Source: U.S. Small Business Administration 2019

Estimate the Percentage of Firms That are Small
To determine the percent of the manufacturers subject to the proposed rule that would be considered small under SBA size standards, EPA identified the subset of affected companies from the 2016 CDR that fall below the SBA size definition, based on employment and sales data from Dun and Bradstreet (Dun & Bradstreet Hoovers 2020). EPA then applied these percentages to the total estimate of affected firms.
Of the 16 non-CBI PFAS manufacturers in the 2016 CDR for which employment and revenue information could be located in the Dun and Bradstreet database, 4 companies (25 percent) are considered small under the SBA definitions for their respective NAICS. These results are presented in Table 7-2.
Table 7-2: Percentage of Small Businesses Among Affected Firms
                                   Category
                           Number of Firms in Subset
                               Percent of Subset
Small Businesses
                                       4
                                                                            25%
Large Businesses
                                      12
                                                                            75%
Total
                                      16
                                                                           100%
Source: Dun & Bradstreet Hoovers 2020; U.S. Small Business Administration 2019

Note that these estimates do not include importers of articles that contain PFAS. EPA is not able to determine the number of importers of articles that may be subject to the proposed rule due to the scope of imported articles that contain PFAS and lack of data on article importers. EPA is soliciting public comment on the number of potential importers of articles and the potential number of imported articles that contain PFAS that may be subject to the proposed rule.
Estimate the Distribution of Costs for Small Parent Entities
Average per-firm  costs of the proposed rule are presented in Chapter 3. However, as discussed in Chapter 3, not all firms will incur costs for all reporting elements. Furthermore, EPA expects that due to their smaller operations, small firms will submit fewer reports than the industry average. Therefore, this analysis makes the following adjustments to the per-firm costs presented in Chapter 3:
 Estimate a distribution of per-firm costs, based on the percentage of firms expected complete each combination of reporting elements.
 Apply a scaling factor to the unit costs that are a function of the number of reports each firm submits. Based on the subset of small firms in the 2016 CDR that manufacture PFAS chemicals subject to the proposed rule, each site manufactures an average of 3.4 PFAS chemicals and each firm is associated with an average of 1.25 sites. Thus, EPA expects each small firm will submit an average of 4.25 reports (4.25 = 3.4 x 1.25) and calculates a scaling factor of 73%. This scaling factor is estimated as the 4.25 reports per small firm divided by the 5.85 reports per firm across all affected entities (see Section 2.2).
Table 7-3 presents the unit costs for each reporting element and the percentage of firms expected to incur that cost.
Table 7-3: Per-Firm Costs, by Reporting Element
                                    Element
                               Reporting Element
                             Cost per Firm (2020$)
                      Percentage of Firms Incurring Cost
RF
Rule Familiarization
                                                                           $70
                                                                           100%
CBI
CBI Substantiation
                                                                        $1,631
                                                                            25%
RC
Recordkeeping
                                                                          $249
                                                                           100%
CDX
CDX Registration and Electronic Signature
                                                                          $231
                                                                           100%
FC/EH
Form Completion - Environmental and health effects data
                                                                       $73,895
                                                                            18%
FC/OT
Form Completion - All other form elements
                                                                       $16,314
                                                                           100%
Note: See Chapter 3 for derivations of per-firm costs and percentage of firms incurring costs. A scaling factor of 73% is applied to the following reporting elements that are a function of the number of reports per firm: CBI Substantiation; Recordkeeping; and Form Completion.

Table 7-4 presents each combination of reporting elements from Table 7-3 and estimates the total cost per firm and the distribution of firms completing those reporting elements. Table 7-4 also presents the revenue thresholds that would result in 1 percent and 3 percent cost-revenue impacts for firms incurring costs for each combination of reporting elements. For example, for a firm in the first row of Table 7-4 incurring costs for all reporting elements, its cost-revenue ratio would be less than 1 percent if the firm has revenues greater than $9.2 million. Similarly, the cost-revenue ratio would be greater than 3 percent if the firm has revenues less than $3.1 million.
Table 7-4: Per-Firm Cost Distribution and Thresholds
                          Reporting Elements Incurred
                          Total Cost per Firm (2020$)
                      Percentage of Firms Incurring Costs
                 Revenue Threshold for 1% Cost-Revenue Impacts
                 Revenue Threshold for 3% Cost-Revenue Impacts
RF, CBI, RC, CDX, FC/EH, FC/OT
                                                                       $92,390
                                                                           4.5%
                                                                    $9,239,026
                                                                    $3,079,675
RF, RC, CDX, FC/EH, FC/OT
                                                                        $90,759
                                                                          13.5%
                                                                    $9,075,914
                                                                    $3,025,305
RF, CBI, RC, CDX, FC/OT
                                                                       $18,495
                                                                          20.5%
                                                                    $1,849,493
                                                                       $616,498
RF, RC, CDX, FC/OT
                                                                       $16,864
                                                                          61.5%
                                                                     $1,686,381
                                                                      $562,127
Total
                                                                              -
                                                                           100%
                                                                              -
                                                                              -
Note: See Table 7-3 for derivations of total costs per firm, percentage of firms incurring costs, and for a description of reporting elements.

