Revised Economic Analysis for the Amended Inventory Update Rule ( IUR)

Final Report Prepared for U. S. Environmental Protection Agency Economics, Exposure, and Technology Division Economics and Policy Analysis Branch Ariel Rios Building ( 7406) 1200 Pennsylvania Avenue, NW Washington, DC 20460 Prepared by Brian C. Murray Robert H. Beach George L. Van Houtven Research Triangle Institute Health, Social, and Economics Research Research Triangle Park, NC 27709 EPA Contract Number 68 W7 0018 RTI Project Number 6807 500 503 August 7, 2001 ACKNOWLEDGMENTS EPA acknowledges the analytical support of Research Triangle Institute of Research Triangle Park, NC, provided under EPA Contract No. 68 W7 0018 in the preparation of this report. This page intentionally left blank. i CONTENTS Section Page Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 1 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1.1 Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 1.2 Description of the IUR Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3 1.2.1 Regulatory History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3 1.2.2 Current IUR Requirements . . . . . . . . . . . . . . . . . . . . . . . 1 4 1.2.3 Changes in Reporting Requirements under the IUR Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4 <IP_ADDRESS> Reporting Thresholds, Reporting Cycles, and Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 <IP_ADDRESS> Information Collected . . . . . . . . . . . . . . . . . . . . . 1 5 <IP_ADDRESS> Definitions of Reporting Terms . . . . . . . . . . . . . . 1 6 1.3 Overview of the Regulated Community . . . . . . . . . . . . . . . . . . . 1 8 1.3.1 Chemical Industry Segments Likely to be Affected by the IUR Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8 1.3.2 Information to be Reported . . . . . . . . . . . . . . . . . . . . . . 1 12 1.4 Organization of this Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 13 2 Statement of the Problem and Regulatory Options . . . . . . . . . . . . . . . . 2 1 2.1 Problem Addressed by IUR Amendments . . . . . . . . . . . . . . . . . 2 1 2.1.1 Data Required to Conduct Risk Screening and Management 2 3 2.1.2 Current Risk Screening Approach . . . . . . . . . . . . . . . . . . 2 3 2.2 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4 2.2.1 Externalities and the Need for Information . . . . . . . . . . . 2 5 2.3 Potential Need for Federal Regulation . . . . . . . . . . . . . . . . . . . . 2 7 2.3.1 Existing Data Sources and Data Gaps . . . . . . . . . . . . . . 2 7 2.3.2 Advantages of the New Information Collection . . . . . . . . 2 9 2.3.3 Approaches to Regulation . . . . . . . . . . . . . . . . . . . . . . . . 2 9 2.4 Original IUR Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 11 ii 2.4.1 Original Reporting Requirements . . . . . . . . . . . . . . . . . 2 11 2.4.2 Original Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 12 2.5 Regulatory Options for Amending the IUR . . . . . . . . . . . . . . . . 2 12 2.5.1 Number of Reports Received under Different Options . 2 13 3 Social Costs of Regulatory Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 3.1 Compliance Costs for IUR Submitters . . . . . . . . . . . . . . . . . . . . 3 2 3.1.1 Methodology for Compliance Cost Analysis . . . . . . . . . . 3 4 <IP_ADDRESS> Identify Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 <IP_ADDRESS> Determine Unit Costs . . . . . . . . . . . . . . . . . . . . . 3 5 <IP_ADDRESS> Determine Number of Forms and Reports . . . . . 3 6 <IP_ADDRESS> Determine Total Costs of Compliance . . . . . . . . 3 7 3.1.2 Data for Compliance Cost Analysis . . . . . . . . . . . . . . . . . 3 7 <IP_ADDRESS> Estimates of Wage Rates . . . . . . . . . . . . . . . . . . 3 8 <IP_ADDRESS> Estimates of Labor Hours . . . . . . . . . . . . . . . . . . 3 9 <IP_ADDRESS> Estimates of the Number of Sites and Reports 3 11 3.1.3 Compliance Cost Calculations . . . . . . . . . . . . . . . . . . . . 3 11 <IP_ADDRESS> Labor Hours Required for Compliance Tasks . 3 12 <IP_ADDRESS> Incremental Costs of Compliance Tasks under IUR Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 3 18 3.1.4 Summary of Compliance Costs . . . . . . . . . . . . . . . . . . . 3 22 <IP_ADDRESS> Compliance Costs under Amendments . . . . . . 3 23 <IP_ADDRESS> Compliance Costs under Regulatory Options . 3 23 <IP_ADDRESS> Average Compliance Costs per Site . . . . . . . . 3 27 3.1.5 Limitations of the Compliance Cost Analysis . . . . . . . . . 3 27 3.2 Agency Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 31 3.2.1 Overview of and Methodology for Determining Agency Costs of Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 31 3.2.2 Agency Cost Calculations . . . . . . . . . . . . . . . . . . . . . . . 3 32 <IP_ADDRESS> Agency Costs Under the IUR Amendments . . . 3 32 3.3 Social Cost Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 34 4 The Benefits of the IUR Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1 4.1 Benefits of Information Based Policies . . . . . . . . . . . . . . . . . . . . 4 2 4.2 Benefits from Processing and Use Data . . . . . . . . . . . . . . . . . . . 4 3 4.2.1 Benefits through OPPT Risk Screening and Management Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 <IP_ADDRESS> Risk Screening Programs . . . . . . . . . . . . . . . . . 4 5 iii <IP_ADDRESS> Risk Management Programs . . . . . . . . . . . . . . . 4 9 <IP_ADDRESS> Benefits from Cost Savings Associated with Pre screening and Screening Activities . . . . . . . 4 9 <IP_ADDRESS> Benefits from Improved Risk Screening and Risk Management Decisions . . . . . . . . . . . . . . 4 10 4.2.2 Benefits to Non OPPT Risk Management Programs . . . 4 11 <IP_ADDRESS> Other Federal Risk Management Programs . . . 4 12 <IP_ADDRESS> State and Local Programs . . . . . . . . . . . . . . . . 4 12 <IP_ADDRESS> Nongovernmental Organization ( NGO) Initiatives and Private Sector Stewardship . . . . . . . . . . . . 4 13 4.3 Benefits Due to Changes in CBI Reporting . . . . . . . . . . . . . . . 4 13 4.4 Benefits of Changing Certain Reporting Exemptions . . . . . . . . 4 14 4.5 Benefits of Administrative Changes . . . . . . . . . . . . . . . . . . . . . 4 15 4.6 Benefits From Changes to Reporting Thresholds . . . . . . . . . . 4 16 4.7 Benefits From Alternative Reporting Cycle Options . . . . . . . . . 4 17 5 Benefit Cost Analysis, Cost Effectiveness Comparisons, and Rationale for the Selected Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 5.1 Benefits and Costs of the Selected Option . . . . . . . . . . . . . . . . . 5 1 5.2 Comparing the Benefits and Costs of Regulatory Alternatives to the Selected Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 5.3 Benefit Cost Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 5.3.1 Rationale for Selecting Option 1 . . . . . . . . . . . . . . . . . . . 5 3 5.3.2 Rationale for the IUR Amendments: Positive Net Benefits of the Selected Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 6 Small Entity and Environmental Justice Impact Determinations . . . . . . 6 1 6.1 Small Entity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1 6.1.1 Determination of the Number of Small Businesses . . . . . 6 1 <IP_ADDRESS> Definition of a Small Business . . . . . . . . . . . . . . 6 1 <IP_ADDRESS> Number of Small Businesses . . . . . . . . . . . . . . . 6 2 6.1.2 Estimation of Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3 <IP_ADDRESS> Cost to Sales Ratios for Small Businesses . . . . 6 5 6.2 Environmental Equity/ Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 iv References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R 1 Appendix A: Draft Reporting Form for the Proposed IUR Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 1 Appendix B Current Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 1 Appendix C Development of the Estimated Numbers of Expected Submissions of the Original IUR and IUR Amendments Reporting . . . . . . . . . C 1 Appendix D Baseline Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D 1 Appendix E Industry Survey Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E 1 Appendix F Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F 1 v LIST OF FIGURES Number Page 3 1 Allocation of Incremental IUR Amendments Reporting Costs . . . . . . . . 3 3 4 1 Flow of Chemicals Through OPPT's Screening and Risk Management Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 vi LIST OF TABLES Number Page 1 1 North American Industrial Classification System for Industries Likely to be Subject to IUR Reporting . . . . . . . . . . . . . . . . . . 1 9 2 1 Components of Exposure Assessments and Exposure Related Data Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4 2 2 Options Considered for the IUR Amendments . . . . . . . . . . . . . . . . . . 2 13 2 3 Number of Reports Expected for Each Option . . . . . . . . . . . . . . . . . . 2 14 2 4 Number of Full and Partial Reports Expected for Each Option by Chemical Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 15 2 5 Number of Chemicals Expected to be Reported for Each Option . . . . 2 17 3 1 Loaded Hourly Wage Rates by Labor Category . . . . . . . . . . . . . . . . . . 3 8 3 2 Estimated First Year Industry Reporting Burden for Sections of Revised Form U ( hours per section for each report) . . . . . . . . . . . . . . . . . . . . . 3 10 3 3 Estimated Number of Sites, Reports, and Discrete Chemicals by Chemical Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 11 3 4 Incremental Labor Hours for Compliance Determination ( hours per site) 3 13 3 5 Incremental Labor Hours Required for Rule Familiarization ( hours per site) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 14 3 6 Scaling Factors for Unit Cost of Preparation and Submission of Reports in Future Reporting Cycles Under the IUR Amendments . . . . . . . . . . . . 3 18 3 7 Incremental Labor Hours for Report Preparation and Submission ( hours per report) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 19 3 8 Incremental Labor Hours for Recordkeeping ( hours per report) . . . . . 3 20 3 9 Incremental Costs of Compliance Determination ( 2000$) . . . . . . . . . . 3 21 3 10 Incremental Costs of Rule Familiarization Per Site ( 2000$) . . . . . . . . 3 21 3 11 Incremental Costs of Report Preparation and Submission Per Report ( 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 22 3 12 Incremental Costs of Recordkeeping per Report ( 2000$) . . . . . . . . . . 3 22 3 13 Summary of Incremental Costs of IUR Amendments for Organic Chemicals ( 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 24 3 14 Summary of Incremental Costs of IUR Amendments for Inorganic Chemicals ( 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 25 3 15 Total Incremental Costs of IUR Amendments ( million 2000$) . . . . . . 3 26 vii 3 16 Total Incremental Burden Hours of IUR Amendments ( thousands of hours) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 26 3 17 Flow of Compliance Costs Over the Next 20 Years ( million 2000$) Under Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 27 3 18 Incremental Net Present Values and Annualized Costs of Amendment Options Discounted at 3 Percent ( million 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 28 3 19 Average Incremental Compliance Costs per Site for Organic Chemicals ( 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 29 3 20 Average Incremental Compliance Costs per Site for Inorganic Chemicals ( 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 30 3 21 Estimated Incremental Agency Costs for the IUR Amendments ( recurring every four years) . . . . . . . . . . . . . . . . . . . . . . 3 35 3 22 Flow of Agency Costs Over the Next 20 Years ( 2000$) under Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 36 3 23 Measures of Incremental Social Costs ( both Industry and Agency Costs) Associated with Amendment Options ( million 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 37 3 24 Measures of Incremental Social Costs ( both Industry and Agency Costs) Associated with Amendment Options ( million 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 37 4 1 Options Considered for the IUR Amendments . . . . . . . . . . . . . . . . . . . 4 4 5 1 Benefits and Costs of Selected Option . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 5 2 Incremental Benefits and Costs of Regulatory Alternatives ( Relative to Selected Option 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4 6 1 Size of Manufacturing Companies Producing Organic Chemicals Based on Annual Sales Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4 6 2 Effect of IUR Amendments on Small Businesses . . . . . . . . . . . . . . . . . 6 6 6 3 Effect of IUR Amendments on Small Businesses Assuming Two Sites Per Small Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 8 viii LIST OF BOXES Number Page 1 1 Chemical Specific Information EPA is Authorized to Collect Under Section 8( a) of the Toxic Substances Control Act . . . . . . . . . . . 1 3 1 2 Industrial Function Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7 1 3 Proposed Commercial and Consumer Product Categories . . . . . . . . . . 1 7 1 4 Reporting Processing and Use Information on Chemicals . . . . . . . . . 1 12 2 1 Progress on Screening Chemicals for Risks . . . . . . . . . . . . . . . . . . . . . 2 2 2 2 Current Existing Chemicals Program Review Process . . . . . . . . . . . . . 2 5 2 3 Reasons for Lack of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6 2 4 Risk Screening Activities Lack Important Data on Exposure . . . . . . . . 2 8 3 1 Comparison of Data Elements for Completion of the Original and Amended Form U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 15 3 2 Burden of Complying with CBI Substantiation Requirements . . . . . . . 3 17 4 1 An Example of How the Amended IUR Data can be Useful in Supporting EPA's Day to Day Operations . . . . . . . . . . . . . . . . . . . . . . 4 4 4 2 EPA Tools to Evaluate and Manage Chemical Risk . . . . . . . . . . . . . . . 4 6 ES 1 EXECUTIVE SUMMARY The U. S. Environmental Protection Agency ( EPA) currently requires manufacturers and importers of certain chemical substances to report plant site and production volume information to the Agency every four years. The information is collected under reporting requirements known as the Inventory Update Rule ( IUR), based on EPA's authority under Section 8( a) of the Toxic Substances Control Act ( TSCA). EPA is seeking to amend these reporting requirements to collect additional information. The economic analysis presented here examines changes in reporting that would result from these amendments and associated costs, benefits, and impacts. The rule will amend the IUR data collection in several ways. First, it will require the collection of various types of exposure related data about certain chemicals ( such as the number of workers potentially exposed, the types of industrial processes the chemical is used in, the number and type of processing sites, the types of commercial and consumer uses of the chemical, and the concentration in these products). The IUR amendments will also make inorganic chemicals reportable, raise the reporting threshold, add a second threshold for reporting chemical processing and use information, add requirements that will reduce inappropriate or unnecessary confidential business information ( CBI) claims, and make administrative changes that would enhance the effectiveness of the data collected under the IUR. EPA will use the information collected under these amendments to screen chemicals based on relative risk, set risk assessment priorities among chemical substances of potential concern, and support EPA's pollution prevention and environmental protection activities. The data collected through these amendments will help to determine potential risks, identify opportunities for safer substitutes, target specific population groups, and evaluate the need for risk management. The data will allow EPA to better focus its programs and use resources more efficiently. Currently, the lack of nationwide information related to chemical production and use prevents the Agency from screening large numbers of chemicals in a timely manner. The data to be produced by the amended IUR are critical if EPA is to meet its Government Performance and Results Act ( GPRA) goal to screen all chemicals in commerce by 2005. This report analyzes multiple regulatory options for amending the IUR by varying the reporting thresholds, exemptions, and reporting cycle. Please note that the results of the economic analysis here differ from earlier drafts. First, the IUR amendments were revised substantially during the interagency review process prior to proposal. The economic results reflect those changes in content. Moreover, EPA has carefully considered the comments on the economic analysis rendered in the public comment period for the proposed rule and has accordingly revised the rule, as well as the economic analysis methods and assumptions. In addition, the passage of time in the rulemaking process has allowed EPA to update the data used to perform the analysis ES 2 and the base year for which costs are reported ( Year 2000 dollars). The selected IUR amendments will collect basic information on roughly 8,900 chemicals out of the more than 75,000 chemicals on the TSCA Inventory. Approximately 1,000 chemical manufacturers or importers will be required to report. These companies are expected to submit about 26,800 reports covering approximately 3,000 sites. In the first year of reporting, approximately 36 percent of the reports ( covering 45 percent of the chemicals) are expected to be full reports ( i. e., containing exposure based use information), while the remaining 64 percent will be partial reports. Most of these reports must already be submitted under the existing IUR requirements, and companies will simply be providing additional information. However, the IUR amendments will also adjust the universe of reportable chemicals. Approximately 1,100 inorganic chemicals will be reportable to the IUR for the first time, and about 1,200 originally reportable chemicals will no longer be reported as a result of the increase in the reporting threshold. EPA estimates the incremental cost of the amendments to be between $ 74 million and $ 90 million for each reporting cycle ( every four years). These startup and quadrennial costs are equivalent to an annual cost of between $ 19.5 million and $ 23.3 million for the first 20 years of the rule. EPA has taken a number of steps to reduce the reporting burden, including raising the reporting threshold from the existing level of 10,000 pounds up to 25,000 pounds; introducing a second threshold of 300,000 pounds to reduce the number of reports for which processing and use information must be provided; establishing a partial exemption for inorganic chemicals in the first reporting cycle; establishing a partial exemption for petroleum process stream chemicals and a full exemption for certain forms of natural gas; requiring the reporting of only " known or reasonably ascertainable" facility and manufacturing information and " readily obtainable" processing and use information; and allowing submitters to report much of the information in ranges. The small business impacts of the rule are minimal. Most small businesses are not affected, since the regulations exempt companies meeting certain small business criteria. The costs would be relatively small for those small businesses that would report. For the roughly 200 to 350 small businesses expected to report, the cost of reporting is estimated at 0.20 percent or less of sales. Because the regulatory costs represent a small fraction of a typical firm's sales, the financial impacts of the regulation are not expected to be significant. Because the IUR amendments are an information collection exercise, no negative environmental equity issues are associated with them. Instead, the information that will become available will enable the Agency to target educational, regulatory, or enforcement activities towards industries or chemicals that pose the greatest risks and to target programs for population groups that are at the highest risk. Thus, the information to be gathered under the IUR amendments will help EPA to make decisions that will benefit potentially at risk communities, some of which may be disadvantaged. Taking together the factors analyzed in this report, EPA believes that amending ES 3 the IUR will generate benefits to society of improved public and private decisions related to chemical risks that more than justify the costs of data collection and administration. 1Only non CBI info will be publicly available.

