Exposure assessments can also be conducted using data on chemical release such as those provided by the Toxic Release Inventory ( TRI). However, few release data are available for chemicals not included in the TRI, which contains estimates of annual releases to the air, water, and land for only about 600 chemicals. Many other potentially harmful chemicals are produced in large quantities. Even for the TRI chemicals, information such as the numbers of workers potentially exposed, the functions of the chemical, and the uses of the chemical is often not available. Considering the diversity of release sources, the large number of associated parameters, and the limited availability of existing data, the effort needed to perform an exposure assessment for thousands of chemicals listed on the TSCA Inventory would be enormous and would be based upon an unreasonable number of assumptions. assist in ranking chemical exposure and use concerns. None of these groups collect the data needed to effectively conduct chemical risk screening at the national level. The available commercial data sources characterizing chemical use are generally not comprehensive in nature. Such data sources include the following:

chemical industry journals, such as Chemical and Engineering News and the Chemical Marketing Reporter;

chemical and business directories, including the Directory of Chemical Products and the Thomas Register;

chemical reference documents, including the Kirk Othmer Encyclopedia of Chemical Technology, SRI International's Chemical Economics Handbook, the Freedonia Market Research database, and the Frost & Sullivan Market Intelligence database; and

publications from chemical trade associations, such as the Chemical Manufacturers Association, and the American Chemical Society. These sources are sometimes useful for characterizing production volume, use categories, physical form, and chemical function information. For instance, once EPA has determined that a particular chemical has a high potential risk, EPA searches these data sources for information on the chemical. However, these data sources do not provide information useful for screening large numbers of chemicals. Some of these sources provide only general chemical information that cannot be used to determine 2 10 production and use at the plant level. Other sources only specify production and use information for particular companies and do not provide data on industry wide chemical production. These sources typically lack useful information on potential worker and consumer exposures. Further information on these sources can be found in the EPA report A Review of Existing Exposure Related Data Sources and Approaches to Screening Chemicals: A Response to CMA ( EPA, 1998a). Overall, it is evident that the information currently available to EPA falls short of the information needed to identify potential risks swiftly and accurately. In particular, the current IUR provides very limited information C only the volume of production C to screen chemicals for exposure. However, impacts on human health and other risks posed by a chemical depend critically on its level of exposure to the public and the environment. While exposure and production volume can be related, the correlation is not close enough to ensure an acceptable estimate of risk. Without more comprehensive data, EPA cannot adequately or accurately predict the magnitude and nature of ecosystems and human populations potentially exposed; the concentrations, frequency, and duration of exposures; and a host of other specific factors related to potential chemical exposures.

2.3.2 Advantages of the New Information Collection The need for EPA to properly allocate resources and set priorities for its programs has been widely recognized and documented. Two reports, the EPA Science Advisory Board's Reducing Risk: Setting Priorities and Strategies for Environmental Protection and the National Academy of Public Administration's Setting Priorities, Getting Results, A New Direction for EPA, recognize that EPA's ability to improve its priority setting and resource allocation activities has been limited by the lack of exposure data. By collecting the exposure related data included in the IUR amendments, the Agency will acquire the necessary information to improve identification, prioritization, and chemical risk screening capabilities. Production volume information, supplemented by relatively scarce public sources of information, generally is not sufficient for identifying chemical exposures and human risks. This recognition motivates the revised and more detailed data collection under the IUR amendments. EPA anticipates that the collection of additional use and exposure information, when combined with hazard data, will provide the means to develop a better risk based screening mechanism that will benefit workers, consumers, the general population, and the environment. The primary goal of this rule is to enhance the quality and quantity of information about chemical uses and exposures that EPA may use to identify risks under TSCA and to protect and inform the public. The information collected under the IUR amendments will enable EPA to better evaluate the potential risks associated with chemical production and use, and will improve EPA's consequent ability to conduct risk management activities, in a more comprehensive and timely manner. It will also enable EPA to be knowledgeable about a wider variety of chemicals and to be proactive, rather than reactive, in identifying risks. 2.3.3 Approaches to Regulation 2 11 In the case of a significant market failure, public intervention is often required to override the market directly or to configure market incentives to achieve a more socially efficient outcome. Several alternative approaches are available to address market failures and thereby correct the results of environmental externalities. These fall into the following three broad categories: command and control approaches, incentivebased strategies, and information based remedies. In addition, EPA may choose to take no regulatory action, or investigate non regulatory approaches, in response to market failures if it is determined that failures are not significant or if costs of regulatory action overwhelm benefits. Command and control approaches are the most specific forms of regulation. Command and control approaches addressing environmental problems include product or process bans and controls, standards for the manner in which a chemical may be manufactured or used, and other measures directly mandated by EPA or other environmental authorities. Incentive based strategies seek to alter the incentives of private sector market participants to consider environmental externalities in decisionmaking. This aim is accomplished by changing price or cost conditions related to polluting or risk generating activities. Incentive based strategies include charges, subsidies, tradeable permit systems, financial assurance, and other market related mechanisms. Information based strategies are the third general class of approaches to addressing environmental risks to human health and the environment. These strategies seek to indirectly alter decisions by improving the information base upon which those decisions are made. The relative efficacy of each approach for addressing market failures depends on the specific circumstances surrounding different risk and pollution problems. Sometimes, an outright ban of products or processes, mandatory exposure controls, or other direct interventions might best achieve the goal of improved environmental protection and maximizing net benefits. In other situations, economic incentive based strategies might be the better choice, especially when a substantial variation in the costs of pollution control exists across many sources. In this case, improved information on chemical exposure will clearly allow EPA to more effectively and accurately identify and initially assess the extent of market failures and the resulting externalities associated with chemical exposures and risks. In addition, information disseminated to chemical producers, consumers, and the public will help achieve more efficient solutions to risk management problems specific to particular circumstances. Based on the data collected, EPA may choose to implement command and control and/ or incentive based strategies in cases that warrant regulations. EPA also has the option of taking no regulatory action. Under a " no action" approach, EPA would continue to rely on production volume information and public data sources to screen human health and other risks. However, EPA believes that the relatively meager body of information currently available is not sufficient to accurately identify chemical exposures and risks, and hence, that some additional information collection is required. 2 12 One alternative to a mandatory information collection rule is a voluntary survey approach under which the added information targeted under the IUR amendments would be collected on a voluntary basis. This approach would entail EPA sending a survey to all or some portion of chemical manufacturers and allowing the manufacturers to decide what information to include in their responses. One such program is the voluntary Use and Exposure Information Project ( UEIP). This program, jointly developed by EPA and industry, provides a method for chemical manufacturers to voluntarily send use and exposure information to OPPT for chemicals entering EPA's Existing Chemicals risk management screening assessment. In this program, manufacturers and importers voluntarily report production volume, site location, percentage of production volume for a given use, environmental releases, worker exposure, and industrial and consumer uses for chemicals selected for the project based on their potential toxicity. Under this program, EPA is able to gain access to exposure data more quickly and avoids resorting to additional regulation. Chemical manufacturers become aware of chemicals that EPA is concerned about and can help ensure accurate assessments of chemical risks. However, despite some advantages of a purely voluntary data reporting program, the value of the additional information provided to EPA would be far lower compared with a mandatory information collection program. Information has been collected under UEIP in three groups ( two in 1994 and one in 1996) for 15 to 20 chemicals per group from a total of approximately 100 facilities. Because of the voluntary nature of the program and the limited number of chemicals examined, the data are not collected for most manufactured chemicals. Therefore, data generated from this project would have limited usefulness for initial risk screening activities. No clear method exists to determine the extent to which these voluntary responses span the entire universe of relevant chemicals and their uses. Consequently, data gaps of perhaps substantial proportions would continue to exist. Moreover, incomplete surveys might not be random in the sense that risks may be higher for chemicals and uses for which surveys are not returned. Finally, EPA would not have a systematic method to ensure quality control and timeliness of the survey responses. Because of these shortcomings, this voluntary survey alternative is unlikely to produce the volume, scope, and detail of information ultimately required by EPA.

2.4 Original IUR Requirements 2.4.1 Original Reporting Requirements The original IUR requires chemical manufacturers and importers to submit information on certain chemical substances listed on the TSCA Chemical Substances Inventory. Manufacturers and importers of subject chemicals must report data on production volume, plant site and chemical identification, and site limited status for the subject chemicals. These data must be provided on a four year reporting cycle and reflect manufacturing and importing activities over the last complete corporate fiscal year preceding the reporting year. Companies can claim specific data elements as confidential business information ( CBI) by using a check box, although CBI claims for 11As used in this analysis, the number of " reports" refers to the total number of individual chemical site combinations reported nationwide. Companies generally submit one Form U per site, addressing multiple chemicals, and therefore multiple chemical " reports" per site.

12The total number of reports received was 26,667 from 2,675 sites, but this includes reports for chemicals with a production volume of less than 10,000 pounds that reported voluntarily. These voluntary reports were not included in calculating the costs associated with the current IUR or the IUR amendments.

2 13 chemical identity require up front substantiation. Firms must retain records that support their submissions for four years following the reporting period. The number of reports11 received under the original IUR requirements has hovered around 26,000 for each of the four reporting periods to date ( i. e., 1986, 1990, 1994, and 1998). This analysis assumes that 1998 is a representative year and that reports in future years will have similar characteristics in terms of the number of reports, number of sites, etc. The reporting data from 1998 was used because it includes the most recent IUR data and presumably best reflects the current population of chemical manufacturers and importers. In 1998, 26,365 reports on chemicals with production volumes of 10,000 pounds or greater were filed from 2,666 sites. 12 2.4.2 Original Exemptions The TSCA Inventory includes more than 75,000 substances, but exemptions and reporting thresholds reduce the number of TSCA chemicals reportable under the original IUR to about 8,800 discrete chemicals. The exemptions under the IUR include a low volume threshold exemption, a small business exemption, and certain chemical substance exemptions. Chemicals produced at a manufacturing site in a volume of less than 10,000 pounds during the last corporate fiscal year preceding the reporting period are exempt from reporting under the original IUR. This reporting threshold applies equally to importers and refers to a single site that contains an operating unit responsible for the import. Small businesses, as defined by TSCA § 8( a), are also exempt from reporting under the original IUR requirements. Small businesses are defined for this purpose as those companies whose annual sales are less than $ 40 million and whose annual production volume is less than 100,000 pounds. The annual sales level is for the overall parent company, and the production volume is site specific. Any company with annual sales less than or equal to $ 4 million is considered to be a small business, regardless of production volume. The IUR also exempts certain chemical substances. These substances include polymers, microorganisms, naturally occurring substances, and inorganic chemicals. Chemicals falling into these categories are not required to be reported, regardless of production volume or small business status. Finally, chemical processors are not subject to the IUR.

2.5 Regulatory Options for Amending the IUR After determining that a non regulatory approach would not fulfill its needs, the Agency considered various regulatory options that would alter the scope of coverage under the IUR reporting requirements. Three basic parameters for the options are 13Note that in an earlier version of this report ( EPA, 1999b), 14 options were analyzed. The correspondence between previous option numbers and current option numbers is as follows: current Options 2 through 8 were previously Options 4, 6, 7, 8, 11, 13, and 14, respectively. Option 1, the option selected for the final rule, was not included in the previous report. In all cases, the options are not identical to the previous options, however, because of several changes in the rule. For example, the rule now includes a full exemption from reporting for natural gas that was not included in the earlier version.

2 14 reporting thresholds, exemptions based on the type of chemical, and reporting cycles. Within the reporting threshold parameter, two categories of reporting thresholds are used in the IUR amendments; the two reporting thresholds determine submission of site and manufacturing data, and submission of processing and use data, respectively. However, only changes in the upper threshold are examined. A total of eight options were analyzed and are summarized in Table 2 2.13 Note that this table displays the differences between the options, and does not show all of the changes from the baseline. The changes from the baseline that apply to all options are presented in Section 1. The first five options are based on different reporting thresholds for processing and use information, but include the same exemptions and a common four year reporting cycle. Option 1 is the option selected for the final rule, and it sets the reporting threshold at 25,000 pounds for site and manufacturing data and 300,000 pounds for processing and use data. Options 2 through 4 vary the threshold for processing and use data from 100,000 pounds to 1,000,000 pounds. Option 5 also varies this threshold, but does so in a staged manner such that the threshold for the first year of reporting is 500,000 pounds and for subsequent reporting years is 100,000 pounds. Option 6 uses the same reporting thresholds as Option 2, but includes a continuation of the present full reporting exemption for inorganic chemicals. Options 7 2 15 and 8 also use the same reporting thresholds as in Option 2, but incorporate different reporting cycles. Option 7 assumes a two year reporting cycle for all information, and Option 8 requires only one time reporting.