Note that the per-firm costs presented in Table 7-3 and Table 7-4 do not reflect potential costs for importers of articles that contain PFAS. EPA is not able to determine the number of importers of articles that may be subject to the proposed rule. As discussed in Section 3.2.6, EPA expects that article importers may incur a range of costs depending on the number of articles they import, their level of knowledge of their imported articles, the complexity of supply chains, and whether PFAS is present in their articles. Importers of articles that contain PFAS may incur costs for rule familiarization ($69.79 per firm); identifying the type of imported articles that potentially use PFAS ($1,641-$1,932 per firm); identifying suppliers involved ($1,185 per firm); collecting data from suppliers ($0-644 per article); and recordkeeping ($12 per firm). See Section 3.2.6 for further detail.
Estimate the Distribution of Annual Revenues for Small Parent Entities
This analysis estimates a distribution of revenues for the NAICS listed in Table 7-1 using data on annual receipts per firm from the 2012 U.S. Census Statistics of U.S. Businesses (SUSB) (U.S. Census Bureau 2015). The SUSB data divides firms into 17 revenue brackets according to the firm's annual receipts, which are defined as "all revenue in whatever form received or accrued from whatever source, including from the sales of products or services" from all affiliates in a given year (13 CFR §121.104). Table 7-5 shows the distribution of firms in the affected NAICS, by revenue bracket.

Table 7-5: Number of Firms by Revenue Bracket (2012$)
                           Annual Revenue Bracket[1]
                           Number of Firms, by NAICS

                                    325130
                                    325180
                                    325211
                                    325320
                                    327910
                                    333415
                                    334511
                                    336111
                                    423690
                                    424690
                                    447190
                                    515210
                                    551112
                                    561499
< $100,000[2]
                                                                             11
                                                                             12
                                                                             25
                                                                             21
                                                                             19
                                                                             47
                                                                             32
                                                                             32
                                                                            692
                                                                            380
                                                                            523
                                                                             86
                                                                            903
                                                                            722
$100,000 - $499,999
                                                                              3
                                                                              2
                                                                             21
                                                                              4
                                                                             21
                                                                             66
                                                                             79
                                                                              3
                                                                          2,165
                                                                          1,327
                                                                          2,009
                                                                            125
                                                                            930
                                                                          1,193
$500,000 - $999,999
                                                                             17
                                                                             22
                                                                             52
                                                                             15
                                                                             28
                                                                             72
                                                                             42
                                                                              8
                                                                          1,379
                                                                            904
                                                                          1,396
                                                                             51
                                                                            381
                                                                            427
$1,000,000 - $2,499,999
                                                                             16
                                                                             48
                                                                            123
                                                                             21
                                                                             70
                                                                            139
                                                                             78
                                                                             28
                                                                          1,754
                                                                          1,140
                                                                          2,570
                                                                             46
                                                                            443
                                                                            357
$2,500,000 - $4,999,999
                                                                             15
                                                                             35
                                                                            147
                                                                             22
                                                                             30
                                                                            103
                                                                             56
                                                                             25
                                                                          1,050
                                                                            744
                                                                          2,249
                                                                             18
                                                                            329
                                                                            134
$5,000,000 - $7,499,999
                                                                             12
                                                                             36
                                                                            100
                                                                             14
                                                                             18
                                                                             47
                                                                             28
                                                                              8
                                                                            578
                                                                            349
                                                                          1,022
                                                                              8
                                                                            191
                                                                             58
$7,500,000 - $9,999,999
                                                                              5
                                                                             16
                                                                             47
                                                                             11
                                                                             16
                                                                             28
                                                                             29
                                                                              5
                                                                            263
                                                                            218
                                                                            469
                                                                              7
                                                                            143
                                                                             19
$10,000,000 - $14,999,999
                                                                              6
                                                                             24
                                                                             55
                                                                             12
                                                                             13
                                                                             50
                                                                             23
                                                                             12
                                                                            323
                                                                            250
                                                                            445
                                                                              7
                                                                            203
                                                                             40
$15,000,000 - $19,999,999
                                                                              3
                                                                             14
                                                                             38
                                                                              4
                                                                              9
                                                                             18
                                                                              8
                                                                              3
                                                                            213
                                                                            159
                                                                            242
                                                                              4
                                                                            139
                                                                             22
$20,000,000 - $24,999,999
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
$25,000,000 - $29,999,999
                                                                              2
                                                                              9
                                                                             19
                                                                              3
                                                                              3
                                                                             11
                                                                              4
                                                                              1
                                                                             99
                                                                             66
                                                                            101
                                                                              4
                                                                             72
                                                                             12
$30,000,000 - $34,999,999
                                                                              3
                                                                             12
                                                                              7
                                                                              0
                                                                              3
                                                                              9
                                                                              5
                                                                              0
                                                                             72
                                                                             61
                                                                             87
                                                                              3
                                                                             57
                                                                             17
$35,000,000 - $39,999,999
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
$40,000,000 - $49,999,999
                                                                              3
                                                                              8
                                                                             12
                                                                              4
                                                                              4
                                                                             11
                                                                              4
                                                                              2
                                                                             88
                                                                             60
                                                                            115
                                                                              2
                                                                             98
                                                                             14
$50,000,000 - $74,999,999
                                                                              2
                                                                             16
                                                                             27
                                                                              5
                                                                              4
                                                                             17
                                                                              3
                                                                              3
                                                                            116
                                                                            112
                                                                            142
                                                                              6
                                                                            162
                                                                             15
$75,000,000 - $99,999,999
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
$100,000,000 +
                                                                             30
                                                                            118
                                                                            163
                                                                             33
                                                                             13
                                                                             69
                                                                             54
                                                                             20
                                                                            412
                                                                            338
                                                                            459
                                                                             40
                                                                          1,108
                                                                             78
Total
                                                                            128
                                                                            372
                                                                            836
                                                                            169
                                                                            251
                                                                            687
                                                                            445
                                                                            150
                                                                          9,204
                                                                          6,108
                                                                         11,829
                                                                            407
                                                                          5,159
                                                                          3,108
Source: U.S. Census Bureau 2015
1 Revenues are later inflated to 2020$ to calculate the revenue distributions used to estimate cost-revenue ratios
2 Minimum revenue estimated as $83,715.84.

