Cross Media Electronic Reporting Rule ( CROMERR) Cost Benefit Analysis Final November 17, 2004 ii EXECUTIVE SUMMARY Background of the Rule On August 31, 2001, the proposed Cross Media Electronic Reporting and Records Rule was published in the Federal Register. As proposed, the rule was intended to provide a uniform legal framework for paperless electronic reporting and record keeping, including electronic signature/ certification, across the Environmental Protection Agency's ( EPA's) environmental programs. Based on public comment, however, EPA is now finalizing only the electronic reporting ( ER) components of the proposed rule and deferring further action on the ER keeping components until a later time. As currently drafted, the final ER rule will:

  Modify the current Code of Federal Regulations ( CFR) requirements to remove any obstacles to electronic reporting   Provide general, performance based criteria for acceptable electronic reporting systems   Specify that acceptable electronic reports must by submitted using EPA's Central Data Exchange ( CDX), or comparable systems certified to satisfy the performance based criteria   Establish the process for EPA oversight of electronic reporting under authorized state, tribal, or local government programs, including special streamlined procedures for EPA approval of modifications or revisions to authorized programs to allow for electronic reporting.

The final ER rule is intended to make electronic reporting as simple, efficient, and cost effective as possible for regulated companies, while ensuring that a transition from paper to electronic reporting does not compromise EPA's compliance and enforcement programs. Consequently, the regulatory strategy is to impose as few specific requirements as possible and to keep those requirements neutral with respect to technology, so the rule will pose no obstacles to adopting new technologies as they emerge. Electronic document submission will be totally voluntary; EPA will not require the submission of electronic documents in lieu of paper documents. EPA will only begin to accept direct submission of an electronic document once EPA has provided public notice that its electronic document receiving system is prepared to receive the document in electronic form.

For regulated entities that choose to submit electronic documents directly to EPA, the rule would require that these documents be submitted to a centralized Agency wide electronic documentreceiving system, called the CDX, or to alternative systems designated by the Administrator. Regulated entities that wish to submit electronic documents directly to EPA will satisfy the requirements in the rule by successfully submitting their reports to the CDX.

The rule also establishes provisions for regulated entities to comply with identity proofing procedures, as applicable.

Methodology In preparing this analysis, EPA developed a computer model that estimates the annual costs to EPA, State/ Locals, and facilities under the final Cross Media Electronic Reporting Rule ( CROMERR) and CDX, as well as under an alternative scenario. The model then compares the annual costs under both scenarios to assess the cost impact of CROMERR and CDX.

The two scenarios modeled were:

  A " Baseline" scenario, in which EPA would enable electronic reporting through an approach other than CROMERR and CDX.

  A " To Be" scenario, in which EPA enables electronic reporting under CROMERR and CDX. iii Table ES 1 summarizes the scope of activities examined in the model.

Table ES 1. Activities Examined in the Model under " Baseline" and " To Be"

" Baseline" " To Be"

EPA Establish program portals and rules enabling automation Establish the CDX and CROMERR Automate individual information collections according to the time frames in Appendix II for " Baseline" Automate individual collections according to the time frames in Appendix II for " To Be" and issue Federal Register notice for each collection Maintain Help Desk*

Process paperwork under electronic signature Review/ approve State/ Locals Program modification requests*

Process electronic and paper submittals from direct reporters*

State/ Locals Upgrade receiving systems and prepare/ submit program modification application to EPA program areas Upgrade receiving systems and prepare/ submit consolidated modification application to EPA Process paperwork under electronic signature agreement Direct Reporters ( facilities that report directly to EPA)

Register with each program's gateway, call the program's Help Desk, and obtain digital signature certificate, as applicable Register with CDX, call the CDX Help Desk, and obtain digital signature certificate, as applicable Process paperwork under electronic signature agreement Perform extensible markup language ( XML) or flat file mapping, if applicable*

Report to EPA by paper or electronic method*

Indirect Reporters ( i. e., facilities that report to the States/ Locals)

Report to EPA by paper or electronic signature agreement Process paperwork under electronic signature agreement * Same under " Baseline" and " To Be"

In developing the model, EPA identified the primary activities that EPA, State/ Locals, and facilities would take under the " Baseline" and " To Be" scenarios as summarized above. For each activity, EPA estimated four basic parameters that govern the total annual costs to them, respectively:

  Unit costs   Labor hour burden iv   Time frame of activity   Number of entities performing the activity EPA entered these parameters into the model's spreadsheets for all activities taken by EPA, State/ Locals, and facilities. The spreadsheets then applied equations to these parameters to estimate the annual costs to these entities, respectively, across all activities in each year of the modeling period. Finally, the model discounted these costs to 2003 levels based on both a 7 percent discount rate and a 3 percent discount rate, as recommended by the Office of Management and Budget ( OMB) guidelines.

Refer to Table III 1 in Appendix III of this document for a summary of the data and assumptions used in estimating the cost impacts to government and facilities in the model.

Conclusion/ Findings In this analysis, the " To Be" scenario represents the costs actually incurred to date under the rulemaking and CDX, as well as the expected costs going forward. As shown in Table ES 2, EPA estimates that the total cumulative costs incurred by EPA, State/ Locals, and facilities under " To Be" from 2003 to 2012 would be higher than their costs incurred under " Baseline" over the same period. The estimated total incremental costs under " To Be" range from $ 34.4 million to $ 41.7 million, depending on the discount rate used. Throughout this analysis, in the Tables and discussion, the dollars referred to are 2003 dollars.

Table ES 2. A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2012* ( in millions of dollars)

Entity Cumulative Costs** Baseline To Be Difference in Cumulative Costs To Be Relative to Baseline Difference in Cumulative Costs To Be Relative to Baseline Discounted at 7% Rate Difference in Cumulative Costs To Be Relative to Baseline Discounted at 3% Rate EPA $ 703.78 $ 618.02 ($ 85.76) ($ 64.44) ($ 75.41)

State/ Locals $ 76.29 $ 149.04 $ 72.75 $ 57.19 $ 65.20 Facilities $ 7039.34 $ 7101.31 $ 61.97 $ 41.61 $ 51.93 Total $ 7819.41 $ 7868.37 $ 48.96 $ 34.36 $ 41.72 * Cost savings shown in parentheses.

** Not discounted.

Limitations of the Analysis The following paragraphs describe the model's primary limitations.

  Annual Implementation Rate. The costs presented in Table ES 2 reflect an annual implementation rate for electronic reporting of 30 percent of facilities during the first year of an information collection's automation start date. The annual implementation rate is assumed to be 10 percent per annum for the rest of the modeling years. EPA notes that these rates are a simplifying assumption, since they likely will vary depending on many factors. Because of this, EPA has performed sensitivity runs based on different implementation rates. Refer to Section 4.0 for the results of these sensitivity runs.

  " Baseline" Automation Start Dates. EPA believes that, under " Baseline", EPA would generally be less expedient in promulgating rules that would allow for automation. The model assumes that, in comparison to the automation start dates under " To Be", information v collections under " Baseline" would be delayed by 2 years. EPA notes, however, that its assumption of a 2 year delay is speculative.

  Scaling Factors. The model examines the cost impacts associated with direct reporters in submitting paper and electronic reports to EPA under " Baseline" and " To Be" ( i. e., facilities that report directly to EPA). As explained in Appendix VII, EPA reviewed each information collection, extracted the hour burden, and attempted to determine the percent of hours associated only with direct reporters. To do so, EPA developed scaling factors based on state authorization assumptions. The scaling factors were then applied to the hour burden of each collection, as described in Appendix VII.

  EPA notes, however, that these scaling factors are based on the highly simplified assumption that authorized states collect all the information under their programs. This is not necessarily the case ( e. g., where states are authorized for only portions of an EPA program, or where EPA shares program administration with states).

  Upgrade Costs. In estimating upgrade costs to State/ Locals, EPA examined the state summary table in Appendix V. EPA attempted to identify State/ Locals receiving systems that would not satisfy CROMERR standards ( e. g., copy of record requirements). Although EPA believes its estimates are reasonable, the Agency notes that they are highly speculative, since State/ Locals specific factors ( e. g., enforcement priorities, state resources, etc.) will determine each State/ Locals' need for upgrading its systems. vi Table of Contents List of Exhibits............................................................................................................. vii List of Tables ............................................................................................................... vii 1.0 Introduction......................................................................................................... 1 1.1 Background ................................................................................................................. 1 1.1.1 Summary of the Rule ........................................................................................... 1 1.2 Problem Statement ...................................................................................................... 2 1.3 Consideration of Alternatives ........................................................................................... 3 1.4 Other CROMERR Goals ............................................................................................. 5 1.5 Document Organization............................................................................................... 6 2.0 Methodology and Assumptions......................................................................... 7 2.1 Introduction................................................................................................................. 7 2.1.1 Summary of " Baseline" and " To Be" Scenarios ................................................... 7 2.2 Development/ Operation of the Model........................................................................ 10 2.3 Model Data and Assumptions .................................................................................... 15 2.3.1 EPA................................................................................................................... 15 2.3.2 State and Local Environmental Programs........................................................... 22 2.3.3 Facilities ............................................................................................................ 26 2.3.4 Electronic Signature Agreement......................................................................... 28 3.0 Conclusions and Findings ............................................................................... 34 3.1 Total Costs ................................................................................................................ 34 3.2 EPA........................................................................................................................... 34 3.3 State/ Locals............................................................................................................... 34 3.4 Facilities.................................................................................................................... 35 4.0 Sensitivity Analysis .......................................................................................... 37 5.0 Qualitative Benefits of CROMERR and CDX................................................... 39 5.1 Summary of Other Impacts........................................................................................ 39 6.0 Limitations of the Analysis .............................................................................. 41 Appendix I. Information Collections To Be Automated by EPA ............................................... 43 Appendix II. Information Collections Under Which Direct Reporting Will Occur ..................... 51 Appendix III. Summary of the Model Data and Assumptions.................................................... 56 Appendix IV. Labor Rates Used in the Analysis....................................................................... 64 Appendix V. State Survey Data................................................................................................. 66 Appendix VI. State Contacts ................................................................................................. 73 Appendix VII. Burden Hours and Costs to Direct Reporters...................................................... 74 Appendix VIII. Multi Media Reporting Scaling Factor ............................................................. 81 Appendix IX. Number of Direct Reporters............................................................................... 82 vii Appendix X. XML and Flat File Usage ..................................................................................... 84 Appendix XI. Industry Consultations ........................................................................................ 86 Appendix XV. Acronyms and Terms ........................................................................................ 91 Appendix XV. Acronyms and Terms ........................................................................................ 91 List of Exhibits Exhibit 2 1. Activities Examined in the Model under " Baseline" and " To Be" ............................. 10 Exhibit 2 2. Inputs and Outputs of the Model ............................................................................ 11 Exhibit 2 3. Hourly Labor Costs ................................................................................................ 12 Exhibit 2 4. Example of Timeframe of Activities for OSWER Under " Baseline".......................... 14 Exhibit 2 5. Other Model Operating Parameters........................................................................ 15 List of Tables Table ES 1. Activities Examined in the Model under " Baseline" and " To Be" ........................... iii Table ES 2. A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2012* ( in millions of dollars)................................................................ iv Table 2 1. Model Inputs: Portal and Rule Development ............................................................ 16 Table 2 2. Model Inputs: Developing Automated Collections ................................................... 16 Table 2 3. Model Inputs: EPA Help Desk Costs........................................................................ 17 Table 2 4. Model Inputs: Program Modification Applications ................................................... 17 Table 2 5. Model Inputs: CDX Development and Maintenance Costs ( in millions of dollars)... 18 Table 2 6. Model Input: CROMERR Development Costs ......................................................... 18 Table 2 7. Model Input: Developing Automated Collections..................................................... 19 Table 2 8. Model Inputs: Help Desk ......................................................................................... 19 Table 2 9. Implementation of Electronic Signature Agreement Provisions ................................ 19 Table 2 10. Model Inputs: Program Modification Applications ................................................. 22 Table 2 11. Authorized State EPAs and State/ Locals Jurisdictions ............................................ 22 Table 2 12. Model Inputs: State/ Locals Receiving Systems Upgrades and Modification Application under " Baseline" ............................................................................................ 23 Table 2 13. Model Inputs: State/ Locals Receiving Systems Upgrades and Modification Applications under " To Be" .............................................................................................. 24 Table 2 14. State/ Locals Implementation of Electronic Signature Agreement Provisions for Submissions by Indirect Reporters .................................................................................... 25 Table 2 15. Number of Facility and Employee Registrants under " Baseline"* .......................... 27 Table 2 16. Number of Facility and Employee Registrants under " To Be"* .............................. 27 Table 2 17. Model Input: Registration and Help Desk............................................................... 28 Table 2 18. Digital Signature Certification Costs ...................................................................... 28 Table 2 19. Model Input: Electronic Signature Agreement Costs .............................................. 28 Table 2 20. Annual Number of Facility and Employee Registrants that Become Subject to Identity Proofing Requirements, by Firm Size ................................................................... 30 Table 2 21. Direct/ Indirect Reporters Implementation of Electronic Signature Agreement Provisions with Burden Assumptions ................................................................................ 31 Table 3 1. Total Cost Impacts under o Be"* ( in millions of dollars) ....................................... 34 viii A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2012* ( in millions of dollars)...................................................................................... 34 Table 4 1. A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2013* at Different Annual Automation Rates ( in millions of dollars)... 38 Table I 1. Information Collections To Be Automated*.............................................................. 43 Table II 1. Information Collections Under Which Direct Reporting Will Occur* ...................... 52 Table III 1. Summary of the Model Data and Assumptions* ..................................................... 56 Table IV 1. Labor Rates and Weight for EPA Employees ......................................................... 64 Table IV 2. Labor Rates and Weight for State/ Locals Employees ............................................. 65 Table IV 3. Labor Rates and Weight for Facility Employees..................................................... 65 Table V 1. State Overview........................................................................................................ 68 Table V 2. Existing State Receiving Systems............................................................................ 68 Table V 3. Planned State Receiving Systems ............................................................................ 69 Table V 4. Summary of State/ Locals System Upgrade Costs Per Receiving System.................. 71 Table V 5. Annual Number of State/ Locals Receiving System Employee Registratants Under " Baseline"......................................................................................................................... 71 Table V 6. Annual Number of State/ Locals Receiving System Employee Registrants under " To Be"*.................................................................................................................................. 72 Table V 7. Upgrade Costs Per State/ Locals Receiving System under Electronic Signature Agreement Provisions ....................................................................................................... 72 Table VI 1. State Survey Contacts ............................................................................................ 73 Table VII 1. Scaling Factors ..................................................................................................... 74 Table VII 2. Annual Burden Hours to Direct Reporters*........................................................... 74 Table VIII 1. Facility Count...................................................................................................... 81 Table IX 1. Scaling Factors....................................................................................................... 82 Table IX 2. Direct Reporters and Registrants* .......................................................................... 83 Table X 1. Number of Companies Implementing XML/ Flat File under " Baseline" ................... 84 Table X 2. Number of Companies Implementing XML/ Flat File under " To Be"....................... 84 1 1.0 Introduction 1.1 Background 1.1.1 Summary of the Rule EPA is finalizing a rule, referred to as the Cross Media Electronic Reporting and Records Rule ( CROMERR), to allow electronic reporting to EPA by permitting the use of electronic documentreceiving systems to receive electronic documents in satisfaction of certain document submission requirements in EPA's regulations. In addition, states, tribes, and local jurisdictions will be able to seek EPA approval to accept electronic documents to satisfy reporting requirements under authorized or delegated environmental programs that they administer. In this analysis, EPA refers to these regulators collectively as State/ Locals. This rule includes criteria against which a State/ Locals electronic document receiving system will be evaluated before EPA can approve changes to the authorized program that allows electronic reporting.

