Regulatory Developments

EPA Seeks Comment on Initial Regulatory Flexibility Analysis on Proposed PFAS Reporting Rule

November 29, 2022 PRINT

On November 25, 2022, the U.S. Environmental Protection Agency (EPA) announced the availability of and solicited comment on an Initial Regulatory Flexibility Analysis (IRFA) and Updated Economic Analysis following the completion of a Small Business Advocacy Review (SBAR) Panel for the Toxic Substances Control Act (TSCA) proposed rule for reporting and recordkeeping requirements for per- and polyfluoroalkyl substances (PFAS). 87 Fed. Reg. 72439. EPA states that it seeks public comment on all aspects of the IRFA and Updated Economic Analysis, including underlying data and assumptions in developing its estimates, as well as on certain items presented in the IRFA for public comment and related to the protection of confidential business information (CBI). Comments are due December 27, 2022.

Background

As reported in our June 11, 2021, memorandum, the fiscal year 2020 (FY2020) National Defense Authorization Act (NDAA) amended TSCA to add Section 8(a)(7), mandating that EPA promulgate a rule “requiring each person who has manufactured a chemical substance that is a [PFAS] in any year since January 1, 2011” to report certain information. EPA’s June 28, 2021, proposed rule would require all manufacturers (including importers) of PFAS in any year since 2011 to report information related to chemical identity, categories of use, volumes manufactured and processed, byproducts, environmental and health effects, worker exposure, and disposal. EPA also proposed a five-year retention period for all relevant records following the submission period. EPA notes that based on information available to it at the time of the proposed rule’s publication, EPA certified that the proposed rule did not have significant impact on a substantial number of small entities under the Regulatory Flexibility Act (RFA).

In the November 25, 2022, Federal Register notice, EPA states that based on public comments and additional data sources on PFAS-containing article importers, EPA convened an SBAR Panel for the proposed rule and prepared an IRFA under the RFA and evaluated the economic impact of the proposed TSCA Section 8(a)(7) rule on small entities, as well as any significant alternatives to the proposed rule that may minimize significant economic impacts on small entities while accomplishing EPA’s objectives.

EPA states that it has updated its estimate of costs for the proposed rule as proposed from approximately $10.8M to $875M in social costs, as well as from $948,078 to $1.5M in Agency costs. As discussed further in the IRFA, the affected small businesses subject to the rule are expected to incur $863,483,965 in costs for this one-time reporting. According to EPA, it is considering changes to the final rule from the regulatory proposal based on updates to the economic analysis, small business impact analysis, and significant regulatory alternatives presented in the IRFA, as well as regarding the treatment of CBI for PFAS.

EPA notes that since publishing the draft Economic Analysis, it has also updated the discussion of the benefits of the proposed rule. EPA states that the IRFA “details the many activities in the Office of Pollution Prevention and Toxics and in other offices across the Agency” that will use and benefit from the data collected under the proposed rule. According to EPA, the proposed rule will provide information on PFAS to which EPA (or the public) does not currently have access. By increasing the data supplied to EPA programs, including risk-screening programs across different media, EPA expects to evaluate more effectively and expeditiously any potential risks posed by PFAS. The IRFA also details the potential benefits of the proposed rule to external stakeholders, such as Tribal, state, and local governments, non-governmental organizations (NGO), and private-sector organizations, based on comments submitted during the proposed rule’s public comment period.

Request for Public Comment

EPA states that it welcomes public comment on all aspects of the IRFA and Updated Economic Analysis, including underlying data and assumptions in developing its estimates, as well as the following items identified in the IRFA and Updated Economic Analysis for public comment:

  • The number of potential small article manufacturers (including importers) that may be subject to the proposed rule;
     
  • The number of PFAS for which small entities may submit reports under the rule, including information related to potential outliers of the industry-wide average estimate and the estimated distribution of PFAS per firm;
     
  • The number of hours small entities will spend on understanding the structural definition of PFAS proposed for this rule; and
     
  • The number of entities that would be affected by implementing a reporting threshold for the proposed rule of either 2,500 lbs or 25,000 lbs manufactured per year.
     