2.5.1 Number of Reports Received under Different Options Because the lower threshold is constant across all of the options, the total number of reports expected under each option is also constant with the exception of Option 6, which exempts inorganic chemicals from reporting. For all options other than Option 6, 22,260 reports for organic chemicals and 4,537 reports for inorganic chemicals are expected. For Option 6, it is expected that 22,260 organic chemical reports and no inorganic chemical reports will be received. Although the total number of reports is generally expected to remain constant across options, differences in the upper threshold lead to different numbers of full and partial reports for the various options. Table 2 3 presents the total number of full and partial reports expected for each option, and Table 2 4 details these reports by chemical type ( organic or inorganic). The breakdown between full and partial form reports differs between the first year and all future years because inorganic chemicals are exempt from reporting processing and use information in the first year but are subject to the 300,000 pound Table 2 2. Options Considered for the IUR Amendments Option Thresholds Reporting Cycles Site and Manufacturing Information Processing and Use Information Site and Manufacturing Information Processing and Use Information Threshold Options 1 ( Selected) 25,000 lbs 300,000 lbs 4 yrs. 4 yrs. 2 25,000 lbs 100,000 lbs 4 yrs. 4 yrs. 3 25,000 lbs 500,000 lbs 4 yrs. 4 yrs. 4 25,000 lbs 1,000,000 lbs 4 yrs. 4 yrs. 5a 25,000 lbs 500,000 lbs/ 100,000 lbs 4 yrs. 4 yrs.

Reporting Exemption Optionb 6 25,000 lbs 100,000 lbs 4 yrs. 4 yrs. Reporting Cycle Options 7 25,000 lbs 100,000 lbs 2 yrs. 2 yrs. 8 25,000 lbs 100,000 lbs one time one time a This option has a threshold of 500,000 pounds for processing and use information in the first reporting year and a threshold of 100,000 pounds for reporting this information in all future reporting years. b Inorganic chemicals are fully exempt from reporting. 2 16 upper threshold for reporting this information in all future years. Under the IUR amendments, partial forms will be completed for 12,501 organic chemicals ( including petroleum process stream chemicals), and 4,537 inorganic chemicals in the 2 17 Table 2 3. Number of Reports Expected for Each Option Option Total Number of Reports Partial Form Full Form Threshol d Level ( lbs) Number of Reports % of Total Threshold Level ( lbs) Number of Reports % of Total First Reporting Year Baseline 26,365 10,000 26,365 100.0 N/ A 0 0 1 ( Selected) 26,797 25,000 17,038 63.6 300,000 9,759 36.4 2 26,797 25,000 13,851 51.7 100,000 12,946 48.3 3 26,797 25,000 18,262 68.1 500,000 8,535 31.9 4 26,797 25,000 19,745 73.7 1,000,000 7,052 26.3 5a 26,797 25,000 18,262 68.1 500,000 8,535 31.9 6 22,260 25,000 9,314 41.8 100,000 12,946 58.2 7 26,797 25,000 13,851 51.7 100,000 12,946 48.3 8 26,797 25,000 13,851 51.7 100,000 12,946 48.3 Future Reporting Years Baseline 26,365 10,000 26,365 100.0 N/ A 0 0.0 1 ( Selected) 26,797 25,000 14,467 54.0 300,000 12,330 46.0 2 26,797 25,000 10,418 38.9 100,000 16,379 61.1 3 26,797 25,000 16,039 59.9 500,000 10,758 40.1 4 26,797 25,000 17,941 67.0 1,000,000 8,856 33.0 5a 26,797 25,000 10,418 38.9 100,000 16,379 61.1 6 22,260 25,000 9,314 41.8 100,000 12,946 58.2 7 26,797 25,000 10,418 38.9 100,000 16,379 61.1 8 26,797 25,000 10,418 38.9 100,000 16,379 61.1 a This option would have a reporting threshold of 500,000 pounds for the full form in the first year and 100,000 pounds for the full form in future reporting years.

Sources: CUS Database. 2000. Information from the Chemical Update System Database maintained by the Information Management Division, Office of Pollution Prevention and Toxics, U. S. Environmental Protection Agency, Washington, DC.

CICIS Database. 1986. Information from the Chemical in Commerce Information System 2 18 Table 2 4. Number of Full and Partial Reports Expected for Each Option by Chemical Type Option Partial Form Full Form Threshold Level ( lbs) Number of Reports Threshold Level ( lbs) Number of Reports Organic Chemicals ( including Petroleum Process Stream Chemicals) Inorganic Chemical s Organic Chemicals ( including Petroleum Process Stream Chemicals) Inorganic Chemicals First Reporting Year Baseline 10,000 26,365 0 N/ A 0 0 1 ( Selected) 25,000 12,501 4,537 300,000 9,759 0 2 25,000 9,314 4,537 100,000 12,946 0 3 25,000 13,725 4,537 500,000 8,535 0 4 25,000 15,208 4,537 1,000,000 7,052 0 5a 25,000 13,725 4,537 500,000 8,535 0 6 25,000 9,314 0 100,000 12,946 0 7 25,000 9,314 4,537 100,000 12,946 0 8 25,000 9,314 4,537 100,000 12,946 0 Future Reporting Years Baseline 10,000 26,365 0 N/ A 0 0 1 ( Selected) 25,000 12,501 1,966 300,000 9,759 2,571 2 25,000 9,314 1,104 100,000 12,946 3,433 3 25,000 13,725 2,314 500,000 8,535 2,223 4 25,000 15,208 2,733 1,000,000 7,052 1,804 5a 25,000 9,314 1,104 100,000 12,946 3,433 6 25,000 9,314 0 100,000 12,946 0 7 25,000 9,314 1,104 100,000 12,946 3,433 8 25,000 9,314 1,104 100,000 12,946 3,433 a This option would have a reporting threshold of 500,000 pounds for the full form in the first year and 100,000 pounds for the full form in future reporting years. 2 19 first reporting year. Of the partial exemption chemicals ( either petroleum process stream chemicals or inorganic chemicals), 2,253 are produced at volumes of less than the 300,000 pound threshold. The partial exemption provides a smaller degree of benefit for these chemicals, because the lower production volume already exempts them from completion of the full form. Full forms will be completed for an estimated 9,759 organic chemicals and no inorganic chemicals under the selected option. In future reporting years, partial forms will be completed for 12,501 organic chemicals ( including petroleum process streams) and 1,966 inorganic chemicals. Full forms will be completed for 9,759 organic chemicals and 2,571 inorganic chemicals. The number of partial and full forms completed for organic, partial exemption, and inorganic chemicals varies by option. Under Options 2, 3, 4, 5, 7, and 8, the total number of reports completed is the same as under the selected option, but Option 2 would generate more full forms than the selected option while Options 3 and 4 would generate fewer full forms than the selected option. Under Option 5, there would be fewer full reports than the selected option for the first year, but more full reports in subsequent years. There would be fewer partial reports and total reports under Option 6 because inorganic chemicals are fully exempt from reporting under this option. Under Option 7, there would be more full reports completed than under the selected option and these reports would be completed twice as often. Option 8 also generates more full reports than the selected option in the single reporting year, but then provides no additional information in subsequent years. The expected number of sites that would report under each option for the amendments is 3,026 ( 2,482 sites reporting organic chemicals and 544 reporting inorganic chemicals) with the exception of Option 6, where only the 2,482 organic chemical sites are expected to report due to the inorganic chemical reporting exemption. It is expected that information will be received on a total of 8,865 discrete chemicals for each option except Option 6, for which information on only 7,748 discrete chemicals is expected. Table 2 5 presents the number of chemicals for which full and partial reports are expected to be reported, broken down by chemical type. Although information on the number of chemicals is not used to estimate industry costs, the table provides a useful comparison of the expected number of chemicals for each option. The number of chemicals that information is provided for is important because one of the main benefits of the rule is that EPA gains more detailed information on chemicals. Other things being equal, there are larger benefits to options that provide information on a larger number of chemicals. 2 20 2 21 Table 2 5. Number of Chemicals Expected to be Reported for Each Option Option Partial Form Full Form Threshold Level ( lbs) Number of Discrete Chemicals Threshold Level ( lbs) Number of Discrete Chemicals Organic Chemicals ( including Petroleum Process Stream Chemicals) Inorganic Chemical s Organic Chemicals ( including Petroleum Process Stream Chemicals) Inorganic Chemicals First Reporting Year Baseline 10,000 8,915 0 N/ A 0 0 1 ( Selected) 25,000 3,771 1,117 300,000 3,977 0 2 25,000 2,303 1,117 100,000 5,445 0 3 25,000 4,366 1,117 500,000 3,382 0 4 25,000 5,079 1,117 1,000,000 2,669 0 5a 25,000 4,366 1,117 500,000 3,382 0 6 25,000 2,303 0 100,000 5,445 0 7 25,000 2,303 1,117 100,000 5,445 0 8 25,000 2,303 1,117 100,000 5,445 0 Future Reporting Years Baseline 10,000 8,915 0 N/ A 0 0 1 ( Selected) 25,000 3,771 484 300,000 3,977 633 2 25,000 2,303 272 100,000 5,445 845 3 25,000 4,366 570 500,000 3,382 547 4 25,000 5,079 673 1,000,000 2,669 444 5a 25,000 2,303 272 100,000 5,445 845 6 25,000 2,303 0 100,000 5,445 0 7 25,000 2,303 272 100,000 5,445 845 8 25,000 2,303 272 100,000 5,445 845 a This option would have a reporting threshold of 500,000 pounds for the full form in the first year and 100,000 pounds for the full form in future reporting years. 2 22 14These real resource costs are distinguished from tax transfers to or from the government, which have no net effect on social costs.

3 1 SECTION 3 SOCIAL COSTS OF REGULATORY OPTIONS This section analyzes the social costs associated with the IUR amendments. Social cost analysis of regulatory actions attempts to measure the economic value of the opportunities foregone to comply with the regulation. Resources committed to producing and reporting information on the presence and use of toxic chemicals ( e. g., TSCA Section 8 reporting rules) could also be productive elsewhere in the economy. Thus, the opportunity cost of devoting those resources to these prescribed activities equals their value in other uses. Some of the social cost components to consider in an economic analysis are compliance costs; government administration, monitoring, and enforcement; foregone economic surpluses; transitional costs; and indirect ( long run) efficiency costs. These components are explained in more detail in subsequent paragraphs. Compliance costs, in general, include expenditures associated with abatement activities, waste recovery, reporting and recordkeeping, or other changes in the production process required to comply with a regulation. These costs are borne directly by the owners of the regulated entities, but they may be partly or completely passed on to other parties in society through market interactions. For the IUR amendments, the incremental compliance costs are assumed to be limited to labor hours required to comply with additional reporting requirements. Government administration, monitoring, and enforcement costs are borne by the taxpayers who support regulatory government agencies ( such as EPA and state environmental agencies) that develop, administer, and enforce environmental regulations. Administrative and enforcement activities involve real resource expenditures that could be spent on the provision of alternative goods and services, and these activities impose social opportunity costs that must be accounted for in the economic analysis. 14 Foregone economic surpluses are incurred when a regulation affects the production or use of goods and services traded in markets. The opportunity cost of these actions is captured in measures of producer and consumer surplus from the markets affected by the regulation. Producer and consumer surplus measures account for changes in economic behavior brought about by the compliance cost requirements, which distinguishes these measures from compliance cost measures. For instance, if the costs of compliance cause producers to raise the market price, consumers will presumably respond by reducing consumption or switching to a substitute. This foregone consumption of the regulated product leads to a reduction in consumer welfare; this reduction is measured as the change in consumer surplus. Similarly, 3 2 unless producers can collectively raise the price enough to offset the compliance costs, the net price of the regulated product will fall for producers. In this case, the producers will presumably respond by reducing production or switching to a substitute output. This action entails reductions in producer welfare ( profits), as measured by the change in producer surplus. Transitional costs are costs not captured in compliance, administration, and enforcement cost measures, but that do involve resource costs resulting from the economy's transition from a pre regulation to a regulated state. An example may be costs associated with unemployment resulting from the regulation or mandated obsolescence of otherwise useful capital. The costs of these impacts are often difficult to quantify. Indirect ( long run) efficiency costs can potentially result from diverting resources toward environmental compliance activities. As resources are moved towards these activities, product quality, innovation, and productivity may be affected. Any negative effects on these factors add to the social cost of the regulation; positive effects reduce social costs. General equilibrium models are sometimes used to estimate the indirect impact of regulations on these elements of long run economic efficiency. Although a consideration of market responses is required for strict consistency with economic theory, the relatively small size of the compliance costs associated with the IUR amendments, and their lack of correspondence with output ( i. e., reporting requirements are assumed not to alter firms' production), suggests behavioral responses will be minimal. Therefore, the focus of this analysis is on the first two categories: compliance costs and government administration costs. This section presents an analysis of the increase in compliance costs borne by IUR respondents relative to the original IUR ( referred to as the incremental cost of the IUR amendments). In addition, it provides an analysis of EPA costs under the IUR amendments. Finally, the social costs incurred as a result of the IUR amendments are summarized.