Electronic document submission will be totally voluntary. EPA will not require the submission of electronic documents in lieu of paper documents. EPA will only begin to accept direct submission of an electronic document once EPA has provided public notice that its electronic document receiving system is prepared to receive the document in electronic form.

For regulated entities that choose to submit electronic documents directly to EPA, the rule would require that these documents be submitted to a centralized Agency wide electronic document receiving system, Central Data Exchange ( CDX), or to alternative systems designated by the Administrator. Regulated entities that wish to submit electronic documents directly to EPA will satisfy the requirements in the rule by successfully submitting their reports to the CDX.

Many facilities submit documents directly to State/ Locals that are approved, authorized, or delegated to administer a federal environmental program on EPA's behalf or to administer an environmental program in lieu of the federal regulatory program. The rule provides for EPA approval of changes to authorized State/ Locals programs to provide for electronic reporting, and EPA approval will be based largely on an assessment of the State/ Locals' electronic documentreceiving system that will be used to implement the electronic reporting provisions. For this purpose, this rule includes performance based criteria that EPA will use to determine that an electronic document receiving system is acceptable. To implement electronic reporting under authorized State/ Locals programs, EPA is creating an optional streamlined procedure that State/ Locals may use to revise their programs to incorporate electronic reporting. The rule also includes special provisions for existing state electronic reporting systems in place at the time of publication of this rule.

In addition, regulated entities reporting electronically to EPA or State/ Locals must comply with the identity proofing provisions of the rule, as applicable. An electronic document must bear the valid electronic signature of a signatory if that signatory would be required under the EPA or State/ Locals environmental program to sign the paper document for which the electronic document substitutes unless the program makes special provisions to accept a handwritten signature on a separate paper submission, as specified. In the case of an electronic document that must bear electronic signatures of individuals, each signatory must sign either an electronic signature agreement or a subscriber agreement with respect to the electronic signature device used to create their electronic signature on the electronic document. The rule further requires that, for each electronic signature device used to create an electronic signature on the document, the identity of the individual uniquely entitled to use the device and their relation to any entity for which they will sign electronic documents must be determined with legal certainty by EPA or State/ Locals, as applicable. In the case of priority reports, this determination must be made before the electronic document is received, by means of: 2   Identifiers or attributes that are verified by attestation of disinterested individuals to be uniquely true of the individual in whose name the application is submitted, based on information or objects of independent origin, at least one item of which is not subject to change without governmental action or authorization.

  A method of determining identity no less stringent than the one above.

  Completion and submittal of a subscriber agreement directly to the receiving agency. A subscriber agreement is an electronic signature agreement signed by an individual in ink on paper. The agreement is signed by the individual with respect to an electronic signature device that the individual will use to create their electronic signatures requiring such individual to protect the electronic signature device from compromise; to promptly report to the agency or agencies relying on the electronic signatures created any evidence discovered that the device has been compromised; and to be held as legally bound, obligated, and responsible by the electronic signatures created as by a handwritten signature.

  Designation of a local registration authority ( LRA). The LRA is an individual who is authorized by EPA or the state to issue an agreement collection certification. An agreement collection certification is a signed statement by which an LRA certifies that a subscriber agreement has been received from a registrant; the agreement has been stored in a manner that prevents authorized or unauthorized access to these agreements by anyone other that the local registration authority; and that the local registration authority has no basis to believe that any of the collected agreements have been tampered with or prematurely destroyed.

1.2 Problem Statement The primary purpose of CROMERR is to set standards for electronic reporting as it is implemented by State, Tribal or local governments administer environmental programs under EPA authorization or delegation. EPA has been motivated to set such standards primarily by considering:

  The roles that many electronically submitted documents would likely play in environmental program management, including compliance monitoring and enforcement;

  EPA's statutory obligation to ensure that authorized or delegated programs maintain the enforceability of environmental law and regulations; and   The consequent need to ensure that enforceability is not compromised as authorized or delegated program make the transition from paper to electronic submission of compliance or enforcement related documents.

Concerning this last point, in many respects electronic submission enhances a document's utility for environmental programs: it significantly reduces the resources and time involved in making the content available to its users, and can greatly facilitate data quality assurance and analysis. Nonetheless, the federal government's experience with prosecuting computer related crimes has shown us that electronic submissions may also be open to challenge, primarily with respect to their authenticity   and particularly where they are used to establish the actions and intentions of the submitters. We have to consider such uses in the case of environmental reporting, especially where 3 electronic submissions are made to report on an entity's compliance status and where the submission includes a responsible individual's certification to the truth of what is reported. For such cases, EPA has identified a programmatic need to be able to authenticate the submission content and the certification   for example, to be able to address issues of fraud or false reporting where they arise   and it is primarily to address this problem of authentication that EPA is setting standards for electronic reporting through CROMERR.

The point of these standards is to assure the authenticity of electronic documents submitted in lieu of paper reports, so that they are able to play the same role as their paper counterparts in providing evidence of what was reported and of what an identified individual certified to with respect to the report. For example, in the case of paper submissions, the evidence surrounding a handwritten signature is normally sufficient to demonstrate that the signature is authentic and rebut any attempt by the signatory to repudiate it   and EPA intends the CROMERR standards ensure that electronic signatures have a corresponding level of non repudiation. Since these evidentiary issues typically arise in the context of judicial or other legal proceedings, electronic documents need to have the same " legal dependability" as their paper counterparts. The over arching standard here is that any electronic document used as evidence to prosecute an environmental crime or to enforce against a civil violation must have no less evidentiary value than its paper equivalent. For example, where there is a question of deliberate falsification of compliance data, whether the submission was electronic or paper, it must be possible to establish the signatory's identity beyond a reasonable doubt. Hence, in general, the goal of the CROMERR standards is to ensure that a system used to receive electronic documents is capable of reliably generating evidence for use in private litigation, in civil enforcement proceedings, and in criminal proceedings in which the standard for conviction is proof beyond a reasonable doubt that the electronic document was actually signed by the individual identified as the signatory and that the data it contains was not submitted in error.

1.3 Consideration of Alternatives EPA considered both a more stringent and a less stringent alternative to the regulatory approach taken in final CROMERR. The more stringent alternative is reflected in the electronic provisions published, August 31, 2001, in the Notice of Proposed Rulemaking for CROMERR. The proposed version of CROMERR is more stringent by virtue of setting much more prescriptive, detailed requirements that acceptable electronic document receiving systems would have to satisfy. For example, proposed § 3.2000( d) set very specific requirements for submitter identity management that a system would have to satisfy, including detailed requirements for renewal of registration and revocation of registration under specified circumstances. Again, § 3.2000( e) set very detailed requirements for the signature/ certification scenario that a system would have to provide for, specifying the exact sequence of steps to be followed in electronically signing a submission, and requiring such features as on screen, scroll 4 through presentation of the data to be submitted for review of the signatory prior to signing ( § 3.2000( e)( 1)( i)). EPA received significant public comment on this approach, both from States and from regulated companies, and there were at least three closely related themes. The first was that such prescriptive requirements would greatly limit the flexibility of States to implement electronic reporting in cost effective way. Many of the comments pointed that such requirements would render the investments that States had already made in electronic reporting infrastructure virtually worthless, would prohibit their use of COTS products, and would require, instead, the development of very costly customized systems that might be both difficult and expensive to operate and maintain. The second theme was that many of the requirements   especially those specifying the signature/ certification scenario   were simply not appropriate to many cases where electronic reporting would occur. Some commenters cited examples where very large data files would be transferred, rendering on screen review impractical; others pointed out that company business processes involved in internal review, approval and certification of regulatory submissions was simply not compatible with the specified scenario. Third and finally, many of these commenters expressed skepticism that these very detailed requirements represented the only possible approach to ensuring the legal dependability of electronic submissions and signatures. In considering such comments, EPA has concluded that, given our inexperience with electronic reporting, we simply lack a basis for certainty that any particular set of function based requirements at the level of specificity reflected in proposed CROMERR is ( or is not) necessary for legally dependable electronic submissions. Given the evidently high cost   to both States and regulated entities   that such requirements would impose, we decided it would be better to focus on criteria that directly articulate these basic issues, that is, the underlying goal of assuring legal dependability, including the authenticity of electronic documents and the nonrepudiation of electronic signatures. Accordingly, we are setting standards in terms of general system performance goals that are less stringent by virtue of allowing much greater flexibility in how such goals are met in specific implementations.

