[Federal Register Volume 81, Number 143 (Tuesday, July 26, 2016)]
[Proposed Rules]
[Pages 49071-49110]
[FR Doc No: 2016-15845]

Vol. 81

Tuesday,

No. 143

July 26, 2016

Part V

Environmental Protection Agency

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40 CFR Parts 262, 263, 264 et al.

Hazardous Waste Management System; User Fees for the Electronic
Hazardous Waste Manifest System and Amendments to Manifest Regulations;
Proposed Rule

Federal Register / Vol. 81 , No. 143 / Tuesday, July 26, 2016 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 262, 263, 264, 265, and 271

[EPA-HQ-OLEM-2016-0177; FRL-9940-99-OLEM]
RIN 2050-AG80

Hazardous Waste Management System; User Fees for the Electronic
Hazardous Waste Manifest System and Amendments to Manifest Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA or the Agency)
proposes its user fee methodology applicable to electronic and paper
manifests submitted to the national electronic manifest system (or e-
Manifest system) that is being established by EPA under the Hazardous
Waste Electronic Manifest Establishment Act. After the implementation
date for the e-Manifest system, certain users of the hazardous waste
manifest would be required to pay a prescribed fee for each electronic
and paper manifest they use and submit to the system in order for EPA
to recover its costs of developing and operating the national e-
Manifest system. The final rule that EPA develops in response to public
comments on this action's proposed fee methodology will include the
final fee methodology. In addition, EPA will include the initial fee
schedule and the implementation date for the e-Manifest system in the
preamble to the final rule.
    This action also proposes several amendments to the regulations
governing the use of electronic hazardous waste manifests and the
completion of manifests. These amendments propose: to change EPA's
longstanding regulations regarding transporter changes to shipment
routing information on the manifest during transportation, to specify a
process by which receiving facilities may submit manifest data
corrections to the e-Manifest system, and to modify a provision of the
current electronic manifest use requirements that precludes the use of
mixed electronic and paper manifests by those users desiring to make
use of electronic manifests in settings where not all users are able to
participate electronically. This action is expected to result in net
cost savings amounting to $34 million per year when discounted at 7%
and annualized over 6 years. Further information on the economic
effects of this action can be found in section VII of this preamble.

DATES: Comments must be received on or before September 26, 2016. Under
the Paperwork Reduction Act (PRA), comments on the information
collection provisions are best assured of consideration if the Office
of Management and Budget (OMB) receives a copy of your comments on or
before August 25, 2016.

ADDRESSES: For this rule, EPA is requesting comments be submitted
electronically on a comment platform being piloted at https://epa-notice.usa.gov. Alternatively, commenters may choose to submit comments
by postal mail or electronically through Regulations.gov. For comments
submitted via postal mail or Regulations.gov, EPA is further requesting
comments be submitted using comment headings. Please see SUPPLEMENTARY
INFORMATION, section I.E. (Submitting Comments) for more information on
the pilot, use of comment headings, and other general instructions for
submitting comments.

FOR FURTHER INFORMATION CONTACT: For further information regarding
specific aspects of this document, contact Richard LaShier, Office of
Resource Conservation and Recovery,<PHONE_NUMBER>,
<EMAIL_ADDRESS>or Bryan Groce, Office of Resource Conservation
and Recovery,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    The hazardous waste manifest affects approximately 80,000 federally
regulated entities and an equal or greater number of entities handling
state-only regulated wastes in at least 45 industries. These industries
are involved in shipping off-site, transporting, and receiving several
million tons \1\ annually of wastes that are hazardous under the
Resource Conservation and Recovery Act (RCRA) or state-only regulated
wastes that are subject to the tracking of their movements with the
RCRA hazardous waste manifest. EPA estimates that these entities
currently use between 3 and 5 million hazardous waste manifests (EPA
Form 8700-22) and continuation sheets (EPA Form 8700-22A) to track RCRA
hazardous and state-only \2\ regulated wastes from generation sites to
receiving facilities for their management. The affected entities
include hazardous waste generators, hazardous waste transporters, and
owners and operators of treatment, storage, and disposal facilities
(TSDFs), as well as the corresponding entities that handle state-only
regulated wastes subject to tracking with the RCRA manifest.
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    \1\ The 2011 RCRA Biennial Report discloses that RCRA large
quantity generators (LQGs) alone shipped about 6.2 million tons of
waste in 2010. Small quantity generators and state regulated wastes
subject to manifesting would likely produce several million more
tons of wastes each year to be tracked with manifests.
    \2\ EPA uses the term ``state-only regulated wastes'' to refer
to all types of wastes that are required under state law to be
tracked with the RCRA hazardous waste manifest, though they exceed
the coverage (i.e., beyond the scope) of the listed and
characteristic wastes that are regulated federally as RCRA hazardous
wastes.
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    However, as explained in section III.B.3 of this preamble, this
proposed rule would primarily affect the several hundred commercial
TSDFs that receive hazardous and state-only regulated wastes from off-
site for management at their permitted or interim status facilities.
Under this proposed rule, these commercial TSDFs would be the focal
point for the payment and collection of the user fees under the
proposed rule. EPA has tentatively concluded that payment of this
proposal's user fees by the several hundred commercial TSDFs is the
most efficient and expedient means for implementing a user fee
requirement for the national e-Manifest system. Potentially affected
categories and entities include, but are not necessarily limited to:

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                                                         Examples of
         NAICS Description            NAICS Code    potentially affected
                                                          entities
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Transportation and Warehousing....           48-49  Transportation of
                                                     hazardous waste.
Waste Management and Remediation               562  Facilities that
 Services.                                           manage hazardous
                                                     waste.
------------------------------------------------------------------------

    This table provides a guide for readers regarding entities likely
to be regulated by this action. This table lists the types of entities
that EPA is aware could potentially be regulated by this action. Other
types of entities not listed in the

table could also be regulated. To determine whether your entity is
regulated by this action, you should carefully examine the
applicability criteria found in title 40 of the Code of Federal
Regulations (CFR) parts 263, 264, and 265. If you have questions
regarding the applicability of this action to a particular entity,
consult the persons listed in the FOR FURTHER INFORMATION CONTACT
section.

B. What action is the agency taking?

    The EPA is requesting comment on its proposed fee formula and
methodology for implementing a user fee to recover costs incurred in
developing, operating, maintaining, and upgrading a national e-Manifest
system, including any costs incurred in collecting and processing data
from any paper manifest submitted to the e-Manifest system after the
date on which the system begins to operate. The EPA is also requesting
comment on its proposed changes to modify its current regulations
regarding transporter changes to shipment routing information on the
manifest during transportation.

C. What is the agency's authority for taking this action?

    The authority to propose this rule is found in sections 1002,
2002(a), 3001-3004, and 3017 of the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act (RCRA), and as
amended by the Hazardous and Solid Waste Amendments, 42 U.S.C. 6901,
6906 et. seq., 6912, 6921-6925, 6937, and 6938, and further amended by
the Hazardous Waste Electronic Manifest Establishment Act, Public Law
112-195, section 6939g.

D. What is the scope of this proposed rule?

    This proposed rule addresses several key policy issues related to
the implementation of user fees to recover and fund the costs of
developing and operating a national e-Manifest system, including:
    1. Which users of manifests and manifest data will be charged user
fees?
    2. What will be the transactional basis for assessing user fee
obligations?
    3. How will users be expected to pay their owed fees?
    4. What model or formula will EPA rely upon for the determination
of users' fees?
    5. How will the rule address fee trajectory and fee schedule
revisions?
    6. Which, if any, manifest transactions warrant a fee premium?
    7. What sanctions are being proposed to induce prompt payment of
user fees?
    8. How will EPA conduct the financial tracking and reporting
functions essential to the proper calculation and determination of fees
and to the oversight of the e-Manifest fee program?
    In addition, the proposed rule addresses several regulatory
amendments related to the use of electronic manifests and the
completion of manifests. These additional regulatory proposals are not
user fee related, and address these issues: (1) A proposal that would
allow certain changes to the routing of a hazardous waste shipment
indicated on the manifest, while the shipment is in transportation; (2)
a proposal that would allow hazardous waste receiving facilities to
make corrections electronically to previously submitted manifest data;
and (3) a proposal that would allow a manifest user, in certain
instances, to execute and use a hazardous waste manifest that combines
the use of a paper manifest with the use of an electronic manifest.

E. Submitting Comments

1. Notice and Comment Pilot
    EPA partnered with the General Services Administration's 18F Team
to pilot a platform for submitting comments on this rule. The new
platform is designed to assist readers in understanding the rule and
proposed regulatory changes, as well as to assist EPA in collecting
structured comments. EPA is requesting commenters to use the new
comment platform, which can be found at https://epa-notice.usa.gov. The
pilot comment platform is a federal application supporting the EPA in
its rulemaking process. Comments filed through the pilot comment
platform are filed to the official docket for this rule. EPA will
process comments submitted through the pilot using the same rules and
restrictions (https://www.epa.gov/dockets/commenting-epa-dockets#rules)
that apply to comments received from any other method. If a comment
meets the aforementioned requirements, then the comment will be
publically posted to Regulations.gov. Commenters, that use the pilot to
submit comments, do not need to submit duplicative comments through
another method (e.g., Regulations.gov or postal mail).
    The use of the pilot comment platform is optional; Commenters may
still choose to submit comments by postal mail or electronically
through Regulations.gov.
2. Comment Headings
    For comments not submitted through the pilot comment platform, and
instead submitted via postal mail or Regulations.gov, EPA is requesting
commenters to identify their comments on specific issues by using the
appropriate number and comment heading listed below. If your comment
covers multiple issues, please use all the heading numbers and names
that relate to that comment. As an example of this optional method,
where one individual comment relates to issue #1 and a second
individual comment pertains to issues #2 and #3, a set of comments
would be submitted as follows, where the number and comment headings
are underlined:

1. Data Access Services
Your comment here. . .
2. Billable Event; 3. Fee Methodology
Your comment here. . .

    The list below also contains the proposed rule section numbers with
which you can find more information on each issue. Similarly,
throughout the proposed rule, parentheticals in italics have been added
to identify the heading number and name to be used when commenting on
the specific issues. The description following each comment heading
summarizes the individual issues. More detailed descriptions of the
issues and issue-specific questions can be found in the indicated
sections of the rule.
    Although submission of your comments using the aforementioned
format is not required at this time, it is encouraged so as to not only
assist the Agency in efficiently and effectively considering and
responding to comments received, but also provide commenters more
effective means of informing environmental decision making.
Comment Headings
    1. Data Access Services--EPA requests comment on the proposal for
TSDF user fees to cover cost of public data access services. (See
Section III.A.2)
    2. Billable Event--EPA requests comment on the proposal to use the
final manifest submission by the TSDFs as the billable event for
purposes of assessing user fees. (Section III.B.3)
    3. Fee Methodology--EPA requests comment on the proposed fee
formula, alternative fee formulas, transition period for application of
different formulas, amortization period for costs, possible omitted
costs, incentivizing material management behavior through the fee
methodology, and other fee formula related issues. (Section III.C.6)
    4. Disallow Postal Mailed Manifests--EPA requests comment on
another approach under which TSDFs would be