Note that the lowest revenue bracket in the SUSB data has a minimum revenue of zero. However, no affected firms are expected to have zero revenue, as a firm would have to manufacture a PFAS chemical in order to be affected by the rule, and presumably they receive some sales revenue for their products. Therefore, EPA estimates a minimum revenue to use as the revenue floor for the first revenue bracket. The minimum revenue is estimated as the cost of employing one part-time technical worker (0.5 FTE). The loaded wage rate for technical workers is approximately $80.50 per hour (see Table 3-1), which equates to an annual salary of $83,715.84 for an employee working 20 hours a week for 52 weeks a year.
Using the revenue brackets and firm counts from Table 7-5, the full annual revenue distribution is estimated by assuming that revenues are uniformly distributed within the revenue brackets. Estimated revenue distributions at the 1st, 5th, 25th, 50th, and 75th percentile for entities across all potentially affected NAICS are presented in Table 7-6.
Table 7-6: Estimated Revenue Distribution
                                1st Percentile
                                5th Percentile
                                25th Percentile
                                50th Percentile
                                75th Percentile
                                                                       $87,031
                                                                      $100,292
                                                                      $468,638
                                                                    $1,929,321
                                                                    $6,949,981

Estimate the Cost-to-Revenue Ratio for Small Entities
Table 7-7 presents a summary of the small business impacts of the proposed rule. To estimate the percentage of small firms at each cost-impact ratio, the revenue thresholds for 1% and 3% cost impacts presented in Table 7-4 are compared against the full percentile revenue distribution summarized in Table 7-6. For example, for the three small firms with reporting elements described in the first row of Table 7-4, the 3% cost-revenue impact threshold is $3,079,675. Based on the revenue distribution summarized in Table 7-6, revenues at the 60th percentile ($2,973,459) and below fall under this threshold. Thus, EPA estimates that 60 percent of firms will have cost impacts of more than 3% of their annual revenues. EPA then multiplies this percentage by the number of small firms to estimate the number of firms with cost impacts of more than 3% of revenues (e.g., 0.60 x 3 firms = 1.58 firms, rounded to 2).
For firms subject to the proposed rule, 46% of small firms are expected to have cost impacts of less than 1% of annual revenues, 19% are expected to have impacts between 1-3%, and 35% are expected to have impacts of more than 3% of annual revenues. Per-firm costs are summarized in Table 7-4 and are estimated to range from $16,864 to $92,390. The affected small businesses subject to the proposed rule are expected to incur $1,788,506 in costs for this one-time reporting.
Table 7-7: Summary of Small Business Impacts
                        Reporting Elements Incurred[1]
                                Affected Firms
            Number and Percent of Small Firms by Cost-Impact Ratio

                                   All Firms
                                 Percent Small
                       Percentage Firms Incurring Costs
                                  Small Firms
                                    <1%
                                     1-3%
                                    >3%
RF, CBI, RC, CDX, FC/EH, FC/OT
                                      234
                                      25%
                                                                           4.5%
                                                                              3
                                                                        1 (20%)
                                                                        1 (20%)
                                                                        2 (60%)
RF, RC, CDX, FC/EH, FC/OT

                                                                          13.5%
                                                                              8
                                                                        2 (20%)
                                                                        2 (20%)
                                                                        5 (60%)
RF, CBI, RC, CDX, FC/OT

                                                                          20.5%
                                                                             12
                                                                       6 (550%)
                                                                        2 (20%)
                                                                        4 (30%)
RF, RC, CDX, FC/OT

                                                                          61.5%
                                                                             36
                                                                       19 (52%)
                                                                        7 (19%)
                                                                       10 (29%)
Total
                                      234
                                      25%
                                                                         100.0%
                                                                             59
                                                                       27 (46%)
                                                                       11 (19%)
                                                                        20(35%)
Note: Estimates for the number of firms are rounded to the nearest firm, so totals may not sum due to rounding
[1]See description of reporting elements in Table 7-3

Note that these estimates likely overstate the number of firms with large impacts because EPA assumes that annual revenue is independent of costs. However, because costs are largely dependent on the number of reports a firm submits, it is likely that a smaller firm with lower revenues would also incur lower costs. For example, firms with lower revenues may not have conducted environmental health and safety studies, and therefore would not incur the higher costs to submit those data. Similarly, firms with lower revenues may not have the capacity to manufacture multiple chemicals at multiple sites, and therefore may incur lower costs for submitting fewer reports.
These estimates may also understate the number of firms with large impacts because it does not include importers of articles that contain PFAS. EPA is not able to determine the number of importers of articles that may be subject to the proposed rule. As discussed in Section 3.2.6, EPA expects that article importers may incur a range of costs depending on the number of articles they import, their level of knowledge of their imported articles, the complexity of supply chains, and whether PFAS is present in their articles. Because the estimates presented in this section may both overstate and understate impacts on small businesses, the overall direction of error is ambiguous.