3.1 Compliance Costs for IUR Submitters Figure 3 1 provides a graphic representation of the allocation of IUR reporting costs expected under the IUR amendments in relation to the original IUR. The relative costs borne by industry for reporting site and manufacturing information, and processing and use information are presented in relation to the expected number of reports at the 10,000 pound, 25,000 pound, and 300,000 pound reporting thresholds. As the figure indicates, some chemicals that are reported under the current IUR ( those with a production volume between 10,000 pounds and 25,000 pounds) will not be required to report under the IUR amendments. In addition, chemicals manufactured above a 25,000 pound threshold will be required to report additional site and manufacturing information and those above a 300,000 pound threshold will report processing and use information, as well as the site and manufacturing information. The Agency used a four step methodology to estimate the incremental compliance costs of the IUR amendments. This section describes that methodology and the data used for the compliance cost analysis. This section also explains the 3 3 compliance cost calculations and summarizes the compliance costs. Finally, limitations of the analysis are discussed. 3 4 3 5 Processing and Use Information Additional Facility and Manufacturing Information Current IUR Information Type of Information 10K 25K Production Volume Type of Reporting Form C A B D E F G H I Partial Form 25K 300K Production Volume ( and partial exemption chemicals) Full Form > 300K Production Volume Increase in Costs under Amendments Reduction in Costs under Amendments Identification of Information Reporting Costs:

A, B: Processing and use information reporting costs and the additional site and manufacturing information reporting costs required under the amended IUR are not incurred for production volumes between 10,000 and 25,000 pounds under either the current or amended IUR requirements. C: Baseline reporting costs for production volumes between 10,000 and 25,000 pounds under the existing IUR requirements. These chemicals are excluded from reporting under the amended IUR information requirements. D: Processing and use information reporting costs for companies completing the partial form. These costs are not incurred under either the existing or amended IUR information requirements due to either the production volume ( under 300,000 pounds) or the partial exemptions. E, H: Site and manufacturing information reporting costs. These costs are incurred for both full and partial forms under the amended IUR but are not incurred under the current IUR requirements. F, I: Reporting costs that are incurred for all companies filing reports under both the current IUR and the amended IUR requirements. G: Processing and use information reporting costs for companies completing the full form. These costs are incurred under the amendments but are not incurred under the existing IUR information requirements.

Incremental Costs of Amendments: E+ H+ G B C Figure 3 1. Allocation of Incremental IUR Amendments Reporting Costs 15The methodology for estimating the compliance costs of the IUR amendments requires estimating the cost of complying with the existing IUR. Only the incremental costs of complying with the amendments are presented in this section. The costs of complying with the current IUR are presented in Appendix D.

3 6 3.1.1 Methodology for Compliance Cost Analysis The following general methodology was employed for estimating the incremental compliance costs of the IUR amendments:

Step 1: Identify the tasks that sites perform to comply with reporting requirements for both the original IUR and for the IUR amendments. 15

Step 2: Determine the unit costs for all activities identified in Step 1, based on labor requirements for managerial, technical, and clerical staff.

Step 3: Determine the expected number of sites and reports filed under the original IUR and the number expected to be reported under the IUR amendments.

Step 4: Multiply the cost per form times the number of forms to determine the estimated total costs of compliance for both the current IUR and the amended IUR, then subtract the cost of the current IUR from the cost of the amended IUR to calculate the incremental costs of the amendments. Each of these steps is outlined in more detail in the following four subsections.

<IP_ADDRESS> Identify Tasks Compliance with the original IUR and with the IUR amendments requires the completion of certain steps. These steps can be broken down into compliance determination, rule familiarization, preparation and submission of reports, and recordkeeping. The amount of effort ( and therefore cost) required for each of these steps varies depending on the type of chemical, company size, and the variety of uses of the chemical. The procedure for compliance with the original IUR and the IUR amendments is as follows:

Compliance Determination: For chemicals produced at or imported to a site, a determination of the need for compliance must be completed, by ascertaining the following information for each chemical produced or imported at a particular site: ( 1) does the chemical being manufactured or imported fall into one of the categories exempt from reporting, ( 2) is the annual production or import volume above the reporting threshold, and ( 3) does the site's parent company meet the small business criteria as set forth in the TSCA § 8( a) Small Manufacturer Exemption Rule ( 40 CFR 704.3)? This task is considered to be incurred at the site level because the majority of the time required for this task involves identifying the requirements. The next step is to determine whether any chemicals produced at the site meet these requirements. This portion of the compliance determination cost depends on the number of chemicals. For most chemicals, however, this component of the burden would be extremely small. For simplicity, this cost is considered 16The incremental burden of compliance determination for chemicals produced in quantities less than 25,000 pounds is assumed to be zero. It is assumed that companies reporting under the current IUR will spend the same amount of time verifying whether the chemicals they produce in volumes between 10,000 and 25,000 pounds need to report as they did before the rule change because they will simply continue to verify whether reporting is required for all chemicals.

3 7 to be a per site cost, as opposed to a per report cost ( see Section <IP_ADDRESS> for more detail on the distinction between per site and per report costs). 16

Rule Familiarization: Once the need for compliance has been determined, sites must familiarize themselves with the rule. Sites that previously reported must become familiar with new requirements and sites new to reporting must become familiar with all requirements. This entails reading the rule, understanding the various reporting and administrative requirements, and determining the manner in which the reporting requirements will be met. The IUR amendments add exposure related information to the original reporting requirements, change the reporting cycle, and amend certain other parts of the rule.

Preparation and Submission of Reports: Once a site has determined that its chemical output must be reported and has become familiar with the rule, the required information must be collected and a Form U including all of the reports from that site must be completed, reviewed, and submitted to EPA. New requirements, including chemical use and exposure information, up front substantiation for plant site identification CBI claims, and reassertion of previous CBI claims, are included in this task.

Recordkeeping: Submitters must keep records supporting their submissions. Currently submitters are required to keep their records for four years. Under the amended IUR, submitters must retain records for five years. EPA estimated the hours required for each of these tasks, including the total time needed to report and the incremental labor hours necessary to comply with the additional requirements under the IUR amendments. These estimates are presented below.

<IP_ADDRESS> Determine Unit Costs To calculate costs of compliance associated with the IUR amendments, it is necessary to estimate both the costs associated with the original requirements and costs anticipated when the IUR amendments go into effect. Unit costs of reporting for both the IUR amendments and the original IUR were developed based on estimates of the wage rates and labor requirements, by labor category, for various activities. Although the development of the baseline costs of the current IUR is not shown in this section, the baseline costs are provided in Appendix D for comparison purposes.

Estimates of Wage Rates: Estimates for wage rates were developed for clerical, technical, and managerial staff. A more detailed description of the method used to develop these estimates is presented below. 17The survey and its results are presented in Appendix E.

3 8

Estimates of Labor Hours: Estimates of labor hours were divided among clerical, technical, and managerial staff for each task described above. The methodology for developing labor hour estimates is presented below. Actual estimates are presented later in this section. Standard wage rates for managerial, technical, and clerical levels were developed from information published by the Bureau of Labor Statistics ( BLS) and an analysis adopted from the Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313 ( EPA, 1997a). Data used to develop basic wage rates were derived from 1993 salary information published by BLS for all goods producing, private industries and were inflated to current dollars as described in Section <IP_ADDRESS>. Four BLS occupation categories were analyzed: engineers, accountants, attorneys, and secretaries. Estimates of costs for compliance determination, rule familiarization, report preparation and submission, and recordkeeping were based on previously prepared economic analyses and new EPA estimates. New estimates were developed from an industry survey17 in cases where previous analyses did not accurately reflect the specific reporting requirements of the IUR amendments. The procedures used to develop the reporting burden estimates are as follows:

review comparable reporting requirements for other rules;

develop assumptions concerning the relationship between previous reporting burden estimates and the IUR amendments reporting requirements and adjust the estimates accordingly;

develop new estimates as necessary; and

present the hours of labor required ( by staff level) for each task associated with the amended and original reporting requirements. Note that the analysis of burden is segmented between organic chemicals ( including petroleum process stream chemicals) and inorganic chemicals to indicate the differential impact of the changes to the IUR on the reporting requirements for each chemical type and production level threshold.

<IP_ADDRESS> Determine Number of Forms and Reports In 1998, the most recent reporting year, more than 26,000 reports, covering over 8,900 chemicals, were received during the IUR reporting cycle ( CUS Database, 2000). The reporting instrument for the IUR is the Form U. Each reporting site is only required to file one Form U, regardless of the number of reportable chemicals it manufactures or imports. Information such as site and company identification are common to all chemicals produced at a single site; therefore, this information need only be reported one time on Form U. Contained within the Form U are any number of individual chemical reports. The site prepares a report for each subject chemical produced at or imported to the site. If there are multiple chemicals produced at a single site, multiple reports are prepared, and the reports are submitted together as a single Form U. EPA 18The amendments include a partial exemption for certain chemicals termed, for the purposes of IUR amendments, " petroleum process stream chemicals," as well as a full exemption for certain forms of natural gas. Chemicals with a partial exemption only have to provide site and manufacturing information. They are exempt from reporting processing and use information regardless of production volume. Inorganic chemicals have a partial exemption from reporting in the first reporting year only. In future reporting years, they are subject to the same threshold for full reports as organic chemicals.

3 9 therefore estimated some costs on a per report basis and some on a per site basis. Per report costs are costs incurred through completion of the individual reports for each reportable chemical. Per site costs are incurred one time for each site through completion of the Form U. Each site must determine whether it must comply with the IUR and then must familiarize itself with rule requirements. The costs associated with these tasks are calculated per site. For each reportable chemical, a report must be prepared and submitted and a record of it must be kept; therefore, reporting and recordkeeping costs are calculated as per report costs. However, in calculating reporting costs, note that Part I of Form U ( Facility Identification Information) is common to all chemical reports and must be completed only once regardless of the number of chemical reports submitted. Therefore, to obtain per report burden hours for Company Information and Plant Site Identification, the burden of filling out this information was divided by the number of reports submitted per Form U. Although the Form U only needs to be certified once, the labor hours required for certification were not scaled by the number of reports per Form U based on the assumption that verification of information included in the Form U must be done for each report before the certification is completed. This may potentially overstate the burden of certification if the time to certify the accuracy of the Form U is not directly proportional to the number of chemical reports submitted. Estimates of the total number of reports expected under the IUR amendments are determined using data compiled from EPA's Chemical Update System ( CUS) and EPA's Chemicals in Commerce Information System ( CICIS). The CUS database contains information collected under the IUR for the 1986, 1990, 1994, and 1998 reporting cycles, and is used to generate estimates of expected reports for organic chemicals. The CICIS database is used to determine the number of inorganic chemicals likely to be reported, because these chemicals are currently exempt and therefore are not included in the CUS. The CICIS contains information collected by EPA on TSCA chemicals in commerce in the United States in 1977, including company and chemical identification, site location, manufactured or imported status, and production volume in ranges. Appendix C contains a detailed description of the analysis used to determine the expected number of reports under the amendments. The total number of reports is broken down into those that must file full reports and those that must file partial reports because of the difference in cost between the two types of reports. 18 3 10 <IP_ADDRESS> Determine Total Costs of Compliance The total industry compliance cost of reporting under both the current IUR and amendments is calculated by first determining the unit cost for each task involved in reporting and then multiplying those unit costs by the number of occurrences ( i. e., reporting forms submitted or number of sites submitting reporting forms under the IUR). The costs associated with reporting under both the original IUR and amendments consist of compliance determination; rule familiarization; preparation and submission of reports, including CBI determination and substantiation; and recordkeeping. To calculate the incremental costs of the IUR amendments, the incremental costs per unit ( either per site or per report) were calculated for each task and multiplied by the number of units for that task. These costs were then added together to get the total incremental cost. It is important to note that all cost estimates are estimates of the average cost and may not represent the actual costs of all firms.

3.1.2 Data for Compliance Cost Analysis The compliance cost analysis uses estimates of wage rates, estimates of labor hours, and estimates of the number of sites and reports.

<IP_ADDRESS> Estimates of Wage Rates As presented in Table 3 1, the managerial and technical level salaries used for the analysis are composites of the BLS average salaries for several occupation categories and levels. Weighting factors were applied to the average salaries for each of the occupation categories within the managerial and technical labor categories to develop the composite salary. The weighting factors are based on information provided by the chemical industry and chemical industry trade associations for the typical fraction of total reporting effort that is accounted for by each specific BLS occupation category ( EPA, 1997a). 19The three labor rates were each adjusted using separate ECI categories. The clerical rate was adjusted using the Administrative Support, including Clerical Occupations data, the technical rate was adjusted using the Professional Specialty and Technical Occupations data, and the managerial rate was adjusted using the Executive, Administrative, and Managerial Occupations data.

3 11 The 1993 composite annual salary estimates were adjusted to first quarter 2000 dollars using the Employment Cost Index ( ECI) for white collar occupations in private industries. 19 The 2000 adjusted, composite salaries for the managerial, technical, and clerical labor categories were then multiplied by benefits and overhead factors to estimate 2000 loaded, annual salaries. Detailed benefits data for white collar occupations in private, goods producing industries were used to account for the additional cost of benefits for managerial, technical, and clerical labor. The overhead factor of 17 percent is based on information provided by the chemical industry and chemical industry trade associations. The loaded annual salary was then divided by 2,080 hours ( i. e., the average annual number of hours worked per year by a full time Table 3 1. Loaded Hourly Wage Rates by Labor Category Occupation ( levels) Average Salary ($ 1993) Weighting Factor Comp. Salarya ($ 1993) ECI Ratio 3/ 00: 6/ 93b Adjusted Salary ($ 2000) 2000 Benefits (% Salary) 2000 Overhead (% Salary) Loaded Annual Salary ($ 2000) Loaded Hourly Rate ($ 2000)

Managerial Engineer ( 6 8) $ 93,981 10/ 17 $ 55,283 Attorney ( 4 6) $ 111,263 5/ 17 $ 32,724 Accountant ( 5 6) $ 73,528 2/ 17 $ 8,650 Composite 17/ 17 $ 96,658 1.33 $ 128,555 37.6% 17.0% $ 198,746 $ 95.55 Technical Engineer ( 3 8) $ 74,802 5/ 6 $ 62,335 Accountant ( 3 6) $ 59,436 1/ 6 $ 9,906 Composite C 6/ 6 $ 72,241 1.23 $ 88,856 37.4% 17.0% $ 137,194 $ 65.96 Clerical Secretary ( 1 5) $ 28,850 1/ 1 $ 28,850 Composite C 1/ 1 $ 28,850 1.26 $ 36,351 39.6% 17.0% $ 56,926 $ 27.37 a 1993 composite salaries were determined by multiplying average salaries by the weighting factor and summing across occupations. b The ECI ratio measures the change in wages and salaries between June 1993 and March 2000.