restricted to submitting their paper manifest data to EPA by electronic
means only, that is, by uploading image files to EPA, or by uploading a
data file (e.g., XML file) of manifest data accompanied by an image
file. (Section III.C.6)
    5. Inflation Adjuster--EPA requests comment on the proposal for an
inflation adjustment factor predicated on the use of the CPI-U, for all
items, not seasonally adjusted, as a sufficiently representative
inflationary index and a means to adjust e-Manifest user fees for
inflation between the first year and second year of the two-year fee
schedules. (Section III.D.3.a and Section III.D.4)
    6. Revenue Recovery Adjuster--EPA is requesting comment on the
inclusion of a revenue recovery adjuster in the proposed fee trajectory
methodology and on the emphasis on inflation, manifest usage estimates,
and uncollectable manifests as the key sources of revenue instability
that the adjusters should address in the trajectory methodology.
(Section III.D.3.b and Section III.D.4)
    7. Two-Year Fee Schedule Revision Cycle--EPA is requesting comment
on the proposed two-year fee schedule revision cycle. (Section III.D.4)
    8. 90-Day Lead Time for Fee Schedule Changes--EPA is requesting
comment on the proposal to have EPA publish the fee schedule changes to
the e-Manifest Web site 90 days prior to the effective date of fee
schedule changes. (Section III.D.4)
    9. Stray and Extraneous Documents--EPA is requesting comment on
proposed fee premiums for processing stray and extraneous documents.
(Section III.E.2.a.v)
    10. Paper Manifest Corrections--EPA is requesting comment on
proposed fee premiums for processing a correction to a paper manifest.
(Section III.E.2.a.vi)
    11. Incentivize Electronic Manifest Use--EPA is requesting comment
on a proposal to rely on the fee formula itself to incentivize
electronic manifest use, and not to include a distinct monetary penalty
to discourage paper manifest use. (Section III.E.2.a.vii)
    12. Payment Options--EPA requests comment on the proposed monthly
invoicing approach and the alternative options. (Section III.F.6)
    13. Fee Dispute Resolution--EPA requests comment on the proposed
informal fee dispute resolution and appeals process. (Section III.G)
    14. Financial Sanctions--EPA requests comment on the proposal to
incorporate the financial interest and penalty charges set out in the
Federal claims collection statutes as the first and second tier of e-
Manifest fee payment sanctions. (Section III.H.2.a)
    15. Delinquent Payors List--EPA requests comment on the inclusion
of a Delinquent Payors List among the sanctions that would be available
to the Agency in the event of serious, continued delinquency of e-
Manifest user fee payments. (Section III.H.2.b)
    16. Denial of Service Sanction--EPA requests comment on the
appropriateness and means by which EPA could deny access to e-Manifest
services to those users who are exceedingly delinquent in their
manifest fee payments. (Section III.H.2.d)
    17. Suspension of Facility Authorization--EPA requests comment on
possible authorization sanctions on facilities that are delinquent on
e-Manifest payments. (Section III.H.2.d)
    18. Changing Transporters en Route--EPA requests comment on the
proposal to modify its current regulations regarding transporter
changes to shipment routing on the manifest. (Section IV.B)
    19. Submission of Manifest Data Corrections--EPA requests comments
on the proposed approach for the submission of manifest data
corrections to the system, and the fees to be assessed for such
corrections. (Section V.C)
    20. Hybrid Approach--EPA requests comment on the proposal for mixed
paper and electronic manifest transactions. (Section VI.B)
    21. RIA--In total, discounting at 7% over six years, the annualized
baseline costs of the paper manifest system are estimated to be $183
million. EPA would appreciate any information to improve the accuracy
of this estimate. (Section VII.C)
    22. ICR--EPA requests comments on the Agency's need for information
under ICR 0801.21, the accuracy of the provided burden estimates and
any suggested methods for minimizing respondent burden to the EPA.
NOTE: You may also send your ICR-related comments to OMB's Office of
Information and Regulatory Affairs via email to
<EMAIL_ADDRESS>Attention: Desk Officer for the EPA. Since
OMB is required to make a decision concerning the ICR between 30 and 60
days after receipt, OMB must receive comments no later than 30 days
after publication in the Federal Register. (Section IX.B)
    23. OTHER--any comments not falling under one of the preceding
categories should be identified using `OTHER' as the comment header.
3. General Information for Submitting Comments
    Comments submitted through Regulations.gov (at http://www.regulations.gov) or submitted by postal mail should be identified
by Docket ID No. EPA-HQ-OLEM-2016-0177. For comments submitted through
Regulations.gov, follow the online instructions for submitting
comments. Once submitted, comments cannot be edited or removed from
Regulations.gov. The EPA may publish any comment received to its public
docket. Do not submit electronically any information you consider to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Multimedia submissions (audio,
video, etc.) must be accompanied by a written comment. The written
comment is considered the official comment and should include
discussion of all points you wish to make. For the full EPA public
comment policy, information about CBI or multimedia submissions, and
general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
    Please note the Agency will not accept comments submitted via email
or fax.

II. Background

A. Enactment of Electronic Manifest Legislation

    In 2012, Congress enacted the Hazardous Waste Electronic Manifest
Establishment Act, Public Law 112-195 (hereafter, the e-Manifest Act or
Act). The goal of this legislation was to provide the users of the
hazardous waste manifest with a much more efficient and modern option
to the 6-copy paper manifest forms that have been used for more than 30
years to track hazardous waste shipments from ``cradle-to-grave.'' The
e-Manifest Act directed EPA to establish a national electronic manifest
system that would enable users, at their option, to obtain and submit
electronic manifests to track waste shipments involving either RCRA
hazardous wastes or certain state-only regulated wastes subject to
manifesting requirements under federal or state law. It was the intent
of the Act that a data repository would be established within the e-
Manifest system, and that this national data repository would collect
and retain waste shipment data from the electronic manifests obtained
from the system, as well as from processing the data from any paper
manifests that continued in use after the deployment of the e-Manifest
system.

    Of particular significance to this proposed rule are the funding
provisions of the e-Manifest Act. While section 2(i) of the Act
authorized Congress to appropriate funds to cover start-up activities
and costs, Congress intended that the e-Manifest system would
ultimately be self-sustaining once deployed. Under section 2(c) of the
Act, EPA was authorized to impose and collect reasonable service fees
(user fees) necessary to pay the costs of developing, operating,
maintaining, and upgrading the e-Manifest system, including any costs
incurred in collecting and processing paper manifests submitted to the
system. Section 2(d) of the Act further authorized the establishment of
a special System Fund in the U.S. Treasury for the deposit of collected
service fees. By the terms of sections 2(d)(2) and 2(c)(4) of the Act,
funds deposited in the System Fund could be transferred from Treasury
to EPA at the Administrator's request and spent for system related
costs to the extent of and in the amount provided in advance in
appropriations Acts. The fees collected and deposited in the System
Fund would be used to fund the system's operating costs and other
system related costs, as well as to offset any appropriated funds
authorized under section 2(i) of the Act to seed the start-up
activities and system development costs.
    In particular, section 2(c) of the Act confers broad discretion to
EPA to determine the user fees to be imposed on users of the system.
This provision states that EPA ``may impose on users such reasonable
service fees as the Administrator determines to be necessary to pay
costs in developing, operating, maintaining, and upgrading the system,
including any costs incurred in collecting and processing data from any
paper manifest submitted to the system after the date on which the
system enters operation'' (emphasis supplied).
    On the issue of timing of fee collections, section 2(c)(2)(A) of
the Act provides EPA discretion to collect fees from users either in
advance of services being provided, or, as reimbursement for the
provision of system-related services by EPA.
    The user fee provisions of the Act further speak to the matter of
fee adjustments. Under section 2(c)(3)(B) of the Act, EPA shall, in
consultation with the Board,\3\ increase or decrease the amounts of the
fees so that the amounts collected and aggregated in the System Fund
are sufficient (and not more than reasonably necessary) to cover
current and projected system costs, including necessary upgrades.
Moreover, the fees should be maintained at levels that minimize, to the
maximum extent practicable, the accumulation of unused amounts \4\ in
the Fund. Where the timing of fee adjustments is concerned, section
2(c)(3)(B)(iii) of the Act specifies that the fee schedule shall be
adjusted initially when start-up costs have been recovered, and
periodically thereafter, whenever an annual audit report on the
system's finances discloses a significant disparity between fees
collected in a fiscal year, and expenditures made for system related
services during that fiscal year.
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    \3\ ``Board'' refers to the e-Manifest System Advisory Board, a
9-person Federal Advisory Committee of stakeholders that EPA must
establish pursuant to the Federal Advisory Committee Act to advise
EPA on the effectiveness of the system, to consult with EPA on
service fee adjustments, and to make recommendations relating to the
system.
    \4\ The Act provides an exception whereby a revenue surplus not
exceeding $2 million may be accumulated in the Fund over the initial
3-year period of system operations.
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B. Issuance of First e-Manifest Regulation in February 2014

    In response to the e-Manifest Act's mandate \5\ to issue
regulations authorizing electronic manifests within one year of
enactment of the statute, EPA issued its first final regulation
pertaining to e-Manifest on February 7, 2014 (79 FR 7518-7563). Because
of the mandate to issue this final regulation within one year of the
statute, EPA refers to this regulation as the e-Manifest One Year Rule.
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    \5\ This mandate appears in section 2(g)(1)(A) of the Act, which
directs EPA to promulgate final regulations to carry out the Act
within one year of enactment of the Act, after consultation with the
Secretary of Transportation. EPA consults regularly with the
Department of Transportation (DOT) on its manifest requirements and
other transportation related actions, since the manifest is a
shipping paper that is grounded on the joint authority of RCRA Sec.
3002(a)(5) and DOT's hazardous materials regulations or HMRs.
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    The purposes of the One Year Rule were to codify key provisions of
the Act touching upon the scope of users and manifests eligible to
participate in e-Manifest, to codify the provisions of the Act
requiring consistent implementation of electronic manifests in all the
states, to finalize EPA's decision to establish a national electronic
hazardous waste manifest system, and to announce policy decisions
related to using and implementing electronic manifests. Fundamentally,
the One Year Rule provides clarity with respect to the validity of
electronic manifests. The Rule explains that the electronic manifest
format obtained from and supported by the national e-Manifest system
shall be the one electronic manifest format authorized for national
use, that electronic manifests obtained from and submitted to the e-
Manifest system in accordance with the One Year Rule are the legal
equivalent to paper manifests in all relevant respects, and that all
authorized states must respect the validity of the national electronic
manifest and revise their authorized programs to allow the use of
electronic manifests. The One Year Rule also clarified that manifest
data could not be subject to confidential business information claims
or protections, and explained how e-Manifest and the recommended
electronic signature methods discussed in the Rule's preamble would
comply with EPA's electronic reporting policies as articulated in the
Agency's Cross Media Electronic Reporting Rule or CROMERR (70 FR 59848,
October 13, 2005). Thus, the One Year Rule announced the legal and
policy framework governing the authorization and use of electronic
hazardous waste manifests within EPA's national e-Manifest system.
    While the One Year Rule addressed fundamental scope and policy
issues related to the use of electronic manifests, it did not speak to
user fees to any significant extent. When developing the One Year Rule,
EPA realized it would not be in a position to determine in that rule's
timeframe all the various components of the e-Manifest information
technology system and their costs, and thus would not be able to
determine the program's initial schedule of user fees as a part of the
One Year Rule. Moreover, the issues raised and determined in the One
Year Rule had been noticed for public comment in previous proposals and
regulatory notices, while the content of the Fee Rule had not yet been
scoped out and noticed for public comment. Therefore, EPA concluded
that the development of an e-Manifest user fee methodology and fee
schedules would be undertaken as a separate rulemaking. This proposed
rule is thus the means by which EPA will solicit comment from the
public on our proposed Fee Rule methodology, suggest the likely range
of fees that will result, identify our economic models and assumptions,
and propose for comment the related scope and other policy issues
related to determining and collecting e-Manifest user fees.