In writing these general performance goals, EPA also considered a less stringent alternative that would have refrained from specifying performance in terms of establishing the identity of an individual to whom a signature device or credential ( e. g. a PIN, password, or PKI certificate) is issued. With reference to the final CROMERR provisions, this less stringent alternative would have omitted § 3.2000( b)( 5)( vii) identity proofing provisions. In terms of regulatory impact, this would be a significant reduction in stringency, insofar as most of CROMERR's burden on regulated entities is associated with have to register to obtain a signature device or credential, and any identity proofing requirement raises at least the aggregate burden substantially. EPA rejected this alternative, because we believe that it would seriously   perhaps fatally   undermine the rule's ability to assure the legal dependability of electronic submissions. It is a basic principle of electronic authentication ( E authentication)   whether in the context of validating an individual's signature, or for other purposes   that our confidence that the individual being authenticated is who we believe him or her to be depends critically on the degree of trust we can place in the 5 credential the individual presents. Trust is largely a function of the identityproofing process conducted when the individual registered for the credential in the first place   the process must have been sufficiently stringent and credible. If we did not establish with sufficient certainty who this individual was when we issued the credential, then we cannot be certain who is using the credential in a specific instance where it is presented. Where the credential is used to create an electronic signature, then, inadequate identityproofing would mean that we cannot be certain who the signatory is   that is, no specific individual would be bound with any certainty by the signature   and this would render the signature virtually worthless for any legal purpose. In view of this, EPA felt that, notwithstanding the cost, it was necessary to specify that identity proofing be conducted. Additionally, for electronic documents of particular legal importance to environmental programs   identified as the " priority reports"   we felt that is was necessary to specify, at least to a degree, how the identity proofing had to be performed. We believe we need this additional specification for cases where signatory identity may be a legal issue, so that we are assured that electronic reporting implementations give us clear and predictable methods to establish this identity that conform to the standard practices of electronic commerce.

1.4 Other CROMERR Goals EPA also envisions that the goals of the CROMERR and CDX will:

  Reduce the cost and burden of data transfer and maintenance for all parties to the data exchanges;

  Improve the data and the various business processes associated with its use in ways that may not be reflected directly in cost reduction ( e. g., through improvements in data quality), and the speed and convenience with which data may be transferred and used.

  Maintain the level of corporate and individual responsibility and accountability for electronic reports and records that currently exists in the paper environment.

The intended effect of this regulation is to permit use of electronic technologies in a manner that is consistent with EPA's overall mission and that preserves the integrity of the Agency's compliance and enforcement activities. Concerning the third goal, the Agency continues to believe that it is essential that EPA continue to ensure sufficient personal and corporate responsibility and accountability in the submission of electronic reports and the maintenance of electronic records; otherwise, EPA places at risk the continuing viability of self monitoring and self reporting that provides the framework for compliance under most of our environmental programs.

In recent years, electronic reporting and record keeping have had strong mandate in federal policy and law. The Government Paperwork Elimination Act ( GPEA) of 1998, Public Law 105 277, requires that agencies be prepared to allow electronic reporting and record keeping under their regulatory programs by October 21, 2003. Given the enormous strides in data transfer and management technologies since 1990, particularly in connection with the Internet, replacing paper with electronic data transfer now promises increased productivity across almost all facets of business and government.

In short, the purpose of the rule is to permit the use of a technology that was not contemplated when most existing EPA regulations were written, without undermining in any way the integrity of environmental compliance documents or the ability of EPA to carry out its statutory 6 environmental and health protection mandate. The rule will permit regulated industry, EPA, and State/ Locals to operate with greater flexibility in ways that improve both efficiency and the speed of regulatory processes. At the same time, it ensures that individuals will assign the same level of importance to affixing their electronic signatures ( and to the documents to which the signature attests) as they currently do to a handwritten signature.

1.5 Document Organization The remainder of this document is organized as follows:

  Section 2.0  Methodology and Assumptions   Section 3.0  Conclusions and Findings   Section 4.0  Sensitivity Analysis   Section 5.0  Qualitative Benefits of CROMERR and CDX   Section 6.0  Limitations of the Analysis 7 2.0 Methodology and Assumptions 2.1 Introduction 2.1.1 Summary of " Baseline" and " To Be" Scenarios In preparing this analysis, EPA developed a computer model that estimates the annual costs to EPA, State/ Locals, and facilities under the final CROMERR and CDX, as well as under an alternative scenario. The model then compares the annual costs under both scenarios to assess the cost impact of CROMERR and CDX. As described earlier, the CROMERR and CDX would have the primary effect of allowing facilities to report electronically to EPA under its information collections, as provided by GPEA. The rule would also require State/ Locals to upgrade their receiving systems to meet the CROMERR standards, if needed, and apply for EPA program modification approval. EPA chose a 10 year period for the regulatory impact analysis, because we believe that this is roughly the time frame for EPA and our authorized or delegated State, Tribal and local government programs to achieve full implementation of electronic reporting under CROMERR. Accordingly, looking at the out years beyond the 10 year time frame would not provide any additional analytic information about CROMERR's impacts.

As a first step in developing the model, EPA surveyed its program offices to identify the specific information collections they intend to automate under GPEA, as well as the anticipated year each collection will be automated ( i. e., the automation start date). In total, the programs identified 137 information collections to be automated. These collections are identified in Appendix I, along with their expected automation start date. 1 Note that each collection in Appendix I is identified by the title of its corresponding Information Collection Request ( ICR). That is, under the 1995 Paperwork Reduction Act ( PRA), EPA is required to prepare ICRs for all of its information collections. The ICRs in Appendix I estimate the annual hour burden to EPA and facilities under the collections and were, therefore, used as a basis for developing the model.

In addition, during the Summer of 2002, EPA spoke with regulators in 15 states to learn about their progress in automating their collections. EPA found that each of these states has at least one existing or planned receiving system for collecting electronic information from facilities. EPA, therefore, believes that State/ Locals are developing electronic receiving systems irrespective of CROMERR. CROMERR would have little cost impact on them, except to require ( 1) upgrades to their receiving systems, if necessary, to meet the rule's standards at 40 CFR 3.2000; ( 2) EPA program modification approval of their receiving systems in accordance with 40 CFR 3.10002 ; ( 3) and development/ implementation of the identity proofing provisions. From this, EPA concluded that the model should examine cost impacts to State/ Locals only in upgrading their systems, applying to EPA for program modification approval, and carrying out electronic signature agreement provisions. The model should not examine their costs for originally developing the systems or receiving/ processing submittals from facilities using these systems. They would have incurred these costs irrespective of EPA's actions.

In regard to facilities, the final rule and CDX would affect those facilities that report directly to EPA ( also referred to as direct reporters in this document) in that electronic reporting would now be available. The final rule and CDX would not impact facilities in reporting under State/ Locals collections ( also referred to as indirect reporters), except to require them to comply with its identity proofing requirements. Therefore, EPA has concluded that the model should examine 1 Note that EPA removed some of these collections from this analysis ( e. g., collections administered completely at the State/ Locals level). 2 It should also be noted that CROMERR does not require State/ Locals to provide for electronic reporting. Therefore, any automation taking place at the State/ Locals level would be completely voluntary. 8 the costs to direct reporters for all activities associated with paper and electronic reporting ( e. g., registering with the CDX, complying with identity proofing provisions, and submitting electronic documents to the CDX under EPA's information collections). The model should examine cost impacts to indirect reporters only for the identity proofing provisions.

Note that the rule provides considerable flexibility for regulatory agencies to decide on the most appropriate identity proofing approach for their receiving systems and electronic signature devices. EPA expects that many State/ Locals will require regulated entities to submit subscriber agreements or designate an LRA. Other State/ Locals ( e. g., those implementing Public Key Infrastructure) may, at their own initiative, implement other approaches, e. g., approaches that involve the use of identifiers or attributes. In this Cost Benefit Analysis ( CBA), EPA makes the simplifying assumption that all regulatory agencies will require submittal of subscriber agreements or use of an LRA. In this regard, the CBA estimates costs to all direct and indirect reporters for carrying out the rule's provisions for subscriber agreements and LRAs.

Based on the above research and assumptions, EPA developed and estimated cost impacts under two scenarios:

  An " Baseline" scenario, in which EPA would enable electronic reporting through an approach other than CROMERR and CDX3.

  A " To Be" scenario, in which EPA enables electronic reporting under CROMERR and CDX.

<IP_ADDRESS> " Baseline"

In developing the " Baseline" scenario, EPA envisions that it would have pursued electronic reporting through an alternate approach were it not for CROMERR and CDX. The GPEA of 1998 requires the Agency to allow electronic reporting by 2003. In addition, EPA is firmly committed to reducing burden under its information collections, not only as part of its own internal agenda, but also in response to Congressional mandates ( e. g., the 1995 PRA) and stakeholder requests. Therefore, it is reasonable to assume that EPA would have pursued automation even in the absence of CROMERR and the CDX and that a " no action" alternative ( i. e., where EPA takes no action to automate its collections) is not realistic.

In the absence of an Agency wide rule and portal, EPA envisions that it would have enabled automation on a piecemeal basis across, and even within, program areas. Individual programs would be responsible for developing their own portals for receiving electronic information and publishing rules amending their regulations ( e. g., to allow for the use of electronic signatures in lieu of handwritten signatures). EPA estimates that nine Agency program areas would have developed portals and rules. 4 3 As mentioned above, the " Baseline" scenario does not involve reporting to the CDX. It is important to note that EPA views the CDX and CROMERR as the outcomes of the Agency's longstanding effort to enable uniform electronic reporting across the Agency. Their development has been inextricably intertwined, in that the CDX's reporting process and technology standards have influenced EPA's research and analysis performed on behalf of the rule. CROMERR codifies standards for electronic documentsreceiving systems operated by authorized state and local governmental entities. These standards, as a practical ( but not legal) matter, have defined the requirements of CDX. In this regard, EPA views the historical development of the CDX and CROMERR as inextricably related and, therefore, does not include the CDX as part of the " Baseline" scenario.

4 In general, EPA expects that the standards established under EPA's rules under the " Baseline" scenario would be comparable in scope and stringency to CROMERR and the CDX. The CROMERR and CDX reflect EPA's programmatic goals, the existing capabilities of electronic systems, as well as EPA's deliberations with its stakeholders. Under " Baseline", EPA would have encountered these same issues in establishing its portals and rules. Therefore, the model assumes that, under " Baseline", EPA's gateways and rulemakings would be comparable in scope and stringency to the CDX and CROMERR. Note, however, that the model differs in its examination of electronic signature agreement costs under " Baseline" and " To Be". Under " Baseline", the model assumes registrants would follow relatively simple procedures for preparing and keeping records of an agreement. Under " To Be", the model examines in significantly greater detail all of the activities that EPA, State/ Locals, and facilities would take in preparing, keeping records of, and submitting/ processing subscriber agreements and other paperwork. 9 In addition, EPA envisions that it would have automated the same collections under " Baseline" and " To Be". As described earlier, EPA polled the programs to identify the information collections they intend to automate in compliance with GPEA. In total, 137 collections were identified, as listed in Appendix I. Note that, for purposes of this analysis, EPA subsequently reviewed and modified this list by removing certain collections that are outside the scope of this analysis. Based on this review, EPA produced a revised list of information collections, as shown in Appendix II. The appendix also describes EPA's rationale for eliminating them. In total, the model examines 68 information collections under " Baseline" and " To Be".

The model also assumes the Agency will convert its collections to an electronic format ( e. g., preparation of Web forms, schemas, etc.) by the automation start dates in Appendix II for " Baseline".

The model assumes that, after EPA publishes its rules enabling automation under " Baseline", authorized State/ Locals would upgrade their receiving systems to satisfy the rule's standards, as necessary. They would also prepare and submit modification requests to the EPA programs, as applicable.

In addition, direct reporters would register with a program's receiving system, obtain an electronic signature certificate, if required, and begin to report electronically by Web form, XML, or flat file. The model examines paper and electronic reporting to the CDX throughout the modeling period under the 68 collections.

Facilities reporting to State/ Locals ( i. e., indirect reporters) would be required to prepare and keep a handwritten electronic signature agreement on site for each employee who reports to the State/ Locals receiving system.

<IP_ADDRESS> " To Be"

Under " To Be", CROMERR would provide for uniform receiving system standards for the CDX and other approved EPA systems. The model assumes EPA began development of the CDX and CROMERR in 2000 and publishes the final CROMERR in 2003. The model also assumes the Agency will convert its collections to an electronic format ( e. g., preparation of Web forms, schemas, etc.) by the automation start dates in Appendix II for " To Be". The model assumes that EPA would issue a notice in the Federal Register announcing the availability of electronic reporting for each collection.