Sources: U. S. Environmental Protection Agency. April 1997a. Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch.

Bureau of Labor Statistics ( BLS). 2000. Employment Cost Index. < www. bls. gov>. As obtained April 28, 2000. 20The contents, administration, and results of the survey are described in detail in Appendix E.

21Please note that the draft version of the revised Form U on which the industry survey is based was different than the final revised Form U presented in Appendix A. Thus, in some cases, adjustments were necessary to use the survey data to estimate burden to comply with the new form.

3 12 employee) to derive the loaded, hourly wage rates used in this analysis for each labor category.

<IP_ADDRESS> Estimates of Labor Hours The baseline, total, and incremental costs of the IUR and amendments were developed through an analysis and comparison of the time required to report the type of information required for compliance with both the original and amended rule. The labor hours required for compliance determination, rule familiarization, and recordkeeping are based on previous EPA studies ( EPA, 1990; EPA, 1997a). However, the time required by industry to prepare and submit information for each data element on Form U is unique to this rule. To examine this issue, the Agency developed a survey to assess the labor hours required to complete each section of the amended Form U. The survey was administered to 81 chemical manufacturers in the spring/ summer of 1996.20 Table 3 2 presents the estimates of reporting burden for each section of the revised Form U as determined from the survey ( see Appendix E). 21 For chemicals produced between 25,000 and 300,000 pounds and for chemicals meeting the partial exemptions, only Sections I, II, and IV of the revised Form U must be completed. Survey respondents provided low and high estimates of labor hours required to complete each task for each of the three staff levels. These estimates are weighted, based on company size, to provide an average low and high burden estimate that would reflect the range of companies expected to report under the amendments. The estimates in Table 3 2 are the foundation of the estimates of baseline, total, and incremental costs of preparing and submitting reports under the proposal. These costs are presented in Section 3.1.3. It is important to note that, although 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, the survey that respondents completed did not mention these standards. Thus, survey respondents were reporting burden estimates assuming a much higher standard of information than EPA will require. In addition, the UEIP program, which asked respondents to report chemical information very similar to that required by the 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. 3 13 Table 3 2. Estimated First Year Industry Reporting Burden for Sections of Revised Form U ( hours per section for each report)

Task Clerical Hours Technical Hours Managerial Hours Total Part I. Site Identification Informationa 0.54 B 0.99 0.91 B 0.98 1.01 B 1.09 2.46 B 3.06 I. Certification 0.46 B 0.89 0.81 B 0.89 0.97 B 1.05 2.25 B 2.82 II. Company Information Company Name, Contact, Address 0.03 B 0.04 0.04 B 0.04 0.02 B 0.02 0.09 B 0.10 D& B Number, Mailing Address III. Plant Site Identification Plant Name, D& B Number, Address 0.04 B 0.05 0.06 B 0.06 0.02 B 0.02 0.12 B 0.14 Mailing Address Part II. Manufacturing Information 1.52 B 1.57 7.18 B 10.38 2.35 B 4.64 11.05 B 16.59 I. Chemical Identification II. ( Other) Manufacturing Information Site Limited 0.49 B 0.55 1.97 B 2.59 0.28 B 0.84 2.75 B 3.98 Activity Production Volume ( lbs) Chemical Identification Up front CBI Substantiation 0.26 B 0.26 1.08 B 1.82 0.48 B 1.05 1.82 B 3.13 Plant Site Up front CBI Substantiation 0.12 B 0.12 0.54 B 1.12 0.23 B 0.79 0.88 B 2.03 Total Number of Workers 0.21 B 0.21 1.13 B 1.73 0.29 B 0.88 1.63 B 2.82 Maximum Concentration 0.44 B 0.44 2.46 B 3.12 1.07 B 1.07 3.98 B 4.64 Physical Form, Percent of Production Volumeb C C C C Part III. Processing and Use Information 8.70 B 9.98 51.21 B 55.3 9 18.99 B 20.25 78.91 B 85.62 I. Industrial Processing and Use Exposure Related Data 7.99 B 9.27 46.32 B 49.9 6 17.53 B 18.66 71.84 B 77.89 Determination of Applicability 0.15 B 0.15 1.13 B 1.24 0.32 B 0.35 1.60 B 1.74 Industrial Function Category 2.17 B 2.80 5.02 B 5.36 2.43 B 2.43 9.63 B 10.59 Function Code 0.22 B 0.22 1.04 B 1.16 0.46 B 0.47 1.71 B 1.85 Percent Production Volume 1.45 B 1.45 11.36 B 12.1 7 5.78 B 6.63 18.59 B 20.26 Total Number of Processing and Use Sites 1.56 B 2.14 10.17 B 11.3 4 4.11 B 4.18 15.84 B 17.66 Total Number of Potentially Exposed Workers 2.44 B 2.51 17.61 B 18.6 9 4.41 B 4.60 24.46 B 25.79 II Commercial and Consumer End Use Exposure Related Data 0.71 B 0.71 4.89 B 5.43 1.47 B 1.59 7.07 B 7.73 Determination of Applicability 0.17 B 0.17 1.07 B 1.13 0.28 B 0.31 1.52 B 1.61 Identification of Product Category/ Children's Use 0.17 B 0.17 0.92 B 1.05 0.28 B 0.30 1.37 B 1.53 Percent Production Volume 0.24 B 0.24 1.40 B 1.56 0.51 B 0.55 2.15 B 2.35 Maximum Concentration by Category 0.13 B 0.13 1.51 B 1.69 0.39 B 0.42 2.03 B 2.25 Part IV. Reassertion of Past CBI Claimsc C C C C Total Hours for Report Preparation and Submission Partial Form 2.06 B 2.56 8.09 B 11.36 3.37 B 5.73 13.51 B 19.65 Full Form 10.76 B 12.5 4 59.30 B 66.7 5 22.36 B 25.98 92.42 B 105.2 7 Notes: 1. Shaded area represents original requirements; the unshaded area represents the additional requirements of the amended IUR. 2. The sum of the components under a particular information category may not equal total due to independent rounding. 3 14 a The burden associated with determining facility identification information has been adjusted to account for the additional information required under the IUR amendments. The baseline burden associated with providing facility identification information is presented in Table D 3. b The burden associated with physical form reporting is subsumed within the chemical identification reporting estimate above. c No reassertion is required in the first reporting year. In future years, labor hours will be required for CBI reassertion as outlined in Section 3.1.3.

Sources: U. S. Environmental Protection Agency. April 14, 1994. Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notifications. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch. Appendix D. 3 15 <IP_ADDRESS> Estimates of the Number of Sites and Reports The number of reports expected and the number of sites filing those reports under both the baseline and the amended IUR are estimated based on the CUS and CICIS databases. Table 3 3 displays the number of reports and sites expected under baseline conditions and under the amendments to the IUR. This information is used to aggregate the unit costs to reflect the population of affected firms.

3.1.3 Compliance Cost Calculations The costs of compliance under the IUR amendments are estimated in this section. Incremental unit costs are presented based on the four steps for compliance ( see Section <IP_ADDRESS>): compliance determination, rule familiarization, report preparation and submission, and recordkeeping. Costs were estimated as either per site or perreport depending on the way the costs are incurred. Compliance determination and rule familiarization were estimated as per site costs, while report preparation and submission and recordkeeping were estimated as per report costs. The incremental unit costs were then combined with the numbers of reports and sites to estimate the cost of compliance in the first reporting year and in future reporting years. From these Table 3 3. Estimated Number of Sites, Reports, and Discrete Chemicals by Chemical Typea Number of Sites Number of Reports Number of Discrete Chemicalsb Type of Chemical Partial Full Partial Full Organic Chemicals ( including Petroleum Process Stream Chemicals)

Baseline 2,666 26,365 0 8,915 0 IUR Amendments 2,482 12,501 9,759 3,359 4,389 Inorganic Chemicals Baseline 0 0 0 0 0 IUR Amendments First Reporting Year 544 4,537 0 1,117 0 Future Reporting Years 544 1,965 2,571 484 633 a Petroleum process stream chemicals do not have to report processing and use information regardless of production volume. Inorganic chemicals do not have to report processing and use information in the first year of reporting, but in all future years are subject to the same 300,000 pound threshold for reporting this information as organic chemicals. b These columns refer to the number of discrete chemicals for which partial reports and full reports are submitted. 22This is because the entire burden of rule familiarization is incremental for those sites that did not have to report in the past.

3 16 values, the net present value of the costs and the annualized cost over a 20 year period were calculated.

<IP_ADDRESS> Labor Hours Required for Compliance Tasks The labor requirements for compliance determination under the amendments are the same as the requirements under the original IUR. Essentially, each site incurs costs to determine whether compliance is necessary. Therefore, the cost of compliance determination attributable to the amendments is zero for those sites already reporting under the original IUR. For sites not reporting under the original IUR ( such as inorganic chemical companies), the incremental labor requirement is estimated to be 1 to 4 hours of technical labor to review production and import data for all chemicals and determine whether compliance is necessary. These estimates are presented as a range to reflect variation in the reporting community. Sites that produce fewer chemicals may only need 1 hour to determine compliance, while sites that produce numerous chemicals may require up to 4 hours ( EPA, 1990). The burden of compliance determination is estimated to remain constant for first and future year reporting, given the length of the time lag between reporting cycles and the potential for changes in a site's chemical output over that time period. Table 3 4 presents the incremental hours required for compliance determination by chemical type for the first reporting year and future reporting years. Once a site determines that reporting is required under the IUR, it is necessary for one or more individuals at the site to become familiar with the rule. Rule familiarization entails reading the rule, understanding the various reporting and administrative requirements, and determining the manner in which the reporting requirements will be met. EPA estimates that rule familiarization for the amendments would require between 16 and 18 additional hours of technical labor and 6 to 8 additional hours of managerial labor relative to the baseline in the first year of reporting for sites already reporting under the original IUR. For sites new to reporting ( such as those reporting inorganic chemicals), EPA estimates that between 18 and 20 hours of technical labor and 8 to 10 hours of managerial labor are required. 22 Table 3 5 provides the incremental labor required for rule familiarization. These estimates are based on EPA's estimate that rule familiarization for the TRI requirements requires an average of 22.5 hours of technical review and 12 hours of managerial review ( EPA, 1997a). The scope of the reporting requirements under the TRI program is similar to the IUR amendments. However, the requirements under the TRI program are more complicated; therefore, the burden estimate for the IUR amendments should be slightly lower. It is assumed, therefore, that the time required for familiarization with the amended IUR will be reduced by 2.5 to 4.5 hours of technical time and 2 to 4 hours of managerial time relative to the estimates developed for rule familiarization with the TRI requirements. 3 17 In future reporting years, the burden of rule familiarization under the amendments is estimated to be equal to the burden under the current IUR. For sites currently reporting, there is no incremental burden associated with the amendments as these parties would have been required to refamiliarize even without the amendments. For sites new to reporting, the refamiliarization burden is estimated to be 2 hours of technical labor and 2 hours of managerial labor. EPA has assumed that the burden of rule familiarization is incurred in both first and future year reporting because of the length of the time 3 18 Table 3 4. Incremental Labor Hours for Compliance Determination ( hours per site)

Clerical Technical Managerial Total Low High Low High Low High Low High First Reporting Year Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 0 0 0 0 0 0 Inorganic Chemicals PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 1 4 0 0 1 4 Future Reporting Years Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 0 0 0 0 0 0 Inorganic Chemicals PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 1 4 0 0 1 4 a As compliance determination is a per site cost, this only applies if all chemicals produced at a site that previously reported under the IUR are manufactured or imported in quantities of less than 25,000 pounds. b This burden applies for sites with at least one reportable chemical manufactured or imported in a volume of greater than 25,000 pounds.

Sources: U. S. Environmental Protection Agency. February 1990. Economic Analysis for the TSCA Inventory Update Final Rule. Office of Toxic Substances, Office of Pollution Prevention and Toxics.