C. Federal User Fee Design Guidance

    The development of this action was influenced greatly by two
federal guidance documents that apply to user fee design and
implementation by executive department agencies. They

are: (1) OMB Circular A-25, a Memorandum for Heads of Executive
Departments and Establishments addressing the subject of ``User
Charges,'' and (2) the United States Government Accountability Office
(GAO) Report No. GAO-08-386SP, Federal User Fees, A Design Guide, (May
2008).
1. OMB Circular A-25
    The purpose of Circular A-25 is to establish federal policy
regarding user charges or fees assessed for government services under
the Independent Offices Appropriations Act or IOAA, 31 U.S.C. 9701, and
31 U.S.C. 1111. It explains for executive agencies the scope and type
of activities subject to user charges and the basis on which user
charges should be set. It also provides guidance for agencies on the
implementation of user charges or fees and on the disposition of fee
collections. The guidance presented in Circular A-25 applies to user
fees implemented generally under the IOAA, as well as to
implementations of user fees that are governed specifically by a
statute, such as the e-Manifest Act, to the extent that Circular A-25
is not inconsistent with the e-Manifest Act.
    The Circular A-25 guidance that is most relevant to this action
includes the following points:
     User charges should be assessed against identifiable
recipients that receive special benefits derived from federal
activities beyond those received by the general public.
     When the provision of special benefits to identifiable
recipients also results in an incidental benefit to the general public,
an agency need not allocate any costs to the public and should seek to
recover the cost of providing the services from the identifiable
recipients of special benefits.
     User charges should be set so as to recover the ``full
cost'' to the Federal Government of providing the good or service,
where ``full cost'' includes all direct and indirect costs to any part
of the government of providing the good or service.
     The relevant direct and indirect costs to be recovered by
user charges include, but are not limited to, an appropriate share of:
    [cir] Direct and indirect personnel costs, including salaries and
fringe benefits such as medical insurance and retirement costs,
    [cir] Physical overhead, consulting, and other indirect costs
including material and supply costs, utilities, travel, and rents or
imputed rents on land, buildings, and equipment,
    [cir] Management and supervisory costs, and
    [cir] Costs of enforcement, collection, research, establishment of
standards and regulations, including environmental impact statements.
     It is general policy that user charges will be instituted
through the promulgation of regulations.
     In their implementation of user charges, agencies should:
    [cir] Review all sources of statutory authority, in addition to the
IOAA, that may authorize the implementation of user charges; \6\
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    \6\ The e-Manifest Act clearly authorizes user charges, and the
Act's provisions on user fees must be accommodated with Circular A-
25 policies.
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    [cir] Make every effort to keep the costs of collection to a
minimum;
    [cir] Initiate and adopt user charge schedules consistent with the
policies of the Circular;
    [cir] Review the user charges for agency programs biennially, to
provide assurance that existing charges are adjusted to reflect
unanticipated changes in costs or market values;
    [cir] Ensure that internal control systems and appropriate audit
standards are applied to collection; and
    [cir] Maintain readily accessible records of the information used
to establish charges, the specific methods used to determine them, and
the collections from each user charge imposed.\7\
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    \7\ Circular A-25, Section 8(g), provides that this information
should be provided on request to OMB in accordance with OMB Circular
No. A-11.
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2. The GAO Federal User Fees Design Guide
    The May 2008 GAO User Fees Design Guide presents a very useful
analytical framework for addressing the equity, efficiency, and cost
allocation issues posed by setting user fees. The User Fees Design
Guide identifies and discusses at length four key design questions, and
sub-questions for each, that agencies should address when establishing
user fees for a good or service provided by the government:
     How are user fees set? What total program costs are
considered and allocated among beneficiaries? Does the beneficiary pay
principle apply, or are there special considerations, such as
particular beneficiaries' ability-to-pay, that affect the setting of
fees? If exemptions are established for one class of beneficiaries, how
are their costs recovered?
     How are user fees collected? How is the proper balance
struck between ensuring compliance with fees and minimizing
administrative costs?
     How are user fees used by the government? What is the
balance between Congressional oversight/appropriations controls and
agency flexibility? Are fees dedicated only to the related agency
program, or, are they deposited in the general fund of the Treasury?
     How are user fees reviewed and updated? Are the fee rates
aligned with actual program costs and activities, and how are they
adjusted for changes in program costs? What opportunities are there for
stakeholder input in fee reviews and how does this affect acceptance?
    In addressing the key design questions, the GAO Guide explains that
the design of user fees typically involves a balancing of several
outcomes, including:
     The economic efficiency of user fees, including a
consideration of the alignment of users' costs with the social costs of
providing the services, and any incentives for reducing costs;
     The equity of the fee system, which may involve trade-offs
between the principle that all beneficiaries of services should ``pay
their fair share,'' and considerations of ability-to-pay;
     The adequacy of resulting revenues, insofar as revenues
being sufficient to cover all known program related costs (direct and
indirect) as well as to keep pace with inflation and other increases to
program costs, and
     The administrative burden of the fees, which requires a
consideration or balancing of the compliance burden imposed by fee
administration and collection, as well as the costs of collection and
enforcement of fees.
    Circular A-25 and the GAO User Fees Design Guide contain a wealth
of information that is relevant to the administrative processes of
setting, revising, collecting, and reporting fees. As EPA discusses its
rationale for setting e-Manifest fees in the remainder of this
preamble, the Agency will rely heavily on the policies and principles
identified in these two federal guidance documents.

III. Detailed Discussion of the Proposed Rule

A. Which users of manifests and manifest data will be charged user
fees?

1. Background
    Under Circular A-25 policy, user fees should be designed to recover
all system related costs that arise from the development and operation
of the e-Manifest system. EPA recognizes that there are two distinct
classes of entities that might be considered as users with respect to
the e-Manifest system: (1) The class of users who represent the waste
handlers that must actually use the

waste manifest in connection with tracking wastes that they generate,
transport, or receive as RCRA designated facilities; and (2) the class
of data consumers who do not use the manifest for regulatory
compliance, but who might wish to access e-Manifest to obtain data on
others' waste movements or activities. The latter class could include
members of the general public, law firms, trade associations, and
research organizations. This class of data users also includes state or
tribal officials that may not have access to an internal tracking
system for manifest data. While EPA believes that the preponderance of
system related costs would arise in connection with the provision of
manifest services to those using the manifest for waste shipment
tracking or regulatory compliance purposes, there would likely be
additional costs associated with providing members of the public with
access to manifest data. For example, EPA might develop a public facing
module within the e-Manifest system for the very purpose of
distributing manifest data to the general public, or, EPA might expend
resources distributing such data to the public through another data
distribution service, such as the Envirofacts data warehouse or similar
service. How should these costs be recovered under a user fee system?
    Of relevance to this issue is the statutory definition of ``user''
included in the e-Manifest Act. In section 2(a)(5), the Act defines
``user'' to mean a hazardous waste generator, a hazardous waste
transporter, an owner or operator of a hazardous waste treatment,
storage, recycling, or disposal facility, or any other person that:
     Is required to use a manifest to comply with any Federal
or State requirement to track the shipment, transportation, and receipt
of hazardous waste or other material that is shipped from the site of
generation to an off-site facility for treatment, storage, disposal, or
recycling, and
     Elects to use the system to complete and transmit an
electronic manifest format, or submits to the system for data
processing purposes a paper copy of the manifest (or data from such a
paper copy) in accordance with such regulations as the Administrator
may promulgate to require such a submission.
    EPA incorporated this statutory definition of ``user'' within the
terms of the February 2014 One Year Rule, which included in 40 CFR
260.10, a definition of ``user of the electronic manifest system'' that
is consistent with the statutory definition. Both the statutory and
regulatory definitions focus on the members of the regulated community
that are required to use the manifest to comply with a federal or state
requirement to track the generation, transportation, and receipt of
waste shipments.
2. What is EPA proposing on this issue?
    As a threshold issue, EPA is proposing to limit the imposition of
user fees to only the members of the regulated community that must use
the manifest as a matter of regulatory compliance for tracking the
generation, transportation, or receipt of hazardous waste or other
regulated waste shipments (e.g., state-only regulated wastes or special
wastes) that are subject to a manifest requirement under federal or
state law. EPA is not proposing to charge members of the general
public, nor officials from federal, state, or tribal agencies, any
service fees for their accessing manifest data from the e-Manifest
system.\8\
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    \8\ EPA notes that public requests for information that are
submitted to EPA pursuant to the Freedom of Information Act or FOIA
may give rise to distinct FOIA imposed fees under FOIA requirements.
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    This proposal is based on the Agency's belief that by defining the
term ``user'' with reference only to the members of the regulated
community who must use the manifest for regulatory compliance with
waste shipment tracking requirements, Congress similarly intended that
the imposition of user fees would be limited to the class of ``users''
as defined under the Act.
    EPA also believes that this proposal is supported by OMB Circular
A-25 policy, as well as by principles of the GAO User Fees Design
Guide. While the establishment of e-Manifest will provide significant
benefits to waste handlers, the EPA believes the general public should
also benefit from e-Manifest. These benefits, however, will likely be
incidental to those afforded to the regulated waste handlers. Thus,
under section 5.A.3 of Circular A-25, it would not be appropriate to
allocate system costs to the public by charging members of the public a
user fee to access e-Manifest data.
    Therefore, EPA is proposing to limit the imposition of user fees to
the class of hazardous or other regulated waste handlers who must use
the manifest for tracking waste shipments. User fees will not be
assessed against members of the general public for their access to
manifest data. As a result, the costs of providing the public with
access to manifest data will be recovered through user fees applicable
to the members of the regulated community who are defined as ``users''
under the e-Manifest Act. There will be a small, incremental increase
in the resulting user fees to cover the cost of the incidental
provision of data access services. EPA requests comment on this
proposal (If submitting comments on this issue, please use comment
header: 1. Data Access Services).

B. What will be the transactional basis for assessing user fee
obligations?

1. Background
    Section 2(c)(1) of the e-Manifest Act provides EPA authority to
``impose on users such reasonable service fees as the Administrator
determines to be necessary to pay the costs incurred in developing,
operating, maintaining, and upgrading the system.'' This authority to
impose such fees extends to electronic manifest activities and to the
processing of data from paper manifests that continue in use after e-
Manifest is implemented. Moreover, under section 2(c)(2) of the Act,
EPA may collect fees from users in advance of, or as reimbursement for,
the provision of system-related manifest services. Apart from this
direction, however, the Act provides EPA with broad discretion insofar
as determining the amounts of applicable fees, and determining what
system activities should give rise to a fee.
    EPA believes that an important scoping consideration for e-Manifest
user fees is determining what transactions should be the basis for
manifest fees. This issue involves both the matter of what manifest-
related event should be the trigger or ``billable event'' for assessing
a user fee, and it also involves where in the manifest business process
this event occurs, and which user entity should thus be responsible for
paying the fee. There is also the issue of whether the fee should be
assessed on a per manifest basis, necessitating numerous fee payments
of relatively small amounts, or, whether there should be a larger,
aggregate payment paid perhaps in advance, based on recent manifest
usage as perhaps the best indicator of likely current usage.
    In determining this issue for this proposed rule, EPA will follow
the principles of the 2008 GAO User Fee Design Guide. The Agency will
attempt to balance: (1) The economic efficiency of the fees so that the
fees align with the costs of providing services; (2) the equity of the
resulting fee system by considering ``beneficiaries pay their fair
share'' and ``ability-to-pay'' principles; and (3) assuring adequacy of
resulting

