Economic Analysis for the TSCA Section 8(a) Proposed Reporting Requirements for Certain Chemical Substances as Nanoscale Materials
                                RIN 2070 - AJ54

Economic Analysis for the TSCA Section 8(a) Proposed Reporting Requirements for Certain Chemical Substances as Nanoscale Materials
                                RIN 2070 - AJ54

                                March 12, 2015

                        -- Does not contain TSCA CBI --

                                  Prepared by
                      Economic and Policy Analysis Branch
                  Economics, Exposure and Technology Division
                  Office of Pollution, Prevention, and Toxics
                     U.S. Environmental Protection Agency
                           1200 Pennsylvania Avenue
                             Washington, DC 20460

                                March 12, 2015

                        -- Does not contain TSCA CBI --

                                  Prepared by
                      Economic and Policy Analysis Branch
                  Economics, Exposure and Technology Division
                  Office of Pollution, Prevention, and Toxics
                     U.S. Environmental Protection Agency
                           1200 Pennsylvania Avenue
                             Washington, DC 20460

                      This Page Intentionally Left Blank
                                 Contributors

The EPA analysts responsible for this report are Kristen Loughery and Lynne Blake-Hedges of the Economic and Policy Analysis Branch; Economics, Exposure and Technology Division; Office of Pollution Prevention and Toxics. Analytical and draft preparation support was provided by Abt Associates, Inc. under EPA Contract No. EP-W-08-010.