S 4 SUMMARY S. 1 Introduction Based on its authority under Section 8( a) of the Toxic Substances Control Act ( TSCA), the U. S. Environmental Protection Agency ( EPA) currently requires manufacturers and importers of certain chemicals to report limited data, including production volume, every four years. The regulation that requires the reporting is known as the Inventory Update Rule ( IUR). EPA is amending the IUR to change the reporting threshold, alter certain reporting exemptions, require companies to provide use and exposure information for some of the chemicals, and make administrative and confidential business information ( CBI) reporting changes that will enhance the effectiveness of the existing regulation. The additional data will assist EPA in evaluating potential exposures and risks resulting from industrial chemical operations and consumer uses of chemical substances. EPA will use the information collected under this rule to set risk assessment priorities among chemical substances of potential concern, to more efficiently manage these risks, and to support EPA's pollution prevention and environmental protection activities. The information will also be valuable to other public and private sector organizations for similar purposes. 1 The data to be produced by the amended IUR are critical if EPA is to meet its Government Performance and Results Act ( GPRA) goal to screen all chemicals in comments by 2005. This analysis reviews the costs, benefits, and impacts of the amendments to the TSCA IUR reporting requirements.

S. 2 Background Congress enacted TSCA in 1976 to establish a number of new requirements and authorities for identifying and controlling toxic chemical risks to human health and the environment. To implement its responsibilities under TSCA, EPA must identify potential chemical risks, assess the magnitude of the identified risks, and manage risks determined to be unreasonable. TSCA provides EPA with the authority to gather information ( such as chemical toxicity, chemical exposure, and other related data) to determine whether a chemical substance may present an unreasonable risk of injury to human health or the environment. Section 8( b) of TSCA requires EPA to compile and keep current an inventory of chemical substances in commerce ( excluding pesticides, tobacco, nuclear material and byproducts, firearms and ammunition, food and food additives, drugs, and cosmetics). In 1977 EPA collected basic information about subject chemicals, including the chemical identity, the identity of sites that were manufacturing or importing the chemical, and the chemical's production volume ( in a range). EPA compiled the 2It should be noted that the numbers of chemicals, reports, and facilities presented above do not include statistics for chemicals with a production volume lower than 10,000 pounds that reported voluntarily.

S 5 information into the initial TSCA Inventory. The TSCA Inventory originally contained approximately 60,000 chemicals. As new chemicals enter into commerce in the United States, they are added to the Inventory. As a result, the Inventory currently contains more than 75,000 chemicals. Section 8( a) of TSCA authorizes EPA to collect a broad variety of information about chemicals in commerce. EPA exercised this authority in 1986 when it promulgated the IUR ( 51 FR 21438) ( Federal Register, 1986a). The IUR, codified at 40 CFR Part 710, requires chemical manufacturers and importers to provide updated information for chemicals in the TSCA Inventory meeting specific criteria. IUR reporting is limited to manufacturers and importers of chemical substances. Small businesses as defined in TSCA Section 8 are exempted from reporting. The IUR includes a production volume threshold of 10,000 pounds a year, and exemptions from reporting for inorganic chemicals, polymers, microorganisms, and naturally occurring substances. EPA created the thresholds and exemptions in the IUR to focus the data collection on the chemicals thought at the time to be most likely to require information for screening and risk assessment purposes and to exclude chemicals for which screening data were thought unlikely to be needed. The IUR requires companies to submit reports every four years; data have been collected in 1986, 1990, 1994, and 1998. Under the original IUR, companies report company, plant site, and chemical identity information; whether the chemical is manufactured or imported; whether it is site limited or is distributed off site; and the production volume. Companies can claim specific data elements as CBI by using a check box, although CBI claims for chemical identity require up front substantiation. Companies must retain records that support their submissions for four years following the reporting period. About 26,000 required submissions from about 2,700 sites, roughly 8,900 chemicals, were reported to EPA in the 1998 reporting cycle. 2 EPA enters the information into the Chemical Update System ( CUS), a confidential database.

S. 3 Need to Amend the IUR EPA uses the IUR data to identify chemical substances, plant sites, and exposures of most concern and to set priorities for more detailed risk assessment and potential risk management actions. Although risk is based on hazard and exposure, EPA's past approaches to chemical risk screening have primarily used production volume as a proxy for exposure. Where available, this information is supplemented by relatively scarce public data on chemical use and exposures. To make more accurate estimates, EPA needs better information on exposure. Information such as how chemicals are used, how many sites use the chemical, and how many workers are potentially exposed would enable EPA and others to develop exposure scenarios. The existing public data sources are inadequate because they are poor in S 6 coverage and often outdated. While EPA has used these sources in the past ( because they do contain some useful data), they are far from adequate for prioritizing, identifying chemicals of concern to specific populations, and managing risks on a nationwide basis. Existing EPA data collections typically do not provide exposure related information that the Agency needs for risk screening, such as industrial and commercial uses, the number of workers potentially exposed, or levels of use in consumer products. Many programs cover only a limited set of chemical substances, a limited number of chemical uses, or only specific industry sectors. Others are regional, rather than national, in scope. Some of the programs collect information on categories of pollutants or on waste streams and not on specific chemical substances, making it difficult to use data in chemical risk screening. And some collect monitoring data for a specific media ( e. g., air or water) but do not collect information on the potential sources of the chemical releases to the environment. Commercial data sources are very limited in scope and detail of use information, and generally provide information only on larger volume chemicals. Although the sources can provide some useful information for these large volume chemicals, none of these information sources ( considered individually or in aggregate) would be adequate substitutes for the information EPA is proposing to collect because each either covers a narrow set of reportable chemicals, was a one time collection, or does not contain adequate exposure related data elements for risk screening. Information specific to the manufacture and use of chemicals, including information on the potential for exposure during the chemical's life cycle, has not been comprehensively or systematically collected at the national level. Each of the existing data sources has limited utility due to a small or specialized sample size, a limited number of chemicals, or age of the data. None of the databases, either alone or combined, provide the Agency with the necessary array of screening level data. After reviewing the data available from existing sources, EPA determined that the best way to address the lack of exposure related data was to collect basic information related to potential chemical exposures through the IUR. EPA has also identified problems associated with the original IUR reporting requirements, including an inconsistent reporting period ( i. e., company fiscal year) that creates difficulties in matching the IUR data to other Agency databases, and the Agency's inability to publicly cite useful information because a company has inappropriately claimed that the data should be classified as TSCA CBI. The Agency determined that amending some of the IUR's administrative and CBI provisions would provide EPA and others with needed flexibility in using these data.