Sensitivity Analysis
This chapter presents a sensitivity analysis related to the number of reports expected to be submitted by each firm. As the number of reports submitted under this proposed rule cannot be estimated directly, the primary analysis uses an average of 3.9 chemical reports per site, and 1.5 sites per firm, as derived from the 2016 CDR, to estimate total industry costs of the proposed rule (see Chapters 2 and 3). Thus, the primary analysis estimates an average of approximately 5.85 reports per firm (5.85 = 3.9 x 1.5). However, these averages represent a wider range of chemicals per site and sites per firm reported to CDR. To determine how sensitive the total burden and cost estimates are to the estimated number of reports submitted by each firm, this sensitivity analysis presents alternative low-end and high-end estimates associated with the number of reports submitted per firm. As shown in Table 8-1, this analysis uses a low-end estimate of 1 report per firm and a high-end estimate of 20 reports per firm, which represents the 10th and 90th percentiles in the CDR data, respectively.
Table 8-1: Estimated Number of Reports per Firm, Primary and Alternative Estimates
                                   Parameter
                         Number of chemicals per site
                           Number of sites per firm
                          Number of reports per firm

                                       A
                                       B
                                   C = A x B
Average (Primary Analysis)[1]
                                                                            3.9
                                                                            1.5
                                                                              6
Low-End Estimate[2]
                                                                            1.0
                                                                            1.0
                                                                              1
High-End Estimate[3]
                                                                            8.3
                                                                            2.4
                                                                             20
Source:: EPA 2020e
1 Average estimates from the 2016 CDR
2 10th percentile estimates from the 2016 CDR
[3] 90th percentile estimates from the 2016 CDR

Table 8-2 presents the total industry burden and costs under the primary and alternative estimates. This sensitivity analysis assumes that the number of firms submitting reports remains the same as the primary analysis under both the low-end and high-end estimates. Note that in the case of the low-end estimate, this assumption also implies that reports are submitted for only 234 chemicals. The low-end estimate results in a total burden of approximately 23,768 hours and a total cost of approximately $1.9 million. The high-end estimate results in a total burden of approximately 343,478 hours and a total cost of approximately $27.6 million. This represents an approximately 81 percent decrease and 181 percent increase in total costs under the low-end and high-end assumptions, respectively. Thus, given that the total industry costs are driven by the costs for form completion, industry costs appear to be sensitive to the number of reports submitted per firm.
Table 8-2: Total Industry Burden and Costs (2020$), Primary and Alternative Estimates
                                   Activity
                           Number of Affected Firms
                        Average Burden per Firm (Hours)
                             Total Burden (hours)
                         Average Cost per Firm (2020$)
                              Total Cost (2020$)
                               Primary Estimate
Rule Familiarization
                                                                            234
                                                                              1
                                                                            192
                                                                            $70
                                                                       $16,331
Form Completion
                                                                            234
                                                                            507
                                                                        118,616
                                                                        $40,764
                                                                     $9,538,839
CBI Claim Substantiation
                                                                            234
                                                                              6
                                                                          1,300
                                                                          $561
                                                                      $131,343
Recordkeeping
                                                                            234
                                                                              6
                                                                          1,371
                                                                          $343
                                                                        $80,267
CDX Registration and Electronic Signature
                                                                            234
                                                                              3
                                                                            624
                                                                          $231
                                                                       $54,033
                                                        Total, Primary Estimate
                                                                            234
                                                                            522
                                                                        122,104
                                                                    $41,969.29
                                                                    $9,820,813
                               Low-End Estimate
Rule Familiarization
                                                                            234
                                                                              1
                                                                            192
                                                                           $70
                                                                       $16,331
Form Completion
                                                                            234
                                                                             87
                                                                         20,280
                                                                         $6,970
                                                                    $1,630,894
CBI Claim Substantiation
                                                                            234
                                                                              6
                                                                          1,300
                                                                          $561
                                                                      $131,343
Recordkeeping
                                                                            234
                                                                              6
                                                                          1,371
                                                                          $343
                                                                       $80,267
CDX Registration and Electronic Signature
                                                                            234
                                                                              3
                                                                            624
                                                                          $231
                                                                       $54,033
                                                        Total, Low End Estimate
                                                                            234
                                                                            102
                                                                         23,768
                                                                     $8,174.65
                                                                    $1,912,868
                               High-End Estimate
Rule Familiarization
                                                                            234
                                                                              1
                                                                            192
                                                                           $70
                                                                       $16,331
Form Completion
                                                                            234
                                                                          1,453
                                                                        339,991
                                                                      $116,821
                                                                   $27,336,231
CBI Claim Substantiation
                                                                            234
                                                                              6
                                                                          1,300
                                                                          $561
                                                                      $131,343
Recordkeeping
                                                                            234
                                                                              6
                                                                          1,371
                                                                          $343
                                                                       $80,267
CDX Registration and Electronic Signature
                                                                            234
                                                                              3
                                                                            624
                                                                          $231
                                                                       $54,033
                                                       Total, High End Estimate
                                                                            234
                                                                          1,468
                                                                        343,478
                                                                   $118,026.52
                                                                   $27,618,205

Other Impact Analyses
Several statutes and executive orders (EOs) pertain to the rule. This chapter presents statements discussing paperwork reduction, unfunded mandates, regulatory planning and review, tribal governments, children's health, and environmental justice, among others.
Employment Impact Analysis
While a standalone analysis of employment impacts is not included in a standard cost-benefit analysis, EPA typically examines employment impacts for 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 rule, EPA presents a qualitative assessment of the potential for employment impacts in the short and long term for firms that might be directly or indirectly affected by the rule.