The model assumes that authorized State/ Locals would begin to upgrade their receiving systems to satisfy CROMERR, as necessary, and prepare their program modification requests to EPA, once CROMERR is published. Note that CROMERR gives State/ Locals the option of either submitting a consolidated application to EPA or separate applications to each EPA program, as applicable. The model assumes that State/ Locals would submit a consolidated application, because it would streamline the application preparation process. State/ Locals also will implement the rule's electronic signature agreement provision ( e. g., receiving, processing, and keeping records of submittals from indirect reporters).

In addition, direct reporters would register with the CDX, obtain an electronic signature certificate, if required, and begin to report electronically by Web form, XML, or flat file.

Finally, the model assumes that all direct and indirect reporters would comply with the rule's electronic signature agreement requirements. Refer to Appendix III for a full description of these activities. Exhibit 2 1 summarizes the broad activities examined in the model for " Baseline" and " To Be".

" Baseline" " To Be" 10 " Baseline" " To Be"

EPA Establish program portals and rules enabling automation Establish the CDX and CROMERR Automate individual information collections according to the time frames in Appendix II for " Baseline" Automate individual collections according to the time frames in Appendix II for " To Be" and issue Federal Register notice for each collection Maintain Help Desk*

Process paperwork under electronic signature Review/ approve State/ Locals Program modification requests*

Process electronic and paper submittals from direct reporters*

State/ Locals Upgrade receiving systems and prepare/ submit program modification application to EPA program areas Upgrade receiving systems and prepare/ submit consolidated modification application to EPA Process paperwork under electronic signature agreement Direct Reporters ( facilities that report directly to EPA)

Register with each program's gateway, call the program's Help Desk, and obtain digital signature certificate, as applicable Register with CDX, call the CDX Help Desk, and obtain digital signature certificate, as applicable Process paperwork under electronic signature agreement Perform XML or flat file mapping, if applicable*

Report to EPA by paper or electronic method*

Indirect Reporters ( i. e., facilities that report to the States/ Locals)

Report to EPA by paper or electronic signature agreement Process paperwork under electronic signature agreement * Same under " Baseline" and " To Be"

Exhibit 2 1. Activities Examined in the Model under " Baseline" and " To Be"

2.2 Development/ Operation of the Model In developing the model, EPA identified the primary activities that EPA, State/ Locals, and facilities would take under the " Baseline" and " To Be" scenarios as summarized above. For 11 each activity, EPA estimated four basic parameters that govern the total annual costs to them, respectively:

  Unit costs   Labor hour burden   Time frame of activity   Number of entities conducting activity EPA entered these parameters into the model's spreadsheets for all activities taken by EPA, State/ Locals, and facilities. The spreadsheets were then used to apply equations to these parameters to estimate the annual costs to these entities, respectively, across all activities in each year of the modeling period. In general, the model used straightforward calculations to estimate the cost impacts to these entities ( e. g., annual number of entities performing an activity multiplied by its unit cost equals the total annual cost for activity). In certain cases, the equations were more complex. In these cases, the equations are presented in Appendix XII to this analysis. Exhibit 2 2 illustrates the basic inputs of the model.

Exhibit 2 2. Inputs and Outputs of the Model Unit Costs. Unit costs include labor, capital, and maintenance costs associated with activities examined in the model. In regard to labor costs, the model drew from two sources of labor costs for the calculations.

  Average hourly labor costs associated with facility reporting under EPA's information collections. These costs were obtained from the specific ICRs associated with each collection and include overhead and fringe as applicable, as described in the ICRs.

  Average hourly labor costs associated with all other activities in the model. EPA developed standard hourly labor rates for EPA, State/ Locals, and facility employees. These costs include overhead and fringe. Refer to Appendix IV for information on how EPA derived these hourly rates. 12 Type of Personnel Hourly Labor Rate EPA $ 41.68/ hr State/ Local $ 30.42/ hr Facility $ 39.23/ hr Exhibit 2 3. Hourly Labor Costs The model also examines the capital ( i. e., start up) and maintenance costs associated with each activity. These costs vary by activity and are presented in Section 2.3 as specific to the activity and in the appendices, as applicable.

Labor Hour Burden. For each activity, EPA estimated the labor hour burden and entered it into the model as a basic input assumption.

  In regard to EPA, the model includes labor hours for providing Help Desk support, reviewing State/ Locals program modification applications, and implementing electronic signature agreement provisions. EPA used its best judgment in estimating the time associated with these activities.

The model also includes labor hours for EPA to receive and process both paper and electronic submittals from direct reporters. These hours were obtained from the 68 information collections in Appendix II. Note that the appendix does not show hours for EPA labor. 5   State/ Locals labor hours are primarily associated with preparation/ submittal of program modification applications to EPA and implementing electronic signature agreement provisions. EPA consulted regulators in 15 states in estimating the hour burden for many of these activities. Refer to Appendix V for additional information on EPA's analysis of these data and Appendix VI for the names of EPA's contacts.

The labor hours for direct reporters are drawn primarily from the 68 information collections in Appendix II, which estimate the total annual hour burden to facilities under the information collections being automated. EPA reviewed each ICR and extracted the hours associated with document preparation and submittal and entered them into the model, as appropriate. Appendix VII describes in more detail how EPA derived these labor hours.

  In addition, EPA used its best judgment to estimate the hour burden for direct and indirect reporters to carry out the electronic signature agreement provisions under the CDX and rule.

Time Frame of Activities. The model examines costs to EPA, State/ Locals, and facilities from 2000 to 2012. Note, however, that the model results presented in Section 3.0 of this document address the period 2003 through 2012 only. That is, this document examines those cost impacts incurred in, and subsequent to, 2003. Throughout this analysis, in the Tables and discussion, the dollars referred to are 2003 dollars. The model accounts for the time value of money expended during the period by discounting the annual costs to 2003 levels using both a 7 percent discount rate and a 3 percent discount rate, as recommended by the Office of Management and Budget ( OMB) guidelines.

5 The hours for EPA labor are not shown in the appendix due to space constraints. The CROMERR model, as well as the cost estimates in this CBA, include EPA labor hours. 13 In comparison with " To Be", EPA expects that the rollout of automation under " Baseline" would be generally less expedient. The offices would have resolved issues on a piecemeal fashion. Lessons learned in one office might not be shared across initiatives, resulting in reinventing the wheel. In this regard, the model assumes that the automation start dates of information collections under " Baseline" would be delayed by 2 years in comparison with " To Be".

Exhibit 2 4 provides an example of how the model examines EPA, State/ Locals, and facility activities over the modeling period under " Baseline". The exhibit illustrates Office of Solid Waste and Emergency Response's ( OSWER's) collections as the example. 6 . The model assumes that OSWER portal and rule development would last 3 years, until 2005. It also assumes OSWER would convert its information collections to electronic format over 2 years, from 2003 to 2005. In 2005, OSWER's information collections would be available for electronic reporting.

In addition, State/ Locals would begin upgrading and preparing/ submitting their program modification requests to EPA upon finalization of OSWER's rule in 2005.

Direct reporters would submit reports to OSWER by paper until its information collections are automated. Direct reporters would then gradually implement electronic reporting, beginning in 2005, based on the model's annual implementation rate. Indirect reporters would not be affected by the EPA actions, except that they would be required to comply with the rule's electronic signature agreement provisions once their State/ Locals submits the program modification application to EPA, ( i. e., in 2007.)

The sequence of activities for EPA, State/ Locals, and facilities shown in Exhibit 2 4 pertains to OSWER's regulatory programs under " Baseline". However, the model follows a comparable sequencing approach in estimating the timeframe for all EPA, State/ Locals, and facility activities under all EPA programs under " Baseline" and " To Be". For example, the model assumes that each information collection under " Baseline" and " To Be" will take 2 years to be automated and that electronic reporting under the collection will commence at the end of the 2 year period and increase incrementally based on the model's annual implementation rate. It also assumes that State/ Locals under " Baseline" and " To Be" will take 2 years to develop their program modification applications. The model assumes that some State/ Locals will submit their applications 2 years after promulgation of the electronic reporting rule ( e. g., CROMERR). The remaining State/ Locals will submit their applications in later years, based on the assumptions laid out in Section 2.3.

6 Note that the same approach was taken for all programs and collections. 14 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2012 2005 OSWER develops portals and rulemakings OSWER develops web forms, XML schemas, etc.

Direct reporters report to OSWER by paper only States/ locals upgrade their receiving systems and apply for program modification approval Indirect reporters comply with electronic signature agreement Direct reporters graduallytransition from paper to electronic reporting OSWER Automation Start Date = 2005 Exhibit 2 4. Example of Timeframe of Activities for OSWER Under " Baseline"

Number of Entities Performing the Activity. In developing the model, EPA estimated the number of entities performing each activity. The numbers of entities per activity vary by activity in the model and are discussed in Section 2.3. Refer to Table 2 10 for the universe of State/ Locals jurisdictions, Table 2 12 for facility registrants to EPA's gateways under " Baseline", and Table 2 13 for facility registrants to the CDX under " To Be".

Exhibit 2 5 summarizes other key model operating parameters.

Parameter Description Annual Implementation Rate for Electronic Reporting The annual implementation rate is the rate at which direct reporters would adopt electronic reporting each year under each information collection. The costs reflect a 30 percent first year implementation rate and a 10 percent rate per annum thereafter. The model applies this rate to derive the total annual costs associated with both paper and electronic submittals, as well as the number of registrants each year. The implementation rate was applied on a collection by collection basis, based on the collection's automation start date under " Baseline" and " To Be". An information collection's automation start date determines the percentage of facilities and submittals that will be automated by the end of the modeling period. As an example, information collections with an automation start date of 2003 would be automated in the 2003 to 2005 timeframe under " Baseline" and " To Be". 15 Parameter Description Electronic Reporting Savings Rate The model assumes that electronic reporters would save time and costs in relation to submittal of paper documents. The model assumes that facilities that report by Web form would save 10 percent of the hours and costs per document preparation and submittal and that facilities that report by XML or flat file would save 25 percent. Web Form Usage Rate The model assumes that 94 percent of direct reporters reporting electronically would use a Web form. The model assumes no hardware or software costs in reporting by Web form. XML or Flat File Usage Rate The model assumes that the remaining 6 percent of electronic reporters would use XML or flat file reporting. Refer to Appendix X for additional information on the XML and flat file usage and cost assumptions. Aggregate Annual Change in Total Hour Burden The model assumes that, each year, the total aggregate hour burden under all 68 information collections decreases by 1 percent per year. This rate is based on EPA's review of the historical growth trends of the 68 collections.

Exhibit 2 5. Other Model Operating Parameters 2.3 Model Data and Assumptions This section describes the activities EPA, State/ Locals, and facilities are expected to take under the " Baseline" and " To Be" scenarios. It also describes the unit costs, hour labor burden, and timeframe of activities, as applicable. All costs presented in this chapter are undiscounted. Refer to Table III 1 of Appendix III of this document for a summary of the data and assumptions used in estimating the cost impacts to government and facilities in the model.

2.3.1 EPA <IP_ADDRESS> " Baseline"

Development of Program Portals and Rules. Under the " Baseline" scenario, EPA assumes that nine program areas would each develop a portal for receiving electronic submissions and exchanging information with co regulators. The programs also would incur annual maintenance costs for these portals following portal development. EPA also assumes each program would establish a rulemaking enabling electronic reporting. All model input assumptions for these activities are shown in Table 2 1. 16 Table 2 1. Model Inputs: Portal and Rule Development Portal Development Program Areas Development Period Total Cost/ Portal Annual Portal Maintenance Costs* Total Cost/ Rule*

2000 2002 $ 6,200,000 $ 2,100,000 $ 1,500,000 OAR OAQPS 2000 2002 $ 6,200,000 $ 2,100,000 $ 1,500,000 OPPTS TSCA 1999 2001 $ 6,200,000 $ 2,100,000 $ 1,500,000 OPPTS FIFRA 1999 2001 $ 6,200,000 $ 2,100,000 $ 1,500,000 OSWER OSW 2003 2005 $ 6,200,000 $ 2,100,000 $ 1,500,000 OSWER CEPPO 2003 2005 $ 6,200,000 $ 2,100,000 $ 1,500,000 OSWER CERCLA 2003 2005 $ 6,200,000 $ 2,100,000 $ 1,500,000 OW NPDES 1998 2000 $ 6,200,000 $ 2,100,000 $ 1,500,000 OW SDW 2003 2005 $ 6,200,000 $ 2,100,000 $ 1,500,000 * Annual maintenance costs are incurred following the portal development period.