S. 4 Options Analyzed for the IUR Amendments This report analyzes eight regulatory options for amending the IUR reporting requirements. The options were created by varying the threshold for processing and use data, the exemptions based on the type of chemical, and the reporting cycle. Table S 1 summarizes these options. S 7 As a result of the various analyses performed and feedback received throughout the regulatory development process, EPA has chosen to amend the IUR based on Option 1. In particular, the selected option will make the following changes to the IUR:

Increase the reporting threshold: The reporting threshold will be increased from 10,000 to 25,000 pounds.

Create a second reporting threshold: Chemicals produced or imported at volumes less than 300,000 pounds will complete a partial reporting form, requiring only facility and manufacturing information and CBI reassertion. Chemicals with production volumes greater than 300,000 pounds will complete the full form, requiring reporting of facility and manufacturing information as well as processing and use data. S 8 Table S 1. Regulatory Options Summary Option Thresholds Reporting Cycles Number of Chemical s Numbe r of Sites Number of Reports Percentage of Reportsa Annualized Cost ( million 2000$)

Facility and Manufacturin g Information Processing and Use Informatio n Facility and Manufacturin g Information Processing and Use Informatio n Partial Full Low High Threshold Options 1 ( Selected) 25,000 lbs 300,000 lbs 4 yrs. 4 yrs. 8,865 3,026 26,797 63.6/ 54.0% 36.4/ 46.0% $ 19.5 $ 23.3 2 25,000 lbs 100,000 lbs 4 yrs. 4 yrs. 8,865 3,026 26,797 51.7/ 38.9% 48.3/ 61.1% $ 24.4 $ 27.7 3 25,000 lbs 500,000 lbs 4 yrs. 4 yrs. 8,865 3,026 26,797 68.1/ 59.9% 31.9/ 40.1% $ 17.6 $ 20.3 4 25,000 lbs 1,000,000 lbs 4 yrs. 4 yrs. 8,865 3,026 76,797 73.7/ 67.0% 26.3/ 33.0% $ 15.3 $ 17.8 5b 25,000 lbs 500,000 lbs/

100,000 lbs 4 yrs. 4 yrs. 8,865 3,026 26,797 68.1/ 38.9% 31.9/ 61.1% $ 22.9 $ 26.0 Reporting Exemption Optionc 6 25,000 lbs 100,000 lbs 4 yrs. 4 yrs. 7,748 2,482 22,260 41.8/ 41.8% 58.2/ 58.2% $ 19.8 $ 22.2 Reporting Cycle Options 7 25,000 lbs 100,000 lbs 2 yrs. 2 yrs. 8,865 3,026 26,797 51.7/ 38.9% 48.3/ 61.1% $ 47.6 $ 53.9 8 25,000 lbs 100,000 lbs one time one time 8,865 3,026 26,797 51.7/ 38.9% 48.3/ 61.1% $ 6.0 $ 6.8 a These percentages are reported as first reporting year/ future reporting years.

b This option has a threshold of 500,000 lbs for processing and use information in the first reporting year and a threshold of 100,000 lbs for reporting this information in all future reporting years.

c Inorganic chemicals are fully exempt from reporting. 3" Natural gas" includes the following CAS Registry Numbers: 64741 48 6, 68919 39 1, 8006 61 9, 68425 31 0, 8006 14 2, 68410 63 9.

S 9

Remove the inorganic exemption: Inorganic chemicals will no longer be exempt from reporting. Inorganic chemicals will not be required to report exposure and use data in the first reporting year, but in subsequent years they will be subject to the same threshold for processing and use data as organic chemicals.

Add exposure related data: Two types of exposure related data will be added:

B All reportable chemicals will supply exposure related manufacturing information on the number of workers potentially exposed during manufacturing, the physical state of the chemical, the maximum concentration of the chemical when manufactured, and whether production volume is confidential when reported in a range.

B Larger volume chemicals will also report exposure related use information on industrial processing and use and commercial and consumer use. Industrial processing and use information includes process or use codes, five digit North American Industry Classification System ( NAICS) codes, industrial function categories, the percentage of production volume in each category, site limited status, number of sites ( in ranges), and number of potentially exposed workers ( in ranges). Consumer and commercial end use information includes commercial/ consumer end use categories, percent of production volume in each category, maximum concentration ( in ranges) of the chemical in the commercial/ consumer end use, and an indication of whether the chemical is intended for children's use.

Create reporting exemptions: Certain petroleum streams will be exempted from providing processing and use data ( industrial processing and use information, and commercial and consumer use information). Inorganic chemicals are also exempt from reporting this information in the first reporting year; although in future years, they are subject to the same threshold for full reports as organic chemicals. In addition, some forms of natural gas3 will be fully exempted from reporting.

Change the CBI requirements: Companies will be required to provide upfront substantiation before claiming facility identity as CBI and to reassert previous CBI claims.

Make certain administrative changes: The reporting cycle will be changed from the current fiscal year to the calendar year. As part of the facility identification, companies will be required to report the county name of the plant site, as well as the Dun & Bradstreet number, the postal mailing 4As used here, the number of " reports" refers to the number of individual chemical plant combinations reported nationwide. Companies generally submit one Form U per site, addressing multiple chemicals, and therefore multiple chemical " reports" per site.

5The information requirements imposed by the amendments can, in principle, lead to additional welfare losses from associated reductions in output in affected markets. Those welfare costs are likely to be quite small relative to the burden estimates and are not estimated separately in this report.

S 10 address, and e mail address of the parent company. The records retention period will be lengthened from four to five years.

S. 5 Analysis of Options Table S 1 also summarizes the results of the analysis for each of the eight different options, including the number of sites that would report, the number of reports that would be submitted, the distribution of partial and full reports, and the cost of reporting. Under the selected option, the amended IUR will collect basic information on about 8,900 chemicals out of the more than 75,000 chemicals on the TSCA Inventory. This information will be collected from about 26,800 reports covering approximately 3,000 sites. 4 In the first reporting year, approximately 36 percent of the reports ( covering 45 percent of the chemicals) are expected to be full reports ( i. e., containing processing and use information), while the remainder will be partial reports. The proportion of full reports rises in future reporting periods as inorganic chemicals become fully reportable under the amendments. Most of the partial reports must already be submitted under the existing IUR requirements and companies would simply be providing additional information. There are more than 1,100 inorganic chemicals that would be reportable to the IUR for the first time, and about 1,200 originally reportable chemicals that would no longer be reported as a result of raising the reporting threshold. Costs of the IUR amendments will be borne by the chemical industry and the taxpayers who fund EPA. 5 Industry costs are associated with complying with the regulation, while EPA costs are associated with administering the regulation and maintaining the collected data. EPA estimated industry costs based on the time required for companies to determine if they must comply with the amended IUR, become familiar with the rule, prepare and submit reports, and maintain records of the submitted data. To determine burden estimates for report preparation and submission, EPA surveyed industry respondents. There are two important factors to note in interpreting the burden estimates obtained through this survey. First, the IUR amendments only require that industry report " reasonably ascertainable" information for most data elements and " readily available" information for downstream processing and use information. However, these standards for reporting information were developed after the survey was executed. Thus, survey respondents were reporting burden estimates assuming a much higher standard of information. Second, the UEIP program, which asked respondents to report chemical information very similar to that required by the S 11 IUR, also asked respondents to report the time spent preparing the UEIP form for submission ( EPA, 1997b). Companies reported a median burden of 8 hours per chemical report, with a mean of 12 hours per chemical report. Both of these factors indicate that the burden estimates derived from the survey may overestimate the actual burden. EPA has assumed that the burden associated with reporting under the IUR amendments would decrease over time as companies become more familiar with the new requirements. Burden would also decrease over time to the extent that the information being reported remains somewhat constant from one reporting period to the next. However, in future reporting periods, respondents must begin to reassert CBI claimed in previous reporting periods. This requirement partially offsets the reduction in burden over time. In addition, the burden on inorganic chemical producers will be higher in future years than in the first reporting year due to the removal of the inorganic partial exemption even though the cost per partial report will have fallen. Taken together, the factors that raise and lower future reporting costs essentially offset each other; thus, costs in future reporting years are similar to first year costs. More detail on cost estimates is given below. EPA assumed that no capital costs would be associated with this rule. EPA estimated the total industry cost of the IUR amendments by multiplying these estimated costs by the estimated number of sites and submissions that will be affected by the IUR amendments. A separate estimate of EPA costs to administer the rule was added to the industry costs to derive the total cost to society. The estimated cost to submit a report depends on the type of chemical being reported ( e. g., organic chemical, petroleum stream chemical, or inorganic chemical) and the production volume of the chemical being reported ( e. g., between 25,000 and 300,000 pounds, or greater than or equal to 300,000 pounds). The estimated incremental cost or savings are as follows:

Chemicals produced at a volume between 10,000 pounds and 25,000 pounds will now be exempt from reporting. This results in avoided reporting costs ( i. e., savings) of approximately $ 589 to $ 936 per report for these chemicals for sites that must continue to report other chemicals under the IUR amendments. The estimated reduction in cost for a site that no longer must report ( because it does not manufacture or import any reportable chemicals in volumes greater than or equal to 25,000 pounds) is between $ 6,213 and $ 9,843.

For sites manufacturing or importing organic chemicals that must report under the amendments, the estimated incremental cost of compliance determination and rule familiarization ( costs incurred at the site level) is $ 1,629 to $ 1,952 in the first reporting year and $ 0 in subsequent years. Sites manufacturing or importing inorganic chemicals are estimated to have an incremental cost of compliance determination and rule familiarization of $ 2,018 to $ 2,539 in the first reporting year and $ 389 to $ 587 in subsequent years. S 12

Chemicals with a production volume between 25,000 and 300,000 pounds, or those qualifying for one of the partial exemptions, can submit a partial report that does not contain processing and use information. The incremental cost for preparation and submission of a partial report and recordkeeping for that report is estimated to range from $ 578 to $ 941 in both the first reporting year and future years for organic chemicals, while the incremental cost for inorganic chemicals is estimated at about $ 1,160 to $ 1,870 in both the first reporting year and future years. Based on the CUS database, EPA expects that 57 percent of reports filed on organic chemicals will be partial reports. For inorganic chemicals, EPA expects 100 percent to be partial reports in the first reporting year, because inorganic chemicals are exempt from full reporting in the first year, but only 43 percent in future reporting periods.

Chemicals produced in volumes over 300,000 pounds that do not qualify for one of the partial exemptions must file a full report. The incremental cost for preparation and submission of a full report and recordkeeping for that report is estimated to range from $ 6,009 to $ 6,803 for organic chemicals and from $ 6,598 to $ 7,731 for inorganic chemicals in the first reporting year. In future reporting years, the incremental cost is estimated to be $ 5,349 to $ 6,085 for organic chemicals and $ 5,938 to $ 7,021 for inorganic chemicals. Inorganic chemicals generally have a higher incremental cost because they have heretofore been exempt from reporting. An estimate of the average cost per site can be derived based on the estimated number of full and partial reports per site. Organic chemical manufacturers are expected to file an average of 9.0 reports per site, while inorganic chemical manufacturers are expected to file an average of 8.3 reports per site. Combining the costs incurred on a per site level with the costs per report, the number of reports per site, and the percentage of reports expected to be full and partial reports, EPA estimates the incremental cost per site for an organic chemical manufacturer to be between $ 27,609 and $ 32,563 in the first reporting year, and between $ 23,343 and $ 27,719 in future reporting years. A similar calculation for inorganic chemical manufacturers yields an estimated incremental cost per site of $ 11,749 to $ 18,194 in the first reporting year and $ 32,638 to $ 40,502 in subsequent reporting years. Projected incremental costs for EPA operations are relatively small and are estimated at about $ 576,000 in the first year of reporting, and about $ 270,000 for each subsequent reporting period. These Agency costs annualize to about $ 90,500 per year. EPA estimates the incremental cost of the amendments to be between $ 74.4 million and $ 89.5 million for the first reporting cycle. Costs for subsequent reporting cycles ( every four years) are estimated at $ 74.8 million to $ 89.3 million. The startup and quadrennial costs are equivalent to an annual cost of $ 19.5 million to $ 23.3 million per year over the first 20 years of the rule. EPA used exemptions or partial exemptions to reduce the number of reports ( and thus costs), where this did not conflict with the utility of the data collection. Specifically, EPA reduced the number of reports by S 13

raising the reporting threshold from 10,000 pounds to 25,000 pounds and adding a full exemption for natural gas ( reducing the number of reports by about 3,100 and 1,000, respectively);

introducing a second threshold of 300,000 pounds for reporting use data ( reducing the number of reports for which full information must be provided by about 7,800 in the first reporting year and 9,800 in future years, when compared with requiring this information for all reports); and

establishing a partial exemption for petroleum process streams and inorganic chemicals ( reducing the number of full reports by over 4,400 for petroleum process streams [ relative to the case without the partial exemptions], and by about 2,600 for inorganic chemicals in the first year of reporting). The result is that full reports are expected on only about 4,000 chemicals and partial reports on about 4,900 chemicals ( out of the more than 75,000 chemicals on the TSCA Inventory). EPA also reduced the specificity of the information required by

requiring the reporting of only known or reasonably ascertainable facility and manufacturing information and readily obtainable processing and use information;

requiring that submitters report much of the information in ranges, reducing the need to generate precise estimates; and

requiring processing and use information only on the bulk of the chemical's volume, not necessarily on 100 percent of the volume ( for instance, only on the top ten NAICS codes). These steps limit the amount of information required, reducing the time and effort spent by industry on complying with the amendments.

