposed rule by mid-December 2016, and a final rule in time for its statutory June 22, 2017, deadline.
Four industry trade associations gave prepared remarks during the meeting: the American Chemistry Council; the American Petroleum Institute; the Society of Chemical Manufacturers and Affiliates; and the American Fuel & Petrochemical Manufacturers. Their comments reflected several common but competing themes, including:
- EPA needs to share its expectations of internal costs as a starting point for discussions of the fee structure.
- The fee system should be straightforward to implement.
- EPA should be mindful in developing a fee structure so as not to stifle innovation; for example, placing too high of fees for review of new chemistries under Section 5 or confidentiality claims under Section 14.
- Not all sections should be given equal weight; in particular, as industry will pay for Section 4 data development, it should not be double-charged by assessing a fee for EPA’s review of these data.
- EPA must provide adequate consideration for the effect on small businesses.
- Consideration should be given to incremental fees, tied to EPA milestones.
- A business should have a way to exit from a Section 6 risk evaluation process if it elects to exit the market.
Congress recognized that the new TSCA tasks EPA with significant additional responsibilities, and included Section 26 as a venue to ensure adequate resources would be available to develop the infrastructure to meet these responsibilities according to the specified timelines and in conformity with sound science. Input from all affected stakeholders will be needed to devise a workable TSCA fee system, particularly in the compressed timeframe for rule development.
EPA and industry stakeholders are supportive of a simple framework, but the complexities and current unknowns of how new TSCA will operate will make this goal challenging. Many questions exist that will not be answered before next week’s comment deadline:
- Should a company have to pay fees for a Section 6 risk evaluation on uses that it does not support?
- Should there be fees associated with Section 6 prioritization actions? If not, does that mean that only high priority chemicals will have Section 6 fees assessed on them?
- Given the new threshold for affirmative findings under Section 5, will EPA complete the same number of new chemical notifications that it has in the past? If not, should that anticipated reduction in notification reviews be reflected in the fees proposal?
- Most industry stakeholders recognize that the current PMN fee of $2,500 will be increased, but how much is too much?
- As previously noted, is it appropriate to require industry to pay for testing under Section 4, and then charge for EPA review of that test data?
- To ensure that sufficient funds are raised, will we need to assess a fee for every “touch” that EPA has within Sections 4, 5, and 6? How can that cost be fairly allocated among all industry players, including small businesses?
While EPA did not offer to share information on budgets at the August 11, 2016, meeting, the Office of Pollution Prevention and Toxics (OPPT) presumably has pertinent information supporting its annual budgets that must be shared in the near term if it hopes to receive any meaningful ideas on a proposed fee structure. Although past program outputs done under old TSCA may bear little resemblance to the duties EPA now has under new TSCA, EPA’s new policies and responsibilities will be some scale of past program capabilities and budget.
Of more relevance will be the experience of OPPT’s sister program, the Office of Pesticide Programs (OPP). OPP has had a dedicated stream of user fees since the 1988 amendments to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and additional fees were imposed in 2004 with enactment of the Pesticide Registration Improvement Act (PRIA) fee-for-service program. While the FIFRA product licensing program is different in many respects from TSCA, there are relevant commonalities that OPPT should find helpful. OPP has a time accounting system, for example, that provides a principled basis on which to estimate the time required for study report review and risk evaluation.
With estimates derived from the time accounting system, OPP (and presumably OPPT) can estimate how much it costs EPA to review toxicity studies individually. For example, there is an estimate of how much it costs EPA to review a 90-day subchronic study, or how much to review a genotoxicity study. These calculations form the basis of the PRIA fee scheme, as PRIA is designed to generate one-third of the program costs involved. The “simple” general rule underlying a now elaborate fee schedule with almost 200 categories is that the more science review involved, the greater the required fee. The new law may not need or want to have so many different categories, but the operating principle can remain the same.
For OPPT, the dollar amounts could vary from OPP given the statutory limitation of the maximum amount to be generated, but the more difficult question will be how OPPT calculates its expected workload under the new law. Given the wealth of information available through OPP’s experience, sharing this information would further inform the public about what to expect in, or options for how to fashion, a fee scheme.