** The rulemaking costs for each program are incurred during the portal development period.

Development of Automated Collections. The model assumes information collections would be automated according to the automation start dates presented in Appendix II for " Baseline". EPA would incur costs for converting each collection to an electronic format ( e. g., developing Web form, and XML schema, etc.). Table 2 2 presents the model's input assumptions, which were used to cost out EPA's development of the 68 collections.

Table 2 2. Model Inputs: Developing Automated Collections Number of Information Collections Cost per Collection Development Period Conversion of Collections to Electronic Format 68 $ 200,000 2 years Help Desk. The model assumes that each registrant to a program's gateway would need to contact the program for assistance. Further, EPA has determined that facilities are subject to 1.3 EPA programs, on average. 7 EPA assumes that each program's portal would be different in regard to registration and use. Therefore, the model assumes that, on average, each employee registrant would make 1.3 calls to EPA's Help Desk. The model estimates the costs to EPA for handling these calls. Refer to Tables 2 15 and 2 16 for the number of employee registrants expected to contact EPA each year.

7 Refer to Appendix VIII for EPA's calculation of this estimate. 17 Table 2 3 presents the model's input assumptions, which were used in conjunction with the EPA labor costs in Exhibit 2 3 and number of employee registrants in Tables 2 15 and 2 16, in order to estimate EPA's costs per year.

Table 2 3. Model Inputs: EPA Help Desk Costs Annual Number of Calls Time/ Call Varies* 6 minutes * Based on the annual number of employee registrants in Table 2 13.

Review of State/ Locals Program Modification Applications. The model estimates costs to EPA for reviewing State/ Locals program modification requests. Based on the discussion in Appendix V, the model estimates that each authorized state environmental protection agency would submit three program modification applications to EPA, on average ( i. e., one application for each receiving system). The other authorized State/ Locals jurisdictions ( e. g., county governments) would submit one application to EPA, on average.

Table 2 4 presents the model's input assumptions, which were used in conjunction with the EPA labor rates in Exhibit 2 3, to estimate the annual costs to EPA.

Table 2 4. Model Inputs: Program Modification Applications Agencies EPA Hours per Application Review Number Applications Submitted per Agency Number of Applications Received and Time frame 42 from state EPAs in 2007 3 from state EPAs/ yr in 2008 to 2011 State EPAs 80 3 2 from state EPAs in 2012 111 from other State/ Locals jurisdictions in 2007 All Other State/ Locals Jurisdictions* 80 1 27 from other State/ Locals jurisdictions/ yr in 2008 to 2012 * Includes tribes, county air programs, publicly owned treatment works ( POTWs), state health departments, and state oil and gas agencies.

Processing of Paper/ Electronic Submittals. The model assumes EPA would incur annual costs for processing paper and electronic submittals from direct reporters under all of the collections. Refer to Appendix VII for the model's equation for deriving EPA's annual costs. 8 <IP_ADDRESS> " To Be"

Development/ Maintenance of the CDX. Table 2 5 presents the total annual estimated CDX development and maintenance costs. This includes, among other things, upgrading the CDX to implement the electronic signature agreement requirements ( e. g., upgrading the CDX to control 8 Note that Appendix VII discusses EPA's approach for estimating costs to direct reporters in submitting information under the collections. However, EPA took an identical approach for estimating costs to EPA in processing the submittals under them. Refer to Figure VII 1 for the equation used in the model to estimate EPA costs in processing paper and electronic submittals under each of the collections. 18 registrants' access into their CDX accounts and data flows pending EPA receipt/ approval of the agreement or notification of certification). The model assumes EPA would incur development and maintenance costs over the duration of the modeling period. Table 2 5 presents all of the model's inputs.

Table 2 5. Model Inputs: CDX Development and Maintenance Costs ( in millions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Development $ 3.8 $ 4.4 $ 6.6 $ 10.9 $ 10.9 $ 11.2 $ 8.9 $ 6.6 $ 6.6 $ 6.6 $ 6.6 $ 6.6 $ 6.6 Maintenance $ 0.4 $ 1.5 $ 1.3 $ 3.1 $ 3.1 $ 3.3 $ 3.6 $ 3.9 $ 3.9 $ 3.9 $ 3.9 $ 3.9 $ 3.9 Total $ 4.2 $ 5.9 $ 7.9 $ 13.4 $ 14.0 $ 14.5 $ 12.5 $ 10.5 $ 10.5 $ 10.5 $ 10.5 $ 10.5 $ 10.5 Development of CROMERR. Table 2 6 presents all model inputs for estimating costs to EPA in developing CROMERR.

The table also presents EPA's costs for preparing for implementation of the electronic signature agreement provisions. The model assumes EPA would need to develop a process and procedures to implement the requirement for the electronic signature agreements, the agreement collection certifications, and related submittals. EPA will need to consider, among other things, appropriate routing, processing, and records management of the submittals when received by EPA; what the staff assignments and responsibilities will be; what policies and criteria will govern the review and approval process for the agreements; LRA applications; and certifications.

Finally, the model assumes that EPA would prepare a brief guidance to assist registrants, local authorities, and EPA Help Desk staff in resolving questions or problems associated with the requirement. This could be in the form of a simple fact sheet or a question and answer document. EPA will need to purchase file cabinets for storing submittals under the electronic signature provision.

Table 2 6. Model Input: CROMERR Development Costs Development Period Total Development Costs Development of CROMERR 2000 2003 $ 1,547,502 Planning/ Development for Implementation of Electronic Signature Agreement Provisions 2003 2004 $ 17,334 Purchase of File Cabinets for Storing Electronic Signature Agreement and Certification Submittals 2003 2012 $ 8,996 Development of Automated Collections. The model assumes information collections would be automated according to the automation start dates presented in Appendix II for " To Be". EPA would incur costs for converting their collections to an electronic format ( e. g., developing Web form, and XML schema, etc.). EPA would also issue a Federal Register notice announcing the availability of electronic reporting of each collection. Table 2 7 presents the model's input assumptions. 19 Table 2 7. Model Input: Developing Automated Collections Number of Information Collections Cost per Collection Development Period Conversion of Collections to Electronic Format 68 $ 200,000 2 years Development of Federal Register Notice 68 $ 300,000 1 year Help Desk. The model assumes that each registrant to the CDX would need to contact the program for assistance, and that EPA would incur costs for handling these calls. Refer to Tables 2 15 and 2 16 for the number of employee registrants expected to contact EPA each year. Table 2 8 presents the model's input assumptions, which were used in conjunction with the EPA labor rates in Exhibit 2 3 and the number of employee registrants in Tables 2 15 and 2 16, in order to estimate costs to EPA.

Table 2 8. Model Inputs: Help Desk Annual Number of Calls Time/ Call Varies* 8 minutes * Based on the annual number of employee registrants in Tables 2 15 and 2 16.

Implementation of Electronic Signature Agreement Provisions. The model assumes that EPA will receive and process the subscriber agreements, certifications, and related documents submitted by small and medium size/ large direct reporters under the CDX's electronic signature agreement provisions. These activities are described in Table 2 9, along with the burden assumptions for each submittal received by the Agency. Refer to Table 2 20 for the number of small and medium size/ large firms that will submit the paperwork each year.

Table 2 9. Implementation of Electronic Signature Agreement Provisions Wet Ink Signature Agreement Burden Hrs/ Submittal O& M costs Annual Number of Submittals Receive, process, review, approve, and file new subscriber agreements 0.17 $ 0.00 Varies annually.*

Receive, process, review, approve, and file new electronic agreements ( employee turnover) 0.17 $ 0.00 Varies annually.** Based on an assumption that registrants of small firms will submit new wet ink agreements due to employee turnover.

Receive, process, review, approve, and file wet ink signature agreement renewals 0.17 $ 0.00 Varies annually.** Model assumes small firms will renew their wet ink agreements every 2 years by submitting a new wet ink agreement.

LRA Notification of Registered Users 20 Wet Ink Signature Agreement Burden Hrs/ Submittal O& M costs Annual Number of Submittals Receive application to designate first time local authority 0.5 $ 0.00 Varies annually.***

Receive, store, process, and review notification of registered users 0.17 $ 0.00 Varies annually.***

Receive application to designate local authority ( local authority turnover) 0.5 $ 0.00 Varies annually.**** The model assumes EPA will receive applications from some medium size and large firms to designate a replacement local authority as a result of local authority turnover ( e. g., if original local authority leaves the firm or transfer to another position).

Receive, process, review, and approve updated notification of certificate ( employee turnover) 0.17 $ 0.00 Varies annually.**** The model assumes each local authority will update their certifications as needed due to employee turnover. Updates will be made electronically via the CDX. EPA will need to review and validate these updates and reflect them in the appropriate CDX accounts.

Receive notification of breach of storage security and take appropriate follow up action 1 $ 10.00 Varies annually.**** A local authority is required to ensure the security of the wet ink agreements in storage. If security is breached, the local authority will notify EPA. EPA will receive these notifications and take appropriate action. The model assumes 1 percent of medium size and large firms experience a breach annually.

Receive, process, review, and approve updated notification of certificate ( breach of security) 0.17 $ 0.00 Varies annually.**** In response to a breach, each local authority will collect newly signed wet ink agreements from employees and will store the signed agreements on site. Local authorities will then send EPA the information required to update the CDX security profiles ( list of employees, data flows for which each is authorized to represent the company, other pertinent information).

Receive, process, review, approve, and 0.5 $ 0.00 Varies annually.**** Each local authority is expected to renew their 21 Wet Ink Signature Agreement Burden Hrs/ Submittal O& M costs Annual Number of Submittals file application renewals designation every 2 years. EPA will receive, review, and approve/ deny the application and notify the local authority.

Ongoing Management Identify and resolve problems 1 $ 10.00 Varies annually based on the total number of direct facility and employee registrants to the CDX. The model assumes EPA will periodically encounter problems that require resolution. The model includes $ 10 per long distance call to a facility to resolve the problem. The model assumes 3 percent of registrants will be involved in a problem that must be resolved annually.

Respond to information requests 1.5 $ 0.00 Varies annually based on the total number of direct facility and employee registrants to the CDX. The model assumes EPA will respond to FOIA requests, management inquiries, internal requests, and budget updates related to wet ink on paper signature agreements to support the process. The model assumes that EPA will respond to information requests involving 3 percent of registrants' accounts each year.

* Based on the number of small direct reporter employees registering with the CDX each year. Refer to Table 2 20 for the annual number of small direct reporter employee registrants.

** Based on the number of small direct reporter facility employees that have registered with the CDX. Refer to Table 2 20 for the annual number of small direct reporter employee registrants.

*** Based on the number of medium size and large direct reporter employees registering with the CDX each year. Refer to Table 2 20 for assumptions on the annual number of medium size and large employee registrants.

**** Based on the number of medium size and large direct reporter employees that have registered with the CDX. Refer to Table 2 20 for assumptions on the annual number of medium size and large employee registrants.

Review of State/ Locals Program Modification Applications. The model estimates costs to EPA for reviewing program modifications from State/ Locals. The model estimates that each authorized state EPA ( i. e., state environmental protection agency) would submit one consolidated program modification application to EPA, on average. The other authorized State/ Locals jurisdictions would submit one application to EPA, on average.

Table 2 10 presents the model's input assumptions, which were used in conjunction with the EPA labor rates in Exhibit 2 3, to estimate costs to EPA. 22 Table 2 10. Model Inputs: Program Modification Applications Agencies EPA Hours per Application Review Number Applications Submitted per Agency Number of Applications Received and Time frame 42 from state EPAs in 2005 3 from state EPAs/ yr in 2006 to 2009 State EPAs 160 1 2 from state EPAs in 2010 111 from other State/ Locals jurisdictions in 2005 All Other State/ Locals Jurisdictions* 80 1 27 from other State/ Locals jurisdictions/ yr in 2008 to 2010 22 from other State/ Locals jurisdictions in 2011 21 from other State/ Locals jurisdictions in 2012 * Includes tribes, county air programs, publicly owned treatment works ( POTWs), state health departments, and state oil and gas agencies.

2.3.2 State and Local Environmental Programs Table 2 11 presents the total universe of authorized state environmental protection agencies and other authorized State/ Locals jurisdictions. The model examines these State/ Locals' costs under " Baseline" and " To Be" for:

  Upgrading their receiving systems.