Regulatory employment impacts are difficult to disentangle from other economic changes affecting employment decisions that occur over the timeframe of analysis and across affected regions and industries. Labor market responses to regulation are complex. They depend on labor demand and supply elasticities and possible labor market imperfections (e.g., wage stickiness, structural unemployment, etc.). The observability of an employment response may depend on the unit of measurement. Possible measured units include the number of jobs, job years, types of job, hours worked, and earnings. Net employment impacts are composed of a mix of potential declines and gains in different areas of the economy including the directly regulated sector, the environmental protection sector, upstream and downstream sectors, and ultimately all affected sectors. In light of these complexities, economic theory provides a constructive framework for analysis. The theory is explained below, followed by a quick summary of empirical findings in the rapidly expanding literature relevant to employment effects of environmental regulation. The final subsections present qualitative assessments of the employment impacts of the current rulemaking.

Theory
Microeconomic theory describes how firms adjust their use of inputs in response to changes in economic conditions. Labor is one of many inputs to production, along with capital, energy, and materials. In competitive markets, firms choose inputs and outputs to maximize profit as a function of market prices and technological constraints.[,] Berman and Bui (2001) adapt this model to analyze how environmental regulations affect the quantity of labor demanded by regulated firms. They model environmental regulation as effectively requiring certain factors of production, such as pollution abatement capital, at levels that firms would not otherwise choose. Berman and Bui (2001) model two components that drive changes in firm-level labor demand: output effects and substitution effects. Regulation affects the profit-maximizing quantity of output by changing the marginal cost of production. If a regulation causes marginal cost to increase, it will place upward pressure on output prices, leading to a decrease in demand for output, and resulting in a decrease in production. The output effect describes how, holding labor intensity constant, a decrease in production causes a decrease in labor demand. As noted by Berman and Bui, although many assume that regulations must increase marginal cost, it need not be the case. A regulation could induce a firm to upgrade to less polluting and more efficient equipment or production processes that lower the marginal cost of production.

The substitution effect describes how, holding output constant, regulation affects the labor-intensity of production. Although increased environmental regulation may increase the use of pollution control equipment and energy to operate that equipment, or otherwise change production processes, the impact on labor demand is ambiguous. For example, pollution abatement technologies or materials that alter the production process, requirements for inspection and certification, and required paperwork and recordkeeping may affect the amount of labor necessary to produce a unit of output. Berman and Bui model the substitution effect as the effect of regulation on pollution control equipment and expenditures and the corresponding change in the labor-intensity of production. In summary, as output and substitution effects may be positive or negative, economic theory alone cannot predict the direction of the net effect of environmental regulation on labor demand at the level of the regulated firm. This proposed rule will require manufacturers and processors of certain PFAS chemicals to electronically report to EPA certain information. This requirement may impact labor demand at regulated firms through increased labor needs.

In addition to changes to labor demand in the regulated industry, net employment impacts encompass changes in other related sectors throughout the U.S. economy. For example, this proposed rule will increase the amount of data on PFAS chemicals available for Federal agency risk management programs, state and local government programs, private sector, and non-governmental organization researchers. As a result, this increased amount of data may increase labor demand at organizations that analyze the data. Therefore, it is important to consider the net effect of compliance actions on employment across multiple sectors or industries. If the U.S. economy is at full employment, even a large-scale environmental regulation is unlikely to have a noticeable impact on aggregate net employment. Instead, labor in affected sectors would primarily be reallocated from one productive use to another, and net national employment effects from environmental regulation would be small and transitory (e.g., as workers move from one job to another). Some workers may retrain or relocate in anticipation of new requirements or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers. These adjustment costs can lead to local labor disruptions. Although the net change in the national workforce is expected to be very small, localized reductions in employment may adversely impact individuals and communities just as localized increases may have positive impacts. If, on the other hand, the economy is operating at less than full employment, economic theory does not clearly indicate the direction or magnitude of the net impact of environmental regulation on employment (Schmalensee and Stavins 2011). For example, the Congressional Budget Office considered EPA's Mercury Air Toxics Standards and regulations for industrial boilers and process heaters as potentially leading to short-run net increases in economic growth and employment, driven by capital investments for compliance with the regulations (Congressional Budget Office 2011).