U. S. Environmental Protection Agency. April 1997a. Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch. 3 19 between reporting cycles. EPA recognizes, however, that the burden of familiarization in future years is likely to be significantly less than the initial first year burden. Once a site has determined that its chemical output must be reported and has become familiar with the rule, the required information must be collected and a Form U must be completed, reviewed, and submitted to EPA. Burden and cost estimates are associated with this process. A more detailed description of the survey results on which these burden estimates are based is provided in Appendix E. The original IUR requires the provision of certain basic production and manufacturer identification information. The costs associated with these data elements comprise the baseline cost of preparation and reporting. The amendments add requirements for information related to worker exposure and chemical use. The costs 3 20 associated with these additional data elements comprise the costs of the proposal. Box 3 1 presents these additional data requirements. Section 1.2 provides a more detailed discussion. Table 3 5. Incremental Labor Hours Required for Rule Familiarization ( hours per site)

Clerical Technical Managerial Total Low High Low High Low High Low High First Reporting Year Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbsa 0 0 B 2 B 2 B 2 B 2 B 4 B 4 PV > 25K lbsb 0 0 16 18 6 8 22 26 Inorganic Chemicals PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 18 20 8 10 26 30 Future Reporting Years Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbsa 0 0 B 2 B 2 B 2 B 2 B 4 B 4 PV > 25K lbsb 0 0 0 0 0 0 0 0 Inorganic Chemicals PV

25K lbsa 0 0 0 0 0 0 0 0 PV > 25K lbsb 0 0 2 2 2 2 4 4 a As compliance determination is a per site cost, this only applies if all chemicals produced at a site that previously reported under the IUR are manufactured or imported in quantities of less than 25,000 pounds. b This burden applies for sites with at least one reportable chemical manufactured or imported in a volume of greater than 25,000 pounds.

Sources: U. S. Environmental Protection Agency. February 1990. Economic Analysis for the TSCA Inventory Update Final Rule. Office of Toxic Substances, Office of Pollution Prevention and Toxics.

U. S. Environmental Protection Agency. April 1997a. Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch. 3 21 Box 3 1. Comparison of Data Elements for Completion of the Original and Amended Form U Baseline Data Elements Certification  signature  date  name and title of the representative responsible for the accuracy of the information provided Company Information  company name  technical contact name  company street address  telephone number Plant Site Identification  plant site name  Dun & Bradstreet number  plant site street address Chemical Specific Information  CAS number or other identifying number  ID code  chemical name  site limited status ( yes or no)

 activity ( manufacturing or import)

 production volume Confidential Business Information  up front substantiation for chemical identity CBI claims Additions under IUR Amendments Estimates for the amount of time required to complete and submit the amended Form U are developed from the results of the survey described in Appendix E. Survey results were weighted based on company size to reflect the universe of companies expected to report under the amendments. As described previously in this report, under the amendments, submitters of certain categories of chemicals complete a partial reporting form, reporting only the site and manufacturing information and completing the reassertion of past CBI claims. These categories of chemicals are those with annual production volumes of 25,000 to 300,000 pounds, petroleum process stream chemicals, and inorganic chemicals in the first reporting year. The remaining chemicals subject to IUR reporting, with annual production volumes greater than 300,000 pounds, must complete the full form, which requires reporting of additional information on industrial processing and use and consumer/ commercial use. The burden associated with CBI claims is accounted for in a variety of ways. Up front substantiation burdens are accounted for separately, as reported in Table 3 2. The burden of complying with these requirements and the frequency of CBI claims is discussed further in Box 3 2. Reassertion of CBI claims appears in Section IV of Form U. For the first year of reporting under the amendments, reassertion is not required. Therefore, for each of the chemical types, the time required for CBI reassertion is zero in the first year of reporting. In future years, firms must reassert CBI claims made in previous reporting periods to maintain the CBI status of this information. It is assumed 23This value is based on EPA's professional judgment of the time required to reassert relative to the time required to complete a report originally. Because of data limitations, a simplifying assumption that submitters reassert the same types of forms ( i. e., breakdown between full and partial reports) for prior periods as they are submitting in the current period was made. This assumption may cause costs to be understated in the second reporting period because of the increase in the proportion of full reports from the first reporting period to the second.

24In a previous version of this report ( EPA, 1999), the burden estimated for CBI reassertion was 3.5 to 7 hours for both full and partial reports. Upon review, EPA anticipates that the burden for reassertion is much more likely to be proportional to the burden of preparing the report ( i. e., a full report that contains many more data elements is likely to take more time to reassert than a partial report). Based on professional judgment, EPA believes 10 percent of the original time required to prepare and submit a report is a reasonable burden estimate for reassertion. This change increased the estimated burden for full reports and decreased the estimated burden for partial reports such that full reports are estimated to require about 5 to 7 times as many hours for reassertion as partial reports. This seems reasonable given the difference in the quantity of data that must be examined for reassertion.

25Analysis is entitled Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313 ( EPA, 1997a).

3 22 that the labor required for reassertion in future years is 10 percent of the labor required to prepare and submit a report. 23, 24 In addition to a change in the cost of CBI reassertion in future reporting years, it is also assumed that the burden of reporting other information on Form U changes in future years. Unit costs for report preparation and submission in future reporting cycles are expected to be lower than unit costs attributed to first year reporting because of efficiencies achieved through the establishment of compliance processes, the availability of data from previous reporting cycles, and familiarity with reporting requirements. The efficiency gained from repeated reporting varies based on the types of information reported and whether that information changes significantly from year to year. Based on these assumptions and a cost analysis for a similar reporting rule, 25 scaling factors are developed for each section of the reporting form under the IUR amendments. These scaling factors, presented in Table 3 6, are applied to the report preparation and submission burden in each reporting period following the first. The second reporting year would include CBI reassertion claims for the first time; hence, the burden of reassertion is first incurred during the second reporting period. Table 3 7 provides estimates of the incremental labor required for report preparation and submission. The current IUR requires that sites maintain records of reported information for at least four years from the effective date of the reporting period. The quantified costs associated with these original recordkeeping requirements consist of the costs of labor to compile and maintain collected information. Sites may maintain records such as invoices, receiving tickets, and incident and operating logs. EPA assumes that the average burden of recordkeeping under the amendments will be somewhat greater than the burden under the original IUR because it is likely submitters would maintain 3 23 Box 3 2. Burden of Complying with CBI Substantiation Requirements The calculations used to develop CBI compliance costs for the economic analysis ( EA) are based on information from the industry survey ( ICF, 1996). As derived from the survey, Table 3 2 presents typical burden associated with compliance for various CBI substantiation issues attributable to the IUR amendments. Using the wage rates presented in Table 3 1, the costs of up front CBI substantiation range from $ 185 to $ 380, as compared to $ 125 to $ 227 under the current IUR requirements because of the additional requirement to provide up front substantiation for plant site information. This results in incremental costs of between $ 60 and $ 153. Companies that indicated no CBI claims were estimated to have zero compliance costs for each appropriate element.

Costs of CBI substantiation for an individual company claiming CBI status for chemical identification, and plant site CBI identification, may be higher than the average values used in the analysis, however. Hence, typical costs may be more accurately characterized by excluding burden estimates of zero for companies that do not claim CBI status. Using only the nonzero entries, the cost of CBI compliance ranges from $ 204 to $ 360 for the baseline scenario and from $ 363 to $ 738 under the amendments. Based on these values, the incremental cost of meeting CBI related requirements is estimated to be between $ 159 and $ 378, or about twice as much as above.

It is worth noting that, historically, companies have claimed information CBI less often than survey responses suggested. Information from the CUS database for the 1986, 1990, and 1994 reporting cycles ( 1998 data on CBI claims were unavailable for analysis) indicates significantly lower percentages of CBI claims for each type of data. According to the CUS database, the fraction of companies claiming CBI status for chemical identification and plant site identification, was 3 percent and 20 percent, respectively. Survey respondents indicated that chemical identification and plant site identification would be claimed confidential by 58 percent and 36 percent of reporting companies, respectively. The difference between the percentage of companies claiming CBI as derived from the CUS database and the percentage indicated by the survey data suggests that survey respondents may have been concerned about providing detailed information on uses and, hence, were conservative in their estimates of the frequency of CBI claims. EPA is aware of companies' potential reluctance to disclose such data and has elected, therefore, to ask for some information ( e. g., production volume) in ranges to reduce potential confidentiality concerns. In particular, by adding check boxes for production volume range information and using this information for analysis and in public reports, EPA expects to reduce companies' confidentiality concerns.

Because of the considerations identified here, the costs presented in this analysis may tend to overestimate the number of CBI claims and, therefore, the average cost of CBI substantiation, both under the baseline and the proposal.

additional records, and the records must be maintained for five years C one year longer than the original requirements. It is expected that recordkeeping of files is an on going activity and that the cost associated with maintaining these records will be constant for each reporting period. Table 3 8 provides the labor required to comply with this portion of the regulation. 3 24 <IP_ADDRESS> Incremental Costs of Compliance Tasks under IUR Amendments Table 3 6. Scaling Factors for Unit Cost of Preparation and Submission of Reports in Future Reporting Cycles Under the IUR Amendments Part Section of Reporting Form Description of Information Incurred Percent of First Year Cost Comments Two Year Reporting Cycle Four Year Reporting Cycle Facility Identification and Manufacturing Information I I Certification 100 100 No reduction expected.

I II Company Information 20 20 Technical contact may change, but other information unlikely to change.

I III Plant Site Identification 20 20 Information unlikely to change.

II I Chemical Identification 20 20 Information unlikely to change.

II II Manufacturing 70 80 Information may change.

Processing and Use Information III I Industrial Processing and Use Exposure Related Data 70 80 Information may change.

III II Commercial and Consumer End Use Exposure Related Data 70 80 Information may change.

Reassertion of Past CBI Claims IV Reassertion 100 100 No reduction expected in future reporting periods. However, reassertion costs are not incurred in the first reporting year. 26Chemicals with production volumes less than 25,000 pounds are denoted by " PV< 25K lbs," chemicals with production volumes between 25,000 and 300,000 pounds and chemicals meeting the partial exemption requirements are denoted by " Partial Form," and chemicals with production volumes greater than 300,000 pounds that do not qualify for an exemption are denoted by " Full Form."

3 25 The incremental costs of compliance with the IUR amendments are presented for two categories of reporting at the site level ( production volume greater than or less than 25,000 pounds) and for three categories of reporting at the report level ( production volume less than 25,000 pounds, partial Form U reporting, and full Form U reporting) and for two types of chemicals ( organic and inorganic). 26 Tables 3 9 through 3 12 provide the incremental costs per unit associated with the four tasks required under the IUR amendments. All industry compliance costs are assumed to be incurred in the year in which reporting occurs. 3 26 Table 3 7. Incremental Labor Hours for Report Preparation and Submission ( hours per report)

Clerical ($ 27.37/ hr) Technical ($ 65.96/ hr) Managerial ($ 95.55/ hr) Total Low High Low High Low High Low High First Reporting Year Organic Chemicals ( including Petroleum Process Stream Chemicals) Form U Part I. Facility Information 0.17 0.30 0.01 0.01 0.00 0.00 0.18 0.31 II. Manufacturing Information 0.77 0.77 4.13 5.97 1.59 2.75 6.48 9.48 III. Processing and Use Information 8.70 9.98 51.21 55.39 18.99 20.25 78.91 85.62 IV. CBI Reassertiona 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Incremental Hours by Labor Category PV

25K lbs B 1.13 B 1.51 B 3.95 B 5.39 B 1.78 B 2.98 B 6.86 B 9.87 Partial Form 0.93 1.06 4.14 5.98 1.59 2.75 6.66 9.79 Full Form 9.63 11.04 55.35 61.37 20.58 23.00 85.57 95.42 Inorganic Chemicals Form U Section I. Facility Information 0.54 0.99 0.91 0.98 1.01 1.09 2.46 3.06 II. Manufacturing Information 1.52 1.57 7.18 10.38 2.35 4.64 11.05 16.59 III. Processing and Use Information 8.70 9.98 51.21 55.39 18.99 20.25 78.91 85.62 IV. CBI Reassertiona 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Incremental Hours by Labor Category PV

25K lbs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Partial Form 2.06 2.56 8.09 11.36 3.37 5.73 13.51 19.65 Full Form 10.76 12.54 59.30 66.75 22.36 25.98 92.42 105.27 Future Reporting Years Organic Chemicals ( including Petroleum Process Stream Chemicals) Form U Section I. Facility Information 0.14 0.26 0.00 0.00 0.00 0.00 0.14 0.26 II. Manufacturing Information 0.61 0.61 3.30 4.77 1.27 2.20 5.19 7.59 III. Processing and Use Information 6.96 7.98 40.97 44.31 15.19 16.20 63.13 68.50 IV. CBI Reassertion C Partial Formb 0.19 0.24 0.73 1.02 0.30 0.52 1.22 1.77 CBI Reassertion C Full Formc 0.88 1.04 4.82 5.45 1.82 2.14 7.53 8.62 Incremental Hours by Labor Category PV

25K lbs B 1.13 B 1.51 B 3.95 B 5.39 B 1.78 B 2.98 B 6.86 B 9.87 Partial Form 0.94 1.11 4.03 5.79 1.57 2.72 6.54 9.62 Full Form 8.59 9.89 49.10 54.54 18.29 20.54 75.98 84.97 Inorganic Chemicals Form U Section I. Facility Information 0.52 0.96 0.90 0.98 1.01 1.09 2.43 3.03 II. Manufacturing Information 1.37 1.42 6.35 9.18 2.04 4.09 9.76 14.70 III. Processing and Use Information 6.96 7.98 40.97 44.31 15.19 16.20 63.13 68.50 IV. CBI Reassertion C Partial Formb 0.19 0.24 0.42 1.02 0.30 0.52 1.22 1.77 CBI Reassertion C Full Formc 0.88 1.04 4.52 5.45 1.82 2.14 7.53 8.62 Incremental Hours by Labor Category PV