Table of Contents
Table of Contents	i
Table of Figures	iii
Executive Summary	iv
Chapter 1  -  Introduction	1-1
1.1	Statutory Authority	1-1
1.2	Regulatory and Programmatic Background	1-1
1.3	Statement of Need	1-3
1.4	Summary of Methodology	1-4
1.5	Organization of This Report	1-5
Chapter 2  -  Affected Entities	2-1
2.1	Chemical Substances Subject to this Rule	2-1
2.2	The Regulated Community	2-1
2.3	Estimated Number of Large (non-Small) and Small Business	2-4
2.4	Estimated Number of Nanomaterials per Company	2-6
Chapter 3  -  Industry Compliance Costs	3-1
3.1	Introduction	3-1
3.2	Wage Rates	3-1
3.3	Unit Industry Compliance Costs	3-1
3.4	Discounting Methods	3-7
3.5	Total Industry Compliance Costs	3-8
Chapter 4  -  Agency Costs	4-1
4.1	Introduction	4-1
4.2	EPA Costs	4-1
Chapter 5  -  Total Social Costs and Sensitivity Analyses	5-1
Chapter 6 - Sensitivity Analyses	6-1
6.1	Annual Industry Growth Rate	6-1
6.2	Number of Nanomaterials per Firm	6-6
6.3	Annual Nanomaterials Growth Rate	6-12
6.4	Summary of all Analyses	6-17
Chapter 7  -  Benefits	7-1
7.1	Market Failure	7-1
7.2	Benefits of Information-Based Policies	7-1
7.3	Potential Users of Information Generated by the Proposed Rule	7-3
Chapter 8  -  Small Entity Impact Analysis	8-1
8.1	Select a Relevant Small Business Definition	8-1
8.2	Estimate the Number of Small Businesses	8-2
8.3	Estimate the Cost-to-Sales Ratio for Small Companies	8-4
Chapter 9  -  Other Impact Analyses	9-1
9.1	Paperwork Reduction Act (PRA)	9-1
9.2	Unfunded Mandates Reform Act (UMRA)	9-1
9.3	Executive Order 13132  -  Federalism	9-2
9.4	Executive Order 13175  -  Consultation and Coordination with Indian Tribal Governments	9-2
9.5	Executive Order 13045  -  Children's Health	9-2
9.6	Executive Order 12898  -  Environmental Justice	9-2
9.7	Executive Order 13211  -  Energy Supply, Distribution, or Use	9-3
9.8	National Technology Transfer and Advancement Act	9-3
Appendix A  -  Wage Rate Calculations	A-1
A.1	Derivation of Industry Unit Wage Rates	A-1
A.2	Derivation of Agency Unit Wage Rates	A-2
Appendix B  -  Small Business Sensitivity Analysis	B-1
B.1	Estimation of the number of nanomaterials per small Firm	B-1
B.2	Conclusions	B-2
Appendix C - References	C-1
Table of Figures
Table 1-1: TSCA-authorized Reporting Requirements	1-1
Table 2-1: Small Business and Large Business Characteristics of Subset	2-5
Table 2-2: Estimated Number of Small Business and Large Businesses	2-5
Table 2-3: Estimated Nanomaterials per Firm, with R&D Exclusion	2-7
Table 3-1: Loaded Industry Wage Rates, 2013$	3-1
Table 3-2: Industry One-Time Cost Estimate to Familiarize with the Rule (2013$) (per Firm)	3-2
Table 3-3: Industry Burden Estimate to Complete the Proposed Form (per Report)	3-3
Table 3-4: Industry Cost Estimate to Complete the Proposed Form (2013$) (Per Report)	3-3
Table 3-5: Industry Burden and Cost of Electronic Reporting Requirements	3-6
Table 3-6: Industry Burden and Cost of Electronic Reporting Requirements (Subsequent Years, per Firm) (2013$)	3-6
Table 3-7: Industry Cost Estimate to Maintain Records (2013$) (per Report)	3-7
Table 3-8: Total Annual Industry Burden Hours	3-8
Table 3-9: Total Annualized Industry Costs	3-10
Table 4-1: Estimate of Agency Hours for the Proposed Rule	4-1
Table 4-2: Agency Cost and Burden Hour Estimate for the Proposed Rule	4-2
Table 5-1: Total Social Burden and Cost of the Proposed Rule	5-1
Table 6-1: Estimated Number of Reports (Increased Annual Growth Rate Scenario)	6-1
Table 6-2: Total Annual Industry Labor Burden (Increased Annual Growth Rate Scenario)	6-3
Table 6-3: Annual Industry Labor Costs (Increased Annual Growth Rate Scenario)	6-4
Table 6-4: Agency Cost Estimate for the Proposed Rule (Increased Annual Growth Rate Scenario)	6-5
Table 6-5: Total Social Costs for the Proposed Rule (Increased Annual Growth Rate Scenario)	6-5
Table 6-6: Estimated High- and Low-End Estimated Number of Commercially Relevant Nanomaterials per Firm	6-6
Table 6-7: Total Annual Industry Burden Hours (Low-and High-End Nanomaterials Estimates Scenario)	6-8
Table 6-8 : Annual Industry Labor Costs (Low-and High-End Nanomaterials Estimates Scenario)	6-9
Table 6-9: Agency Cost Estimate for the Proposed Rule (Low-and High-End Nanomaterials Estimates Scenario)	6-10
Table 6-10: Total Social Costs for the Proposed Rule	6-11
Table 6-11: Total Industry Burden Hours (Increased Nanomaterials Growth Scenario)	6-13
Table 6-12: Annual Industry Labor Costs (Increased Nanomaterials Growth Scenario)	6-14
Table 6-13: Agency Cost Estimate for the Proposed Rule (Increased Nanomaterials Growth Scenario)	6-15
Table 6-14: Total Social Costs for the Proposed Rule	6-16
Table 6-15: Comparison of Annualized Costs of Sensitivity Analysis (Millions 2013$)	6-17
Table 8-1: Ultimate Parent NAICs Codes for the 20 Small Businesses in Subset	8-2
Table 8-2: Small Business and Large Business Characteristics of Subset	8-3
Table 8-3: Small Business and Large Business Estimates	8-3
Table 8-4: Characterization of Economic Impacts	8-5
Table 8-5: Estimate of Impacts on Small Business Subset	8-5
Table 9-1: Industry Burden Estimates for the Proposed Rule	9-1
Exhibit A-1: Detail of Labor Categories Used in the Analysis	A-3
Exhibit A-2: Derivation of Loaded Industry Wage Rates	A-3
Exhibit A-3: Derivation of Loaded Agency Wage Rates	A-3
Exhibit B-1: Number of Nanomaterials per Company after the R&D Exclusion	B-3