S. 6 Benefits The data collected through this rule will assist EPA in evaluating potential exposures and risks resulting from industrial chemical operations and commercial and consumer uses of chemical substances. EPA will use the information collected under this rule to set risk assessment priorities among chemical substances of potential concern and to support EPA's pollution prevention and environmental protection activities. The information ( non CBI portions) will also be valuable to other public and private sector organizations for similar purposes. Because the current state of knowledge about the economics of information is not highly developed, this analysis does not attempt to assign monetary value to the direct benefits of the information collected by this rule. The direct benefits are the improved quality and timeliness of decision making in EPA's risk screening process and EPA's improved ability to focus its programs and use resources more efficiently. Because the outcome of EPA's screening and risk management programs for these chemicals cannot be predicted, it is also not possible to quantitatively estimate the indirect benefits of the rule in terms of lives saved, illness averted, or ecosystem damages avoided. While the benefits cannot be monetized or quantified, the analysis does qualitatively describe the types of benefits that are expected. The benefits of some of the major changes are described below and summarized in Table S 2. S 14 The amendments are directed at improving the data available for risk screening of existing chemicals. Improving the data available for the chemical screening process provides EPA with the means to more effectively protect human health and the environment. At present, EPA uses hazard information in conjunction with production volume ( as a proxy for exposure) as the primary tools to focus existing chemical resources. The addition of use and exposure related information will provide a better risk characterization and allow EPA to develop priorities based on that risk. Identifying and focusing on those chemicals with greater risks earlier in the process reduce the health care and environmental costs borne by society. The amendments will also require reporting on inorganic chemicals, which will enable the Agency to identify and target risks from this class of chemicals. The amendments make a number of administrative changes that will increase the effectiveness of the data collected. One example is the change to the reporting period. Under the original IUR, companies report on the basis of their fiscal year, which varies from company to company. Changing the reporting period to coincide with the calendar year as opposed to a company's fiscal year will make the data set internally consistent. It will also make the reporting period for the IUR data consistent with other EPA databases, most of which are on a calendar year basis. Much of the information reported through the original IUR is claimed CBI, which reduces the usability of the data. Information that is claimed to be CBI can only be used by staff with a security clearance, and the data cannot be included in any report or other document that will be made available to the public. As a result, if EPA uses this information ( for instance to set risk management priorities), the basis for the decision cannot be completely shared with the public. If EPA only uses data that have not been claimed as confidential, the results will be incomplete and of limited usefulness. Several of the amendments are intended to limit CBI claims to only those that are necessary to protect legitimate business interests. For instance, since companies are less likely to claim production volume as CBI if the data are presented as a range rather than a point estimate, the IUR amendments add a range reporting element. Data that have been appropriately claimed as CBI would continue to be treated as confidential. S 15 Table S 2. Summary of IUR Amendments Action Result Benefit or Rationale Raise Threshold Raises the production volumereporting threshold from 10,000 pounds a year to 25,000 pounds a year. Exempts 75 sites and roughly 3,100 reports for 1,200 chemicals, at a savings of $ 1.8 to $ 2.9 million per reporting cycle. Lowers companies' reporting burden.

Remove Inorganic Exemption Removes the exemption for inorganic chemicals in the original IUR. Adds approximately 4,500 reports for over 1,100 chemicals, including about 2,600 full reports in future reporting cycles at a cost of $ 6.4B$ 9.9 million in the first year of reporting, $ 17.8B$ 22.0 million in future reporting years, and an annualized cost of $ 3.9B$ 5.0 million. Allows EPA to make informed risk screening decisions about inorganic chemicals.

Natural Gas Exemption Eliminates all reporting for natural gas substances with six specific Chemical Abstracts Service ( CAS) numbers. Exempts approximately 99 sites and roughly 1,000 reports from all reporting, saving $ 0.6 to $ 1.0 million per reporting cycle. Reduces burden by eliminating a large number of reports on these specific chemicals for which EPA feels available data are adequate. S 16 Table S 2. Summary of IUR Amendments ( continued)

Action Result Benefit or Rationale Processing and Use Information Requires additional processing and use information for chemicals with production volumes greater than 300,000 pounds that do not qualify for a partial exemption:

$ process or use code;

$ five digit NAICS code for processing;

$ industrial function category;

$ percentage of production volume in function category;

$ number of processing sites ( in ranges);

$ number of potentially exposed workers ( in ranges);

$ end use category;

$ percentage production volume in end use category;

$ indication of children's use $ maximum concentration ( in ranges) of the chemical in the end use. Results in an increase in unit costs; does not change the number of reports required.

Processing and use exposure information on organic chemicals is collected from approximately 9,800 reports on roughly 4,000 chemicals, at an estimated cost of approximately $ 53.0B$ 57.2 million in the first year of reporting, and $ 42.4B$ 45.8 million in future reporting cycles. Increases EPA's ability to make informed riskscreening decisions.

The earlier identification of problems and fewer misidentifications improves the targeting of resources by EPA and industry.

Reporting Period Changes the reporting period from the company's fiscal year to the calendar year. Does not change unit costs or the number of reports required. Reporting for industry would be the same as for other reporting requirements.

All data within the IUR database would reflect a consistent time frame, which would make data inferences more reliable.

Reporting period consistent with other EPA data collections. S 17 Table S 2. Summary of IUR Amendments ( continued)

Action Result Benefit or Rationale Confidential Business Information Requires separate confidentiality claims for production volume ranges, in addition to exact production volume.

Requires up front substantiation of confidentiality claims for plant site information.

Requires the reassertion of CBI claims for each reporting period. Results in an increase in unit costs; does not change the number of reports required.

Approximately 20 percent of submissions received during the 1994 reporting period claimed plant site information as CBI, suggesting that a comparable percentage would provide up front substantiation under the amendments.

Approximately 64 percent of submissions received during the 1994 reporting period claimed some data element as CBI, indicating that up to this percentage may have to reassert claims under the IUR amendments. Reassertion is not required in the first reporting period, but it increases costs by approximately $ 6.1B$ 7.3 million in future reporting years for organic chemicals. Produces greater flexibility in the use of the data.

Production volume ranges are less likely to be claimed to be confidential than point estimates. Production volume ranges maintain confidentiality for point estimates, while allowing greater flexibility in the use of the information.

Up front substantiation of plant site claims reduces the frequency of inappropriate CBI claims being filed, while protecting data that can legitimately be claimed as CBI.

CBI reassertion ensures full access to data that companies no longer deem to be confidential.

These changes will allow EPA to provide more information to the public without breaching the confidentiality of legitimate CBI data. Finally, collecting the additional IUR information will help further develop and measure the results of private sector stewardship programs. The data will help to identify potential risks and opportunities for safer substitutes, target specific population groups, and evaluate the need for risk management. In general, the additional information collected through the IUR amendments will be used to identify and manage human health and environmental risks. The data will aid in identifying chemicals to which consumers, children, and workers are exposed; establishing priority chemicals for testing; and finding areas where voluntary programs are more likely to provide real gains in environmental protection. Currently, the lack of nationwide information related to chemical production and use prevents the Agency from screening large numbers of chemicals in a timely manner. These amendments are critical if EPA is to meet its GPRA goal to screen all chemicals in commerce by 2005. S 18 As presented in Table S 1, EPA considered a variety of options in developing its selected approach. These options can be separated into three categories C reporting threshold, reporting exemption, and reporting cycle options. In determining which reporting threshold to propose, EPA considered the number of chemicals on which information would be collected, the burden associated with reporting the information, comments received from a variety of sources, and the future direction of EPA's program. For the reporting exemption options, EPA considered its ability to use the information and the information otherwise available to the Agency. For the reporting cycle options, EPA considered the dynamic nature of the chemical industry and the burden associated with reporting the information. Decisions as to the specific information collected were based on EPA's experience and information needs and are described in the technical support documents.

S. 7 Small Entity Analysis Small businesses are the only small entities expected to be affected by the IUR amendments. In addition to the reporting thresholds ( that help screen out small businesses), the existing regulation contains two small business exemptions ( 40 CFR 704.3). First, companies with annual sales of less than $ 4 million are exempt from reporting regardless of their production volume. Second, companies with annual sales less than $ 40 million are exempt from reporting if they produce less than 100,000 pounds of a regulated substance at a single site. These exemptions are not being changed by the IUR amendments. For the purpose of the small entity analysis, all firms with $ 40 million or less in annual sales were assumed to be small businesses. The rule is estimated to affect between 202 and 335 small businesses. EPA compared the cost of reporting due to the IUR amendments to sales at these small businesses. Even using conservative assumptions, the average cost to sales ratio in the first year of reporting is estimated to be 0.19 percent or less. In future reporting years, costs are estimated to be 0.19 to 0.23 percent of sales for inorganic chemical manufacturers and slightly less for organic chemical manufacturers. Because regulatory costs represent a small fraction of a typical firm's sales, the financial impacts of the regulation are likely to be minimal.

S. 8 Environmental Justice Because the IUR amendments are an information collection exercise, there are no negative environmental equity issues associated with them. Instead, the information that would become available through the rule would enable the Agency to target educational, regulatory, or enforcement activities towards industries or chemicals that pose the greatest risks and to target programs to geographic areas that are at the highest risk. Thus, the information to be gathered under the IUR amendments will help EPA make decisions that will benefit potentially at risk communities, some of which may be disadvantaged. Of the 121 million people who live within 10 miles of an IUR site, almost 38 million ( 30 percent) are minorities. This number is greater than the nationwide rate of approximately 20 percent minority individuals. Roughly 24 million S 19 ( 20 percent) of the people living within 12 miles of an IUR site are at or below 150 percent of the poverty level, which is consistent with the nationwide rate of 21 percent.

S. 9 Differences in Economic Analysis Results between the Final and Proposed Rule The results of the economic analysis for the final rule are materially different than the results of the economic analysis for the proposed rule ( EPA, 1999a). Of particular note is the difference in the estimates of the total cost of the rule. The costs of the selected option reported here are approximately $ 74 to $ 89 million every four years. The annualized cost over the first 20 years of the rule is $ 19 to $ 23 million per year. By comparison, the cost of the rule at proposal was estimated to be $ 36 to $ 51 million in the first year, $ 27 to $ 41 million in future reporting years, and an annualized total cost of the proposed rule was $ 10 to $ 14 million. Several reasons contribute to the difference in cost estimates.

The selected option in this report differs from the proposed rule. Notable differences between the proposed and final rule include the fact that the partial exemption for inorganic chemicals now applies only in the first year. Thus the cost of the rule in future years is higher under the final rule than under the proposed rule.

The costing methodology was modified. The methodology to estimate the costs of the rule was modified to account for feedback provided to EPA in the public comment period. Notable among these changes was an increase in the burden estimate for CBI reassertion cost. Also, after careful reassessment of the connection between the costing methodology used in the EA for the proposed rule and the industry survey data from which the burden estimates are made, the methodology was modified to better reflect the data provided in industry survey responses.