Adding to the unknowns and complex movements of labor within the regulated sector and across the larger U.S. economy, effects on employment are also likely to change over time. Employment in some sectors will be affected at the time of promulgation or when a regulation becomes effective, while others may be affected farther into the future. In addition, environmental regulation may affect labor supply and productivity. In particular, pollution and other environmental risks may impact labor productivity or employees' ability to work. The empirical findings regarding labor supply are reviewed below.
 Empirical Findings
The labor economics literature contains an extensive body of peer-reviewed empirical work analyzing various aspects of labor demand, relying on the theoretical framework discussed in the preceding section. This work focuses primarily on effects of employment policies such as labor taxes and minimum wages. In contrast, the peer-reviewed empirical literature specifically estimating employment effects of environmental regulations is growing, but is more limited. This section presents an overview of the latter.
Empirical studies, such as Berman and Bui (2001) and Ferris et al. (2014), suggest that regulation-induced net employment impacts may be zero or slightly positive, but small in the regulated sector. Gray et al. (2014) find that pulp mills that had to comply with both the air and water regulations in EPA's 1998 "Cluster Rule" experienced relatively small, and not always statistically significant, decreases in employment. Other research on regulated sectors suggests that employment growth may be lower in more regulated areas (Greenstone 2002; Walker 2011; Walker 2013; Kahn and Mansur 2013). However since these latter studies compare more regulated to less regulated counties this methodological approach likely overstates employment impacts to the extent that regulation causes plants to locate in one area of the country rather than another, which would lead to "double counting" of the employment impacts. List et al. (2003) find some evidence that this type of geographic relocation may be occurring.
The empirical literature on environmental regulatory employment impacts focuses primarily on labor demand. However, there is a nascent literature focusing on regulation-induced effects on labor productivity and supply. Although this literature faces empirical challenges, researchers have found that air quality improvements lead to reductions in lost work days (e.g., Ostro 1987). Limited evidence suggests worker productivity may also improve when pollution is reduced. Graff Zivin and Neidell (2012) used detailed worker-level productivity data from 2009 and 2010, paired with local ozone air quality monitoring data for one large California farm growing multiple crops, with a piece-rate payment structure. Their quasi-experimental structure identifies an effect of daily variation in monitored ozone levels on productivity. They find "ozone levels well below federal air quality standards have a significant impact on productivity: a 10 parts per billion (ppb) decreases in ozone concentrations increases worker productivity by 5.5 percent." (Graff Zivin and Neidell 2012, p. 3654).As noted above, it is very difficult to estimate the net national employment impacts of environmental regulation. Given the difficulty with estimating national impacts of regulations, EPA has not generally estimated economy-wide employment impacts of its regulations in its benefit-cost analyses. However, in its continuing effort to advance the evaluation of costs, benefits, and economic impacts associated with environmental regulation, in 2015 EPA formed a panel of experts as part of EPA's Science Advisory Board (SAB) to advise EPA on the technical merits and challenges of using economy-wide economic models to evaluate the impacts of its air pollution regulations, including the impact on net national employment. An SAB report issued in September 2017 (EPA 2017b) noted that the case for using economy-wide models is strongest when costs are expected to be large in magnitude and the sector has strong linkages to the rest of the economy. The report also noted that the extent to which economy-wide models add value to the analysis depends on data availability, in that data limitations are a significant obstacle to achieving the granularity needed to adequately represent a regulation in the model to estimate its effects. In the case of this proposed rule, secondary effects are likely to be limited in scope.
Conclusions Regarding the Literature. This section has outlined the challenges associated with estimating regulatory effects on both labor demand and supply for specific sectors. These challenges make it difficult to estimate net national employment estimates that would appropriately capture the way in which costs, compliance spending, and environmental benefits propagate through the macro-economy. Overall, the peer-reviewed literature does not contain evidence that environmental regulation has a large impact on net employment (either negative or positive) in the long run across the whole economy.
Section 9.1.3 presents a qualitative assessment of immediate and short-term employment impacts of the current rulemaking. Section 9.1.4 describes longer term impacts.
Qualitative Assessment: Immediate and Short-term Employment Impacts
Firms impacted by this proposed rule are manufacturers and processors of certain PFAS chemicals. The one-time activities that firms may need to perform to comply with this proposed rule are rule familiarization, form completion, CBI substantiation, electronic reporting, and recordkeeping. An estimated 234 firms are expected to be affected under the proposed rule, incurring an average one-time cost of $41,696 per firm. See Chapter 3 for a discussion of how per-firm costs were estimated. The net effect on short-term labor demand in the regulated sector is ambiguous but expected to be small.

Qualitative Assessment: Longer-term Employment Impacts
EPA is not anticipating any significant longer-term cost impacts on regulated entities and therefore the proposed rule is not expected to have any significant longer-term employment effects.
Summary of Qualitatively Assessed Employment Impacts
The direction of change in employment in the regulated and environmental sectors from this proposed rulemaking is ambiguous. This is true for both the short-term employment impacts and the long-term employment impacts. However, the increase in total costs, labor costs, and labor hours per firm as a consequence of this proposed rule is reasonably small, thus EPA expects employment impacts to be small as well.
Paperwork Reduction Act (PRA)
According to the Paperwork Reduction Act (PRA), 44 USC 3501 et seq., an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information that requires Office of Management and Budget (OMB) approval under the PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The proposed rule will impose a burden requiring additional OMB approval.
This section estimates the burden and costs for both the respondents and the Agency associated with the recordkeeping and reporting requirements of the proposed rule. In this context, the term "burden" is interpreted as the total time, effort, or financial resources expended by people to generate, maintain, retain, disclose, or provide information to or for a federal agency. This includes the time needed by regulated entities to review instructions and to develop, acquire, install, and use technology and systems to collect, validate, verify, and disclose information. Time taken to adjust existing ways to comply with any previously applicable instructions and requirements and to train personnel to respond to the information collection task is also included. In this section, burden hours for both the industry respondents and the government are estimated.
Table 9-1 presents a summary of the total burden and costs to industry associated with the proposed rule. The data used to populate this table are explained in greater detail in Chapter 3.
Table 9-1: Industry Burden Estimates
                             Reporting Population
                               Number of Reports
                 Rule Familiarization Burden per Firm (Hours)
Form Completion, CBI Substantiation, and Recordkeeping Burden per Firm (Hours)
                 Electronic Reporting Burden per Firm (Hours)
                             Total Burden (Hours)
                                       A