  Applying to EPA for program modification approval.

Table 2 11. Authorized State EPAs and State/ Locals Jurisdictions Entity Total Universe State EPA 56 Tribes 20 County Air Programs 40 POTWs 412 State Health Department 22 State Oil and Gas Agencies 19 Based on EPA's best judgment, the model assumes that these agencies would upgrade their systems and apply for program modifications according to the following frequency:

  Seventy five percent of state EPAs within the first 2 years of promulgation of EPA's rules, and 5 percent annually thereafter.

  Forty five percent of tribes within the first 2 years of EPA rule promulgation, and 10 percent annually thereafter. 23   Ten percent of POTWs within the first 2 years of EPA rule promulgation, and 5 percent annually thereafter.

  Seventy five percent of all other State/ Locals jurisdictions within the first 2 years of EPA rule promulgation, and 5 percent annually thereafter.

<IP_ADDRESS> " Baseline"

Table 2 12 presents the model inputs for the number of State/ Locals upgrading their receiving systems and developing/ submitting their program modification applications under " Baseline". Based on the discussion in Appendix V, the model assumes each state environmental protection agency would spend 180 hours in preparing/ submitting each program application, and that each would submit three applications ( i. e., one for each receiving system). The model assumes each of the other State/ Locals jurisdictions would spend 180 hours in preparing/ submitting one application. The model applies the data in Table 2 12 to these hourly estimates and the hourly State/ Locals labor costs in Exhibit 2 3 in order to estimate annual costs to State/ Locals in preparing/ submitting their applications. In addition, the model estimates upgrade costs to State/ Locals based on the data in Table 2 12 and the upgrade assumptions in Appendix V, Table V 4.

Table 2 12. Model Inputs: State/ Locals Receiving Systems Upgrades and Modification Application under " Baseline"

Universe Timeframe* Number of Agencies Number of Receiving Systems 2006 and 2007 42 126 2007 and 2008 3 9 2008 and 2009 3 9 2009 and 2010 3 9 2010 and 2011 3 9 State EPA 2011 and 2012 2 6 2006 and 2007 111 111 2007 and 2008 27 27 2008 and 2009 27 27 2009 and 2010 27 27 2010 and 2011 27 27 All other agencies 2011 and 2012 27 27 * Time frame pertains to agency's development of their program modification requests and performance of startup upgrades to their receiving systems. It does not apply to their ongoing maintenance of their upgraded systems, because these costs would be incurred annually following the startup upgrade.

<IP_ADDRESS> " To Be"

Table 2 13 presents the model inputs for State/ Locals upgrades to their receiving system and development/ submittal of their program modification applications under " To Be". Based on the discussion in Appendix V, the model assumes each state environmental protection agency would spend 245 hours in preparing/ submitting a consolidated modification application to EPA. In addition, EPA assumes that 10 percent of states adopting CROMERR annually will conduct a 24 rulemaking, incurring an additional 120 hours and $ 20,000 in contractor costs to support rule development.

The model assumes each of the other State/ Locals jurisdictions would spend 210 hours in preparing/ submitting one application. The model applies the data in Table 2 13 to these hourly estimates and the hourly State/ Locals labor costs in Exhibit 2 3 in order to estimate annual costs to State/ Locals in preparing/ submitting their applications.

In addition, the model estimates upgrade costs to State/ Locals based on the data in Table 2 13, in conjunction with the upgrade assumptions in Appendix V, Tables V 4 and V 7.

Table 2 13. Model Inputs: State/ Locals Receiving Systems Upgrades and Modification Applications under " To Be"

Universe Timeframe* Number of Agencies** Number of Receiving Systems 2004 and 2005 42 126 2005 and 2006 3 9 2006 and 2007 3 9 2007 and 2008 3 9 2008 and 2009 3 9 2009 and 2010 2 6 State EPA 2010 and 2011 0 0 2004 and 2005 111 111 2005 and 2006 27 27 2006 and 2007 27 27 2007 and 2008 27 27 2008 and 2009 27 27 All other agencies 2009 and 2010 27 27 2010 and 2011 22 22 2011 and 2012 21 21 * Time frame pertains to Agency's development of their program modification requests and performance of startup upgrades to their receiving systems. It does not apply to their ongoing maintenance of their upgraded systems, because these costs would be incurred annually following the startup upgrade.

** In both Tables 2 12 and 2 13, the " Number of Agencies" column refers to the number of agencies implementing electronic reporting. The total of agencies in this column is 43 less in Table 2 12 than in Table 2 13, because Table 2 12 reflects the Baseline ( or " As Is" model) while 2 13 reflects CROMERR. Under the Baseline model, implementation begins two years later than under CROMERR, so   for the same 2004  2012 period   fewer systems ( i. e. two years worth) implement under the Baseline than under CROMERR. That is, starting two years earlier, implementation under CROMERR reaches 43 more systems by 2012 than under the Baseline.

In addition, the model assumes that State/ Locals will receive and process the subscriber agreements, certifications and related documents submitted by indirect reporters under the rule's electronic signature agreement provisions. These activities are described in Table 2 14, 25 along with the burden assumptions for each submittal received by the State/ Locals. Refer to Table 2 20 for the number of small and medium size/ large firms that will submit the paperwork each year and a description of their activities.

Table 2 14. State/ Locals Implementation of Electronic Signature Agreement Provisions for Submissions by Indirect Reporters Wet Ink Signature Agreement Burden Hrs/ Submittal O& M Costs Annual Number of Submittals Receive, process, review, approve, and file new subscriber agreements 0.17 $ 0.00 Varies annually.*

Receive, process, review, approve, and file new electronic agreements ( employee turnover) 0.17 $ 0.00 Varies annually.** Based on an assumption that registrants of small firms will submit new wetink agreements due to employee turnover. Receive, process, review, approve, and file wet ink signature agreement renewals 0.17 $ 0.00 Varies annually.** Model assumes small firms will renew their wet ink agreements every 2 years by submitting a new wetink agreement. LRA Notification of Registered Users Receive application to designate first time local authority 0.50 $ 0.00 Varies annually.***

Receive, store, process and review notification of registered users 0.17 $ 0.00 Varies annually.***

Receive application to designate local authority ( local authority turnover) 0.50 $ 0.00 Varies annually.**** The model assumes State/ Locals will receive applications from some medium size and large firms to designate a replacement local authority as a result of local authority turnover ( e. g., if original local authority leaves the firm or transfer to another position). Receive, process, review, and approve updated notification of certificate ( employee turnover) 0.17 $ 0.00 Varies annually.**** The model assumes each local authority will update their certifications as needed due to employee turnover. Updates will be made electronically via the State/ Locals. The State/ Locals will need to review and validate these updates and reflect them in the appropriate accounts. Receive notification of breach of storage security and take appropriate follow up action 1 $ 10.00 Varies annually.**** A local authority is required to ensure the security of the wet ink agreements in storage. If security is breached, the local authority will notify the State/ Locals. The State/ Locals will receive these notifications and take appropriate action. The model assumes 1 percent of medium size and large firms experience a breach annually.

Ongoing Management Identify and resolve problems 1 $ 10.00 Varies annually based on the 26 Wet Ink Signature Agreement Burden Hrs/ Submittal O& M Costs Annual Number of Submittals total number of direct facility and employee registrants to the CDX. The model assumes the State/ Locals will periodically encounter problems that require resolution. The model includes $ 10 per long distance call to a facility to resolve the problem. The model assumes 3 percent of registrants will be involved in a problem that must be resolved annually. Respond to information requests 1.5 $ 0.00 Varies annually based on the total number of direct facility and employee registrants to the State/ Locals system. The model assumes the State/ Locals will respond to FOIA requests, management inquiries, internal requests, and budget updates related to wet ink on paper signature agreements to support the process. The model assumes that EPA will respond to information requests involving 3 percent of registrants' accounts each year. * Based on the number of small direct reporter employees registering with the State/ Locals systems each year. Refer to Table 2 20 for the annual number of small direct reporter employee registrants.

** Based on the number of small direct reporter facility employees that have registered with the State/ Locals systems. Refer to Table 2 20 for the annual number of small direct reporter employee registrants.

*** Based on the number of medium size and large direct reporter employees registering with the State/ Locals systems each year. Refer to Table 2 20 for assumptions on the annual number of medium size and large employee registrants.

**** Based on the number of medium size and large direct reporter employees that have registered with the State/ Locals systems. Refer to Table 2 20 for assumptions on the annual number of medium size and large employee registrants.

2.3.3 Facilities As described in Appendix IX, EPA estimated the total number of facilities that will need to register with EPA's receiving systems under " Baseline" and " To Be". EPA also estimated the number of employees within these facilities that will perform the registration process. EPA generally believes that the majority of facilities ( 89 percent) will be small ( i. e., fewer than 20 employees); the remainder ( 11 percent) are considered medium size or large. EPA estimates that small facilities will designate three employees and medium size and large facilities will designate six, on average.

For both " Baseline" and " To Be", the model applied the annual implementation rate, described in Exhibit 2 5, to the total number of registering employees ( shown in Table IX 2 of Appendix IX) in order to estimate the annual number of employee registrants per year. The model took into account the automation start date of each collection under each scenario, as well as the number of direct reporters subject to these collections, in determining the number of registrants in each year.

In general, EPA does not expect that registrants will incur any notable costs in registering or reporting electronically, except for the activities listed in Exhibit 2 1. In particular, EPA does not expect registrants to buy a personal computer or Internet access in order to report electronically. EPA assumes that facilities will pursue electronic reporting only if they already have, or plan to 27 purchase, computer capabilities as part of their normal business practices. Therefore, the model does not include costs to them for buying a computer or Internet access.

Tables 2 15 and 2 16 present the annual number of facility and employee registrants to EPA under " Baseline" and " To Be" during 2003 through 2012.

Table 2 15. Number of Facility and Employee Registrants under " Baseline"*

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Facilities 1,467 1,320 14,551 4,863 4,996 3,783 3,405 3,064 2,758 2,484 Employee Registrants 4,885 4,396 48,455 16,194 16,637 12,597 11,339 10,203 9,184 8,265 * Table includes rounding error.

Table 2 16. Number of Facility and Employee Registrants under " To Be"*

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Facilities 14,830 8,302 5,221 3,986 3,588 3,229 2,906 2,615 2,354 2,118 Employee Registrants 49,384 27,646 17,386 13,273 11,948 10,753 9,677 8,708 7,839 7,053 * Table includes rounding error.

<IP_ADDRESS> " Baseline" and " To Be"

Registration and Help Desk. The model assumes that, under " Baseline", each employee registrant in Table 2 15 will register with 1.3 EPA receiving systems, on average. 9 The model assumes each employee registrant will need to call the EPA Help Desk each time they register.

The model assumes that, under " To Be", each employee registrant will register with the CDX once. It also assumes each employee registrant will call the Help Desk once.

Table 2 17 presents model inputs for registration and Help Desk costs under " Baseline" and " To Be". They were used in conjunction with the number of employee registrants in Table 2 15 and 2 16, as well as the facility labor costs in Exhibit 2 3, to estimate registration and Help Desk costs to facilities under " Baseline" and " To Be". EPA performed consultations with the industry representatives in Appendix XI in developing these estimates.

9 This 1.3 estimate is based on EPA's analysis of facility data in its Envirofacts database, as described in Appendix VIII. 28 Table 2 17. Model Input: Registration and Help Desk Activity Annual Number of Employee Registrants Time/ Registrant Registration Varies annually* 3 minutes under " Baseline" and " To Be"

Help Desk Varies annually* 6 minutes under " Baseline" 8 minutes under To Be * Based on the annual number of employee registrants in Table 2 15 for " Baseline" and 2 16 for " To Be".

Digital Signature Certification and Re Certification. The model assumes that 20 percent of employee registrants would be required to submit enforcement sensitive information to EPA. To preserve the integrity of the data submitted, the model assumes that these registrants would need to obtain and install a digital electronic signature certificate on their browser. EPA estimates that a registrant would need 30 minutes to obtain and install the certificate. The registrants would need to renew their registration with EPA every 2 years.

Table 2 18 presents model inputs, which were used in conjunction with the facility labor rates in Exhibit 2 3 and the number of employee registrants in Table 2 15 or 2 16, in order to estimate costs for digital signature certifications.