The final rule analysis employs data from the 1998 CUS database. Compared to the previous data from 1994 and before, the new data provide a more accurate assessment of current IUR reporting volume, the distribution of chemicals reported, and the distribution of reporting sites. Using the 1998 data increased the number of reports used in the analysis by about 1,000 relative to the data used at proposal, which led to an increase in the cost of the rule.

Costs are now expressed in year 2000 dollars. The costs of the rule at proposal stage were expressed in 1997 dollars. Costs are now expressed in 2000 dollars ( first quarter). This base year adjustment inflates costs about 13 percent.

These modifications provide a more accurate assessment of the social costs of the rule. While the estimated cost of the rule is higher, EPA believes that the rule's S 20 benefits to society, derived from improvements in risk screening and risk management, justify the costs borne to obtain the information and administer the program. Benefitcost comparisons are addressed in Section 5 of the report. 6According to EO 12866, a significant regulatory action is any regulatory action that is likely to ( 1) have an annual effect on the economy of $ 100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; ( 2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; ( 3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or ( 4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in EO 12866.

1 1 SECTION 1 INTRODUCTION The U. S. Environmental Protection Agency's ( EPA's) Office of Pollution Prevention and Toxics ( OPPT) conducts economic analyses of planned regulatory actions to inform Agency decisionmakers about the effects of the regulatory action on society at large and on specific subpopulations. An economic analysis is typically composed of both a benefit cost analysis and impact analyses. The former refers to analyses of the overall benefits and costs of an action and its alternatives, while the latter analyses are often intended to supplement a traditional benefit cost analysis and usually involve analyzing the distribution of benefits and costs across different segments of society. In addition to informing decisionmakers within the Agency, economic analyses meet numerous statutory and administrative requirements imposed by Congress and the White House. The White House, through Executive Order ( EO) 12866, requires Executive Branch agencies to assess the benefits and costs of all rules it deems to be " significant" 6 and to submit these analyses to the Office of Management and Budget ( OMB) for review. In addition to benefit cost analysis, impact analyses are required in certain circumstances by both EOs and statutes. Of particular relevance to this report, the Regulatory Flexibility Act ( RFA) requires agencies to consider the effects of their regulations on small entities ( businesses, governments, and nonprofit organizations), and EO 12898 requires agencies to consider the effects of their actions on minority and low income populations. This report assesses the benefits and costs expected to result from implementing amendments to the Inventory Update Rule ( IUR). The existing IUR, which has been in place since 1986, requires chemical manufacturers and importers to collect, maintain, and submit location and production volume information for chemicals with annual production volumes of 10,000 pounds or higher. The IUR amendments will change this reporting threshold to 25,000 pounds and will augment the required site and production information. In addition, the amendments will require sites with production volumes of 300,000 pounds or higher of a reportable chemical to collect, maintain, and submit additional information to EPA regarding chemical processing and use . Furthermore, the amendments change administrative requirements and 1 2 exemption status for various chemical groups. Moreover, the amendments will include new provisions for confidential business information ( CBI) data claims that ( 1) require up front substantiation of CBI claims for plant site identification, ( 2) allow production volume to be specified in ( non CBI) ranges while maintaining CBI status for specific production volumes, and ( 3) require reassertion of CBI claims from previous reporting cycles. The data elements required by the amendments will provide information to populate an exposure and use information database, which will provide the information necessary for EPA's everyday decisionmaking and will enable EPA to develop chemical screening priorities and streamline regulatory efforts. This will benefit society by enabling public and private parties to make more informed risk assessment and management decisions. The collected information will improve understanding of potential exposures resulting from industrial chemical use, allow more accurate tracking of chemical exposure and use, and permit more effective targeting of chemicals that pose the greatest exposure or risk. The costs associated with these amendments include the costs for private entities, generally firms in the targeted industries, to collect, maintain, and submit the required information and the cost to taxpayers for financing government expenditures attributable to data management. This economic analysis assesses and compares the benefits and costs of the planned amendments to the IUR. This report also analyzes alternatives to the selected regulatory approach. The following analyses are provided in this report:

an overview of changes in the reporting requirements,

a characterization of the industry groups considered in this analysis ( i. e., regulated community),

a compilation and estimation of industry and Agency unit and total costs,

an assessment of the benefits that will result from the information collected, and

a comparison of the benefits and the costs of the IUR amendments. This report also discusses the impacts of the IUR amendments on small businesses pursuant to the RFA and the impacts on minority and low income populations in conformance with EO 12898, and it addresses impacts emphasized by other relevant congressional mandates ( e. g., Paperwork Reduction Act). The remainder of this section provides information on EPA's statutory authority for implementing the IUR amendments, a discussion of the regulatory history and a description of the original rule requirements and the planned changes, an overview of the regulated community, and a description of the contents of this report.

1.1 Statutory Authority Congress has granted EPA broad authority to collect information on chemical substances, including information that will help EPA and others assess the magnitude and extent of human and environmental exposure to chemicals used in commerce. Specifically, under Section 8( a) of the Toxic Substances Control Act ( TSCA) ( 15 U. S. C. 2607( a)), EPA is authorized to promulgate regulations requiring manufacturers and processors of chemicals to report production and use information on various types and 7Chemicals listed on the TSCA Inventory are referred to as Existing Chemicals. Chemicals not currently listed are referred to as New Chemicals, and all producers intending to manufacture or import a new chemical must comply with the Agency's New Chemicals Program ( NCP). The NCP screens new chemicals to determine if and under what conditions they can be brought into the United States. Once a chemical passes through the program, the manufacturer or importer files a Notice of Commencement indicating that the chemical will now be in commerce.

1 3 Box 1 1. Chemical Specific Information EPA is Authorized to Collect Under Section 8( a) of the Toxic Substances Control Act ( not a comprehensive list)

1. Common or trade name, chemical identity, and molecular structure of each chemical substance or mixture for which reports are required.

2. Categories or proposed categories of use for each substance or mixture reported.

3. The total amount of each substance and mixture manufactured or processed and each of its categories of use; reasonable estimates of the total amount to be manufactured or processed and each of its categories of use.

4. A description of the byproducts resulting from the manufacture, processing, use, or disposal of each such substance or mixture.

5. All existing data concerning the environmental and health effects of such substances or mixtures.

6. The number of individuals exposed, and reasonable estimates of the number who will be exposed, to such substances or mixtures in their places of employment and the duration of such exposure.

7. The manner or method of disposal, and in any subsequent report on such substance or mixture, any change in the manner or method. classes of chemicals. Examples of the types of chemical specific information that the Agency is authorized to collect is provided under TSCA § 8( a)( 2). Box 1 1 presents a summary of this information.

1.2 Description of the IUR Rule This section describes the regulatory history of the TSCA IUR, the original requirements of the rule, and the planned changes to the rule through the IUR amendments.

1.2.1 Regulatory History The TSCA Chemical Substances Inventory ( 42 FR 64572) ( Federal Register, 1977) was created just after TSCA's passage into law. The Inventory lists all TSCA chemicals in commerce, thereby providing a snapshot of the chemicals manufactured or processed in the United States. All chemicals are included, with the exception of pesticides, tobacco, nuclear material, firearms and ammunition, food and food additives, drugs, and cosmetics. The Inventory initially included chemicals in commerce in 1977. Chemicals for which manufacturers complete EPA's New Chemicals7 process and file a Notice of Commencement have been added to the Inventory. Currently, the Inventory lists over 75,000 chemicals. Under the authority of TSCA Section 8( a), EPA promulgated regulations requiring chemical manufacturers and importers to submit data on certain chemical substances listed in the TSCA Inventory ( 51 FR 21447) ( Federal Register, 1986b) that 1 4 they produce in volumes over 10,000 pounds per site. These regulations are commonly called the TSCA IUR. Data are collected every four years on an average of 9,200 separate chemicals. This collection provides a more up to date picture of a subset of the TSCA chemicals in commerce, generating data that are used to support many EPA risk management activities. The data also provide general support to many other EPA and non EPA program activities. After analyzing the data submitted under the IUR during the 1986, 1990, and 1994 reporting periods and publicly available data, EPA identified the need to amend the IUR to provide basic information related to potential chemical exposures. EPA plans to use this new information to improve its chemical screening, risk assessment, and risk management capabilities. EPA also identified the need to amend some CBI reporting requirements and administrative provisions in the IUR to enhance the data's usefulness.

1.2.2 Current IUR Requirements The existing IUR requires that members of the regulated community submit information on certain TSCA chemicals once every four years. Reporting is mandatory for each regulated chemical produced or imported in annual quantities of 10,000 pounds or greater, although inorganic substances, polymers, microorganisms, and naturally occurring chemical substances are exempt from reporting. Reporters are required to provide the following information:

Company information requires information for a technical contact, including company name, contact name, company street address, and telephone number.

Plant site identification includes reporting the identification and address information for a manufacturing plant site, including plant site name, Dun & Bradstreet number, and plant site street address.

Chemical identifying number involves reporting both the specific chemical name and the Chemical Abstracts Service ( CAS) Registry Number, or other identifying number, of the chemical substance.

Manufacturer/ importer activity requires identifying whether the chemical is produced at the site or is imported.

Site limited activity entails indicating whether the chemical substance is produced and used at the same site. These chemicals do not undergo packaging and shipping.

Production volume must be reported for the chemical manufactured at the plant site.

CBI status ( claimed/ not claimed) must be indicated for each data element reported. For chemical identification, up front substantiation of CBI claims is required.

Certification statement requires a signature certifying that complete and accurate information is provided. 1.2.3 Changes in Reporting Requirements under the IUR Amendments 1 5 The reporting requirements under the IUR amendments encompass changes in the reporting thresholds, timing of reports, exemptions, and the amount and type of information that must be collected and submitted to EPA. This section defines several terms that correspond to data needs for the new requirements. <IP_ADDRESS> Reporting Thresholds, Reporting Cycles, and Exemptions The amendments raise the reporting threshold from 10,000 to 25,000 pounds and add a second reporting threshold of 300,000 pounds for processing and use information. This means that sites producing or importing TSCA chemicals at annual volumes of 25,000 pounds up to 300,000 pounds are required to report only site and manufacturing information ( Parts I and II of Form U) and to complete the CBI reassertion section ( Part IV of Form U). Sites producing or importing TSCA chemicals at annual volumes of 300,000 pounds or greater are required to report site and manufacturing data, to reassert CBI, and to report processing and use information ( Part III of Form U). The amendments retain the original reporting cycle of every four years but change the period of coverage for production from corporate fiscal year to calendar year. Additionally, the amendments change the recordkeeping period from four years to five years. The amendments include certain changes to the original reporting exemptions. Under the amendments, the inorganic chemical exemption is eliminated and reporting for these chemicals is phased in. For the first reporting period, inorganic chemicals are subject to a partial exemption, but are subject to full reporting requirements in all future reporting periods. A partial exemption stipulates that only site and manufacturing information ( Parts I and II of Form U), but not processing and use information ( Part III of Form U), must be reported. A partial exemption is also granted for petroleum process stream chemicals. Certain natural gas substances will be fully exempt from reporting. <IP_ADDRESS> Information Collected The IUR amendments add new data elements to the information currently collected. Information already required under the original IUR will continue to be collected. Form U, the instrument used to collect the IUR information, has been revised; a copy of the revised form is provided in Appendix A. The revised Form U is divided into four parts: Facility Identification Information, Manufacturing Information, Processing and Use Information, and Reassertion of Past CBI Claims. An overview of the changes in the types of information to be reported follows:

Facility Identification Information B Company and plant site identification would include more detailed information to determine the company and plant site identities. The most notable change is the addition of the county name.

B Up front CBI substantiation for plant site identification is also being added. Under the existing IUR, up front substantiation is only required for chemical identification. 8The Standard Industrial Classification ( SIC) system has recently been replaced with the NAICS. NAICS is a sixdigit coding system, therefore allowing for more detailed specification than the four digit SIC system.

1 6

Manufacturing Information B Exposure related data include the number of workers involved in manufacturing, the physical form as the chemical leaves the site, and the maximum concentration of the chemical as it leaves the site. Codes representing ranges would be used to report these data. Submitters must also report all physical forms of the chemical and the percentage of production volume in each physical form.