                                       B
                                       C
                                       D
                                E = A x (B+C+D)
                                                                            234
                                                                          1,369
                                                                              1
                                                                            518
                                                                              3
                                                                        122,104

Unfunded Mandates Reform Act (UMRA)
This action contains no Federal mandates of $100 million or more as described in UMRA (2 U.S.C. 1531-1538), and does not significantly or uniquely affect small governments.
Executive Order 13132  -  Federalism
Under Executive Order 13132, "Federalism" (64 FR 43255, August 10, 1999), EPA has determined that the rule does not have "federalism implications" because 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, as specified in the executive order. The proposed rule establishes reporting and recordkeeping requirements that apply to manufacturers and processors of certain chemicals. Because EPA has no information to indicate that any state or local government manufactures or processes the chemical substances covered by this action, the proposed rule does not apply directly to states and localities and will not affect state and local governments. Thus, EO 13132 does not apply to the proposed rule.
Executive Order 13175  -  Consultation and Coordination with Indian Tribal Governments
As required by Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000), 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, as specified in the Order. Thus, EO 13175 does not apply to the proposed rule.
Executive Order 13045  -  Children's Health
Executive Order 13045, "Protection of Children from Environmental Health Risks and Safety Risks" (62 FR 19885, April 23, 1997), requires that federal agencies examine the impacts of each regulatory action on children for any economically significant regulation (as defined by Executive Order 12866) that the Agency has reason to believe may disproportionately affect children.

EPA interprets EO 13045 as applying only to those regulatory actions that concern health or safety risks, 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. Nevertheless, the information obtained from the reporting required by this rule will be used to inform the Agency's decision-making process regarding chemicals to which children may be disproportionately exposed. This information will also assist the Agency and others in determining whether the chemicals in this rule present potential risks, allowing the Agency and others to take appropriate action to investigate and mitigate those risks.
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. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice 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 information collected under this proposed rule, if finalized, will assist EPA and others in determining the potential hazards and risks associated with PFAS chemicals. Although not directly impacting environmental justice-related concerns, this information 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 PFAS chemicals for which basic production, use, and toxicity information is currently unavailable. All consumers of these chemicals and the products made from them, all workers who come into contact with these chemicals, and communities neighboring PFAS manufacturing sites 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 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 notlikely to have a significant adverse effect on the supply, distribution, or use of energy and has not otherwise been designated by the Administrator of OMB's Office of Information and Regulatory Affairs as a "significant energy action."
National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

The proposed rule does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

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Wage Rate Calculations
This appendix describes the derivation of the fully loaded wage rates and inflation factors used in calculating costs of labor, materials, and other inputs. All cost estimates are presented in 2020 dollars.
The fully loaded unit labor cost for managerial, professional/technical, and clerical labor in the regulated industry and for EPA staff is estimated by adding fringe benefits and overhead costs to the hourly wage or annual salary for each category following the method described in EPA's Handbook on Valuing Changes in Time Use Induced by Regulatory Requirements and Other EPA Actions (EPA 2020c).. This appendix describes the method employed to estimate the fully loaded unit labor costs for each labor category and presents the results of the analysis.
Labor categories used in the analysis correspond to the U.S. Bureau of Labor Statistics (BLS) Standard Occupational Classification (SOC) system. In March 2004, BLS began using the North American Industry Classification System (NAICS) instead of the Standard Industrial Classification (SIC) System, and the Standard Occupational Classification (SOC) system instead of the Occupational Classification System (OCS). Table A-1 summarizes the crosswalk between old and new occupational titles, and lists the SOC titles that correspond to the managerial, professional/technical, and clerical labor categories used in this analysis (Weinstein and Loewenstein 2004).
Table A-1: Detail of Labor Categories Used in the Analysis
                      Labor Category Used in the Analysis
                              BLS Old Title (OCS)
                              BLS New Title (SOC)
Managerial
Executive, administrative, and managerial
Management, business, and financial
Professional/Technical
Professional specialty and technical
Professional and related
Clerical
Administrative support, including clerical
Office and administrative support
Sources: BLS 2020a; Weinstein and Loewenstein 2004

Derivation of Industry Unit Wage Rates
Wages and fringe benefit data for managerial, professional/technical, and clerical labor are from the BLS Employer Costs for Employee Compensation (ECEC) historical data for December 2020 (BLS 2021a). For attorney, the wage rate was taken from the BLS Occupational Employment Statistics (OES) May 2020 National Industry-Specific Occupational Employment and Wage Estimates for Sectors 31, 32, and 33  -  Manufacturing and SOC Code 23-1011  -  Lawyers (BLS 2021b).