Executive Summary
This economic analysis estimates and evaluates the costs and benefits of collecting information for certain chemical substances when they are manufactured or processed as nanoscale materials. through a rule proposed by the U.S. Environmental Protection Agency (EPA), under the authority granted by Section 8(a) of the Toxic Substances Control Act (TSCA). The proposed rule would require that persons who currently manufacture (including import), or process certain nanoscale materials (alternately described as "nanomaterials companies" and "nanomaterials firms" in this report), and/or persons who begin to manufacture, (including import), or process nanoscale materials (as defined by the proposed rule) after the effective date of this rule, to electronically report to EPA certain information including specific chemical identity, production volume, methods of manufacture and processing, use, exposure and release information, and available health and safety data.
The proposed rule builds on a history of Federal and international oversight of nanotechnology. EPA has developed a Nanomaterial Research Strategy (NRS) and previously conducted a Nanoscale Materials Stewardship Program (NMSP) to collect information on nanoscale materials in commerce (both discussed in Chapter 1). Other Federal agencies have also collaborated to better understand the opportunities and risks posed by nanotechnology, as have members of the Organisation for Economic Co-operation and Development (OECD).
EPA estimates that there are approximately 800 U.S. nanomaterials manufacturers, and processors subject to TSCA and believes this to be a high-end estimate of the number of nanomaterial firms subject to the rule (see Chapter 2). Around 500 firms (nearly 65 percent of firms) are estimated to be small businesses with less than $4 million in revenue, and these firms are exempt from the reporting requirements of the proposed rule. Each of the remaining 300 firms is expected to report on approximately five commercially-relevant nanoscale materials in the first year of the rule. While this analysis assumes that the number of nanoscale materials firms remains constant over the 10-year analysis period, the total number of regulated nanoscale materials is assumed to double.
Under the proposed rule, industry is estimated to incur a burden of approximately 206,098 hours in the first year and 22,755 hours in subsequent years, with costs of approximately $13.9 million and $1.5 million, respectively (see Chapter 3), while the Agency is expected to use approximately 6,539 hours in the first year and 723 hours in subsequent years, with costs of approximately $0.51 million and $0.06 million respectively (see Chapter 4). Discounted over a 10-year period at three and seven percent, total annualized costs are estimated to be approximately $2.80 million and $3.08 million, respectively.
As required by the Regulatory Flexibility Act of 1980 and the Small Business Regulatory Enforcement Fairness Act of 1996, a small entity impact analysis conducted in Chapter 8 is based on small business definitions provided by the U.S. Small Business Administration (SBA). EPA found that the costs of the proposed rule did not exceed 1 percent of the value of sales for any of the small businesses evaluated.
The rule is expected to provide benefits to EPA and the public. Increased and improved data on the production, sale, and use of nanoscale materials in the U.S. will allow EPA to more effectively determine whether additional risk assessment and management measures are needed. This information will lead to reduced cost of risk-based decision making and improved decisions concerning nanoscale materials. These benefits are discussed qualitatively in Chapter 7 of this report.

  -  Introduction
This report estimates and evaluates the costs and benefits expected to result from an information collection rule for nanoscale material manufacturers and processors proposed by the U.S. Environmental Protection Agency (EPA) under the authority granted by Section 8(a) of the Toxic Substances Control Act (TSCA). The proposed rule would require that persons who currently manufacture (including import), or process certain nanoscale materials (alternately described as "nanomaterials companies" and "nanomaterials firms" in this report), and/or persons who begin to manufacture (including import), or process nanoscale materials (as defined by the proposed rule) after the effective date of this rule, to electronically report to EPA certain information, described in detail below. Section 1.1 provides background information on EPA's statutory authority for the proposed rule; Section 1.2 reviews the regulatory background; Section 1.3 discusses the need for the regulation; Section 1.4 presents a brief summary of the methodology used in the analysis; and Section 1.5 describes the organization of the remainder of this report.
 Statutory Authority
Under Section 8(a) of TSCA, EPA has statutory authority to impose information reporting and recordkeeping requirements on manufacturers and processors of chemical substances used in commerce. Insofar as the information is known, or readily available, EPA may issue an information collection rule requiring the following items:
Table 1-1: TSCA-authorized Reporting Requirements
Reporting Elements
(A) The common or trade name, the chemical identity, and the molecular structure of each chemical substance or mixture for which such a report is required.
(B) The categories or proposed categories of use of each such substance or mixture.
(C) The total amount of each such substance and mixture manufactured or processed, or reasonable estimates of the total amount to be manufactured or processed.
(D) A description of the byproducts resulting from the manufacture, processing, use, or disposal of each such substance or mixture.
(E) All existing data concerning the environmental and health effects of such substance or mixture.
(F) The number of individuals exposed, and reasonable estimates of the number who will be exposed, to such substance or mixture in their places of employment and the duration of such exposure.
(G) In the initial report under paragraph (1) on such substance or mixture, the manner or method of its disposal, and in any subsequent report on such substance or mixture, any change in such manner or method.
Source: TSCA Section 8(a), Paragraph (2), Subparagraphs (A) through (G)