Table 2 18. Digital Signature Certification Costs Number of Registrants Requiring Digital Certificate Time/ Certificate Varies annually* 30 minutes * Based on 20 percent of the annual number of employee registrants in Table 2 15 or 2 16.

2.3.4 Electronic Signature Agreement <IP_ADDRESS> " Baseline"

Under " Baseline", facilities reporting to State/ Locals receiving systems ( i. e., indirect reporters) must ensure that their employees sign an electronic signature agreement. The annual number of facility employee registrants to State/ Locals receiving systems is presented in Table V 5 of Appendix V. The model assumes that each employee would take 10 minutes to prepare, sign, and keep records of the signature agreement, on average. Refer to Appendix V for additional information on how EPA derived the number of employees registering with State/ Locals systems.

Table 2 19 presents the hour burden per employee registrant, which the model applied to the annual number of registrants in Table V 5 of Appendix V and the facility labor costs in Exhibit 2 3, in order to estimate total costs to them.

Table 2 19. Model Input: Electronic Signature Agreement Costs Number of Registrants Time/ Registrant Varies* 10 minutes * Based on the annual number of employee registrants, as shown in Table V 5 of Appendix V. 29 <IP_ADDRESS> " To Be"

Under " To Be", the model assumes that facilities that report to both EPA and State/ Locals receiving systems must comply with the electronic signature agreement requirement for both EPA and the State/ Locals systems. The model also assumes that facilities subject to multiple State/ Locals receiving systems must comply with the requirement for each system. The model assumes that each indirect reporter reports to, on average, 2.5 State/ Locals systems.

Table 2 20 presents the annual number of direct and indirect reporting facilities and their employees that are expected to register with EPA or State/ Locals receiving systems and become subject to the identity proofing requirements. However, note that, in regard to compliance with the electronic signature agreement requirements, the model makes a number of additional assumptions to estimate the annual number of employees and facilities that will submit subscriber agreements, LRA certifications, and other paperwork to the CDX and State/ Locals systems.

The model assumes that small firms ( i. e., 20 or fewer employees) would opt to have each of their employee registrants submit the wet ink agreement directly to EPA or State/ Locals. Specifically, the model assumes that a registrant would log onto the agency's receiving system, create an account, and generate a signature ( e. g., PIN or password). They would then prepare and submit the subscriber agreement to the receiving agency and keep it on file. The agency would conduct a review of the agreement and, if accepted, open the system's account so that the registrant can begin use. Employee registrants would renew their agreements every 2 years. The model assumes that small firms have, on average, three employee registrants each. In addition, the model assumes an annual employee turnover rate of 10 percent.

The model assumes that medium to large sized firms would exercise the local authority option under EPA and State/ Locals systems. The model assumes that the local authority would be an official designated by their entity to act in that capacity. To be designated as a local authority, the official must submit to EPA or State/ Locals, a notarized affidavit of identity, as well as a written authorization from their entity that they are authorized to issue agreement collection certifications on its behalf. After being designated, the official would compile wet ink signature agreements from their employee registrants, prepare an agreement collection certification, and store the documents in a secured location. The official would then electronically submit a notification to the receiving agency for review and approval. The agency would conduct a review of the notification and, if accepted, open the accounts so that the registrants can begin use. In addition, the model assumes an annual employees and local authority turnover rate of 10 percent.

The model assumes that medium and large sized firms own on average, three facilities, each of which has six employee registrants. Hence, medium and large sized firms are assumed to have, on average, 18 employee registrants each.

Table 2 20 presents the annual number of direct and indirect facility and employee registrants, by firm size, that become subject to the electronic signature agreement requirements. 30 Table 2 20. Annual Number of Facility and Employee Registrants that Become Subject to Identity Proofing Requirements, by Firm Size 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Direct Reporters Small Facilities 13,199 7,388 4,647 3,548 3,193 2,874 2,586 2,327 2,095 1,885 Small Facility Employee Registrants 39,597 22,164 13,941 10,644 9,579 8,622 7,758 6,981 6,285 5,655 Medium/ Large Size Facilities 1,631 914 574 438 395 355 320 288 259 233 Medium/ Large Size Facility Employee Registrants 9,786 5,484 3,444 2,628 2,370 2,130 1,920 1,728 1,554 1,398 Indirect Reporters Small Facilities   130.888 30,540 27,486 24,738 22,263 20,037 18,034 16,231 Small Facility Employee Registrants   392,664 91,620 82,458 74,214 66,789 60,111 54,102 48,693 Medium/ Large Size Facilities   16,177 3,775 3,397 3,058 2,752 2,477 2,229 2,006 Medium/ Large Size Facility Employee Registrants   97,062 22,650 20,382 18,348 16,512 14,862 13,374 12,036 XML and Flat File Mapping Costs. The model estimates XML and flat file mapping costs to the registrants shown in Table X 1 or X 2 of Appendix X for " Baseline" or " To Be", respectively. Refer to the Appendix X for additional model assumptions.

Reporting to EPA by Paper and Electronic Methods. The model estimates the total costs to direct reporters in preparing and submitting documents by paper and electronically. Refer to Appendix VII for the model's equations in calculating these costs.

Table 2 21 presents the activities and burden assumptions associated with direct and indirect reporter compliance with the electronic signature agreement requirements. These burden assumptions were multiplied by the facility employee labor rates shown in Exhibit 2 3 and the number of employee registrants in Table 2 20 in order to estimate costs to them. Note that all employee registrants in small firms are expected to submit a subscriber agreement when they register. Medium and large size firms are expected to designate a local registration authority that will collect and store subscriber agreements from the firm's employees, prepare an agreement collection certification, and send a certification of receipt and secure storage to a receiving agency. 31 Table 2 21. Direct/ Indirect Reporters Implementation of Electronic Signature Agreement Provisions with Burden Assumptions Facilities Hour Burden Capital/ O& M Cost Number of Submittals Prepare, submit, and file wet ink signature agreements 0.25 $ 2.50 Varies annually.* Each small firm will submit wet ink agreements for their employees using certified mail. This includes all new registrants in 2003 through 2012 ($ 2.50/ submittal). It also includes registrants that had registered with EPA or State/ Locals system prior to publication of the final rule. The model assumes these registrants would have to submit their wet ink agreements in 2004.

Prepare, submit, and file new wet ink signature agreements ( employee turnover) 0.25 $ 2.50 Varies annually.** Small firms must submit a new wet ink signature agreement when it replaces an existing employee registrant ( due to employee turnover).

Renew wet ink signature agreements 0.25 $ 2.50 Varies annually.** Employee registrants at small firms must renew their signature agreements every 2 years.

Develop a plan/ process to collect and store wetink signature agreements, designate local authority, and submit application material 12 $ 5.00 Varies annually.* Medium size and large firms will develop a plan/ process to comply with the requirement, identify who their local authority should be, and submit application materials to EPA or State/ Locals to designate a local authority. The application must establish the identity of the individual by notarized affidavit and include written statement that the individual is authorized by the regulated entity to issue an agreement certificate on its behalf. This includes all new registrants in 2003 through 2012. It also includes registrants that had registered with EPA or State/ Locals system prior to publication of the final rule. The model assumes these registrants would have to submit their applications in 2004. Model includes $ 2.50 for notary public and $ 2.50 for certified mail delivery.

Obtain legal counsel 1 $ 0.00 Varies annually.* Each medium size and large firm will obtain legal counsel in establishing a process.

Register local authority with CDX or State/ Locals system 0.183 $ 0.00 Varies annually.* Each local authority will establish an account at the CDX or State/ Locals system so that they can 32 Facilities Hour Burden Capital/ O& M Cost Number of Submittals transmit submittals electronically. The local authority will also ask questions of the identity proofing requirement when they call the CDX or State/ Locals Help Desk.

Prepare/ send wet ink signature agreement to local authority 0.25 $ 0.37 Varies annually.* All employee registrants within a medium size or large firm must prepare and submit wet ink agreements to the local authority. The model assumes the local authority is at an offsite local ( e. g., headquarters office).

Prepare local authority certification and submit notification of certificate 1 $ 0.00 Varies annually.* Each local authority will store the signed agreements on site. Local authorities will then send EPA the information required to update the CDX security profiles ( list of employees, data flows for which each is authorized to represent the company, other pertinent information). EPA will receive/ process the security information and review it for completeness and acceptability.

Prepare/ send new agreements to local authority ( employee turnover) 0.25 $ 0.37 Varies annually.** New wet ink signature agreements will be prepared and sent by new employee registrants who replace an existing employee registrant who is leaving the company ( employee turnover). The agreements will be sent to their local authority for record keeping.

Submit updated notification of certificate ( employee turnover) 0.08 $ 0.00 Varies annually.** When the local authority receives the new wet ink agreement from the replacement employee, they will file the agreement on site and electronically submit an updated notification of certificate to EPA or State/ Locals system ( employee turnover).

Redesignate local authority and send application material ( local authority turnover) 1 $ 5.00 Varies annually.** Some local authorities will leave the firm ( or current position/ role) and have to be replaced. Their firm must identify a new local authority and submit a new application to EPA or State/ Locals agency to designate him.

Register new local authority 0.183 $ 0.00 Varies annually.** The replacement local authority must register with the CDX in order to submit updates to the certification electronically. 33 Facilities Hour Burden Capital/ O& M Cost Number of Submittals Report breach of storage security 0.5 $ 0.00 Varies annually.** Some firms will experience a breach of security of their stored agreements. The local authority must report such breach. The model assumes 1 percent of medium size and large firms will experience a breach annually.

Prepare/ send wet ink signature agreement to local authority ( breach of security) 0.25 $ 0.37 Varies annually.** All employee registrants must prepare and submit a new wet ink agreement to the local authority.

Prepare and submit notification of certificate ( breach of security) 0.08 $ 0.00 Varies annually.** When the local authority receives the new wet ink agreements from the employees, they will file the agreement on site and electronically submit an updated notification of certificate to EPA or State/ Locals system ( employee turnover).

Renew local authority designation 1 $ 5.00 Varies annually.** The local authority must renew their designation every 2 years by resubmitting the application to EPA or State/ Locals. Model includes $ 2.50 for notary public and $ 2.50 for certified mail delivery.

Identify and resolve problems 1 $ 0.00 Varies annually.** Some small, mediumsize and large firms will have to work with EPA or State/ Locals to resolve problems involving their agreements or certifications. The model assumes 3 percent of registrants will be involved in a problem that must be resolved annually.

* Based on the annual number of direct or indirect reporter employees registering with the CDX and/ or State/ Locals receiving system each year.

** Based on the number of direct and indirect reporter employees that have already registered with the CDX and/ or State/ Locals receiving systems each year. 34 3.0 Conclusions and Findings 3.1 Total Costs In this analysis, the " To Be" scenario represents the costs actually incurred to date under the rulemaking and CDX, as well as the expected costs going forward. As shown in Table 3 1, EPA estimates that the cumulative costs incurred by EPA, State/ Locals, and facilities under " To Be" from 2003 to 2012 would be higher than their cumulative costs incurred under " Baseline" over the same period. The estimated total incremental costs under " To Be" range from $ 34.4 million to $ 41.7 million, depending on the discount rate used. ( Refer to Appendix XII for summary tables of the total annual costs to EPA, State/ Locals, and facilities under " Baseline" and " To Be". The costs in Table 3 1 are based on the tables in the appendix. The tables in the appendix are not discounted, however.)

Table 3 1. Total Cost Impacts under To Be"* ( in millions of dollars)

A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2012* ( in millions of dollars)

Entity ** Cumulative Costs Baseline To Be Difference in Cumulative Costs To Be Relative to Baseline Difference in Cumulative Costs To Be Relative to Baseline Discounted at 7% Rate Difference in Cumulative Costs To Be Relative to Baseline Discounted at 3% Rate EPA $ 703.78 $ 618.02 ($ 85.76) ($ 64.44) ($ 75.41)

State/ Locals $ 76.29 $ 149.04 $ 72.75 $ 57.19 $ 65.20 Facilities $ 7039.34 $ 7101.31 $ 61.97 $ 41.61 $ 51.93 Total $ 7819.41 $ 7868.37 $ 48.96 $ 34.36 $ 41.72 * Cost savings shown in parentheses.