The costs of fringe benefits such as paid leave and insurance, specific to each labor category, are taken from the same BLS report (BLS 2021a). Overhead costs are assumed to equal 20% of the sum of wages plus fringe benefits. This loading factor is described in Handbook on Valuing Changes in Time Use Induced by Regulatory Requirements and Other U.S. EPA Actions (EPA 2020c), and is reflective of multiplier values used in prior EPA economic analyses and ICRs that are based on industry- and occupation-specific overhead rates affected by EPA regulations. This overhead loading factor is multiplied by the total compensation (wages plus fringe benefits). For example, the fully loaded wage rate for professional/technical labor is ($44.63 + $22.45)*1.2 = $80.50. Fully loaded costs for managerial, clerical, and attorney labor are calculated in a similar manner. The calculated overhead costs (20% of the total compensation) are shown in Table A‑2 as well as the total hourly loaded wages.

Table A-2: Derivation of Loaded Industry Wage Rates (2020$)
                                Labor Category
                       Data Source for Wage Information
                                    Wage[1]
                               Fringe Benefit[2]
                              Total Compensation
                      Overhead % of Total Compensation[3]
                                   Overhead
                            Hourly Loaded Wages[4]

                                       A
                                       B
                                   C = A + B
                                       D
                                   E = C x D
                                   F = C + E
Clerical
BLS ECEC, Private Manufacturing industries, "Office and administrative support occupations"
                                                                        $20.86
                                                                         $9.62
                                                                        $30.48
                                                                            20%
                                                                         $6.10
                                                                        $36.58
Professional/Technical
BLS ECEC, Private Manufacturing industries, "Professional and related occupations"
                                                                        $44.63
                                                                        $22.45
                                                                        $67.08
                                                                            20%
                                                                        $13.42
                                                                         $80.50
Managerial
BLS ECEC, Private Manufacturing industries, "Management, business, and financial occupations"
                                                                        $54.32
                                                                        $24.46
                                                                        $78.78
                                                                            20%
                                                                        $15.76
                                                                         $94.54
Attorney
BLS OES, Occupational Employment and Wages, 23-1011 Lawyers
                                                                        $71.59
                                                                        $17.96
                                                                        $89.55
                                                                            20%
                                                                        $17.91
                                                                       $107.46
1 Source: Employer Costs for Employee Compensation Supplementary Tables: December 2020 (BLS 2021a); National Industry-Specific Occupational Employment and Wage Estimates, May 2020 (BLS 2021b).
2 Source: Employer Costs for Employee Compensation Supplementary Tables: December 2020 (BLS 2021a)
3 An overhead rate of 20% is used based on assumptions in Handbook on Valuing Changes in Time Use Induced by Regulatory Requirements and other U.S. EPA Actions (EPA 2020c).
4 Values may not sum due to rounding. Wage rates are rounded to the nearest cent.

Derivation of Agency Unit Wage Rates
Unit wage rates for EPA staff are calculated based on annual federal salaries for the Washington-Baltimore area published by the Office of Personnel Management (OPM) and effective January 2020 (OPM 2020). The average salary for one full-time equivalent (FTE) technical/professional staff member is estimated as the salary for a GS-13 Step 5 employee, and the average salary for on FTE attorney staff member is estimated as the salary for a GS-14, Step 5 employee. EPA's Handbook on Valuing Changes in Time Use Induced by Regulatory Requirements and Other EPA Actions (EPA 2020c) recommends a study by the Congressional Budget Office (Falk 2012) for estimating benefit values for federal government workers. The study reports that total benefits account for 63.9 percent of average wages in the federal government sector. Therefore, 63.9 percent of the wage is used to calculate the fringe in the derivation of Agency wage rates. An additional factor of 20 percent is applied to wages to account for overhead, consistent with the approach described in Section A.1 for industry wage rates.

The loaded hourly salary of EPA staff was calculated to be $109.65and $129.57 per hour for technical and attorney staff, respectively.

Fully loaded costs for Agency labor are shown in Table A-3.

Table A-3: Derivation of Loaded Agency Wage Rates (2020$)
                                Labor Category
                       Data Source for Wage Information
                                 Wage ($/hour)
                            Fringes as % of Wage[2]
                                Fringe Benefit
                              Total Compensation
                    Overhead as % of Total Compensation[3]
                                   Overhead
                              Loaded Wage ($/hr)

                                       A
                                       B
                                   C = A * B
                                   D = A + C
                                       E
                                   F = D * E
                                   G = D + F
Technical
Annual federal staff cost: OPM Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV area, GS-13 Step 5 pay rates[1]
                                    $55.75
                                     63.9%
                                    $35.62
                                    $91.37
                                     20.0%
                                    $18.27
                                   $109.65
Attorney
Annual federal staff cost: OPM Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV area, GS-14 Step 5 pay rates[1]
                                    $65.88
                                     63.9%
                                    $42.10
                                   $107.98
                                     20.0%
                                    $21.60
                                   $129.57
[1] Source: U.S. Office of Personnel Management (2020)
[2] Source: Falk 2012
[3] An overhead rate of 20% is used based on assumptions in Handbook on Valuing Changes in Time Use Induced by Regulatory Requirements and Other U.S. EPA Actions (EPA 2020c)