 Regulatory and Programmatic Background
Nanoscale materials, alternately referred to in this report as nanomaterials, constitute a unique class of chemicals. Nanomaterials are chemical substances organized in structures with dimensions measuring from 1 to 100 nanometers (nanoscale). Under the proposed rule, reporting would be required of certain solid chemical substances manufactured or processed in the range of 1 to 100 nanometers at ambient conditions.
Several regulatory and programmatic activities precede or coincide with the proposed rule. These activities are briefly described in this section. The Nanoscale Materials Stewardship Program (NMSP), a voluntary information collection program for nanomaterials manufacturers, processors, and users established by EPA in January 2008, is described in Section 1.2.1. The broader EPA Nanomaterial Research Strategy (NRS) is described in Section 1.2.2. The government-wide National Nanotechnology Initiative (NNI) is described in Section 1.2.3. Sections 1.2.4 and 1.2.5 present two international programs to encourage global collaboration in nanotechnology regulation.
EPA Nanoscale Materials Stewardship Program (NMSP)
On January 28, 2008, EPA formally instituted the Nanoscale Materials Stewardship Program (NMSP). The NMSP was a voluntary information collection program to assemble data from manufacturers, importers, and processors, and users of industrial nanomaterials subject to TSCA. In addition to industry and commercial organizations, researchers were also invited to participate in the NMSP (EPA, 2007). By the end of the program, 31 companies and associations had responded under the Basic program, submitting information on 132 nanomaterials (EPA, 2009d).
According to the NMSP Interim Report (EPA, 2009b), the program has "considerably increased [EPA's] understanding of the types of nanoscale materials in commerce." Submissions typically provided physical and chemical properties, commercial uses, manufacturing processes, and risk management practices; however, very few submissions provided data on exposure and toxicity. Overall, EPA considers the NMSP a success for having informed EPA's regulatory understanding of nanomaterials; however, a significant number of the environmental health and safety data gaps remain.
EPA Nanomaterial Research Strategy (NRS)
The Nanomaterial Research Strategy (NRS) is a document released by the EPA Office of Research and Development (ORD) on September 29, 2009 describing EPA's strategy for conducting and supporting research to understand the environmental health and safety implications of exposure to manufactured nanomaterials and the ways in which nanotechnology can be used in environmental protection applications (EPA, 2009c). The document has three main purposes: (1) to guide EPA researchers and managers as they conduct EPA's research program; (2) to assist scientists in other organizations as they plan their own research programs; and (3) to inform the public of how EPA intends to generate scientific information to guide environmental decisions related to nanomaterials (EPA, 2009c).
The NRS focuses on developing scientific information for nanomaterial decision support. EPA has focused the NRS on four areas to take advantage of its scientific expertise as well as fill the gaps of information not addressed by other organizations. The four research themes are:
*       Sources, Fate, Transport, and Exposure
*       Human Health and Ecological Research to Inform Risk Assessment and Test Methods
*       Risk Assessment Methods and Case Studies
*       Preventing and Managing Risks
The NRS is the guiding document for the EPA Nanotechnology Research Program. EPA plans to collaborate across government, industry, and the international community to implement this strategy (EPA, 2009c).
U.S. National Nanotechnology Initiative (NNI)
The 21st Century Nanotechnology Research and Development Act of 2003 resulted in the implementation of the National Nanotechnology Initiative (NNI). The NNI created a framework for a comprehensive nanotechnology R&D program by establishing shared goals, priorities, and strategies. The NNI consists of individual and cooperative nanotechnology-related activities of 25 federal agencies with a range of research and regulatory roles and responsibilities. EPA coordinates its nanotechnology research activities with other federal agencies through the NNI (EPA, 2009b).
OECD Working Party on Manufactured Nanomaterials (WPMN)
In 2006, the Organisation for Economic Co-operation and Development (OECD) Chemicals Committee established its Working Party on Manufactured Nanomaterials (WPMN). The objective of the WPMN is to promote international cooperation in human health and environmental safety-related aspects of manufactured nanomaterials. The WPMN is engaged in a variety of projects to further the understanding of the properties and potential risks of nanomaterials (EPA, 2009b).
International Organization for Standardization (ISO) Technical Committee 229
The International Organization for Standardization (ISO) has established a technical committee to develop international standards for nanotechnology. This technical committee, ISO/TC229, is working to develop standards for terminology and nomenclature, metrology and instrumentation, including specifications for reference materials, test methodologies, modeling and simulation, and science-based health, safety and environmental practices (EPA, 2009b).
 Statement of Need
Executive Order 12866 requires regulatory Agencies to identify the specific market failure that a significant rule addresses. The major causes of market failure identified in the Office of Management and Budget (OMB) guidance (OMB, 2003) on Executive Order 12866 are externality, natural monopoly, market power, and inadequate or asymmetric information. The proposed rule is designed to address the issue of inadequate information about nanomaterial manufacture and use in commerce and, to the extent that new information indicates the presence of negative externalities, inform future rulemaking and/or legislation governing the manufacture, processing, and use of nanomaterials.
Inadequate Information
Economic theory requires that buyers and sellers have complete information about the costs and benefits of their economic choices to produce an efficient allocation of resources. When buyers or sellers do not have perfect information, rational decision making cannot occur and a market failure exists. As an example, a producer may not consider substituting a less hazardous chemical for a hazardous chemical if knowledge about either chemical's hazard is unknown or uncertain. More complete information on the hazards associated with the chemical will allow a producer to make more socially efficient decisions.