revenues, while minimizing the administrative burden of implementing
the fee.
2. What options did EPA consider?
    EPA considered several options for determining the transactional
basis for e-Manifest fees. Obviously, there appears to be a natural
linkage between the system costs that accrue and the number of manifest
transactions engaged in by the users. Thus, all options involve a
consideration of manifest usage as a determining factor in assessing
user fees. The options here differ in terms of what event in the
manifest business process triggers the fee, and which entity is thus
responsible for that fee.
    While the consideration of the transactional basis for fee
assessments might also consider the question of whether fees should be
collected as a lump sum payment vs. collected from multiple manifest
transactions, that issue is addressed later in this preamble in section
III.F, dealing with how fee payments will be made and collected. The
remainder of this section addresses the appropriate event in the
manifest business process for assessing fees and which of the regulated
community users of the manifest should therefore be responsible for e-
Manifest fee payments.
    As a first option, EPA considered imposing a per manifest fee on
the hazardous waste generators at the time they initiate their
manifests in the system. The system would track manifest usage by each
generator, and payments could be collected either at the time of
provision of manifests to the generators, or, these generators could be
billed for their usage on a monthly basis. This option would ensure
that all manifest users, including the many generators that initiate
the manifest and that are responsible for much of the manifest content,
pay their fair share for the services they would use. However, this
option would also entail establishing 100,000 or more payment accounts
for the many hazardous waste and state-only regulated waste generators
and engaging in invoicing and collection activities with all those
accounts. Thus, the ``all pay their fair share'' principle must be
balanced against the administrative efficiency of assessing fees from
the many generators in the system.
    The alternative option considered would also impose a per-manifest
fee, but the billable event under this option would be the submission
of the final manifest by the TSDF to the system. While this option
necessarily entails providing manifest services to waste handlers prior
to the final copy submission by the TSDF, it involves the significant
advantage that there are only a few hundred commercial or captive TSDFs
that receive waste from off-site and that would be submitting final
manifests to the system. Thus, there would be far fewer parties
responsible for paying fees under this approach. Many more manifests
would be concentrated among these several hundred TSDFs, so the fee
collections would be far more efficient than pursuing 100,000 or more
generators for payments of smaller amounts. Also, with the TSDFs
primarily responsible for payment of user fees to EPA, these facilities
would be able to pass their fee costs through to their generator
customers as part of their waste management service charges, if so
desired. When this option was discussed with the waste industry
members, they appeared to accept this option as the preferred approach
for dealing with fees and their customer relations. Industry members
were particularly supportive of this option if it were implemented with
a monthly billing cycle, under which they would be billed each month
for the prior month's actual usage, rather than being assessed fees for
estimated levels of usage.
3. What is EPA proposing on this issue?
    EPA is proposing the second option, under which the submission of
the final manifest to the e-Manifest system by the TSDF would be the
billable event for calculating per manifest fees. This proposal is
driven by the far greater administrative efficiency of dealing with a
much more manageable base of several hundred TSDFs with payment
accounts and collection activity in the system, rather than having to
establish and deal with 100,000 or more generator accounts and the
attendant administrative costs of billing and collecting from so many
more entities. This option could pose some additional revenue stability
risk, if the EPA elects to collect fees monthly as accounts receivable
after providing facilities with manifest services. Under this approach,
EPA might provide TSDFs with a month of manifest services at
significant cost prior to billing the TSDFs on a monthly cycle for
their actual manifest usage. Thus, credible sanctions to induce prompt
fee payments would appear to be a necessary feature to support this
option. Such fee sanctions are discussed in section III.G of this
preamble.
    EPA requests comments on the merits of treating the final manifest
submission by TSDFs as the transactional basis or billable event for
purposes of assessing user fees in e-Manifest (If submitting comments
on this issue, please use comment header: 2. Billable Event). Do
commenters agree with EPA's assessment that the more manageable number
of commercial and captive TSDFs submitting manifests to the system,
relative to the number of generators that might initiate manifests, is
an appropriate analysis for the adoption of the policy that the final
TSDF submission should be the billable transaction in e-Manifest? Is
there another option available that is equally or more effective than
this preferred option, insofar as providing a rational means for
charging users for their manifest activity in the system, while
minimizing the administrative costs of collection?
    In the February 2014 final regulation on electronic manifests
(i.e., the One Year Rule), EPA codified language in parts 262, 263, and
264/265 that would authorize the Agency to impose reasonable user fees
on hazardous waste generators, transporters, and receiving facilities
or TSDFs. EPA included this broad authority to impose electronic
manifest user fees on all classes of users, as this was consistent with
the broad grant of authority to impose such fees in the e-Manifest Act.
In this proposal, EPA is clarifying that its preferred option would be
to limit electronic manifest user fee payments and collections to the
receiving facilities, thereby excluding generators and transporters
from fee payments and collections. If the final rule adopts this
approach, and there are no other issues presented that suggest a need
for a broader fee collection system, EPA intends to delete the current
parts 262 and 263 provisions that now extend fee collection authority
to generators and transporters.

C. What model or formula will EPA use to calculate fees?

1. Background
    In this section, EPA is presenting for comment its proposed
methodology for determining the fees that TSDFs will be assessed based
on their usage of manifests in the system. As discussed previously in
this proposed rule, EPA believes that assigning fees to TSDFs based on
a per-manifest charge is the most equitable and efficient means for
allocating system costs to users. By relying on a per-manifest charge,
users will bear the costs of developing and supporting the system in
proportion to their usage of it. The TSDF users would be expected to
bear the burden and realize the benefits of the system in proportion to
their usage, and because TSDFs can pass their fee expenses

through to their generator customers if desired, the system costs can
be efficiently shared across the manifest user community.
    The proposed fee model or methodology must, of course, fully
recover EPA's costs to design, build, operate, maintain, upgrade, and
manage the e-Manifest system and program. This will ensure that the
Agency can manage the e-Manifest system and program without funds from
other appropriations, and avoid the possibility of Anti-Deficiency Act
violations. Therefore, the development of a proposed methodology is all
about determining first, what are all the activities related to
developing and operating e-Manifest, and what are the costs of these
activities? Second, once the total costs of developing and supporting
e-Manifest have been documented, we then must determine how these costs
will be allocated over all the manifests that will be submitted to the
system. While at the most basic level, one might determine a per
manifest fee by simply dividing total system costs by the total number
of manifests in use. There are advantages to parsing the fees based on
the type of manifest (i.e., electronic or paper types), since some
system costs are uniquely associated with paper manifests, while others
tend to follow electronic manifest usage. Thus, it may be possible to
allocate system costs more equitably to the manifest types that bear
their related costs, and perhaps incentivize electronic manifest usage
more than would be possible if costs were simply allocated to all
manifests equally.
2. System Related Cost Categories
    There are several categories of costs under which e-Manifest
system-related costs may be grouped and explained. First among these
groupings, it is important to distinguish between the System Setup
Costs and costs that are described as Operations and Maintenance Costs.
    a. System Setup Costs. EPA considers System Setup Costs to include
all system-related costs, intramural and extramural, prior to the time
the e-Manifest system is fully operational. Intramural costs are those
costs related to the efforts exerted by EPA staff and management in
developing, operating, and managing e-Manifest. Extramural costs are
those costs related to the acquisition of contractors to develop and
operate the e-Manifest system. EPA will track System Setup Costs
distinctly from post-activation Operations and Maintenance (O&M) Costs,
since the e-Manifest Act requires that the System Setup Costs, which
are to be funded initially by seed appropriations, be offset eventually
by user fee collections and repaid to the Treasury. Thus, System Setup
Costs will be tracked distinctly for the period of system development,
which EPA anticipates will require three to five years of effort.
    EPA will amortize the System Setup Costs over an initial period of
system operations. EPA is proposing an amortization period for System
Setup Costs of five years, which EPA believes provides sufficient time
to recover the System Setup Costs, while not significantly increasing
the fees for the user community.\9\ Once the system is operational, all
system costs will be tracked as O&M Costs in EPA's fee calculations and
in its accounting of system expenditures. Once the five-year
amortization period has elapsed, EPA will drop the factor in the fee
formula representing the amortization of System Setup Costs from the
formula, and will thereafter track all costs as O&M Costs.
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    \9\ EPA analyzed the effects of a payback period of three, five,
and ten years, and found that varying the amortization period had
little effect on the total costs, resulting fee levels, or the
efficiency of the proposed fee levels. EPA found that its total
system costs are affected much less by the fixed costs of system
development than by O&M costs, particularly, the marginal costs of
processing manifests submitted to the system and the operations and
maintenance costs for the system itself. The Agency's analysis of
amortization options showed only a nominal effect on total fixed
costs and on how the system's fixed costs would be collected each
year in user fees. The impacts of amortization period on total costs
and their recovery with the proposed rule's fee levels are
overshadowed by the impact of other fee design elements.
---------------------------------------------------------------------------

    Within the broad category of System Setup Costs, EPA will track and
calculate fees based on two distinct sub-categories of costs: (1)
System Procurement Costs; and (2) EPA Program Costs dedicated to
developing the system. The Procurement Cost sub-category is
straightforward and includes all the IT-related contracting costs
associated with the acquisition and development of the actual e-
Manifest IT system and all e-Manifest related IT system services (i.e.,
accounting, billing, collection, and reporting systems).
    The EPA Program Cost sub-category can be described as the EPA Full
Time Equivalent (FTE representing EPA's staffing/labor costs) and the
non-IT contracting costs to the Agency for developing, running, and
managing the system. EPA Program Costs are included in either Setup
Costs or O&M Costs based on the year they are incurred. It is the EPA
Program Costs that are incurred before the system activation date that
we are including in this discussion of Setup Costs. These are EPA staff
and non-IT \10\ contract costs necessary to the design and development
of the e-Manifest system itself and to the development of the overall
e-Manifest program. Thus, these costs would include the costs of EPA
staff and contracts used for the system planning and design effort, for
development of the system architecture, for development of the program
regulations, including this user fee regulation, for conducting program
outreach and oversight prior to activation, for developing the Help
Desk, for developing the FACA Advisory Committee required by the e-
Manifest Act, for conducting Capital Planning and Investment Control
(CPIC) and other budget related activities for the program, for
conducting program management, and other costs related to establishing
the e-Manifest system and program prior to the system's activation. All
of these types of costs would be EPA Program Costs and included in the
System Setup Cost category as they are incurred prior to the system
activation date.
---------------------------------------------------------------------------

    \10\ EPA is tracking closely its e-Manifest program costs by the
date the costs are incurred, which is relevant to their
classification as System Setup or as O&M costs. Likewise, EPA will
establish distinct codes for tracking its contract tasks and their
costs so that EPA can accurately distinguish its IT contracting
costs (tracked either as System Procurement Costs and Electronic
System O&M Costs depending on date incurred) from its non-IT
contracting costs, which will be tracked in the formula as EPA
Program Costs.
---------------------------------------------------------------------------

    b. Operations and Maintenance Costs. The Operations and Maintenance
(O&M) Costs include all system-related costs incurred after the e-
Manifest system is activated. Important components of O&M costs are the
costs of operating the electronic IT system to which electronic
manifests will be submitted and all manifest data collected, and the
costs of operating the paper manifest processing center that EPA will
establish to meet the e-Manifest Act's and One Year Rule's requirements
that EPA collect and process the data from any paper manifests that
continue in use after the implementation of e-Manifest. In addition to
the costs of running the electronic system and the paper processing
center, O&M costs also include the same types of costs described
previously as EPA Program Costs (EPA FTE and non-IT contract costs),
when these costs are incurred after the e-Manifest system activation
date. Other components of O&M Costs include Help Desk Costs necessary
to run the e-Manifest Help Desk that will be established to provide
technical support to system users; life-cycle enhancements to all e-
Manifest system related services, such as the services

required for e-Manifest billings and collections; and the CROMERR
Costs, which are the costs of implementing solutions for e-Manifest
that meet the requirements for electronic reporting to EPA under the
Agency's Cross Media Electronic Reporting Rule or CROMERR. The latter
costs include certain registration requirements for users and
signatories, the requirements for identity proofing (when required) e-
Manifest signatories, the costs of collecting, processing, and
maintaining Electronic Signature Agreements executed by signatories,
and the requirements for producing and retaining copies of record of
electronic manifests submitted to the system.
    c. Indirect costs. Indirect costs are the intramural and extramural
costs that are not captured in any of the previously defined cost
categories, but that are necessary to capture because of their
necessary enabling and supporting nature, and so that our proposed user
fees will accomplish full cost recovery. Indirect costs typically
include such cost items as physical overhead, maintenance, utilities,
and rents on land, buildings, or equipment. As discussed in section
2(c)(3)(A) of the statute, the indirect costs include the EPA costs
incurred from the participation of EPA offices and upper management
personnel outside of the immediate program office (the Office of
Resource Conservation and Recovery or ORCR) that is primarily
responsible for implementing the e-Manifest program. These other EPA
offices and upper management personnel provide support to all aspects
of the e-Manifest program, including promulgating the e-Manifest
implementing and fee regulations, supporting the IT system planning and
system acquisition, and participating in the e-Manifest Advisory Board
and the related Federal Advisory Committee Act (FACA) processes.
Indirect costs are disparate and more difficult to track than the other
cost categories, because they are typically incurred as part of the
normal flow of work (e.g., briefings and decision meetings involving
upper management) at many offices across the Agency and cannot be
attributed directly to the activity they support. Also, the level of
indirect costs incurred by a particular office is also likely to change
as the e-Manifest program develops and its needs change. For these
reasons, it is not practical to account for indirect costs in the same
manner as the other categories of e-Manifest costs.
    EPA will account for indirect costs in the proposed e-Manifest user
fee formulas by the inclusion of an indirect cost factor. This rate is
multiplied by the base fee that accounts for the program's direct
costs. The product of the indirect cost rate and the base fee is then
added to the base fee to determine the final, comprehensive user fee.
    The Agency-wide indirect cost rate is determined for all EPA user
fee programs by the Agency's Office of Financial Management, according
to that Office's indirect cost methodology, and as required by Federal
Accounting Standards Advisory Board's Statement of Federal Financial
Accounting Standards No. 4: Managerial Cost Accounting Standards and
Concepts. The Office of Financial Management publishes annually an
indirect cost rate for each of the Agency's Regional Offices and for
each of the Assistant Administrator-level program offices within EPA
Headquarters. An indirect cost rate customized for the e-Manifest
program will be developed, based on consideration of the EPA's existing
indirect cost methodology and other indirect costs required to support
the e-Manifest program.
    Therefore, once the appropriate indirect cost rate for e-Manifest
is developed, then the indirect costs for e-Manifest would be captured
by our proposed fee formulas as the product of the base fee times that
indirect cost factor.\11\ The result is that the total or comprehensive
user fee is simply the base fee formula times the expression (1 +
indirect cost rate).
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    \11\ The EPA is developing an indirect cost rate for the e-
Manifest Program. The FY 2015 Interagency Agreement (IA) indirect
cost rate for OLEM is 19.74%. This rate is recalculated each year
and is therefore subject to change and consideration regarding its
applicability to e-Manifest. EPA will calculate the fees with the
Final Rule using the then applicable-Manifest Program indirect cost
rate, which will be based on a consideration of the OLEM IA indirect
cost rate and other appropriate indirect costs attributable to e-
Manifest.
---------------------------------------------------------------------------