** Not discounted.

3.2 EPA EPA estimates an overall cost savings to EPA from 2003 to 2012 under " To Be" relative to " Baseline." As shown in Table 3 1, these estimated savings range from $ 64.4 million to $ 75.4 million, depending on the discount rate used. Under both " Baseline" and " To Be," EPA must develop receiving systems and rules to allow for automated submittals. However, EPA would develop one gateway and rule under " To Be," instead of nine rules and gateways under " Baseline." In this regard, CROMERR/ CDX would be more efficient than the approach under " Baseline," where nine programs would have to enable automation on a more piecemeal basis, which is less efficient.

3.3 State/ Locals EPA estimates that State/ Locals will incur greater costs between 2003 and 2012 under " To Be" than " Baseline." As shown in Table 3 1, cumulative incremental costs to State/ Locals under " To Be" are estimated to range from $ 57.2 million to $ 65.2 million, depending on the discount rate used. As an initial point, it is important to understand that the State/ Locals' costs estimated in the model for both " Baseline" and " To Be" are solely those costs that result from EPA's rules. 35 Specifically, the model examines State/ Locals' costs for complying with EPA rule requirements for upgrading their electronic receiving systems to meet EPA standards, applying to EPA for approval of their program changes, and administering electronic signature agreement provisions as applicable. The model does not consider the potential savings ( e. g., efficiencies) to State/ Locals in processing electronic submittals from indirect reporters, as these impacts are considered outside the scope of this analysis.

One of the primary reasons for the greater costs under " To Be" is that State/ Locals would be required to comply with more robust electronic signature agreement requirements than under " Baseline." Under " Baseline," it is assumed State/ Locals would require indirect reporters to prepare and keep electronic signature agreements on site. Because State/ Locals would not collect them, there is negligible cost to them under this requirement. Under " To Be," State/ Locals need to perform significantly more activities. They must plan for implementation of the signature agreement provisions ( e. g., develop systems for processing the paperwork) and carry out implementation activities ( e. g., working with entities to designate an LRA, processing/ filing agreements and other submittals received, and upgrading their receiving systems as appropriate).

In addition, the model assumes that EPA would be more efficient in promulgating CROMERR under " To Be" than it would under " Baseline" in promulgating its program rules enabling automation. This greater efficiency leads to the earlier publication of CROMERR under " To Be" than publication of the program rules under " Baseline." Because of its earlier publication, CROMERR would prompt State/ Locals to begin upgrading their systems and applying for EPA program modification approval sooner under " To Be" ( i. e., beginning in 2004) than under " Baseline" ( i. e., beginning in 2006). Once they finalize their initial system upgrades and submit their applications to EPA, they would begin to incur annual maintenance costs for their systems.

In this regard, the model estimates State/ Locals' upgrade and application costs under " To Be" for the period 2004 through 2012 ( i. e., a 9 year period). The model estimates State/ Locals' upgrade and application costs under " Baseline" for the period 2006 through 2012 ( i. e., a 7 year period). As such, the cumulative costs to State/ Locals under " To Be" involve a greater number of years than the cumulative costs for " Baseline." As a consequence, the cumulative costs under " To Be", including the cumulative discounted costs shown in Table 3 1, are greater.

3.4 Facilities EPA estimates that facilities will incur greater costs between 2003 and 2012 under " To Be" than " Baseline." As shown in Table 3 1, incremental costs to facilities under " To Be" are estimated to range from $ 41.6 million to $ 51.9 million, depending on the discount rate used.

The model examines cost impacts to both direct and indirect facility reporters. The model examines costs to direct and indirect reporters using different assumptions because they would be affected differently under EPA's regulatory actions.

With regard to direct reporters under " Baseline" and " To Be", it is assumed the EPA's rulemaking and other actions would enable them to report electronically to EPA under existing information collections, as an alternative to paper based reporting. Direct reporters also would be subject to specific other requirements as applicable ( e. g., registration with EPA receiving system). Therefore, the model estimates costs to direct reporters under " Baseline" and " To Be" for both ( 1) the ongoing reporting to EPA electronically and by paper and ( 2) compliance costs with specified other requirements.

In this respect, the model assumes that direct reporters will incur some efficiencies and other benefits under " To Be" relative to " Baseline". First, the model assumes they would have to register only once with the CDX under " To Be" because the gateway is Agency wide. Under 36 " Baseline", they may need to register with multiple program gateways, because the programs would have separate gateways. Second, the model assumes that, by and large, direct reporters would begin reporting electronically to EPA sooner under " To Be" than " Baseline". The model assumes that the Agency would be more efficient in establishing CROMERR and the CDX under " To Be" than in establishing program specific rules and gateways under " Baseline". Hence the model assumes the Agency would automate a number of its information collections sooner under " To Be". This would allow direct reporters to begin experiencing the savings/ efficiencies of electronic reporting sooner. However, the model assumes that direct reporters would not be required to comply with electronic signature agreement requirements under " Baseline". By contrast, it assumes that direct reporters must comply with robust electronic signature agreement requirements under " To Be". They must conduct a number of activities under these requirements ( e. g., prepare/ submit agreement paperwork or implement an LRA approach).

Despite the signature agreement costs under " To Be", the model assumes that direct reporters would experience a net cumulative cost savings under " to Be" in comparison with " Baseline" during the period 2003 through 2012. ( Note that Table 3 1 does not break out the respective cost impacts for direct versus indirect reporters. Rather, it shows only the combined cost of impacts during the period.) With regard to direct reporters under " Baseline" and " To Be", it is assumed that EPA's rulemaking actions would have no effect on indirect reporter costs, except to require State/ Locals to impose electronic signature agreement provisions on them. It is assumed that the pace of State/ Locals electronic reporting initiatives would not be affected by EPA's regulatory actions and that indirect reporters would, therefore, implement electronic reporting on a schedule that is independent of EPA's regulations. Hence, the model examines the costs to indirect reporters for complying with EPA electronic signature requirements. It does not examine their cost savings/ efficiencies in reporting electronically tp State/ Locals receiving systems on an ongoing basis because these impacts are considered outside the scope of this analysis.

In this respect, the model assumes that the electronic signature provisions under " To Be" would be significantly more robust than under " Baseline." Under " Baseline," they would only prepare and keep records of an electronic signature agreement on site. Under " To Be," they must implement significantly more activities ( e. g., prepare/ submit electronic signature agreements or implement LRA approach, report to State/ Locals as specified). The more robust electronic signature agreement provisions under " To Be" result in incremental costs to indirect reporters in comparison with " Baseline". Table 3 1 shows that the combined cumulative costs to direct and indirect reporters under " To Be" are higher than their combined cumulative costs under " Baseline". Specifically, the cost savings to direct reporters under " To Be" as described above are more than offset by the incremental costs to indirect reporters under the signature agreement requirements of " To Be". 37 4.0 Sensitivity Analysis Based on past data on the CDX, the Agency estimates that 30 percent of facilities would implement electronic reporting during the first year of an information collection's automation start date. The annual implementation rate is assumed to be 10 percent per annum during the rest of the modeling years. The model applies this rate to derive the total annual costs associated with both paper and electronic submittals, as well as the number of registrants each year. The implementation rate was applied on a collection by collection basis, based on the collection's automation start date under " Baseline" or " To Be".

An information collection's automation start date determines the percentage of facilities and submittals that will be automated by the end of the modeling period. As an example, information collections with an automation start date of 2003 would see 73 percent automation by the end of 2012. The majority of collections would be automated in the 2003 to 2005 timeframe under " Baseline" and " To Be".

EPA notes, however, that these rates are speculative and subject to wide variation. Therefore, EPA performed sensitivity analyses to assess cost impacts using two different implementation rate scenarios:

  Scenario 1. An annual implementation rate of 25 percent for the first year in which an information collection is automated and 8.5 percent annually thereafter. As a basis of comparison to the annual implementation rate above ( i. e., 30/ 10), an information collection with an automation start date of 2003 would see 66 percent automation by the end of 2012.

  Scenario 2. An annual implementation rate of 45 percent for the first year in which an information collection automates and 15 percent annually thereafter. As a basis of comparison to the annual implementation rate above ( i. e., 30/ 10), an information collection with an automation start date of 2003 would see 87 percent automation by the end of 2012.

Table 4 1 compares the overall cumulative costs to EPA, State/ Locals, and facilities under " To Be" relative to " Baseline" under the three different implementation rate scenarios. The results suggest that the overall costs to these entities are sensitive to the annual implementation rate. For example, the annual implementation rates under Scenario 2 are 50 percent higher than the rates used in this analysis ( i. e., 30/ 10). However, the costs under Scenario 2 are almost 70 percent higher than that of the modeled scenario. 38 Table 4 1. A Comparison of Total Cumulative Costs under " To Be" Relative to " Baseline" Between 2003 and 2013* at Different Annual Automation Rates ( in millions of dollars)

Entity Difference in Cumulative Costs with Implementation Rates at 25% and 8.5%

( Scenario 1) Difference in Cumulative Costs with Implementation Rates at 30% and 10% Difference in Cumulative Costs with Implementation Rates at 45% and 15%

( Scenario 2)

EPA ($ 64.55) ($ 64.44) ($ 64.25)

States/ Locals $ 53.36 $ 57.19 $ 67.31 Facilities $ 36.48 $ 41.61 $ 55.11 Total $ 25.30 $ 34.36 $ 58.17 * Seven percent discount rate used. Cost savings shown in parentheses. 39 5.0 Qualitative Benefits of CROMERR and CDX 5.1 Summary of Other Impacts The preceding analysis in Sections 2.0 and 3.0 of this memorandum examines the cost burden to EPA, State/ Locals, and facilities solely with developing and implementing the identity proofing requirement. The analysis does not consider other impacts, such as the following:

  The identity proofing requirement will most likely discourage a number of facilities from choosing electronic reporting over paper reporting for certain information collections. Under the requirement, facilities would incur upfront and ongoing compliance costs ( e. g., establishing a local authority, preparing the wet ink on paper signature agreements, renewing the wet ink on paper signature agreements). These compliance costs will partially or fully offset the cost savings that some facilities would expect from reporting electronically. This is particularly true for one time and infrequent collections, as well as voluntary collections ( e. g., surveys). As a result, a number of facilities will determine that electronic reporting under such collections is not cost effective or is simply inconvenient and opt for paper reporting. In the end, these facilities will not incur the burden savings/ efficiencies associated with electronic reporting; rather, they will incur the higher burden associated with paper reporting.

  CSC has not performed any in depth quantitative analysis to determine what the cost impacts would be. However, a review of the CROMERR CBA spreadsheets suggest that a 1 percent decrease in facilities' annual automation rate with the CDX would translate into $ 2 million or more in incremental costs to facilities annually. This suggests that costs under the CDX are highly influenced by minor changes in the automation rate and that the identityproofing requirement could have a significant cost impact beyond the cost estimates presented in Section 3.0 of this document. Impacts to facilities reporting to State/ Locals receiving systems would likely be similar.

  Along these same lines, the identity proofing requirement will likely discourage State/ Locals from automating some of their information collections. This is partly because some State/ Locals government offices will not want to incur the burden of planning for, and implementing the requirement, as it will require ongoing resources ( e. g., receiving, processing, filing wet ink on paper signature agreements). As described earlier in this analysis, some states may also need to conduct rulemakings to implement the requirement. Further, State/ Locals will recognize that it would not be cost effective for facilities to report electronically under some collections ( e. g., one time collections, surveys), and therefore, the State/ Locals will not automate them in the first place.

Implementing electronic reporting under CROMERR and CDX will result in a number of important benefits that cannot readily be quantified. Some of the benefits are described below:

  More accurate data. Replacing paper forms with electronic forms will result in more accurate data. Electronic forms can perform real time edit checks that will reduce the number of input errors. These checks can range from simple verification of valid date formats to complex validations of proper nomenclature and limits of chemicals emitted into the environment. Other aspects of data accuracy include: Duplication of data entry efforts. As they receive paper submissions, environmental agencies often key or scan in the data. That duplicative effort can result in data errors. These errors can cause confusion because the agency could act on information that is different from what the submitter believes was submitted. 40   Time required for remediation. When data errors are detected by agencies, remedial action must be undertaken. These remedial actions require participation by both the submitter and the receiving agencies, and are extremely time consuming.

  Effect of inaccurate data. If the data that passes through agency systems is inaccurate and made publicly available, it creates additional costs and inefficiencies and could lead to more significant problems, such as enforcement actions. The effect of inaccurate data has reached a point that EPA has initiated a data correction effort. This initiative uses Help Desk personnel to receive calls, take complaints, and oversee corrective action.