There are many reasons why information regarding the hazards associated with a chemical substance may not be widely known. Two of these reasons are:
*       Producers may know this information but have no incentive to act on it or reveal it to their customers (because the costs are not borne by, and are therefore external to, the producer).
*       This information may be unknown to both the producers and their customers.
The first of these reasons is known as asymmetric information; that is, a case in which consumers and producers do not have the same level of information regarding the aggregate production, uses, and hazards of a chemical substance. Typically, the producers' level of information regarding these items, particularly hazards, exceeds the consumers' level of information.
In the second case, chemical production, use, and hazard information is inadequate and/or unavailable (i.e., unknown to both consumers and producers). Producers may have little incentive to acquire such information due to the potential costs associated with its acquisition. Information is by nature a public good; that is, non-rival (one person's use of information does not diminish the amount remaining for other users) and non-excludable (once made available, information cannot be easily withheld from others). Thus, where information is provided by one person, others are free to use and benefit from that information without having made a contribution to its development. This situation reduces the incentive to provide the information, resulting in a failure of the market to efficiently provide the information. In addition, individual consumers are unlikely to be willing to pay the cost of collecting and reporting information if they can use information developed and paid for by others.
Externalities
Externalities are another cause of market failure. An externality occurs when the actions of one economic agent impose costs (or benefits) on parties that are "external" to the market transaction; that is, these costs (or benefits) are not borne by the producers or consumers directly involved. Such is the case where manufacturing or other business activities harm human health or the environment in excess of the costs borne by the parties to this activity, resulting in negative externalities. When information is missing about the human health and environmental costs to society, or when these costs are external to producers' decision making, the costs are not incorporated into business decisions. The result can be the overuse and/or overproduction of certain harmful products.
EPA often intervenes when negative externalities pose risks to human health and the environment. For example, risks may arise as a result of chemical exposure to the general population from the manufacture, processing, and use of chemicals. As a first step in mitigating externalities, the EPA Office of Pollution Prevention and Toxics (OPPT) routinely screens chemicals for the potential risks they may pose. This screening is used to determine if risks from the manufacture, processing, or use of chemicals are of sufficient concern to warrant risk management. Given that EPA's TSCA Inventory recognizes more than 75,000 chemicals in commerce, chemical risk screening represents a significant effort. Risk is a function of hazard and exposure and when information on either is lacking, EPA's ability to effectively identify significant risks arising from externalities is compromised.
Effect of the Proposed Rule
The proposed rule will address market failure due to inadequate information by ensuring that basic information about the production, use, and environmental health and safety impacts of manufactured nanomaterials is available to the public. This information can be used by consumers, producers, the public sector, and others to make more informed decisions regarding the production, sale, and use of nanomaterials. The information may also be used to resolve externalities. To the extent that the provision of this information induces the producers to account for external social costs, either due to fear of litigation or due to the benefits of corporate stewardship, increased availability of information will address the negative externalities generated by producing or using these chemicals.
 Summary of Methodology
This analysis seeks to quantify, to the extent possible, the costs to society of the proposed rule by identifying the costs to industry (and to small entities, in particular) associated with performing the required reporting and recordkeeping, and the costs to EPA of administering the rule. Industry costs consist of the collection, compilation, and submission of required information for the nanomaterials handled by each reporting firm. Agency costs include reviewing and processing the data received as a result of the rule. Small entity impact is defined as a small business' estimated cost of compliance with the proposed rule as a percent of sales. Data sources for this analysis include burden estimates derived from information collection requests for similar regulations, compensation data acquired from government publications, and supplementary market research to produce an estimate of the number of affected entities. EPA believes the inputs for this analysis (e.g., estimated number of nanoscale materials) are high-end estimates and that the final burden and cost estimates may therefore be overestimated.
This report qualitatively discusses the benefits of the proposed rule based on the value of the information it will provide. The benefits analysis was undertaken to address the implicit call for cost-benefit balancing contained in TSCA, as well as the requirements of Executive Order 12866.
 Organization of This Report
The remainder of this report provides EPA's economic analysis in support of the proposed rule. The affected chemical substances and companies are characterized in Chapter 2. Chapter 3 estimates industry cost of complying with the proposed rule, and Chapter 4 estimates government costs associated with the administration of the proposed rule. Chapter 5 presents the total social costs. Chapter 7 addresses the benefits of the proposed rule using a "value of information" framework. Chapter 8 provides the small entity impact analysis for the proposed rule, as mandated by the Regulatory Flexibility Act (RFA), and amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). Several additional impact analyses are presented in Chapter 9, including: a burden hour analysis, which responds to the requirements of the Paperwork Reduction Act (PRA); an unfunded mandates statement, which is required by the Unfunded Mandates Reform Act (UMRA); an environmental justice statement, which addresses the requirements of Executive Order 12898; and a children's health statement, which is mandated by Executive Order 13045. Note that all dollar amounts in this analysis are reported in 2013 dollars.