B Production volume data will now include production volume ranges and a CBI range check box, enabling submitters to determine if the production volume range for their chemical should be considered confidential. The ranges are predetermined.

Processing and Use Information B Industrial processing and use exposure related data would be reported for the first time. These data include process or use codes, North American Industrial Classification System ( NAICS) codes, industrial function codes, percentage of production volume attributable to each processing or use activity reported, number of sites, and number of workers for downstream processing and uses of the chemical. 8 Codes representing ranges would be used to report these data, and only " readily obtainable" data would be reported. These data would be reported for up to ten uses most applicable to each chemical ( by volume).

B Consumer and commercial end use exposure related data would also be reported for the first time. These data include product category codes, percentage of production volume, maximum concentration of the chemical in each final product, and an indication of whether the chemical is intended for children's use. Codes representing ranges would be used to report these data, and only " readily obtainable" data would be reported. These data would be reported for up to ten uses most applicable to each chemical ( by volume).

Reassertion of Past CBI Claims B Most of the information on Form U can be claimed confidential. The amendments require the reassertion of any CBI claims made in the previous IUR reporting. The second reporting period will be the first time reassertion is required. 1 7 <IP_ADDRESS> Definitions of Reporting Terms Several terms are defined below to provide some general background for the new requirements.

Submitters will now report the total number of workers reasonably likely to be exposed to each reportable chemical substance at each site where the substance is manufactured. " Reasonably likely to be exposed" is defined as exposure to a chemical substance under foreseeable conditions of manufacture ( including import), processing, distribution in commerce, or use of each reportable chemical, that is more likely to occur than not to occur. This definition includes, but is not limited to, such activities as charging reactor vessels, drumming, bulk loading, cleaning equipment, maintenance operations, materials handling and transfers, and analytical operations. Accidental or merely speculative exposures are excluded. The amendments require reporting of exposure using the range code corresponding to the submitter's estimate of the total number of potentially exposed workers.

Processing is ( 1) the preparation of a chemical substance, after its manufacture, for distribution in commerce in the same form or physical state or in a different form or physical state from that in which it was received; ( 2) the preparation of a chemical substance, after its manufacture, for distribution in commerce as a part of a mixture or article containing the substance; or ( 3) use of a chemical substance as an intermediate.

NAICS codes describe the industrial activities associated with each reported industrial processing or use operation.

Industrial function category codes correspond to the appropriate functions of the reportable chemicals, based on a review of different chemical function classification systems both internal and external to EPA. For each NAICS code that is reported, the functional use category code that best represents the specific manner in which the reportable chemical substance is used must be selected. These categories were developed from the European Organisation for Economic Cooperation and Development's ( OECD's) use categories and EPA experience from the NCP. Box 1 2 lists the initial Industrial Function Categories for the IUR amendments. There is significant 1 8 Box 1 2. Industrial Function Categories $ Adsorbents and absorbents $ Adhesives and binding agents $ Aerosol propellants $ Agricultural chemicals ( nonpesticidal)

$ Antiadhesive agents $ Bleaching agents $ Coloring agents, dyes $ Coloring agents, pigments $ Corrosion inhibitors and antiscaling agents $ Fillers $ Fixing agents $ Flame retardants $ Flotation agents $ Fuels $ Functional fluids $ Intermediates $ Lubricants $ Odor agents $ Oxidizing agents $ pH regulating agents $ Photosensitive chemicals $ Plating agents and metal surface treating agents $ Processing aid, not otherwise listed $ Process regulators, used in vulcanization or polymerization processes $ Process regulators, other than polymerization or vulcanization processes $ Reducing agents $ Solvents ( for cleaning or degreasing)

$ Solvents ( which become part of product formulation or mixture)

$ Solvents ( for chemical manufacture and processing and are not part of the end product at greater than 1 percent by weight)

$ Stabilizers $ Surface active agents $ Viscosity adjustors $ Other Box 1 3. Proposed Commercial and Consumer Product Categories $ Artists' supplies

Adhesives and sealants

Automotive care products

Electrical electronic products

Glass and ceramic products

Fabrics, textiles, and apparel

Lawn and garden products ( nonpesticidal)

Leather products

Lubricants, greases and fuel additives

Metal products $ Paper products

Paints and coatings

Photographic chemicals

Polishes and sanitation goods

Rubber and plastic products

Soaps and detergents

Transportation products

Wood and wood furniture

Other overlap between this suggested list for the amended IUR and the industrial function codes used for the Premanufacture Notification ( PMN), Use Cluster Scoring System ( UCSS), Use and Exposure Information Project ( UEIP), and the OECD's programs ( EPA, 1996d). If more than ten NAICS industrial function code combinations apply to a reportable chemical substance, only the ten code combinations for the substance that cumulatively represent the largest percentage of production volume ( measured by weight) need to be reported.

Commercial and consumer product category codes must be reported for each category in which the reportable chemical substance is used. These categories have been developed based on a review of national usage 9These segments of the chemical industry represent those most likely to be subject to TSCA § 8 reporting, but other industry sectors ( as indicated by Table 1 1) may also manufacture certain subject chemicals and thus may also be affected by the IUR amendments.

1 9 surveys of consumer products, exposure monitoring data, product emissions testing, and a variety of other data sources. This review provided a list of consumer products and a subsequent categorization of these products by common characteristics, such as use scenarios, into major groupings of consumer and commercial products. Box 1 3 provides a listing of these commercial and consumer product categories.

1.3 Overview of the Regulated Community The regulated community for the IUR amendments consists of companies manufacturing or importing chemicals in amounts of 25,000 pounds or more annually that are listed on the TSCA Inventory and regulated under TSCA § 8. In general, the industry segments that compose the regulated community for the IUR amendments are those that produce or import organic and inorganic chemical substances. Manufacturers and importers of non TSCA chemical substances ( such as pesticides, tobacco, nuclear material, firearms and ammunition, food and food additives, drugs, and cosmetics) are not required to report on those chemicals under the IUR. Chemical processors are also exempt from all reporting. The sections below describe the industries likely to be affected by the amendments. This list is not intended to be exhaustive, rather it is intended to describe those entities likely to be affected by the IUR amendments. Companies must review the rule to determine whether they are subject.

1.3.1 Chemical Industry Segments Likely to be Affected by the IUR Amendments The NAICS codes correlating with the industry groups likely to be affected by the IUR amendments are identified in Table 1 1. These NAICS codes show the primary activities for establishments within industries that manufacture or import chemicals listed on the TSCA Inventory. The six sectors of the U. S. economy likely to be most affected by the rule amendments can be classified and described as follows ( EOP, 1987): 9

Major Group 211 C Oil and Gas Extraction includes establishments primarily engaged in producing crude petroleum and natural gas, extracting oil from oil sands and oil shale, producing natural gasoline and cycle condensate, and producing gas and hydrocarbon liquids from coal at the mine site.

Major Group 2122 C Metal Ore Mining includes establishments primarily concerned with mining, developing mines, or exploring for metallic minerals ( ores). These ores are valued for the metals contained and the metals to be recovered for use as such or as constituents of alloys, chemicals, pigments, or other products. 1 10

Major Group 322 C Paper Manufacturing includes establishments primarily engaged in the manufacture of pulps from wood and other cellulose fibers and from rags; the manufacture of paper and paperboard; and the manufacture of paper and paperboard into converted products.

Major Group 324 C Petroleum and Coal Products Manufacturing includes establishments that participate in petroleum refining, petroleum manufacturing, manufacturing of paving and roofing materials, and compounding of lubricating oils and greases from purchased materials. Establishments providing gas to consumers are not included in this category, but rather are classified with Utilities Industries ( Major Group 221). 1 11 Table 1 1. North American Industrial Classification System for Industries Likely to be Subject to IUR Reporting NAICS Description 211 Oil and Gas Extraction 2111 Oil and Gas Extraction 21111 Oil and Gas Extraction 211111 Crude Petroleum and Natural Gas 211112 Natural Gas Liquid Extraction 212 Mining ( Except Oil and Gas) 2122 Metal Ore Mining 21223 Copper, Nickel, Lead and Zinc Mining 212234 Copper Ore and Nickel Ore Mining 2123 Nonmetallic Mineral Mining and Quarrying 21232 Sand, Gravel, Clay, and Ceramic and Refractory Minerals Mining and Quarrying 212325 Clay and Ceramic and Refractory Minerals Mining 21239 Other Nonmetallic Mineral Mining and Quarrying 212391 Potash, Soda, and Borate Mineral Mining 212392 Other Chemical and Fertilizer Mineral Mining 213 Support Activities for Mining 2131 Support Activities for Mining 21311 Support Activities for Mining 213111 Drilling Oil and Gas Wells 213112 Support Activities for Oil and Gas Operations 311 Food Manufacturing 3112 Grain and Oilseed Milling 31122 Starch and Vegetable Fats and Oils Manufacturing 311222 Soybean Processing 311223 Other Oil Seed Processing 311225 Fats and Oils Refining and Blending 3116 Animal Slaughtering and Processing 31161 Animal Slaughtering and Processing 311613 Rendering and Meat Byproduct Processing 3117 Seafood Product Preparation and Packaging 31171 Seafood Product Preparation and Packaging 311711 Seafood Canning 311712 Fresh and Frozen Seafood Processing 3119 Other Food Manufacturing 31194 Seasoning and Dressing Manufacturing 311942 Spice and Extract Manufacturing 1 12 Table 1 1. North American Industrial Classification System for Industries Likely to be Subject to IUR Reporting ( continued)

NAICS Description Chemical Manufacturing ( continued) 32519 Other Basic Organic Chemical Manufacturing 325191 Gum and Wood Manufacturing 325192 Cyclic Crude and Intermediate Manufacturing 325193 Ethyl Alcohol Manufacturing 325199 All Other Basic Organic Chemical Manufacturing 3252 Resin, Synthetic Rubber, and Artificial and Synthetic Fibers and Filaments Manufacturing 32521 Resin and Synthetic Rubber Manufacturing 325211 Plastics Material and Resin Manufacturing 325212 Synthetic Rubber Manufacturing 32522 Artificial and Synthetic Fibers and Filaments Manufacturing 325221 Cellulosic Organic Fiber Manufacturing 325222 Noncellulosic Organic Fiber Manufacturing 3253 Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing 32531 Fertilizer Manufacturing 325311 Nitrogenous Fertilizer Manufacturing 325312 Phosphatic Fertilizer Manufacturing 32532 Pesticide and Other Agricultural Chemical Manufacturing 3259 Other Chemical Product and Preparation Manufacturing 32599 All Other Chemical Product and Preparation Manufacturing 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing 3254 Pharmaceutical and Medicine Manufacturing 32541 Pharmaceutical and Medicine Manufacturing 325411 Medicinal and Botanical Manufacturing 325412 Pharmaceutical Preparation Manufacturing 325413 In Vitro Diagnostic Substance Manufacturing 325414 Biological Product ( except Diagnostic) Manufacturing NAICS Description Chemical Manufacturing ( continued) 3255 Paint, Coating, and Adhesive Manufacturing 32551 Pain and Coating Manufacturing 32552 Adhesive Manufacturing 3256 Soap, Cleaning Compound, and Toilet Preparation Manufacturing 32561 Soap and Cleaning Compound Manufacturing 325611 Soap and Other Detergent Manufacturing 325612 Polish and Other Sanitation Good Manufacturing 325613 Surface Active Agent Manufacturing 32562 Toilet Preparation Manufacturing 3259 Other Chemical Product and Preparation Manufacturing 32591 Printing Ink Manufacturing 32592 Explosives Manufacturing 327 Nonmetallic Mineral Manufacturing 3274 Lime and Gypsum Product Manufacturing 32741 Lime Manufacturing 331 Primary Metal Manufacturing 3311 Iron and Steel Mills and Ferroalloy Manufacturing 33111 Iron and Steel Mills and Ferroalloy Manufacturing 331111 Iron and Steel Mills 3312 Steel Product Manufacturing from Purchased Steel 33122 Rolling and Drawing of Purchased Steel 331221 Rolled Steel Shape Manufacturing 3313 Alumina and Aluminum Production and Processing 33131 Alumina and Aluminum Production and Processing 331311 Alumina Refining 1 13

Major Group 325 C Chemicals Manufacturing includes establishments producing basic chemicals and establishments manufacturing products by predominantly chemical processes. Major Group 325 establishments manufacture three general classes of products: basic chemicals, chemical products to be used in further manufacture, and finished chemical products to be used for ultimate consumption.