3. Types of Manifests and Fee Categories
    Another piece of information relevant to determining applicable e-
Manifest user fees is the type of manifest that is being submitted to
the system. In this regard, there are electronic manifests that will be
completed by users electronically and submitted electronically to the
system, and there are several types of paper manifests that will be
received and processed by the e-Manifest system's paper processing
center.\12\
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    \12\ Unlike electronic manifests, paper manifest copies (or the
scanned images and data from paper manifests) are to be submitted to
the national e-Manifest system for data processing purposes only,
and are not submitted as copies of record intended to replace paper
manifests as valid and enforceable documents. The ink-signed paper
manifest copies that are retained at waste handler sites remain the
enforceable copies of record where paper manifests continue in use
to track waste shipments. The paper copies (or scanned images and
data from them) submitted for data processing purposes require no
CROMERR related processes or electronic signatures to accompany
their submission.
---------------------------------------------------------------------------

    Under the One Year Rule, EPA indicated that it would accept paper
manifest data from final manifest copies submitted by TSDFs by several
modes of delivery. First, paper manifests could be mailed by TSDFs
directly to EPA's processing center, where personnel staffing that
center would open the mail, scan the paper forms to create image files,
and manually key in the data to the national data repository. These
paper manifests would likely undergo a significant level of Quality
Assurance (QA) activity as well, as the experience of EPA's state
partners with manifest tracking systems suggests that a significant
number of paper manifests will present legibility issues, typographical
errors, missing data, or other errors requiring follow-up with
submitters to clarify or correct. Also, state partners advise EPA that
they frequently find extraneous documents or mis-directed mail included
with manifests mailed to their systems, and these require clerical
attention to sort and return to their senders.
    Second, the One Year Rule allows TSDFs to submit scanned images of
paper manifests to the processing center in lieu of mailing paper forms
to EPA. These scanned image submissions involve less clerical effort
insofar as opening mail and returning extraneous mailings, but still
require clerical effort to conduct QA activities and to key the data
into the data repository.
    Third, the One Year Rule provided TSDFs with the alternative of
submitting the data from paper manifests to EPA as an image file and
data file (e.g., XML file) that can be uploaded into the data
repository. The receipt of data files from the TSDFs would involve less
processing effort for EPA, as the data could be loaded to the data
repository and merged with e-Manifest data directly with little, if
any, QA or manual data entry.
    Thus, for purposes of this proposed rule, EPA believes there would
be four distinct types of manifests that may be submitted to the system
for processing. These are electronic manifests submitted in accordance
with the national electronic format supported by the system, and three
possible types of manifest submissions arising from the continued use
of paper manifests: Paper manifests mailed to the EPA system operator,
scanned images of paper manifests uploaded to the system, and an upload
of both an image file produced from a paper manifest and a

corresponding data file produced by the TSDF's data system.
    As explained in detail later in this document, EPA believes that
the several types of manifest submissions discussed here would involve
differing effort and burden for EPA or its system operator to process.
Indeed, since the premise of this proposed rule is that e-Manifest user
fees should be charged on a per manifest basis, the Agency believes
that the varying processing burden associated with these four distinct
types of manifest submissions would be the key differentiating factor
insofar as determining the appropriate user fee for manifests that
would be submitted to the system. The varying processing effort
involves varying manual labor and other costs arising from each type of
submission. These varying human labor and related costs can be thought
of as the marginal costs of entering the data from each method of
submission and ultimately merging the information into the national e-
Manifest data system. Therefore, in the several user fee formula
options that EPA considered for this action, we focus on this differing
marginal cost per manifest submission type as a significant factor
distinguishing the fees calculated by the proposed formula. As further
explained in the discussion of the proposed formula, another key factor
distinguishing the amount of the calculated fees would be the extent to
which the different manifest types are assumed to share in the other
O&M costs associated with operating the electronic manifest system and
also the paper processing center. The result would be a fee schedule
that would announce four distinct per-manifest fee categories based on
the four types of manifest submissions, and the varying extent to which
marginal labor costs and other system O&M costs would be allocated to
each of the submission types by the formula.
4. What formula options did EPA consider?
    EPA considered three distinct fee formula options, which vary by
the extent to which they distribute the marginal manifest processing
costs and other system O&M costs across the different manifest
submission types. As a result, the three fee formula options vary by
the extent to which they differentiate the applicable fees for each of
the four manifest submission types.
    The fee formula options can be compared on the basis of three
important characteristics: Simplicity, Equity, and Resilience.
Simplicity refers to the presence or absence of fees differentiated by
manifest type. Equity refers to the extent to which a fee formula
generates fees that reflect the true costs of each manifest type.
Resilience refers to the extent to which uncertainty in the component
variables of a formula affects its ability to assess accurate fees, and
by extension realize full cost recovery.
    Each fee formula option entails a different trade-off between these
characteristics, with no formula option outperforming the other two on
every characteristic. The first option, the average cost fee,
prioritizes simplicity over equity and resilience. The second option,
the marginal cost fee, prioritizes resilience and equity over
simplicity. The third option, the marginal cost highly differentiated
fee, is the most equitable but at the loss of resilience and
simplicity. The three fee formula options are explained in greater
detail in the following sections.
    a. Average Cost Fee Option. The first option is a basic ``average
cost fee'' formula. Under this option, all the manifest submission
types would pay the same average fee. This option first calculates a
weighted average marginal cost for processing all manifest submission
types. To this weighted marginal cost is added another factor which
distributes all other system setup and O&M costs equally across all
manifests expected to be in use. In other words, under this option,
marginal costs are averaged, setup and O&M costs are allocated equally
to all manifest types, and there is no attempt to use the fee formula
to differentiate among the manifest types.
    The mathematical expression of the Average Cost Fee Option is as
follows:
[GRAPHIC] [TIFF OMITTED] TP26JY16.003

Where:

[GRAPHIC] [TIFF OMITTED] TP26JY16.004

System Setup Cost = Procurement Cost + EPA Program Cost
O&M Cost = Electronic System O&M Cost + Paper Center O&M Cost + Help
Desk Cost + EPA Program Cost + CROMERR Cost + LifeCycle Cost to
Modify or Upgrade eManifest System Related Services

    This option has the advantage of simplicity, as it results in one
average or standard fee to be paid on a per-manifest basis for all four
of the manifest submission types. However, it is quite sensitive,
meaning it may not collect sufficient revenue, since the use of a
weighted average marginal cost assumes that EPA can accurately predict
the prevalence of each manifest submission type each year. If the
actual distribution of manifest types differs from these projections,
then this formula will likely under- or over-collect fee revenue
relative to program costs.
    Additionally, this option is not very equitable. There is
simplicity in using this formula to arrive at a standard fee, but it
results in this option permitting a portion of the costs of paper
manifest use to be subsidized by electronic manifests. Paper manifest
submission types will almost certainly bear greater marginal costs than
fully electronic manifests, but this formula does not recognize such
differential costs when it prescribes one average fee for all
manifests. Therefore, this option would not be very helpful in
effectuating the Agency's goal of promoting the greater use of
electronic manifests in the system.
    b. Marginal Cost Differentiated Fee Option. The second option
considered by EPA would attempt to differentiate among the different
manifest submission types by focusing most on the varying marginal or
human labor cost of processing each manifest submission type into the
national e-Manifest data system. As a part of the economic analysis EPA
conducted for these fee formula options, EPA

developed estimates of the marginal, human labor cost of processing
paper manifests received in the mail, processing image files uploaded
to EPA, processing data (XML) files uploaded to EPA with image files,
and processing fully electronic manifests into e-Manifest. This option
keys off the differing marginal cost of processing manifests as the
factor that differentiates the resulting manifest user fees. Otherwise,
it addresses System Setup Costs and O&M Costs in the same manner as
Option 1, that is, by amortizing system setup costs over five years,
and by otherwise distributing setup costs and O&M costs from overall
systems operations equally across all manifest submission types.
    The mathematical expression of the Marginal Cost Differentiated Fee
Option is as follows:
[GRAPHIC] [TIFF OMITTED] TP26JY16.005

Where:

System Setup Cost = Procurement Cost + Program Cost
O&M Cost = Electronic System O&M Cost + Paper Center O&M Cost + Help
Desk Cost + EPA Program Cost + LifeCycle Cost to Modify or Upgrade
eManifest System Related Services + CROMERR Cost

    This fee formula option is premised on our belief that the
marginal, human labor costs of opening mail, conducting QA on paper
submission types, and conducting data key entry on the paper submission
types (other than XML file uploads that load directly into the system)
are the costs that most clearly and significantly differentiate
manifest submissions for purposes of determining fees. This option
further assumes that since data from all manifest types will be entered
into the e-Manifest system's data repository, it is appropriate for all
paper submission types to contribute to the electronic system's setup
and O&M costs. The option is the most resilient as it does not involve
any projections of the prevalence of manifest types such as is involved
with the calculation of a weighted average marginal cost under Option
1, so it is less likely to under- or over-collect revenue should such
projections not pan out. Another significant advantage of this option
is that because it would result in higher differential fees for paper
manifest submission types, it is consistent with our goal of promoting
the greater use of electronic manifests.
    A potential weakness in this option is that it may not be
sufficiently aggressive insofar as requiring paper manifest types to
bear the full differential costs associated with managing paper
manifest submissions. Under this option, for example, electronic
manifests share in the costs of establishing the paper processing
center and in the O&M costs (other than labor costs) of running the
paper center. EPA believes that this option could represent a useful
bridge toward the greater use of electronic manifests, particularly in
the initial years of e-Manifest program implementation. It will likely
require several years for the full transition to electronic manifesting
to occur, as manifest users will need to acquire the hardware and
capability to participate in e-Manifest, and they will need to gain
confidence in the reliability of electronic manifests relative to the
paper forms that are so familiar and have served the needs of the
program for many years. When EPA discussed fee options with the
hazardous waste management community during the development of this
proposed rule, industry members confirmed that they anticipated a
transition to electronic manifesting, with perhaps a period of time
when industry members may first submit XML data file uploads to EPA
from their customers' paper manifests, and over time, acquire the
technology and systems to migrate to supplying fully electronic
manifests for their customers' use. EPA heard concerns from industry
members that the fee formula should be sensitive to the need for a
period of transition, and that there should not be too great a premium
fee for paper manifest use at the outset.
    Thus, EPA believes that this second fee option reflects these
concerns, and is consistent both with encouraging electronic manifest
use, while recognizing that a transition from paper submissions to XML
file submissions may be the course that e-Manifest implementation
follows on its ultimate path to electronic manifest use. However, EPA
does remain concerned that, over time, the Marginal Cost Differentiated
Fee Option may not be effective to promote the full transition to
electronic manifesting, and could instead result in the interim
arrangements--the submission of XML files produced from paper
manifests--becoming the end result. While such an outcome would produce
a robust data base of manifest data from designated facilities, it
would perhaps leave in place a regime in which inefficient and
burdensome paper manifests remain in wide circulation among all
manifest users.
    c. Marginal Cost Highly Differentiated Fee. As a third option for
determining the e-Manifest user fee, EPA also considered an approach
that goes further than the previous option in requiring paper manifest
submission types to bear more of the program costs arising from the
continued use of paper manifests. This third fee formula option, the
Marginal Cost Highly Differentiated Fee option, is structured similarly
to the second option, but with one key difference. Under the third
option, the O&M costs of running the paper processing center are
allocated only to paper manifest submission types, and not shared
equally with the electronic manifests. The premise of this option is
that since fully electronic manifests will have no contacts or dealings
with the paper processing center, then these fully electronic manifests
should bear no part of the costs of operating the paper center. Thus,
in addition to the marginal, human labor costs of processing paper
manifest types that are allocated to paper manifest submissions under
Option 2, this option more fully allocates the program costs of
managing paper manifests to the paper submission types, by adding the
other non-labor O&M costs of the paper center to the cost burden to be
borne by paper submission types. This also may encourage industry users
to migrate to electronic manifests more expeditiously, since it will
not mask the true costs of processing paper manifests by subsidizing
the non-labor costs of the paper processing center, as occurs with
Option 2.
    This option does not present the simplicity of Option 1, as the
fees it would produce clearly differentiate among several manifest
submission types. This option would also appear to be the most
equitable of the options, as it would require paper manifest
submissions to bear both the labor and non-labor costs of the paper
processing center, rather than sharing the non-labor costs with
electronic submissions. However, the equity of this option is achieved
at the expense of resiliency, as