25K lbs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Partial Form 2.07 2.62 4.62 11.18 3.35 5.69 13.41 19.49 Full Form 9.73 11.40 49.69 59.92 20.06 23.52 82.80 94.84 a No reassertion is required in the first reporting year. In future years, labor hours will be required for CBI reassertion as outlined in Section 3.1.3. b Labor hours for CBI reassertion in future years is assumed to equal 10 percent of the time required to complete 3 27 Table 3 8. Incremental Labor Hours for Recordkeeping ( hours per report)

Clerical Technical Managerial Total Low High Low High Low High Low High First Reporting Year Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbs B 0.5 B 1 B 1 B 2 B 0.5 B 1 B 2 B 4 Partial Form 0.5 1 1 2 0.5 1 2 4 Full Form 0.5 1 1 2 0.5 1 2 4 Inorganic Chemicals PV

25K lbs 0 0 0 0 0 0 0 0 Partial Form 1 2 2 4 1 2 4 8 Full Form 1 2 2 4 1 2 4 8 Future Reporting Years Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbs B 0.5 B 1 B 1 B 2 B 0.5 B 1 B 2 B 4 Partial Form 0.5 1 1 2 0.5 1 2 4 Full Form 0.5 1 1 2 0.5 1 2 4 Inorganic Chemicals PV

25K lbs 0 0 0 0 0 0 0 0 Partial Form 1 2 2 4 1 2 4 8 Full Form 1 2 2 4 1 2 4 8 3 28 Table 3 9. Incremental Costs of Compliance Determination ( 2000$)

Type of Chemical Per Site Cost First Reporting Year Future Reporting Years Low High Low High Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbsa $ 0 $ 0 $ 0 $ 0 PV > 25K lbsb $ 0 $ 0 $ 0 $ 0 Inorganic Chemicals PV

25K lbsa $ 0 $ 0 $ 0 $ 0 PV > 25K lbsb $ 66 $ 264 $ 66 $ 264 a As compliance determination is a per site cost, this only applies if all chemicals produced at a site that previously reported under the IUR are manufactured or imported in quantities of less than 25,000 pounds. b This burden applies for sites with at least one reportable chemical manufactured or imported in a volume of greater than 25,000 pounds.

Table 3 10. Incremental Costs of Rule Familiarization Per Site ( 2000$)

Type of Chemical Per Site Cost First Reporting Year Future Reporting Years Low High Low High Organic Chemicals ( including petroleum Process Stream Chemicals)

PV

25K lbsa B$ 323 B$ 323 B$ 323 B$ 323 PV > 25K lbsb $ 1,629 $ 1,952 $ 0 $ 0 Inorganic Chemicals PV

25K lbsa $ 0 $ 0 $ 0 $ 0 PV > 25K lbsb $ 1,952 $ 2,275 $ 323 $ 323 a As compliance determination is a per site cost, this only applies if all chemicals produced at a site that previously reported under the IUR are manufactured or imported in quantities of less than 25,000 pounds. b This burden applies for sites with at least one reportable chemical manufactured or imported in a volume of greater than 25,000 pounds. 3 29 3.1.4 Summary of Compliance Costs The total costs to industry of the IUR amendments are estimated for the first year of reporting and for future reporting years in constant 2000 dollars. Total costs were calculated based on the unitcosts and the number of reports and sites estimated earlier in this section. These costs were developed based on costs for each type of Table 3 11. Incremental Costs of Report Preparation and Submission Per Report ( 2000$)

Type of Chemical First Reporting Year Future Reporting Years Low High Low High Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbs $ 0 $ 0 $ 0 $ 0 Partial Form $ 451 $ 686 $ 442 $ 672 Full Form $ 5,882 $ 6,548 $ 5,221 $ 5,830 Inorganic Chemicals PV

25K lbs $ 0 $ 0 $ 0 $ 0 Partial Form $ 912 $ 1,367 $ 903 $ 1,353 Full Form $ 6,343 $ 7,221 $ 5,683 $ 6,512 Table 3 12. Incremental Costs of Recordkeeping per Report ( 2000$)

Type of Chemical First Reporting Year Future Reporting Years Low High Low High Organic Chemicals ( including Petroleum Process Stream Chemicals)

PV

25K lbs B$ 127 B$ 255 B$ 127 B$ 255 Partial Form $ 127 $ 255 $ 127 $ 255 Full Form $ 127 $ 255 $ 127 $ 255 Inorganic Chemicals PV

25K lbs $ 0 $ 0 $ 0 $ 0 Partial Form $ 255 $ 510 $ 255 $ 510 Full Form $ 255 $ 510 $ 255 $ 510 27Table 3 3 presents the estimated number of reports and reporting sites under the amendments. The estimates in this table were used to develop the incremental costs associated with each compliance task in Tables 3 9 through 3 12 and industry wide incremental costs of the IUR amendments in Tables 3 13 through 3 15.

28Further discussion of the approach used to develop the appropriate discount rate is presented in Appendix E.

3 30 chemical ( i. e., organic chemicals, or inorganic chemicals) and for the two report types ( full or partial form, based on production volume and exemption status).

<IP_ADDRESS> Compliance Costs under Amendments Incremental costs for the amendments were developed by combining information from Tables 3 3, 3 9, 3 10, 3 11, and 3 12.27 These costs are presented for organic chemicals and inorganic chemicals in Tables 3 13 and 3 14, respectively. Table 3 15 provides the total incremental cost associated with the IUR amendments and Table 3 16 presents the total incremental burden hours associated with the IUR amendments. Because the benefits resulting from the regulation will not occur simultaneously with the costs, it is necessary to discount the future streams of costs and benefits before comparing them. The time horizon over which costs and benefits are discounted in this analysis is 20 years. There is considerable debate in the economics discipline whether to use the social rate of time preference or the rate of return on investment when discounting. The debate between using a rate of return on investment capital and the consumption rate of return focuses on whether investment or consumption is being displaced by compliance requirements. The issues involving the appropriate discount rates and procedures are complex and are not likely to be resolved soon. Much of the recent economics literature summarizing the discounting debate concludes that it is appropriate to use either the social rate of time preference or the rate of return on investments; there is not much difference between the rates. For example, Moore and Viscusi ( 1990) find no evidence that the rate of time preference for environmentalrelated health effects differs from financial rates of return and cite evidence that a 2 percent rate is appropriate. Lind ( 1990) recommends a range of 1 to 3 percent, and Freeman ( 1993) recommends 2 to 3 percent. Based on this information, this analysis uses a 3 percent discount rate. 28 The results of an analysis using a 7 percent discount rate are presented in Appendix F for comparison. Table 3 17 shows the flow of compliance costs over a 20 year period. <IP_ADDRESS> Compliance Costs under Regulatory Options The costs associated with the alternative reporting options for the IUR amendments are presented in Table 3 18. Industry costs for the alternative threshold options would be either higher or lower than the selected option depending on whether the upper threshold is higher or lower than 300,000 pounds. For thresholds above 300,000 pounds, the total costs would be lower than the selected option, and for thresholds below 300,000 pounds, the total costs would be higher than for the selected option. The costs will be lower under Option 6 than the selected option because inorganic chemicals would not have to report any information under this option. Option 7 increases net present value of the costs because the information is collected more 3 31 frequently. Option 8 would have a much lower net present value of costs than any other option because information is collected only once under this option. 3 32 Table 3 13. Summary of Incremental Costs of IUR Amendments for Organic Chemicals ( 2000$)

Unit of Analysis Cost per Unit Number of Units Total Cost Low High Low High First Reporting Year Baseline Compliance Determination Site 65.96 263.84 2,666 175,848 703,392 Rule Familiarization Site 323.02 323.02 2,666 861,178 861,178 Report Preparation and Submission Report 461.51 681.09 26,365 12,167,554 17,956,675 Recordkeeping Report 127.42 254.84 26,365 3,359,352 6,718,705 Total Baseline Cost 16,563,933 26,239,949 With Amendments Compliance Determination Site 65.96 263.84 2,482 163,710 654,839 Rule Familiarization Site 1,951.6 6 2,274.68 2,482 4,844,032 5,645,766 Report Preparation and Submission Partial report Report 912.02 1,367.43 12,501 11,401,110 17,094,300 Full report Report 6,343.0 5 7,229.28 9,759 61,901,784 70,550,510 Recordkeeping Report 254.84 509.67 22,260 5,672,661 11,345,322 Total Cost with Amendments 83,983,297 105,290,73 7 Incremental Cost 67,419,364 79,050,787 Future Reporting Years Baseline Compliance Determination Site 65.96 263.84 2,666 175,846 703,385 Rule Familiarization Site 323.02 323.02 2,666 861,169 861,169 Report Preparation and Submission Report 461.51 681.09 26,365 12,167,663 17,956,836 Recordkeeping Report 127.42 254.84 26,365 3,359,382 6,718,765 Total Baseline Cost 16,564,061 26,240,155 With Amendments Compliance Determination Site 65.96 263.84 2,482 163,710 654,839 Rule Familiarization Site 323.02 323.02 2,482 801,734 801,734 3 33 Table 3 14. Summary of Incremental Costs of IUR Amendments for Inorganic Chemicals ( 2000$)

Unit of Analysis Cost per Unit Number of Units Total Cost Low High Low High First Reporting Year Baseline Compliance Determination Site 0.00 0.00 0 0 0 Rule Familiarization Site 0.00 0.00 0 0 0 Report Preparation and Submission Report 0.00 0.00 0 0 0 Recordkeeping Report 0.00 0.00 0 0 0 Total Baseline Cost 0 0 With Amendments Compliance Determination Site 65.96 263.84 544 35,885 143,540 Rule Familiarization Site 1,951.6 6 2,274.68 544 1,061,810 1,237,550 Report Preparation and Submission Partial report Report 912.02 1,367.43 4,537 4,137,495 6,203,570 Full report Report 6,343.0 5 7,221.48 0 0 0 Recordkeeping Report 254.84 509.67 4,537 1,156,104 2,312,207 Total Cost with Amendments 6,391,294 9,896,868 Incremental Cost 6,391,294 9,896,868 Future Reporting Years Baseline Compliance Determination Site 0.00 0.00 0 0 0 Rule Familiarization Site 0.00 0.00 0 0 0 Report Preparation and Submission Report 0.00 0.00 0 0 0 Recordkeeping Report 0.00 0.00 0 0 0 Total Baseline Cost 0 0 With Amendments Compliance Determination Site 65.96 263.84 544 35,885 143,540 Rule Familiarization Site 323.02 323.02 544 175,740 175,740 3 34 Table 3 15. Total Incremental Costs of IUR Amendments ( million 2000$)

First Reporting Year Total Cost Future Reporting Years Total Cost Low High Low High Baseline Organic Chemicals ( including Petroleum Process Stream Chemicals) 16.6 26.2 16.6 26.2 Inorganic Chemicals 0.0 0.0 0.0 0.0 Total Baseline Cost 16.6 26.2 16.6 26.2 With Amendments Organic Chemicals ( including Petroleum Process Stream Chemicals) 84.0 105.3 73.4 93.3 Inorganic Chemicals 6.4 9.9 17.8 22.0 Total with Amendments 90.4 115.2 91.1 115.3 Total Incremental Cost 73.8 88.9 74.6 89.1 3 35 Table 3 16. Total Incremental Burden Hours of IUR Amendments ( thousands of hours)

First Reporting Year Total Burden Hours Future Reporting Years Total Burden Hours Low High Low High Baseline Organic Chemicals ( including Petroleum Process Stream Chemicals) 249.0 389.5 249.0 389.5 Inorganic Chemicals 0.0 0.0 0.0 0.0 Total Baseline Burden 249.0 389.5 249.0 389.5 With Amendments Organic Chemicals ( including Petroleum Process Stream Chemicals) 1,228.0 1,536.9 1,078.2 1,368.1 Inorganic Chemicals 94.2 144.0 260.2 322.4 Total with Amendments 1,322.2 1,680.9 1,338.4 1,691.0 Total Incremental Burden 1,073.2 1,291.4 1,089.4 1,301.5 29It is assumed here that a site either produces organic chemicals ( including petroleums stream chemicals) or inorganic chemicals, but not both.

3 36 <IP_ADDRESS> Average Compliance Costs per Site The average incremental compliance costs per site for organic chemicals manufacturers and inorganic chemical manufacturers are presented in Tables 3 19 and 3 20, respectively. 29 The number of reports per site is based on the CUS database for organic chemicals and on the relationship between organic and inorganic chemicals from the CICIS database. The distribution of reports between partial and full is based on the percentage of reports expected to be partial and full under the IUR amendments calculated from Table 2 4. The incremental cost for an average organic chemical site is expected to be $ 27,609 to $ 32,563 in the first reporting year and to decrease in future reporting years to $ 23,343 to $ 27,719. The cost for an average inorganic site is expected to be around $ 11,749 to $ 18,194 in the first reporting year and then to increase to $ 32,638 to $ 40,502 in future reporting years because they will no longer have a partial exemption for reporting processing and use information.