Additionally, EPA welcomes public comment on the following items in the IRFA that were not available for public comment during the proposed rule’s comment period:

  • Regulatory flexibility alternatives, such as exemptions for businesses with less than $12M or $6M in revenue, exemptions for article importers with less than $6M in revenue, limiting the scope of PFAS to a finite list, establishing reporting thresholds, simplified reporting forms for certain entities (i.e., article importers and manufacturers of research and development (R&D) substances in volumes less than 10 kg per year) (see alternatives in the IRFA);
     
  • Reporting exemptions common to other chemical reporting programs, such as for R&D substances, byproducts, impurities, recyclers, and intermediates. EPA particularly seeks information on the potential impacts of such exemptions, which it did not quantify in the IRFA; and
     
  • Potentially duplicative or overlapping reporting requirements with the proposed rule (see “Other Federal Rules that may Duplicate, Overlap, or Conflict with the Rule” in the IRFA). EPA specifically requests comment on potential duplication with any reporting requirements that have been implemented since the publication of the proposed rule.
     

EPA also welcomes comment on whether any of the significant regulatory alternatives considered in the IRFA, such as de minimis or R&D exemptions, would be appropriate to extend more broadly to each person who has manufactured a chemical substance that is a PFAS in any year since January 1, 2011.

Lastly, EPA also welcomes public comment on the following items pertaining to CBI that are not in the IRFA and Updated Economic Analysis:

  • Treatment of chemical identity claims: EPA seeks to clarify and add to language included in the PFAS proposed rule based on comments received in response to the TSCA CBI Procedures proposed rule about an entity’s knowledge of a specific chemical identity. Section 705.30(a)(2)(iii) of the proposed PFAS rule indicates that confidentiality claims cannot be asserted when a response is left blank or designated as “not known or reasonably ascertainable.” EPA states that it seeks to explain how it will handle such a response in the context of a specific chemical identity. If any entity reports a PFAS substance by specific chemical identity and does not claim the specific chemical identity as CBI, EPA expects to determine that the specific chemical identity is no longer entitled to confidential treatment. EPA states that it would not make this determination where an entity attests that it does not have knowledge of the specific chemical identity, however. Instead, an entity that does not have knowledge of a specific chemical identity must initiate a joint submission with its supplier or other manufacturer. In these cases, the secondary submitter would be responsible for providing the specific chemical identity and for asserting and substantiating any CBI claims concerning the specific chemical identity. According to EPA, “[‌i]f an entity (likely an article importer) attests that it lacks knowledge of the specific chemical identity and also that it lacks knowledge of the identity of the manufacturer of the substance, the joint submission provisions would not apply, and the entity would not be able to make or waive a CBI claim for the specific chemical identity.”
     
  • Notice prior to publication on the public TSCA Inventory: EPA seeks to clarify further and add to language in the PFAS proposed rule at 40 C.F.R. Section 705.30 to explain which entities, if any, should expect to receive notice before a chemical identity is moved to the public portion of the TSCA Inventory. In the PFAS proposed rule, at 40 C.F.R. Section 705.30(g), EPA indicated that information not claimed as confidential may be made public without further notice to the submitter. EPA seeks to clarify that if a submitter reports a PFAS substance by specific chemical identity, but does not assert a CBI claim on that specific chemical identity, “then EPA will move that chemical identity to the public portion of the TSCA Inventory without further notice to the submitter.” (Emphasis in the original.) EPA also requests comment on aligning this provision in the final PFAS rule with language in the proposed TSCA CBI Procedures rule, by indicating that persons who previously made a CBI claim for the same specific chemical identity will also not receive prior notice before the specific chemical identity is moved to the public portion of the Inventory. See 87 Fed. Reg. 29078, 29081 and proposed 40 C.F.R. Section 703.5; rule docket including comments available at Docket ID EPA-HQ-OPPT-2021-0419.
     
  • Generic names without “fluor”: EPA states that generic names must be sufficiently detailed to identify the reported chemical as a PFAS. Specifically, EPA would reject any generic name reported for a PFAS that does not contain “fluor” in the name as insufficient under TSCA Section 14(c)(1)(C). EPA notes that additionally, any previously existing generic names from earlier TSCA Section 5 submissions for PFAS without “fluor” are insufficient. Further, even if a generic name reported under the TSCA 8(a)(7) rule lacks the structural unit “fluor,” EPA will identify the chemical substance as a PFAS.
     