Major Group 422 C Wholesale Trade C Nondurable Goods includes establishments primarily engaged in the wholesale distribution of nondurable goods. This group includes the wholesale distribution of plastics materials and of chemicals and allied products, not elsewhere classified. The major groups identified above and the more detailed four digit groups presented in Table 1 1 represent the designation of examples of sites that would likely be subject to IUR amendment reporting. However, many factors relate to the nature of these sites, making identification of the entire regulated community more difficult. For example, NAICS codes reflect a site's primary activity, omitting substantial participation a company may have in other industry activities. Secondly, NAICS codes assigned to parent companies reflect the parent company's primary activity, although many parent companies are primarily holding companies with small subsidiaries. Each of these Table 1 1. North American Industrial Classification System for Industries Likely to be Subject to IUR Reporting ( continued)

NAICS Description 332 Fabricated Metal Product Manufacturing 3329 Other Fabricated Metal Product Manufacturing 33299 All Other Fabricated Metal Product Manufacturing 332999 All Other Miscellaneous Fabricated Metal Product Manufacturing 32791 Abrasive Product Manufacturing 327125 Nonclay Refractory Manufacturing 422 Wholesale Trade, Nondurable Goods 4226 Chemical and Allied Products Wholesalers 42269 Other Chemical and Allied Products Wholesalers 4227 Petroleum and Petroleum Products Wholesalers 42271 Petroleum Bulk Stations and Terminals 42272 Petroleum and Petroleum Products Wholesalers ( except Bulk Stations and Terminals) NAICS Description Wholesale Trade, Nondurable Goods ( continued) 4229 Chemical and Allied Products Wholesalers 42291 Farm Supplies Wholesalers 42295 Paint, Varnish, and Supplies Wholesalers 444 Building Materials and Garden Supplies Dealers 4442 Lawn and Garden Equipment and Supplies Stores 44422 Nursery and Garden Centers C Retail 454 Nonstore Retailers 4543 Direct Selling Establishments 45431 Fuel Dealers 454311 Heating Oil Dealers 454312 Liquified Petroleum Gas ( Bottled Gas) Dealers 1 14 Box 1 4. Reporting Processing and Use Information on Chemicals The regulated community will be expected to provide readily obtainable information on downstream processing and use of subject chemicals. Reporting this information could be straightforward for companies that manufacture a chemical for a single customer for a specific commercial end use. For example, a small volume, proprietary use chemical ( e. g., a specialty adhesive for aerospace applications) might have only one processor, very few users, no consumer use, and a limited exposure profile. By comparison, the nuances associated with distributing a large volume chemical within and outside of a particular site will place a greater burden on the portion of the regulated community that provides chemicals to a wide range of sites and for a variety of end uses. An example of this might be a company distributing chemicals for use in various perfumes and fragranced toiletries, thereby reaching hundreds of processing sites. In either case, however, manufacturers and importers are required only to provide downstream information considered to be readily obtainable; therefore, more complicated scenarios should require only a marginally greater effort than small volume, limited use chemicals. Processors are not required to report. small subsidiaries may belong in a completely different industry classification based on its own primary activity. Therefore, sites considered to fit into other NAICS codes due to their primary activities or to their parent company activities may be subject to this rule. Likewise, sites whose parent companies fit into these NAICS codes may not be subject to this rule.

1.3.2 Information to be Reported In addition to the information required under the existing IUR, companies reporting under the amended IUR will be reporting additional information on site and company identification, chemical use and exposure, and status of CBI claims. In addition to reporting information on their own site, the company will also report estimates of downstream uses and exposures, as well as provide information on commercial and consumer end uses of a particular chemical. Reported site and manufacturing information is to be supplied as far as it is known to or reasonably ascertainable by the submitter, and reported processing and use information is to be supplied as far as it is readily obtainable by the submitter. The purpose in specifying the term " reasonably ascertainable" is to ensure that supplying these data elements will not entail a highly burdensome level of effort ( see Box 1 4). Furthermore, EPA requires that some information will be reported in ranges, and that only the majority of the production volume will be accounted for when reporting use information. Allowing for reporting in ranges is intended to reduce the potential burden to submitters of developing a precise point estimate of their chemical production, but it will provide information that is sufficiently precise for the Agency's risk screening purposes.

1.4 Organization of this Report The contents of the five remaining chapters and six appendices contained in this report are organized as follows: 1 15

Section 2 describes the need for amendments to the IUR, existing data sources, and regulatory options considered. The statement of need explains the economic rationale for these amendments.

Section 3 analyzes and presents the social costs of the selected amendments and the nonselected regulatory alternatives. Social costs include both the industry costs to comply with the reporting requirements and the Agency costs to administer the amended IUR program.

Section 4 qualitatively describes the benefits that will be generated from collecting additional information under the IUR amendments. This section describes how the Agency will use the information and how use of this information will generate societal benefits by improving public and private risk management decisionmaking.

Section 5 compares the nonmonetized benefits of the amendments with the associated costs. Comparisons are made for the selected option to address whether the rule is likely to generate benefits for society that justify its costs. Comparisons are also made between the selected option and regulatory alternatives to assess whether the most cost effective option is selected.

Section 6 provides a discussion of small business impacts and environmental equity considerations.

Appendix A includes Form U, the revised IUR reporting form.

Appendix B provides information on the types of data that are currently available to EPA, demonstrating the need for collecting additional data under the IUR amendments.

Appendix C presents basic data regarding the number of chemicals, reports, and sites involved in IUR reporting, as well as the methodology used to generate numbers of reports expected to be submitted for each reporting cycle.

Appendix D presents the cost of the existing IUR to use as a point of comparison for the costs of the IUR amendments estimated in Section 3.

Appendix E describes the survey administered to determine the industry burden of reporting under the original IUR and the IUR amendments and presents an analysis of the survey results.

Appendix F provides a sensitivity analysis of several cost assumptions used in determining the industry cost of reporting. The analyzed cost assumptions include the number of chemicals reported per site and the discount rate used to calculate the net present value and annualized costs of the amendments. 2 1 SECTION 2 STATEMENT OF THE PROBLEM AND REGULATORY OPTIONS The production, processing, and use of chemicals can generate residuals that, when introduced into the environment, can cause great harm to humans and ecosystems. The market has not provided the public or the government with adequate information on risks associated with the production, processing, and use of chemicals. Because the market does not necessarily provide all of the information for affected parties to optimally modify their behaviors and reduce environmental risks, socially suboptimal levels of human health and environmental quality persist. This section describes the underlying market failure that the IUR amendments are designed to address, and discusses how this new regulation helps to solve the problem. It summarizes the difficulties related to a lack of information on the risks associated with these chemicals. This section explains the market failure, the need for information, and the manner in which the IUR amendments address these information needs. It also discusses the reasons why there is a potential need for federal regulation in cases such as this one. To show how the problem is currently being addressed, the original IUR requirements are presented. Finally, the regulatory options that were considered for this rule are summarized.

2.1 Problem Addressed by IUR Amendments Effective screening of the risks posed by chemicals requires sufficient information to predict potential exposure to humans and the ecosystem. Because of resource constraints, EPA can provide detailed risk assessment for a limited number of chemicals in a given year. Therefore, it is important for EPA to have enough information to select efficiently the chemicals that will be subjected to detailed assessment of the risk associated with their use. Risk is a function of both hazard and exposure, and EPA needs information on both variables. Other things being equal, chemicals that are thought to be highly toxic to humans and/ or ecosystems would have priority for detailed risk assessment. However, exposure also plays an important part in determining assessment priorities. For a given level of suspected hazard, chemicals that humans and the environment are exposed to in large quantities ( as measured by a combination of chemical concentration, duration, and frequency of exposure) are a higher priority for detailed examination than those chemicals to which humans and the environment are rarely exposed. For most chemicals, though, the market makes little information relevant to exposure readily available. Therefore, it is not necessarily clear how to optimally prioritize more detailed chemical testing. This lack of market information about chemical exposure is one of the primary justifications for the government to collect information through the IUR. However, the current IUR and other public sources of information do not provide enough exposure information to effectively aid in EPA's risk screening process for chemicals. 10Under this scenario, the negative externality would now be identified, but this does not imply that market forces will always act to eliminate this externality.

2 2 Box 2 1. Progress on Screening Chemicals for Risks A successful chemical risk management program requires EPA to identify chemical substances, plant sites, and exposures of most concern, and to set priorities for more detailed risk assessment and potential risk management actions. EPA's TSCA Inventory lists more than 75,000 chemicals in commerce. Screening the potential risks of these chemical substances, and setting priorities for more detailed risk assessment and possible risk management, is an enormous challenge given the extremely large number of manufacturing, processing, and use sites and exposure scenarios. However, of these 75,000 chemicals, EPA is focusing the IUR on the 10 percent to 15 percent of chemicals that are the highest priority. This is based on the fact that many chemicals are produced in very low volumes, not at all, or belong to larger classes of chemicals, such as polymers, that present little risk.

Additional information is required to adequately assess the risks of these chemicals ( about 10,000 chemicals) on which EPA would like to focus attention. EPA plans to implement a more thorough screening of these chemicals and requires additional use and exposure information to adequately screen their risks. Without the additional information to be collected with the amended IUR, EPA and others may not be able to identify the potential risks posed by these chemicals and their use. If the potential risks are not identified, EPA may not be able to evaluate or address the severity of these risks associated with the chemicals and their use. EPA believes that collecting augmented site and manufacturing information for the remaining chemicals provides sufficient information to maintain a profile of the chemical industry and to react to unanticipated risks.

Key benefits of the IUR amendments are that EPA will be able to collect and process data to develop more accurate exposure estimates, and they will be able to develop these estimates more quickly. Because the process by which chemicals enter and proceed through EPA's risk management programs is hindered by the lack of data on exposure, the risks posed by these chemicals cannot be dealt with efficiently. Therefore, detrimental worker and consumer exposures and releases to the environment cannot be mitigated in a timely manner, resulting in continued negative consequences for human and ecosystem health.

This shortfall was highlighted in a GAO report entitled " Toxic Substances Control Act: Legislative Changes Could Make the Act More Effective." The report states that, in total, EPA has reviewed only about 16 percent of the Inventory, either as new or existing chemicals. ( New chemicals are evaluated through the New Chemicals Program prior to becoming part of the Inventory.) At this rate, it seems clear that EPA cannot effectively screen and manage chemical risks for the chemicals for which there are significant concerns without additional information. Adding the information collected through the IUR amendments provides the information needed by the Agency to determine which chemical use scenarios are likely to pose significant risks, to determine which chemicals are selected for more detailed analysis, and, ultimately, to determine which chemicals enter the risk management program. With sufficient risk information, individuals can better respond to the risks from chemical exposure by changing their behavior. These behavioral responses would lead to changes in market demands and prices so that the market would more accurately reflect the risk involved with chemical use and exposure. In addition, EPA could take actions to mitigate the risks to public health and the environment where needed. This intervention is necessary because, even under perfect information, negative externalities may still exist in the absence of government intervention. 10 2 3 In the absence of such risk data, individuals cannot correctly account for the risk of chemical exposure in decisionmaking, and EPA cannot effectively decide where regulation is most appropriate. This results in suboptimal levels of risk, where the suboptimal level may be either too high or too low. Obtaining more data concerning exposure is vital ( see Box 2 1) to improve EPA's ability to conduct efficient chemical screenings so that information concerning the risks associated with using various chemicals is made available in the most appropriate order.