3.1.5 Limitations of the Compliance Cost Analysis A number of uncertainties result from the approach and methodology used to model the industry costs associated with the IUR amendments. Some of these uncertainties may lead to underestimates or overestimates of quantified industry costs. The following points discuss some uncertainties that could significantly affect the results of the analysis:

Although 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, the industry survey ( ICF, 1996) that respondents completed did not mention these Table 3 17. Flow of Compliance Costs Over the Next 20 Years ( million 2000$) Under Amendments Cost Year Low High 1 73.8 88.9 2 0.0 0.0 3 0.0 0.0 4 0.0 0.0 5 74.6 89.1 6 0.0 0.0 7 0.0 0.0 8 0.0 0.0 9 74.6 89.1 10 0.0 0.0 11 0.0 0.0 12 0.0 0.0 13 74.6 89.1 14 0.0 0.0 15 0.0 0.0 16 0.0 0.0 17 74.6 89.1 18 0.0 0.0 19 0.0 0.0 20 0.0 0.0 30As discussed in Appendix E, small companies were identified as having annual sales less than $ 40 million, medium sized companies as having annual sales greater than $ 40 million and less than or equal to $ 200 million, and large companies as having annual sales greater than $ 200 million. Small businesses that manufacture less than 100,000 pounds of a reportable chemical in a reporting year are exempt from all reporting.

3 37 standards. Thus, survey respondents were reporting burden estimates assuming a much higher standard of information than EPA will require.

The analysis may overestimate the costs of compliance for smaller companies. According to the survey ( ICF, 1996) ( see Appendix E), the average cost of preparing and submitting a partial report for a large company is $ 1,100 to $ 1,855, for a medium company is $ 784 to $ 833, and for a small company is $ 521 to $ 537.30 For a full report, the average cost is between $ 7,158 and $ 8,635 for a large company, between $ 9,744 and $ 10,092 for a medium company, and between $ 3,110 and $ 3,192 for a small company. The burden estimates for completion of the other tasks associated with compliance may also be more appropriate for a typical large company. Large companies may have to coordinate various levels of management and technical personnel to prepare the required information, while smaller companies are likely to have less variation in their chemical output and use Table 3 18. Incremental Net Present Values and Annualized Industry Costs of Amendment Options Discounted at 3 Percent ( million 2000$)

Option First Year Cost Net Present Valuea Annualized Cost Low High Low High Low High Threshold Options 1 ( Selected) $ 73.8 $ 88.9 $ 289.1 $ 346.0 $ 19.4 $ 23.3 2 $ 91.1 $ 103.1 $ 362.3 $ 410.3 $ 24.4 $ 27.6 3 $ 67.2 $ 77.3 $ 260.7 $ 300.6 $ 17.5 $ 20.2 4 $ 59.1 $ 68.6 $ 226.4 $ 263.6 $ 15.2 $ 17.7 5 $ 67.2 $ 77.3 $ 339.0 $ 385.2 $ 22.8 $ 25.9 Reporting Exemption Option 6 $ 84.7 $ 94.7 $ 292.5 $ 328.8 $ 19.7 $ 22.1 Reporting Cycle Options 7 $ 91.1 $ 103.1 $ 706.3 $ 800.0 $ 47.5 $ 53.8 8 $ 91.1 $ 103.1 $ 88.5 $ 100.1 $ 5.9 $ 6.7 a NPV determined for a 20 year period. 3 38 and a more contained managerial and technical staff. Given the differences between small and large companies, the unit cost estimates presented in this analysis are probably somewhat high for a typical small company.

It is likely that the cost of supplying the processing and use information for a smaller volume chemical with few uses is lower than for a larger volume and widely used chemical. For example, if compliance costs for a small use, lowvolume chemical are one third of the compliance costs for a larger volume, multiuse chemical, a substantial drop in the total expected costs is possible. Although this analysis attempts to account for this by scaling the burden estimates reported in the industry survey according to company size categories, the unit costs of compliance presented in this analysis are averages and not intended to represent these two quite different scenarios.

The scaling factors that have been applied to future unit costs are based on an assumed reduction in reporting burden in future reporting cycles. These factors may be high if information for many of the reportable chemicals does not change significantly over time, resulting in overestimates of the industry reporting burden. Conversely, these factors may be too low if changes to the industry are greater than expected or if there is a large turnover in companies reporting or chemicals being reported. 3 39 Table 3 19. Average Incremental Compliance Costs per Site for Organic Chemicals ( 2000$)

Unit of Analysi s Cost per Unit Number of Units Total Cost Low High Low High Baseline Compliance Determination Site $ 65.96 $ 263.84 1.0 $ 66 $ 264 Rule Familiarization Site $ 323.02 $ 323.02 1.0 $ 323 $ 323 Report Preparation and Submission Report $ 461.51 $ 681.09 9.9 $ 4,564 $ 6,736 Recordkeeping Report $ 127.42 $ 254.84 9.9 $ 1,260 $ 2,520 Total Baseline Cost $ 6,213 $ 9,843 First Reporting Year Compliance Determination Site $ 65.96 $ 263.84 1.0 $ 66 $ 264 Rule Familiarization Site $ 1,951.66 $ 2,274.68 1.0 $ 1,952 $ 2,275 Report Preparation and Submission Partial report Report $ 912.02 $ 1,367.43 5.0 $ 4,598 $ 6,893 Full report Report $ 6,343.05 $ 7,229.28 3.9 $ 24,921 $ 28,403 Recordkeeping Report $ 254.84 $ 509.67 9.0 $ 2,286 $ 4,572 Total Cost in the First Reporting Year $ 33,822 $ 42,407 Incremental Cost in First Reporting Year $ 27,609 $ 32,563 Future Reporting Years Compliance Determination Site $ 65.96 $ 263.84 1.0 $ 66 $ 264 Rule Familiarization Site $ 323.02 $ 323.02 1.0 $ 323 $ 323 Report Preparation and Submission Partial report Report $ 903.46 $ 1,353.08 5.0 $ 4,554 $ 6,821 Full report Report $ 5,682.77 $ 6,511.51 3.9 $ 22,327 $ 25,583 Recordkeeping Report $ 254.84 $ 509.67 9.0 $ 2,286 $ 4,572 Total Cost in Future Reporting Years $ 29,556 $ 37,563 Incremental Cost in Future Reporting Years $ 23,343 $ 27,719 3 40

Insufficient data exist to determine how many sites currently subject to reporting will be affected by removing the exemption on inorganic chemicals. It is assumed that, in response to this change, there will be an increase in the number of sites reporting, rather than an increase in the number of chemicals reported per site. This assumption may overestimate the total cost of the rule but underestimate the per site cost. 3 41 Table 3 20. Average Incremental Compliance Costs per Site for Inorganic Chemicals ( 2000$)

Unit of Analysi s Cost per Unit Number of Units Total Cost Low High Low High Baseline Compliance Determination Site C C 0.0 C C Rule Familiarization Site C C 0.0 C C Report Preparation and Submission Report C C 0.0 C C Recordkeeping Report C C 0.0 C C Total Baseline Cost C C First Reporting Year Compliance Determination Site $ 65.96 $ 263.84 1.0 $ 66 $ 264 Rule Familiarization Site $ 1,951.66 $ 2,274.68 1.0 $ 1,952 $ 2,275 Report Preparation and Submission Partial report Report $ 912.02 $ 1,367.43 8.3 $ 7,606 $ 11,404 Full report Report C C 0.0 C C Recordkeeping Report $ 254.84 $ 509.67 8.3 $ 2,125 $ 4,251 Total Cost in the First Reporting Year $ 11,749 $ 18,194 Incremental Cost in the First Reporting Year $ 11,749 $ 18,194 Future Reporting Years Compliance Determination Site $ 65.96 $ 263.84 1.0 $ 66 $ 264 Rule Familiarization Site $ 323.02 $ 323.02 1.0 $ 323 $ 323 Report Preparation and Submission Partial report Report $ 903.46 $ 1,353.08 3.6 $ 3,265 $ 4,890 Full report Report $ 5,682.77 $ 6,511.51 4.7 $ 26,858 $ 30,775 Recordkeeping Report $ 254.84 $ 509.67 8.3 $ 2,125 $ 4,251 Total Cost in Future Reporting Years $ 32,638 $ 40,052 Incremental Cost in Future Reporting Years $ 32,638 $ 40,502 3 42

The analysis assumes that a site only submits one type of report ( i. e., full form or partial form). In reality, it is likely that sites will submit both full and partial forms. This assumption may significantly over or underestimate the costs of compliance for a given site, depending on the particular mix of report types.

3.2 Agency Costs This section provides an analysis of the costs associated with the IUR amendments expected to be incurred by taxpayers to support EPA efforts in establishing and maintaining IUR amendments data. The activities associated with the IUR amendments and the attendant costs are discussed below. This section presents the methodology for Agency cost analysis and a description of Agency tasks. It also provides the calculations used to develop Agency cost estimates. Agency costs are summarized as well.

3.2.1 Overview of and Methodology for Determining Agency Costs of Reporting This section describes the assumptions and general methodology employed for estimating Agency costs associated with both the original IUR and the IUR amendments. The expected costs include costs attributable to systems development, document processing, contract oversight and management, and publication of forms and materials. Costs related to using the data are not included. The following methodology for developing estimated costs for the IUR amendments was used:

Step 1: Identify the tasks performed for both the original IUR and the IUR amendments.

Step 2: Determine the costs for each activity under the original IUR and the IUR amendments.

Step 3: Determine the estimated total costs for the original IUR and the IUR amendments.

Step 4: Subtract the estimated cost of the original IUR from the estimated cost of the amendments to find the incremental change in Agency costs. Additionally, in developing the cost estimates for determining Agency burden, activities associated with one time events are distinguished from costs incurred annually. This distinction is considered throughout the discussion of individual tasks and is handled directly in the presentation of Agency costs. The Agency tasks required for processing submissions under the current IUR include database systems development, Form U processing, document development, and mailings and other informational activities:

Database Systems Development and Maintenance: The Agency is responsible for having adequate information systems in place to support the CUS that serves as the primary data storage medium for IUR collections. For the 1994 collection period, the Agency incurred capital expenses associated with redeveloping CUS for operation on a PC LAN environment, replacing the 3 43 CBI mainframe environment of the past. Systems development is a one time cost for the original IUR. File servers with appropriate backup are used to contain the IUR databases. In addition, IUR data are tracked via the correspondence tracking system used by the Confidential Business Information Tracking System ( CBITS) located within the Confidential Business Information Center ( CBIC). Hence, a portion of the CBIC overhead is attributable to IUR.

The Agency has plans to improve the quality control of these databases. These plans range from the development of computer programs to check information against previously submitted information and to look for abnormalities in the submitted data to the use of electronic submissions to increase the speed and accuracy of adding information to the database. The costs of these improvements are not included in this analysis because the Agency plans to make these changes regardless of the status of these amendments.

Additional costs associated with recordkeeping include purchasing and maintaining file cabinets and office space to store accumulated records. Estimates of the costs attributable to these activities have not been developed because costs are expected to result from both original IUR and IUR amendments requirements and because these costs are expected to be small.

Guidance Document Development: The Agency is responsible for developing guidance for the IUR to assist reporters in complying with IUR requirements. The guidance documents usually are developed by a contractor with oversight by Agency personnel. The costs associated with guidance document development are discussed below under both extramural tasks and tasks performed by Agency personnel.

Form U Processing: The Agency is responsible for handling processing of IUR submissions. This activity includes developing standard operating procedures and documentation for all stages in the IUR document life cycle, document receipt and tracking, data input, quality control, file and database maintenance, information security, CBI aggregation policy, data dissemination, and staff training. Agency personnel and contractors perform the various tasks associated with document processing.