this option would require that EPA estimate with precision the number
of electronic manifest and the number of paper-variant manifests in
order to properly assign non-labor paper center O&M costs to paper
manifests. Thus, as a result of uncertainties affecting the numbers of
electronic and paper submission, this fee option is more likely to
over- or under-recover revenue than Option 2. Moreover, because this
option is somewhat more aggressive than the second option in allocating
program costs to paper manifest types, it could be more effective than
Option 2 in promoting the greater use of electronic manifests. However,
this option could be perceived by users as imposing initially too great
of a premium fee on paper manifest types, before electronic manifesting
is widely available to and embraced by users.
    Mathematically, the Marginal Cost Highly Differentiated Fee option
can be expressed as follows:
[GRAPHIC] [TIFF OMITTED] TP26JY16.006

Where:

System Setup Cost = Procurement Cost + Program Cost
O&M fully electronic
    = Electronic System O&M Cost + EPA Program Cost
    + CROMERR Cost
    + LifeCycle Cost to Modify of Upgrade eManifest System Related
Services
O&M all other
    = Electronic System O&M Cost + Paper Center O&M Cost + Help Desk
Cost
    EPA Program Cost + CROMERR Cost
    + LifeCycle Cost to Modify or Upgrade eManifest System Related
Services

5. What fee formula is EPA proposing?
    EPA's preferred option for this proposed rule is actually a
combination of the second and third options discussed earlier. In other
words, EPA is proposing that it would initially implement the Marginal
Cost Differentiated Fee Option (2nd option), but would reserve the
ability to transition to the Marginal Cost Highly Differentiated Fee
Option (3rd option), should a triggering condition included in this
rule be actuated, suggesting that a more aggressive fee formula is
needed to promote greater levels of electronic manifest use.
    By proposing this combined or hybrid option, EPA acknowledges that
the second option represents a useful compromise between promoting
electronic manifest use initially, while recognizing that a transition
from paper submissions, to XML submissions, to fully electronic
submissions may be a useful path for industry and the e-Manifest system
to pursue. EPA believes that the Marginal Cost Differentiated Fee
Option is consistent with such a transition approach. Indeed, if the e-
Manifest option is fully adopted by most hazardous waste handlers, the
fee formula represented by this option may be the only fee formula
necessary to determine fees for the e-Manifest program.
    However, EPA is concerned that after the desired transition period
has run, that it may require some additional incentives to effectuate a
fuller migration to electronic manifest usage. Under the second formula
option, the fee differential between electronic manifests and those
paper manifest submissions uploaded by TSDFs as XML files is not very
great, with the XML submissions bearing fees that are perhaps only 15%
greater than the electronic manifests. Paper manifests mailed to EPA
for processing would incur a per-manifest fee about 88% greater than
the fee for electronic manifests. Thus, there is a possibility that the
transition to XML file submissions from paper manifest use could become
a plateau in the program implementation that is difficult to move
beyond without greater fee incentives. So, upon an appropriate
triggering condition, EPA believes it would be useful to change the fee
formula to the third formula option, so that the paper submission types
bear a fuller share of the program costs related to using and
processing paper manifests.
    Another issue for this proposed rule, therefore, is what is the
appropriate condition that should trigger the implementation of the
Marginal Cost Highly Differentiated Fee Option after a transition
period? For several years, EPA has indicated to stakeholders and to the
program's overseers that the Agency believed that it could accomplish
significant paperwork burden reductions and cost savings if 75%
electronic manifest usage could be attained after program
implementation. Based on very preliminary estimates of possible program
adoption rates, EPA further postulated that under favorable conditions,
adoption of electronic manifesting by some of the larger manifest user
companies might bring about a 75% use rate after a period of about five
years. That being the estimate or goal previously announced, EPA
believes that this stated goal, with a slight modification to comport
with our proposed two-year cycles \13\ for reviewing and revising our
fee schedules, could represent a useful trigger condition for this
proposed rule. Therefore, EPA is proposing that the e-Manifest user fee
schedule would be initially developed using the second option's
Marginal Cost Differentiated Fee formula for the base fee. EPA is also
proposing that if, however, EPA finds after four years of e-Manifest
system operations that electronic manifest usage has not yet reached
our goal of 75% penetration, then EPA will thereafter use the third
option's Marginal Cost Highly Differentiated Fee formula for developing
the applicable user fee schedules.
---------------------------------------------------------------------------

    \13\ The proposal to publish revised fee schedules at two-year
intervals is discussed in the following section III.D, of this
preamble. Because we propose to revise the fee schedules at two-year
intervals, it makes sense to examine whether electronic manifest use
has reached a 75% adoption rate after four years, rather than five
years.
---------------------------------------------------------------------------

6. Request for Comment
    EPA requests comment on its preferred option that would initially
calculate per-manifest fees based on the Marginal Cost Differentiated
Fee formula, and then transition to the Marginal Cost Highly
Differentiated Fee formula should electronic manifests not attain a 75%
usage rate after four years of system operations (If submitting
comments on this issue, please use comment header: 3. Fee Methodology).
Do commenters agree that the combination of these two formula options
is superior to the other options alone? Do commenters agree with EPA's
strategy of starting with the less aggressive fee formula in the
initial years of program implementation, to foster a smoother
transition from paper manifest use to electronic manifesting? Do
commenters agree that after an initial period of transition, it makes
sense to adopt a fee formula that more aggressively allocates paper
manifest management costs to the paper manifest submission types that
remain in use? Has EPA proposed a sensible trigger condition for
shifting between the fee formulas? Is the goal of 75% electronic

manifest penetration a reasonable goal, and if not, why not? Would some
other period be preferable for EPA to measure electronic manifest
implementation progress? If so, what is that period of time and why
would it be preferable? Is the third fee formula option sufficiently
aggressive to accomplish this purpose, and will it likely promote the
adoption of higher levels of electronic manifest usage?
    In addition, EPA would appreciate comments addressing these fee
formula questions (If submitting comments on any of the questions in
the following seven bullets, please use comment header: 3. Fee
Methodology).
     Is the proposed fee formula sufficiently clear insofar as
identifying the program costs that will be allocated among manifests,
and explaining how the fee amounts will be determined? How can the
clarity of the fee formula be improved?
     Do commenters agree with the general premise of the fee
formula that per-manifest fees should be charged to manifests based on
the type of manifest submission, and that the marginal cost (human
labor cost of data key entry and QA activities) should be a significant
factor in determining the appropriate fees? What other bases are there
for differentiating manifest fees?
     Do commenters agree with the proposed fee methodology that
first determines the marginal human labor cost for processing each
manifest submission type, and then adds to that cost estimate a factor
that distributes setup and O&M costs over the numbers of manifest in
use? Are there other fee models that would more effectively and
equitably allocate program costs to users and determine appropriate
fees for the various manifest submission types?
     Do commenters agree that a five-year amortization period
is an appropriate period of time over which to recover system setup
costs? Is there another amortization period that EPA should adopt for
this purpose, and if so, why?
     Do commenters agree with EPA's analysis of the options
considered, and that EPA has selected the most desirable fee option?
Does the proposed fee approach promote EPA's goals of accomplishing
full program cost recovery and promoting electronic manifest use?
     Has EPA omitted any program costs that should be included
in our determination of e-Manifest user fees?
     In developing its fee methodology, EPA has not proposed
any specific fee or other incentives to promote desirable materials
management behaviors, such as waste minimization or recycling of
hazardous secondary materials. In many instances, our hazardous waste
regulations provide manifest exemptions for hazardous secondary
materials, so in one sense, the user fee costs that this action would
impose on shipments subject to the manifest may provide some additional
incentive for recycling or waste minimization. Are there other
incentives that could be included in this user fee regulation that
would promote greater recycling of these materials? If such incentives
would involve fee discounts or monetary incentives, how should EPA
allocate the revenue effects of such incentives among the manifest
users who would pay fees under this action? Are there other incentives
that EPA could consider for this user fee regulation? EPA welcomes
comments on these matters.
    Finally, EPA emphasizes that this proposal addresses the submission
of paper manifests by adopting a fee approach that assigns fees to
paper manifest submissions from TSDFs based upon the difference in
marginal costs of processing the various paper manifest types. The
submission of paper forms to EPA by mail would bear the highest fees,
while submission of image files, or data and image files, would involve
less processing effort and thus reduced fees under the proposed fee
methodology.
    EPA has heard from TSDFs that they generally would prefer to submit
data files from their paper manifests to EPA, rather than incurring the
costs of mailing paper forms to EPA for full processing. However, EPA
has consulted primarily with a trade association (the ETC) that is
comprised of larger TSDFs, so we do not know whether mid-size or
smaller TSDFs would be similarly inclined to submit data files and
scanned images of manifests to EPA and avoid mailing paper forms to EPA
for processing. The differential fee approach we propose should itself
discourage TSDFs from submitting large numbers of manifests by mail.
However, it is difficult for EPA to project with confidence how many
paper manifests will be mailed to the Agency in the initial years of e-
Manifest operations. This is a concern for EPA, as the processing of
mailed forms could involve significant personnel and contractor costs
for opening and screening mail, for data key entry, document archiving,
and for QA activities related to resolving data quality issues. Paper
processing costs could dominate the O&M costs in the early years of
operation, and if mail submissions occur in unexpectedly large numbers,
EPA may need to increase fees or consume more of its appropriated funds
than anticipated to process mailed manifests. Therefore, EPA is
requesting comment on another approach under which TSDFs would be
restricted to submitting their paper manifest data to EPA by electronic
means only, that is, by uploading image files to EPA, or by uploading a
data file (e.g., XML file) of manifest data accompanied by an image
file (If submitting comments on this issue, please use comment header:
4. Disallow Postal Mailed Manifests). Would TSDFs support an option
that precluded their mailing paper manifest forms to the Agency, as
this would reduce EPA's processing costs and the associated user fees?
Are there TSDFs that would find this approach objectionable, because it
requires the capacity to scan documents and upload data to EPA, or for
other reasons? Is the proposed differential fee approach for paper
manifest types sufficient to regulate the number of mail submissions to
EPA, or is a more forceful approach (i.e., restricting paper copy data
submissions to digital methods only) necessary to keep the paper
processing costs and fees in check? Are the processing efforts related
to mailed paper manifests that different from the effort related to
processing image files sent to the Agency? \14\ EPA requests specific
comments on the merits of an approach that would restrict TSDFs to
submitting their paper manifest data to the Agency by digital methods
only, and not by mailing hard copies to the EPA system.
---------------------------------------------------------------------------

    \14\ EPA anticipates that fees for processing mailed manifests
will be about 20-25% greater than for scanned images, because
manifests delivered by mail will need to be opened, sorted for
errant submissions, logged, stored and retrieved prior to
processing, scanned by paper center personnel, and then disposed of
after scanning.
---------------------------------------------------------------------------

7. Illustrative Range of User Fees Using the Proposed Fee Formula
    EPA has developed illustrative ranges of user fees based on varying
the system development costs and allocating such costs across a large
range of possible manifest usage numbers. These illustrative ranges are
intended to show the relative difference in possible fee amounts among
the various manifest submission types. The illustrative ranges also
suggest generally the users' possible exposure to fees, and show the
effect on fees of varying the overall system-related costs and the
numbers of manifests that will share in these costs when fees are
assessed. The result is a possible or illustrative range of user fee
estimates that are displayed in the following tables. Since EPA's fee
determination model was based on the varying marginal cost of
processing the

several types of manifest submissions, we have included a distinct
table presenting illustrative fee ranges for fully electronic manifests
and each of the three paper manifest submission types.