2.1.1 Data Required to Conduct Risk Screening and Management Currently, the process of collecting information on chemical effects and exposures to support risk management actions is a resource intensive and time consuming process. EPA's priority setting and resource allocation depends on the availability of exposure data that are not currently collected on a comprehensive basis. Consequently, this rule's primary goal is to enhance the quality and quantity of information about chemical uses and exposures that EPA can use to identify risks under TSCA and ultimately to protect the public. To fully assess human exposure to a chemical, EPA needs to know how many workers, consumers, and others are exposed; the mechanism through which exposure occurs; and the amount and duration of exposures. The Agency has systematically defined the components of exposure assessment in its Guidelines for Exposure Assessment, which discuss the information requirements for several different approaches to exposure assessment, ranging from initial risk screening to full scale risk assessments ( EPA, 1992). Specific data needs include the following:

estimates of the number of workers potentially exposed to specific chemicals;

information on whether a chemical substance is used in consumer products;

information on frequency and duration of exposure or time of contact;

information to enable EPA to sort and screen information by industry sector; and

information on the industrial function of a chemical substance. Table 2 1 lists the three components of exposure assessment, examples of variables affecting these components, and specific exposure related data elements to be collected under the amended IUR for initial screening assessments. These data elements provide a variety of useful information for estimating potential exposures. For example, industrial process and use activity, production volume, function code, and industry sector information can aid in determining the frequency, magnitude, and duration of potential worker exposures. Similarly, consumer use information and the number of chemical processing and manufacturing sites will provide information on the nature and size of the general population that may potentially be exposed.

2.1.2 Current Risk Screening Approach To implement its responsibilities for managing chemical risks under TSCA, EPA identifies or screens potential chemical risks, assesses identified potential risks in more detail, and, if necessary, manages risks determined to be unreasonable. However, 2 4 tens of thousands of chemicals are currently in use, and exposures can occur in many different ways. OPPT's past approaches to chemical risk screening have been primarily based on relative chemical hazard, coupled with IUR production volume data. This approach, used because large scale, national level data on worker and consumer use and exposure are generally not available, has proven inadequate for screening the large number of chemicals in commerce ( see Box 2 1). EPA uses the chemical hazard/ production volume approach, among others, to initially screen many chemical substances for potential risks to select candidate chemicals for inclusion in its Existing Chemicals Program ( see Box 2 2). Other approaches include recommendations from Table 2 1. Components of Exposure Assessments and Exposure Related Data Elements Component of Exposure Assessmentsa Examples of Variables Affecting Component for Exposure Assessments Exposure Related Screening Data Elements in IUR Amendments Source and concentration of chemical substances $ Industrial process/ use activity $ Unit operations $ Process type $ Industry practices $ Industrial function $ Application methods $ Throughput rates $ Use concentrations $ Physical and chemical properties $ Efficiency $ Control technologies $ Treatment and disposal options $ Ventilation design $ Use of personal protective equipment $ Regulations $ Production volume $ Industrial process/ use activities and volumes $ Industry sectors $ Industrial chemical function $ Physical form $ Maximum concentration Population and receptor information $ Number of workers $ Size of general population exposed ( consumer products are assumed to have widespread potential exposures)

$ Time activity patterns $ Physical characteristics $ Age $ Number of workers $ Number of sites $ Consumer use information Frequency and duration of exposure or time of contact $ Default values are typically used ( i. e., 250 days/ yr, 8 hrs/ day for workers) Default values ( not collected)

a Source: U. S. Environmental Protection Agency. 1992. " Guidelines for Exposure Assessment." Notice. Federal Register 57( 104): 22888 22938. 2 5 Box 2 2. Current Existing Chemicals Program Review Process Because there is no adequate current system available for screening all of the chemicals in commerce, EPA relies on various methods to determine which chemicals enter the Existing Chemicals Program review process, including referrals from the European Union, the Interagency Testing Committee ( ITC), state agencies, and environmental groups. Once a chemical or group of chemicals is determined to have a potential for risk, the chemical enters the existing chemical review process. The existing chemical review process typically takes from 12 to 16 weeks and requires about 100 staff hours per chemical, although the required level of effort to complete the process may vary. Despite EPA's attempts to prioritize chemical review efforts according to the potential for risk, the current system offers no guarantee that the chemicals chosen for review necessarily pose the greatest risk. The IUR amendments would provide EPA with more information to effectively determine which chemicals pose the greatest potential for risk.

During the review process, the Agency searches its files and public data bases for information on the chemical's effects, physical properties, production volumes, manufacturing processes, uses, releases to the environment, and other data, such as the number of workers exposed to the chemical. Because limited information is generally available, EPA uses various computer models to estimate or project certain data, such as the amounts and types of environmental releases. A further complication is that a chemical may have various potential health and environmental effects that EPA needs to consider in evaluating its risks. In addition, chemicals often have multiple uses, each of which needs to be examined to determine the amount of exposure ( GAO, 1994). the Interagency Testing Committee ( ITC), the European Union, states, or environmental groups. The initial screening is designed to select chemical substances in commerce that appear to present the greatest potential risk to human health and the environment. At the close of the review, there are three possible outcomes: a testing recommendation, a recommendation for further evaluation, or closure. " Closure" may include referrals to other programs or agencies; dissemination of screening results; or the decision to discontinue further evaluation based on the chemical substance's low hazard or low risk reduction potential, or because it will be considered as part of a broader cluster of chemical substances.

2.2 Market Failure Under Executive Order 12866, EPA is required to identify whether the regulation addresses a significant market failure. The major types of market failure are externalities, natural monopoly, market power, and inadequate or asymmetric information. This rule deals with two types of market failure. First, the information gathered under the rule reduces the problems associated with inadequate and asymmetric information. When affected parties have more complete information, they can make better decisions. Second, one of the most important expected outcomes of the rule is that the information gathered can be used to identify and address externalities arising from chemical production and use. 2 6 2.2.1 Externalities and the Need for Information A defining feature of a market failure is the inequality between the social consequences of an action and a purely private perception of benefits and costs. For environmental problems resulting from market failures, this divergence between private and social perspectives is normally called an externality or external cost. Such divergences occur when the actions of one economic entity impose costs on parties that are external to, or not accounted for in, a market transaction or activity. Although many different types of environmental externalities exist, regulations under TSCA and other OPPT initiatives typically focus on those related to chemical production and use. In this area, exposure of humans and the environment to hazardous substances typically results in market outcomes that are less than optimal from a social welfare perspective. A common example would be a manufacturing process that emits some amount of a chemical while producing or using that chemical. As a result of this activity, environmental and health risks are imposed on the company's employees, the public at large, and ecosystems. These risks are created by the manufacturing site, but it is society ( employees and the public) that bears the cost of these risks. When these externalities can be internalized to the parties ( firms) making the decision that generate the risks, the problem can be mitigated. Given the host of substances and potentially risky activities within OPPT's purview, the number of environmental externalities possibly requiring EPA's investigation and intervention is quite large. Because of the diverse character of the chemical industry, its products, and the uses of those products, the first crucial step in remedying market failures is to identify instances in which these externalities are likely to occur. Thus, identifying situations in which externalities are present C and where the potential risks posed by these externalities are sufficiently large as to warrant further investigation C is a key goal of the chemical screening that EPA performs as part of its risk management activities. To improve internalization of environmental externalities, EPA must first identify these risks of concern. Information about exposure is a critical component of this screening. The information required to identify relevant externalities is not currently available to EPA's risk management process. The question thus arises: " why does the market fail to provide the information needed to identify these externalities?" Several reasons cause this information void. One of the primary reasons is that companies have little incentive to provide information. Providing information is not costless, and providing the information may have negative consequences for the company by either dissuading customers from purchasing the product or by providing competitors with information. This lack of information provides motivation for many activities that EPA undertakes ( Box 2 3 and the text below provide examples of reasons for the lack of information). EPA's mission is to act in the public's interest. In the absence of adequate information, EPA fulfills this mission by undertaking actions to correct the lack of information. The information collected by EPA permits identification of existing externalities that cause a suboptimal level of protection for the environment and the public. 2 7 Box 2 3. Reasons for Lack of Information Negative incentivesCManufacturers have an incentive not to provide information that highlights the negative characteristics of the product or job for consumers or workers. Such information would lessen the attractiveness of purchasing the product or accepting employment.

Information production/ dissemination costsCThe production and dissemination of information has a cost that may or may not be expensive. Someone has to be willing to pay this cost for the information to be made available.

Causation difficult to establishCOften substantial distance may separate the original polluting event and subsequent human or environmental damage; frequently many possible sources exist. Moreover, often the linkages from a pollution or exposure event may be extremely numerous and hard to trace. For example, the impact of toxics released in one part of a wetland on oceanic aquatic species is difficult to determine. If establishing a chain of causation from the harm to the responsible party and event is hard, the market and even extramarket systems ( such as conventional legal remedies) may not adequately address these risks.

Exposures not perceptibleCIf exposures to harmful substances are not perceptible when they occur, individuals may have difficulty taking action to ensure that these exposures are adequately reflected in market demands and prices.

Long time lags between exposure and effectsCLong latency periods and other factors that cause harm to occur long after the exposure event can also hinder the market's attempts to establish and enforce responsibility for environmental consequences of some activities. Market forces encourage the provision of some types of information. For example, consumers and job seekers are able to obtain information on some types of product and job characteristics relatively easily. In particular, producers have an incentive to provide information if it encourages a potential consumer to purchase the product. Similarly, employers have an incentive to entice potential employees by highlighting attractive and safe features of the work environment. Consumers and workers can also seek out some types of relevant information that is not readily provided in the market through indirect sources such as consumer magazines and labor unions. However, the market does not readily provide all the information that consumers and workers could use to make safety decisions, or that EPA needs to determine the existence and magnitude of potential externalities. For example, manufacturers do not have an incentive to provide information that would dissuade consumers from purchasing the product or workers from choosing employment in the manufacturing firm. Such information might be about the safety characteristics of the product or job. In some cases, manufacturers may think that alerting consumers or workers to such characteristics, even in the context of improvements that have been made or steps that individuals can take to minimize risks, would negatively affect the attractiveness of the product or employment. Thus, they may not have incentives to provide such information, and they may have an incentive not to provide it. 2 8 A potential failure to provide adequate information can occur for the simple reason that information may be costly to generate and disseminate. Moreover, economies of scale may be associated with information provision, interpretation, and use. From society's point of view, the benefits of collecting the information extend beyond one person to all potential consumers of the product or to workers manufacturing the product. Even if information could be collected, it may not be in an individual's best interest to do so. Thus, government's role ( in this case, EPA's) is to collect and maintain information and to interpret it to identify the externalities and determine if action is warranted to protect the public's interest.

2.3 Potential Need for Federal Regulation 2.3.1 Existing Data Sources and Data Gaps The specific information that OPPT needs to provide more accurate preliminary screens of chemicals in commerce, to identify chemicals of concern, to identify potentially safer substitute chemicals, and to properly allocate resources and set priorities for its programs is currently not available ( see Box 2 4). Ongoing chemical data collection efforts occurring within various EPA offices do not systematically or comprehensively collect chemical use and/ or worker exposure data. Appendix B describes the information collected by these EPA offices, and other publicly available data. In addition to data collected by EPA, chemical information is collected at the state level to support a variety of state and federal programs and regulations, including Emergency Planning and Community Right to Know Act ( EPCRA), state Right to Know programs, state permitting requirements, and other state programs. According to EPA regional offices and state environmental agencies, chemical use and worker exposure information generally is not collected at the state level ( Codina, 1996; Layne, 1996; Fried, 1996; Browning, 1996; Hope, 1996; Larmee, 1996). For example, under EPCRA § 311 and § 312, states collect data on the maximum and average amount of a chemical on site for the purposes of emergency response planning. Information on total annual volume, function of the chemical, or use of the chemical, however, is not available from this source. Although several states and other federal agencies have or are developing programs to collect information related to chemical manufacturing, processing, storage, and distribution ( OSPIRG, 1993), the information is typically used to support waste reduction programs and/ or emergency management plans, and is not designed to 2 9 Box 2 4. Risk Screening Activities Lack Important Data on Exposure Currently, EPA often must conduct its screening activities based on assumed conditions, outdated information, and incomplete data sets. For instance, EPA's major source of data on the number of workers exposed is the National Occupational Exposure Survey conducted by the National Institute for Occupational Safety and Health in the early 1980s. This survey contains estimates of the number of workers exposed nationally to over 10,000 chemicals. It also contains data such as the number of sites at which a chemical is manufactured or used. Although EPA officials recognize that the survey is somewhat outdated, it is often the only available source of data on the number of workers exposed to a particular chemical.