Mailings and Other Informational Activities: The Agency undertakes the publication and printing of the IUR form and other miscellaneous materials. In addition, the Agency is responsible for providing the TSCA Hotline with standardized responses for frequently asked questions; preparing mailings, mailing lists, and labels; and developing outgoing informational materials. 3 44 3.2.2 Agency Cost Calculations The Agency incurs costs associated with the IUR that are attributable to the task areas described above. Costs for tasks in these categories can be divided into those performed by Agency personnel, those performed by contractors, and additional tasks. The incremental costs of these three components under the amendments to the IUR are presented. The costs associated with developing a database system and a guidance document are assumed to be one time costs. <IP_ADDRESS> Agency Costs Under the IUR Amendments Agency tasks that must be performed under the IUR amendments consist largely of an expanded effort for tasks already undertaken for the original IUR. Thus, the task descriptions presented in Section 3.2.1 generally do not change. However, the magnitude of any specific task may change. One change worthy of explanation involves database systems development and maintenance. In addition to the tasks identified for this category under Section 3.2.1, the IUR amendments will require that the database be expanded to handle the additional reporting requirements of the IUR amendments. The cost estimate for the IUR amendments accounts for further expenses associated with expanding the database system. Recreating the CUS entails the following tasks:

procurement of new hardware and software;

contractor supported programming for database redesign;

development of new input modules to facilitate scanning and text recognition of paper versions; these modules include a manual data entry module, an electronic ( ASCII) version of the form, and subsequent upload modules;

creation of retrieval modules that standardize reports; and

incorporation of CBI protection into the system's design. A change in the magnitude of each task described in Section 3.2.1 is reflected in the number of Agency personnel or contractors required and/ or in the incremental cost. The cost of tasks performed by Agency personnel is estimated using the number of FTEs and the GS level required to perform each task. The salary rates are taken from the 2000 General Schedule Locality Rates of Pay for Washington Baltimore, DCMD VA WV from the U. S. Office of Personnel Management ( OPM, 2000). The salary rates are presented by GS level and Step. For this analysis, a Step 3 is assumed for all FTEs. The IUR amendments would require one additional FTE, GS 12 at a salary of $ 54,618 to perform quality control of data entry and an additional FTE, GS 13 at a salary of $ 64,949, to perform data processing, systems development, and contract oversight and management, relative to the original IUR. The cost of tasks performed by these personnel for the IUR amendments would amount to incremental salary costs of $ 119,567. Once fringe benefits and overhead are added, this represents incremental annual costs of $ 197,250 ( IMD, 1996; EPA, 1996b; EPA, 1997a). The development of a guidance document for the amended IUR would require 0.5 FTE, GS 13 at a total cost of $ 53,573 with benefits and overhead included. The cost of developing the guidance document is a one time cost. 3 45 Extramural tasks would also require more labor. For the IUR amendments, document receipt and tracking and data entry would increase by approximately $ 42,318; the backup systems operations cost would double, causing an incremental cost of $ 26,449. Hence, the annual incremental cost of extramural activities for the IUR amendments is estimated to be about $ 68,767. Compared to the original systems development and hardware/ software costs, the one time costs of hardware and software acquisition, systems development, and the development of a new guidance document would require a one time incremental cost of approximately $ 214,763. This incremental cost is the one time cost for conducting the necessary systems and hardware/ software upgrades to handle submissions under the IUR amendments ( IMD, 1996; EPA, 1996b). Additional tasks associated with the IUR amendments include publication and printing of forms and materials, provision of supplies and materials for the hotline, staffing, and costs associated with mailings. IUR informational materials that would need to be printed include guidance documents, policy letters, and current and past forms. As with the original IUR, the TSCA Hotline staff ( contractor) is responsible for responding to phone calls, faxes, letters, and e mail regarding questions about the IUR and requests for materials. In addition, the Hotline staff performs all activities associated with mailing requested materials and bulk mailings. Under the IUR amendments, it is estimated that the incremental costs of providing forms and materials would be approximately $ 4,232. In addition to these costs, it is anticipated that the costs associated with operating the TSCA Hotline to handle IUR related calls will increase by $ 31,738 in the first year of reporting under the amendments. No incremental costs are expected in future years because it is estimated that the annual Hotline cost associated with the IUR will return to the original cost of this activity under the current IUR. The cost associated with preparing mailings under the IUR amendments is estimated to increase by $ 5,396 in the first year, based on approximately 3,400 more mailings than the original IUR at $ 1.59 each for a peak period of 6 months and then a return to the current rate of mailings for the remainder of the year. Thus, the annual incremental costs of preparing mailings under the IUR amendments is estimated to be zero in future years. Under the IUR amendments, the one time costs of the amendments are all assumed to be incurred in the first reporting year. Recurring costs would be incurred in the first and all future reporting years. Therefore, the incremental costs for additional tasks under the IUR amendments is approximately $ 270,249 in future reporting years, while the incremental costs estimated for the first reporting year are calculated by summing the recurring costs and the one time costs, which yields $ 575,719 ( EPA, 1996g; EPA, 1998b). These incremental costs are summarized in Tables 3 21 and 3 22. The flow of Agency costs over a 20 year period is displayed in Table 3 23 along with the net present value of these costs and the annualized cost to the Agency using a 3 percent discount rate. 3 46 3.3 Social Cost Summary The total social cost associated with the IUR amendments includes both the compliance costs borne by the affected firms and the government administration, monitoring, and enforcement costs borne by taxpayers. The IUR amendments involve real resource expenditures for both firms and the government, causing social opportunity costs in both cases. Because the costs to the government are assumed not to vary with the quantity of reports, this cost is constant across all options. Table 3 24 summarizes the total social cost associated with the IUR amendments across all of the 3 47 regulatory options. Table 3 21. Estimated Incremental Agency Costs for the IUR Amendments ( recurring every four years)

Task IUR Amendment Costs Tasks Performed by Agency Personnel Quality Control of Data Entry $ 90,103 ( 1 FTE, GS 12)

Data Processing, Systems Development, and Contract Oversight & Management $ 107,146 ( 1 FTE, GS 13)

Subtotal $ 197,250 Extramural Tasks ( contractor)

Document Receipt & Tracking and Data Entry $ 42,318 Backup Systems Operations $ 26,449 Subtotal $ 68,767 Additional Tasks Publication and Printing Forms & Materials $ 4,232 Subtotal $ 4,232 Total Annual Cost $ 270,249 Note: All costs associated with FTEs include 41 percent fringe benefits and 17 percent overhead.

Sources: U. S. Environmental Protection Agency. April 1997a. Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch.

Information Management Division ( IMD). 1996. Questions for Branches within OPPT with Responsibility for IUR Data Collection, Processing, and Storage. Information Management Division, U. S. Environmental Protection Agency, Washington, DC.

U. S. Environmental Protection Agency. August 29, 1996d. Transcribed Telephone Conversation with Ruth Heikkinen on Hotline and Mailing Costs, Office of Pollution Prevention and Toxics.

U. S. Environmental Protection Agency. August 26, 1998b. 1994 IUR. Memorandum from Rob Esworthy, U. S. Environmental Protection Agency, to Susan Krueger, Office of Pollution Prevention and Toxics, U. S. Environmental Protection Agency.

Office of Personnel Management ( OPM). 2000. " 2000 General Schedule Locality Notes of Pay for Washington Baltimore, DC MD VA WV." < http:// www. opm. gov/ oca/ 2000tbls/ GSannual/ html/ GSDCB. HTM> As obtained on May 30, 2000. 3 48 Table 3 22. Estimated Incremental One Time Agency Costs for the IUR Amendments Task IUR Amendment Costs Tasks Performed by Agency Personnel Guidance Document Development $ 53,573 ( 0.5 FTE, GS 13)

Subtotal $ 53,573 Extramural Tasks ( contractor)

Systems Development $ 100,505 Hardware & Software $ 8,464 Guidance Document Development $ 105,794 Subtotal $ 214,763 Additional Tasks Hotlinea $ 31,738 Mailinga $ 5,396 Subtotal $ 37,134 Total One Time Cost $ 305,470 Note: All costs associated with FTEs include 41 percent fringe benefits and 17 percent overhead.

a These costs are the costs that would be incurred in the first year of reporting under the IUR amendments. No incremental costs are expected for these tasks in subsequent years.

Sources: U. S. Environmental Protection Agency. April 1997a. Economic Analysis of the Final Rule to Add Certain Industry Groups to EPCRA Section 313. Office of Pollution Prevention and Toxics, Regulatory Impacts Branch.

Information Management Division ( IMD). 1996. Questions for Branches within OPPT with Responsibility for IUR Data Collection, Processing, and Storage. Information Management Division, U. S. Environmental Protection Agency, Washington, DC.

U. S. Environmental Protection Agency. July 30, 1996b. IUR Amendments C Agency Costs Question. Memorandum from Ward Penberthy to Susan Krueger, Office of Pollution Prevention and Toxics, U. S. Environmental Protection Agency.

Office of Personnel Management ( OPM). 2000. " 2000 General Schedule Locality Notes of Pay for Washington Baltimore, DC MD VA WV." < http:// www. opm. gov/ oca/ 2000tbls/ GSannual/ html/ GSDCB. HTM>. As obtained on May 30, 2000. 3 49 Table 3 23. Flow of Agency Costs Over the Next 20 Years ( 2000$) under Amendments Year Cost Year Cost 1 $ 575,719 12 $ 0 2 $ 0 13 $ 270,249 3 $ 0 14 $ 0 4 $ 0 15 $ 0 5 $ 270,249 16 $ 0 6 $ 0 17 $ 270,249 7 $ 0 18 $ 0 8 $ 0 19 $ 0 9 $ 270,249 20 $ 0 10 $ 0 Net Present Value $ 1,346,774 11 $ 0 Annualized Cost $ 90,524 Table 3 24. Measures of Incremental Social Costs ( both Industry and Agency Costs) Associated with Amendment Options ( million 2000$)

Option First Year Cost Net Present Valuea Annualized Cost Low High Low High Low High Threshold Options 1 ( Selected) 74.4 89.5 290.4 347.3 19.5 23.3 2 91.7 103.7 363.6 411.6 24.4 27.7 3 67.7 77.8 262.1 302.0 17.6 20.3 4 59.7 69.1 227.7 264.9 15.3 17.8 5 67.7 77.8 340.4 386.5 22.9 26.0 Reporting Exemption Option 6 85.3 95.2 293.9 330.1 19.8 22.2 Reporting Cycle Options 7 91.7 103.7 708.7 802.3 47.6 53.9 8 91.7 103.7 89.0 100.7 6.0 6.8 a NPV determined for a 20 year period using a discount rate of 3 percent. 4 1 SECTION 4 THE BENEFITS OF THE IUR AMENDMENTS As discussed in Section 2, neither EPA nor the public has access to the information that is needed to most effectively and accurately identify chemical risks from production or use in the United States. Screening chemicals according to these potential risks is an essential first step in developing and prioritizing risk management activities. Effective risk screening depends critically on the ability to characterize chemical uses and to predict potential exposures; however, current screening activities are greatly hampered by their reliance on production volume estimates and on relatively scarce public sources of information. This rule will benefit society by filling this information void and contributing to better assessments of potential risks and risk management decisions. Currently, the IUR is one of EPA's most important tools for meeting its mandate ( under TSCA) to manage the risks resulting from chemical production and use in the United States. It is EPA's most comprehensive source of data on the chemical industry, and it is used in almost all of OPPT's risk screening and management programs. However, the IUR data in their current form are limited, and this in turn limits EPA's effectiveness in meeting its TSCA mandate. The amendments will reduce many of these data constraints and, as a result, improve the effectiveness of EPA's chemical risk management programs. Most importantly, the new IUR rule will require the collection and compilation of additional manufacturing, processing, use, and exposure related information. This additional information will allow EPA to more accurately assess human and ecosystem exposures to specific chemicals, including the concentrations, frequency, and durations of these exposures. With this additional information, EPA will be able to better screen chemicals to identify whether additional risk assessment and management steps are needed. By enhancing the data supplied to EPA's risk screening programs, EPA expects to more effectively and expeditiously reduce the risks posed by chemicals. Ultimately, enhancing the risk screening process will have positive consequences for human and ecosystem health, and will use EPA's and society's resources more efficiently. Additional benefits will accrue from changes in reporting requirements that will improve consistency and compatibility with other EPA databases. EPA also expects more publicly available non CBI information and an increased ability to anticipate industry trends, particularly for chemicals about which EPA has concerns. Finally, in an effort to better target information gathering efforts, the rule removes one reporting exemption while adding reporting exemptions in other areas. The social benefits resulting from the IUR amendments are qualitatively discussed in this section. Unfortunately, quantitative estimates of these benefits are not feasible due to data limitations. This section first defines a conceptual framework 4 2 for evaluating the benefits of public information based programs such as the IUR amendments. The section then applies this framework to identify and describe the types of benefits that will accrue from the different components of the rule.

4.1 Benefits of Information Based Policies In assessing the benefits of information based policies such as this rule, it is important to identify the primary ways through which the public provision of information yields benefits for society. In general, increasing the amount and quality of publicly available information has two effects:

It reduces the costs of making decisions.

It improves the expected outcomes of these decisions. In the first case, policies that make new information about toxic substances available to the public ( including EPA) can serve to replace other information gathering, management, and dissemination activities related to toxic substances. In so doing, they allow information users ( i. e., decisionmakers) to avoid some of the time and resource costs devoted to these activities. In effect, they increase the efficiency of the decisionmaking process. In the second case, information based policies contribute to better decisions, by redirecting resources towards their most highly valued uses. With incomplete information regarding toxic substances, public and private decisionmakers are not able to adequately assess the benefits and costs of actions that involve these substances. For example, EPA decisions regarding whether, when, and how to impose controls on a substance can be misdirected if the risks from the substance are not fully understood and are therefore underestimated ( or overestimated). Improved information can therefore lead to socially optimal reductions in risks to humans and the environment ( and/ or reductions in control costs). As discussed in more specific terms in the remainder of this section, the rule will generate both kinds of benefits. First, it will reduce EPA's ( and other decisionmakers') reliance on other databases and information sources that are ill suited and inadequate for accurately and efficiently characterizing the risks associated with the thousands of chemicals in commerce that need to be evaluated. As discussed in previous sections, EPA will bear additional costs for collecting and managing the new IUR data; however, by providing more reliable and complete data on chemical uses and exposures, the rule will also allow EPA to save time and resources in screening chemicals and in developing risk management priorities. Furthermore, by improving the consistency and compatibility of IUR data relative to other datasets used in evaluating chemical risks, the rule will reduce the costs of using the IUR data themselves. Second, it will improve decisionmaking by EPA and others, by providing them with a better understanding of the benefits and costs associated with chemical substances. It will allow EPA to better prioritize its risk management activities C to move more quickly in addressing chemicals that pose relatively high risks ( and/ or relatively low risk management costs) and to delay or avoid actions where the gains to society would be relatively small or negative. 31Appendix B describes databases and literature sources commonly reviewed by EPA.

4 3 In assessing the benefits of information based policies, it is also important to distinguish between and identify

who uses the information,

how the information is used, and