              Per Manifest Fee, Fully Electronic Manifests
------------------------------------------------------------------------
                                              System procurement costs
                                                    (millions $)
      Number of manifests  (millions)      -----------------------------
                                               10        15        20
------------------------------------------------------------------------
5.........................................      9.00      9.00      9.50
4.5.......................................     10.00     10.00     11.00
4.........................................     11.50     11.50     12.00
3.5.......................................     13.00     13.00     14.00
3.........................................     15.00     15.50     15.50
2.5.......................................     18.00     18.50     19.00
2.........................................     23.00     23.50     24.00
------------------------------------------------------------------------

         Per Manifest Fee, XML Submissions From Paper Manifests
------------------------------------------------------------------------
                                              System procurement costs
                                                     (millions )
      Number of manifests  (millions)      -----------------------------
                                               10        15        20
------------------------------------------------------------------------
5.........................................     11.50     11.50     12.00
4.5.......................................     12.50     12.50     12.50
4.........................................     14.00     14.00     14.50
3.5.......................................     15.00     15.50     15.50
3.........................................     17.50     18.00     18.00
2.5.......................................     20.50     21.00     21.50
2.........................................     24.50     25.00     25.50
------------------------------------------------------------------------

      Per Manifest Fee, Image File Submissions from Paper Manifests
------------------------------------------------------------------------
                                              System procurement costs
                                                     (millions )
      Number of manifests  (millions)      -----------------------------
                                               10        15        20
------------------------------------------------------------------------
5.........................................     17.00     17.00     17.50
4.5.......................................     18.00     18.00     18.50
4.........................................     19.00     19.00     20.00
3.5.......................................     20.50     21.00     21.50
3.........................................     23.00     23.50     23.50
2.5.......................................     25.50     26.50     27.00
2.........................................     30.50     31.00     31.50
------------------------------------------------------------------------

                 Per Manifest Fee, Postal Mail Manifests
------------------------------------------------------------------------
                                              System procurement costs
                                                     (millions )
      Number of manifests  (millions)      -----------------------------
                                               10        15        20
------------------------------------------------------------------------
5.........................................     21.00     21.00     21.50
4.5.......................................     22.00     22.00     22.00
4.........................................     23.50     23.50     24.00
3.5.......................................     24.50     25.00     25.00
3.........................................     27.00     27.50     27.50
2.5.......................................     30.00     30.50     31.00
2.........................................     34.00     34.50     35.50
------------------------------------------------------------------------

D. How does the proposal address fee trajectory issues?

1. Background
    The topic of fee trajectory is concerned with the actions that EPA
will take to adjust e-Manifest user fees to inflationary or other
program cost changes, so that fee schedules and resulting revenues keep
pace with program costs. In the document, Federal User Fees, A Design
Guide, GAO emphasized the significance of this issue in ensuring that a
user fee program is able to maintain full cost recovery. GAO noted that
if fees are not reviewed and adjusted regularly, programs will run the
risk of overcharging or undercharging users, while also raising equity,
efficiency, and revenue adequacy concerns. GAO further noted that the
questions affecting fee trajectory and revisions include:
     What are the fixed and variable costs of fee-funded
activities?
     What are the timing and pattern of program spending?
     How quickly can the program adjust fee rates in response
to changes in collections or costs?
     Are there other sources of funding or authority for a
reserve that may mitigate shortfalls?
     Can the Agency update its fees more frequently by rule,
and if so, how will the Agency enhance stakeholders' trust in its
revision methodology?
    The e-Manifest Act does speak to several of these matters. Sections
2(c)(1) and 2(c)(3)(B) of the Act clearly confer discretion on EPA to
set and periodically adjust e-Manifest fees to ensure alignment with
program costs. The latter section authorizes EPA to consult with the
System Advisory Board on fee revisions, and to increase or decrease the
amount of fees to a level that results in the collection of revenue
that is sufficient, but not more than reasonably necessary, to cover
current and projected system related costs (including upgrades). Fee
adjustments are also required to maintain revenues at a level that will
minimize the accumulation of unused amounts in the System Fund.\15\
---------------------------------------------------------------------------

    \15\ EPA must recover the system development costs and repay the
Treasury for the funds advanced for system development work. EPA
will amortize development costs over 5 years, and while the fee
collections corresponding to these development costs may accumulate
in the System Fund, they would not be counted toward any surplus.
---------------------------------------------------------------------------

    On the question of the timing of fee revisions, the Act provides
that an initial adjustment to user fees shall be made at the time at
which initial system development costs have been recovered, and
periodically thereafter, upon receipt of information in annual
financial accounting or audit reports, disclosing a significant
disparity between fee collections for a fiscal year and expenditures
made that year for program related costs. Thus, EPA does have
discretion to revise fees as necessary to maintain balance between
revenues from fee collections and program costs as changes occur over
time. The e-Manifest Act authorizes EPA to accumulate a revenue surplus
of not more than $2 million over the initial three-year period of
operations, presumably out of recognition that there might be
imprecision in cost estimates and revenue forecasts in the initial
period of system operations.
    EPA attaches great significance to the role of the System Advisory
Board in consulting with EPA on fee revisions. As the Board will be
comprised of a cross-section of program stakeholders, EPA believes that
this consultation role will be very important to maintaining trust in
EPA fee setting and revision methodology. Financial reports and audits
will be shared with the Advisory Board, and current and projected
program budgets and their effects on proposed fee revisions will be a
regular agenda item for EPA's discussions with the Advisory Board.
Therefore, it is essential that these discussions, our fee setting
methodology, and our fee revision methodology be rational and
transparent to our stakeholders. Thus, this section of the preamble is
intended to explain the fee revision methodology and schedule we
propose to follow in our regular efforts to maintain balance between
fee collections and program costs.
    Additional Federal guidance relating to fee revisions appears in
OMB Circular A-25. In Section 8.e. of this Circular, addressing Agency
responsibilities, OMB states that each agency will review the user
charges for agency programs biennially to include, among other things,
``assurance that existing charges are adjusted to reflect unanticipated
changes in costs or market values.'' Thus, it is the objective of this
action to propose a fee trajectory or revision methodology that
implements the direction provided by the e-Manifest Act, as well as the
applicable guidance in Circular A-25 and the GAO Design Guide.
2. What methodology and process is EPA proposing for e-Manifest fee
revisions?
    EPA is proposing a fee revision methodology under which the Rule's
fee formula would be re-run at two-year intervals, with the most recent
program cost and manifest usage numbers being

used in running the fee formula to calculate the fees for each manifest
submission type. The result would be a fee schedule that announces the
fees for each of the next two years. EPA would publish the revised fee
schedules at the e-Manifest program's Web site, and would also provide
a link to users when they access the e-Manifest system so that they
could be immediately notified of and directed to the new fee schedules.
We would provide this type of actual notice to system users (via a link
to the publication at the program's Web site) 90 days prior to the
effective date of the new fee schedule. This proposal would require
revisions to several provisions of the One Year Rule that EPA issued in
February 2014. In the One Year Rule, EPA stated in several regulatory
provisions that it would update e-Manifest user fees from time to time,
and that fee schedules would be published as an appendix to 40 CFR part
262. This proposed rulemaking would instead publish the fee schedules
and their revisions to users at the e-Manifest program's Web site, and
not codify the fee schedules in an appendix to part 262. Therefore,
this proposed rule would delete the requirement to codify fee schedules
in a part 262 appendix from the current regulations at 40 CFR
262.24(g), 263.20(a)(8), 264.71(j), and 265.71(j).
    Thus, while EPA would develop the initial fee schedule under this
action using notice-and-comment rulemaking procedures, it is not EPA's
intent to issue the subsequent fee schedule revisions through notice-
and-comment proceedings. Rather, EPA is proposing its methodology for
fee calculations and revisions in this rulemaking, and when we finalize
this rule in response to comments, our final methodology will be
announced and used to calculate the initial set of program fees.
However, with each two year fee revision cycle thereafter, EPA will re-
run the fee calculations using the latest program costs and manifest
numbers, but will not subject the revised fee schedules to notice-and-
comment proceedings, as long as the fee revision calculations are based
on the same fee methodology that we develop with this action. Our
intent is to develop a fee setting and revision methodology that would
be durable and could be used repeatedly over the coming years, with
adjustments to fees being announced consistently with the formulas and
adjusters included in this methodology. However, if EPA alters
significantly its methodology for calculating or adjusting fees, or the
fees are affected by significant new program costs not anticipated in
the formulas we include in our initial fee-setting methodology, then
EPA would follow notice-and-comment procedures before announcing any
revised fees based on a significantly new fee methodology.
    EPA also considered a process under which the Agency would run the
fee formula with the most recent costs and manifest usage numbers on an
annual basis. While this option would appear to be most responsive to
program cost changes, it is not our preferred option for this proposal.
EPA is instead proposing a two-year cycle for re-running the fee
formula and publishing fee schedules, because we believe that a two-
year cycle strikes a better balance between revenue accuracy, process
burdens, and fee program stability for users. With a two-year cycle,
the user community will know and be able to budget for the fees that
will be owed for each manifest submission over a more stable period of
two years, rather than having to deal with a fee schedule that is
constantly under revision. For EPA, there will also be advantages, in
that the Agency will not need to incur the administrative costs of re-
issuing fee schedules and publishing them each year, and explaining the
resulting fee changes to the Advisory Board and user community.
Moreover, EPA believes that a two-year cycle for issuing fee schedule
revisions is consistent with the guidance of OMB Circular A-25, which
requires agencies to conduct biennial reviews of its user fees,
including adjustments in fee charges.
3. What adjusters would be included in the proposed fee revision
methodology?
    Obviously, with each re-running of the fee setting formula at our
proposed two-year interval, the fees that are so determined will have
been ``adjusted'' to reflect the most recent program costs from each of
the cost categories discussed in the formula, and to reflect the number
and type of manifest submissions. Nevertheless, we are proposing
additional adjusters to further enhance our ability to keep fee
revenues in balance with program costs.
    a. Inflation Adjuster. First, since fee schedules will be announced
for each of the two years following the issuance of the new fee
schedule, we believe it may be necessary to include an adjuster to
account for inflationary effects between the first and second years of
each fee schedule. While inflation has been very modest in recent
years, and it may not seem worthwhile at existing inflation rates to
adjust for inflation in the second year's schedule, it is not clear
that the recent experience with marginal rates of inflation will
continue into the future. Since EPA desires to establish a durable fee
revision methodology that will service the program's needs for several
years, we believe it is prudent to include an inflation based factor to
deal with inflationary impacts to program costs between the two years
covered by each fee schedule.
    One such inflation based adjustment would make use of the Consumer
Price Index (CPI) or similar index of price or labor cost changes to
represent the impact of inflation in changing the program costs to be
recovered from user fees. It is not uncommon for the CPI that is
published by the Bureau of Labor Statistics (BLS) to be used in fee
programs such as e-Manifest to represent the impact of inflation on
program costs generally. Given the manner in which the CPI is
determined by BLS, the CPI may not be an entirely accurate measure of
the changes in the costs of labor and IT services and commodities that
are being purchased to support the e-Manifest project. However, absent
a demonstration that there is another index that is more specific to
and more representative of program costs changes for e-Manifest, the
Agency is proposing to rely on the use of the CPI as a sufficiently
representative index for our fee adjustment purposes.
    According to BLS, the CPI is intended as a measure of the average
change over time in the prices paid by urban consumers for a so-called
``market basket'' of consumer goods and services. The CPI market basket
is determined from surveys of the purchases and spending habits by
several thousand urban families from around the country. For this urban
population, the CPI market basket represents goods and services
purchased for consumption from more than 200 categories of items drawn
from eight major groups: Food and beverages, housing, apparel,
transportation, medical care, recreation, education and communication,
and other goods and services. Charges for certain government services,
such as water and sewer charges, auto registration fees, and vehicle
tolls are also included in the calculation of the CPI. The broadest and
most comprehensive CPI published by the BLS is known as the All Items
Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City
Average, 1982-84 = 100. Many other CPI indices are published, involving
various seasonal or regional adjustments or to specifically include or
exclude certain goods or services. However, for purposes of e-Manifest
fee inflation adjustments, EPA proposes to rely on the CPI based on all
items, and not seasonally adjusted.