Commentary

The change in EPA’s estimate for just small business reporters to over $800 million reflects an extraordinary admission on EPA’s part that its initial cost estimate was incorrect. Even with this much higher cost estimate, the updated estimate excludes the cost to businesses that do not qualify as small businesses. As we speculated in our memorandum on the original rule proposal, EPA was indeed underestimating the potential cost for compliance. We are pleased that EPA has more thoroughly reviewed the potential cost. Unfortunately, we fear that EPA is now straining credulity in its estimate of benefits. EPA “expects to more effectively and expeditiously evaluate any potential risks posed by PFAS.” While we agree that EPA needs more information on PFAS, our expectation is that, as proposed, the vast majority of information that EPA will receive will be “not known or reasonably ascertainable” (NKRA) responses. If articles, impurities, and incidentally formed substances are not exempted from reporting, there is the potential for an enormous disconnect between the cost of searching records of all manufacturing, import, processing, and use transactions over the past ten years for the presence of all potential PFAS in any quantity to determine if a reporting entity had a basis to know the information that EPA is now seeking and actually eliciting useful information. The likely result of that reporting, that the information was NKRA, will provide little to no value to EPA’s decision-making or risk assessment. It will, of course, confirm that entities that were exempt from reporting or even tracking were in fact not reporting or tracking. The meaningful information that EPA seeks is much more likely to be among manufacturers and importers of PFAS products (substances or articles) for which the PFAS was intentionally present.

We are pleased that EPA is also requesting specific comments on possible exemptions from reporting, and we urge parties to comment on this aspect of the reporting rule. Our view is that substances that are eligible for the exemptions under 40 C.F.R. Section 720.30 paragraphs (a), (c), (h), and (i) (e.g., impurities -- perhaps below a certain threshold, R&D substances, substances formed upon end use, substances formed incidental to ageing, weathering, or storage, among others) should also be exempt from reporting under this rule. EPA’s desire to have such information or EPA’s view that entities “should have known” whether a PFAS was present is unpersuasive; EPA’s offer that such information could be reported as NKRA does not relieve the reporter from the regulatory obligation imposed under the rule to research and document whether the information was or is actually NKRA.

Imagine, for example, if EPA imposed a requirement for each individual to search ten years of purchases, online or in-store, and see if any of those products contained a PFAS. Each individual would have to record how it researched their purchases, ask each seller about PFAS content, and save any documentation (product literature, website listing, box or other external label) as proof that they performed their due diligence. This is similar to what EPA (and many commenters on the original rule) expected of companies in the original rule proposal. If EPA restores many of the exemptions at 40 C.F.R. Section 720.30, EPA may receive the useful information that is not buried in a sea of less useful information.

We also suggest that readers review the other areas on which EPA solicits comments, such as the treatment of CBI. EPA proposes that if an importer does not know the identity of a PFAS (again any PFAS, regardless of previous exemptions related to the knowledge of the identity or presence of such substances) in a product, that the importer would have to submit a joint submission with the foreign manufacturer. How would EPA approach a situation in which a foreign supplier is no longer available to provide such information? How would EPA treat an importer if it submitted its portion of the report, but the foreign supplier submitted late or refused to submit? Would EPA hold the importer responsible for the supplier’s delay or reticence?

Finally, EPA is proposing to require that each PFAS with a generic name include the string “fluor” in the generic name. EPA will need to hear whether this requirement (which will impose more effort on EPA’s part than individual submitters) will disclose information that could impose substantial commercial harm on the claimant.

We remind readers that EPA promulgated a reporting rule for nanoforms of substances, imposing substantial burden on industry. It remains to be seen whether, and if so how, EPA is using that information. As far as we can ascertain, that information resides in a database that is, for the most part, unexamined for any evaluation of risk.

We do not question that EPA has the authority to collect information under Section 8(a)(7). We hope that EPA will exercise that authority on a basis that reflects the reality of what information is potentially available and tailor the reporting rule to those circumstances in which information is likely to be available. It is vital that EPA hear from entities large and small about the burden that may be imposed to perform the due diligence and recordkeeping to provide EPA with little, if any, meaningful information.


 
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