    The CPI is certainly a commonly relied upon measure of inflation,
which has been defined as a process of continuously rising prices or of
the continuously falling value of money. The CPI is skewed toward
consumer goods and services, so it does measure inflation as
experienced by consumers in their day-to-day living expenses. However,
it is not the only measure of inflation that is available as a gauge of
inflation's possible effects on e-Manifest program costs. There is also
a Producer Price Index (PPI) for measuring inflation at earlier stages
of the production process; there is an Employment Cost Index (ECI) to
measure the effects of inflation in the labor market; and there is a
Gross Domestic Product Deflator to measure inflation experienced by
both consumers and governments and other institutions providing goods
and services to consumers. There are also other more specialized
measures that could be used for this purpose as well. However, other
federal user fee programs tend to use the CPI as the means to measure
inflationary impacts on their program costs, and barring persuasive
evidence that there is a more suitable index for e-Manifest, we believe
that the CPI should be sufficient for this purpose.
    A CPI-based adjuster used to adjust the second year of e-Manifest
fees in a two-year fee schedule could be structured as follows:

FeeiYear 2 = FeeiYear1 x
(CPIYear2-2/CPIYear2-1),

Where

FeeiYear2 is the Fee for each type of manifest submission
``i'' in Year 2 of the fee cycle,
FeeiYear1 is the Fee for each type of manifest submission
``i'' in Year 1 of the fee cycle, and
CPIYear2-2/CPIYear2-1 is the ratio of the CPI
published for the year two years prior to Year 2 to the CPI for the
year one year prior to Year 2 of the cycle.

    Thus, by factoring the Fee for Year 1 for each manifest submission
type by the ratio of the two most recent years' CPI's, the result would
represent the second year fee amount corrected for inflation under this
proposed rule.
    In summary, EPA is proposing an inflation adjustment factor
predicated on the use of the CPI-U, for all items, not seasonally
adjusted, as a sufficiently representative inflationary index and a
means to adjust e-Manifest user fees for inflation between the first
year and second year of the two-year fee schedules that EPA will
develop and publish to the e-Manifest program Web site. We request
comment on this aspect of the proposed rule (If submitting comments on
this issue, please use comment header: 5. Inflation Adjuster).
    b. Revenue Recovery Adjusters. In addition to an inflation
adjuster, EPA is proposing an additional adjuster that would be aimed
at recapturing revenue that was lost on account of imprecision in
estimating the numbers and types of manifest submissions that would be
processed by the e-Manifest system. We also are proposing an adjuster
that would recover revenue lost on account of manifest submissions that
were uncollectable from the users that submitted manifests but did not
pay their fees when due or in response to collection actions. Unlike
the inflation adjuster, which operates to adjust fees between the first
and second years of each two-year fee cycle, these two adjusters would
be ``look back'' adjusters that would look back to the previous two-
year fee cycle, and attempt to recover revenue losses from that
previous cycle through adjustments to the fee schedules for the new
cycle. The revenue recaptured through these adjusters would be added to
the O&M Costs in the fee calculation formula, so that this recaptured
revenue would be re-allocated like other program operation costs to the
fees charged on a per-manifest basis.
    In support of this user fee regulation, EPA has developed a model
that provides estimates over several years of assumed adoption rates
for each manifest type, of call center costs, of electronic system O&M
costs, of paper center costs, of system setup costs, of EPA Program
Costs, of CROMERR implementation costs, of e-Manifest related system
enhancement costs, and of the marginal costs of each manifest
submission type. These cost categories are the major elements of
program costs that our user fees will allocate to users through the
development of per manifest unit charges or fees. As EPA develops more
current information on actual program and system procurement costs
incurred in developing and operating e-Manifest, these actual cost
figures will be inserted in the fee formulas to develop our initial and
subsequent fee schedules. However, an area of high sensitivity for the
accuracy of e-Manifest fees that are determined on a per manifest basis
is the accuracy of our projections about manifest usage. Particularly
at the outset of the e-Manifest program, when we are capturing fee
revenue based on unproven projections about how many total manifests
and how many manifests of each type will be submitted, there is a risk
of revenue instability for the program if these initial projections are
not accurate.
    To address this revenue stability risk, EPA is proposing an
adjuster that would add to the revenues to be collected in a new fee
cycle the revenues lost in the previous cycle on account of imprecision
in the manifest usage numbers used as assumptions in the development of
the previous fee amounts. This manifest number adjuster could be
expressed as follows:

Revenue Recapturei = [(NiYear1 +
NiYear2)Actual (NiYear1 +
NiYear2)Est] x
[Feei(Ave of Yrs1and2)],
Where:

Revenue Recapturei is the amount of fee revenue to be
recaptured for each type of manifest submission ``i'';
(NiYear1 + NiYear2)Actual
(NiYear1 + NiYear2)Est is the
difference between actual manifest numbers submitted to the system
for each manifest type during the previous two-year cycle and the
numbers estimated when we developed the previous cycle's fee
schedule; and
Feei(Ave) is the average fee charged per manifest type
over the previous two-year cycle.

    By factoring the average fee times the difference between manifest
numbers actually collected and the manifest numbers estimated, the
proposed adjuster would return to the program the revenues that were
lost to the program because our estimates of manifest usage did not
match actual experience during the two-year fee cycle. Of course, it is
possible that this adjuster could also result in a negative adjustment
and reduce fee revenues in the next fee cycle, because the Agency
underestimated manifest numbers in the prior cycle and actually
generated surplus revenue from the greater numbers actually submitted.
In either case, this look back adjuster would attempt to reconcile
actual manifest usage with estimates used to develop fee schedules, so
as to restore revenue balance. EPA requests comment on the inclusion of
this adjuster in the proposed fee trajectory methodology (If submitting
comments on this issue, please use comment header: 6. Revenue Recovery
Adjuster).
    A second revenue recapture adjuster we are proposing in this fee
regulation is an adjuster aimed at recovering revenues lost on account
of ``uncollectable'' manifests, that is, manifests for which the fees
were not paid by the user when due or after fee collection activities.
While EPA expects that most TSDFs will be current with their e-Manifest
fee obligations, there is a possibility that despite the Agency's best
efforts at collection of fees, and despite imposition of sanctions for
non-payment, some manifest fee obligations may remain uncollectable.
This revenue stability risk becomes more significant should fee
payments occur predominantly as accounts receivable

for reimbursement of services, rather than as advance payments for
manifest related services. Therefore, in order for EPA to ensure that
we are able to maintain a fee program that accomplishes full cost
recovery, we are proposing an adjuster that would recover revenue lost
from the previous two-year fee cycle on account of uncollectable fees.
    This proposed adjuster for uncollectable fees would be expressed as
follows:

Uncollectable Revenuei = (NiYear1 +
NiYear2)UNCOLLECTABLE x Feei(Ave),

Where:

(NiYear1 + NiYear2)UNCOLLECTABLE is
the sum of the number of uncollectable manifests of each type ``i''
over the previous two-year cycle, and
Feei(Ave) is the average fee charged for each manifest
type ``i'' during the previous two-year cycle.

4. Requests for Comment
    EPA requests comment on the uncollectable manifest adjuster and the
other adjusters and processes included in the proposed fee trajectory
methodology. In particular, EPA requests comments responding to these
questions:
     Do commenters generally agree with the trajectory
proposal's emphasis on inflation, manifest usage estimates, and
uncollectable manifests as the key sources of revenue instability that
the adjusters should address? Are there other sources of revenue
instability that are not addressed or could be addressed better by
another methodology? (If submitting comments on this issue, please use
comment header: 6. Revenue Recovery Adjuster)
     Do commenters agree that a two-year fee schedule revision
cycle is desirable and practical for keeping pace with program cost
changes? Do commenters agree that stability and avoidance of
administrative burden are sound reasons for not adjusting fees annually
or at some other frequency? Should fees be adjusted less frequently
than every two years? (If submitting comments on this issue, please use
comment header: 7. Two-Year Fee Schedule Revision Cycle)
     Do commenters agree that EPA's publication of fee schedule
changes to the e-Manifest site 90 days prior to the effective date of
fee schedule changes is sufficient notice to users of fee revisions?
(If submitting comments on this issue, please use comment header: 8.
90-Day Lead Time for Fee Schedule Changes)
     Do commenters agree with the use of the CPI-U to measure
inflationary impacts on program costs between the first and second year
of each fee schedule? Is there a different index or another measure of
cost changes that would more accurately reflect the changes in the
labor and IT commodities and services costs that are more
representative of our e-Manifest program costs than the ``market
basket'' of consumer goods and services which BLS tracks with the CPI?
(If submitting comments on this issue, please use comment header: 5.
Inflation Adjuster)
     Do commenters agree that uncollectable manifests are
appropriate for inclusion in a revenue adjuster to be paid for as fee
increments by those users who are timely with their fee payments? How
else can EPA ensure full cost recovery in the face of the instability
posed by those who might become delinquent in their payments? (If
submitting comments on this issue, please use comment header: 6.
Revenue Recovery Adjuster)

E. What manifest transactions warrant fee premiums?

1. Background
    The consideration of fee premiums touches upon several of the user
fee design principles discussed previously. Specifically, the EPA must
balance economic efficiencies of user fees (align users' fees with the
costs of providing services) and the equity of the fee system
(beneficiaries pay their fair share vs. ability to pay considerations),
while assuring the adequacy of resulting revenues and minimizing the
administrative burden of the fee system. Consequently, EPA prefers to
keep the fee structure as simple as possible and balance the
desirability of any fee premiums with the resulting complexity to the
fee system and any resulting equity issues. Therefore, the EPA does not
strongly favor adding fee premiums to the fee structure, unless there
is a compelling basis for such premiums. The EPA believes fee premiums
could be appropriate to recover e-Manifest system related costs where:
     The activity benefits a particular user to a significant
extent;
     It is more equitable to charge that user for a service
than to have the costs shared collectively;
     The cost of the premium service can be estimated
accurately, and is not outweighed by collection costs; and
     The premium could deter undesirable activities or produce
other favorable policy outcomes.
2. What fee premiums has EPA considered?
    Based on the factors discussed earlier, EPA has considered the
following as candidates for e-Manifest user fee premiums:
     Complex manifest transactions that incur greater cost
(e.g., rejections and discrepancies, consolidated loads, split loads),
     Submission to and return of stray documents from the paper
center,
     Help desk encounters,
     Manifest Q/A and correction submissions, and
     An additional paper manifest use penalty.
    a. Complex Manifest Transactions. Complex manifest transactions