  -  Affected Entities
This chapter presents information about the manufacturers, production, and uses of nanoscale materials subject to the proposed rule. Section 2.1 provides a definition of nanoscale materials affected by the rule; Section 2.2 describes and estimates the population of affected organizations; Section 2.3 divides the population estimate into large (non-small) and small businesses subpopulations; and Section 2.4 estimates the number of nanoscale materials handled by each reporting firm subject to TSCA.
 Chemical Substances Subject to this Rule
The proposed rule requires the reporting and maintenance of records concerning chemical substances as nanoscale materials. The proposed rule would apply to chemical substances containing primary particles, aggregates, or agglomerates in the size range of 1-100 nm in at least one dimension. This proposed rule would not apply to chemical substances that only have trace amounts of primary particles, aggregates, or agglomerates in the size range of 1-100 nm, such that the chemical substance does not exhibit the unique and novel characteristics or properties because of particle size. Reporting is also required if the chemical substance has different morphology or is coated with different chemical substances.
Nanomaterials of a single molecular identity may vary both in the number of dimensions at the nanoscale and the measurements in each dimension. For example, silver nanomaterials are available as nanoparticles (i.e., nanoscale in three dimensions) as well as nanorods (i.e., nanoscale in two dimensions). Silver nanoparticles and nanorods are also available in dozens of different particle sizes and diameters, respectively. Each of these configurations constitutes a distinct physical form. In addition, nanomaterials with different shapes, morphology, or coatings are also required to be reported.
The rule would not require manufacturers or processors to report information that has already been submitted to EPA. The reporting requirements of this proposed rule would not apply to any person for a nanoscale material submitted as a new chemical notice under section 5 of TSCA to EPA since January 1, 2005. In addition, any person who has already reported part of or all of the required information under the Nanoscale Materials Stewardship Program would not need to report that information again. If, however, information required by this proposed rule had not been reported or new information is now available reporting of that information would be required.
 The Regulated Community
As previously noted, the proposed rule affects firms manufacturing and/or processing chemical substances at the nanoscale. The rule applies to organizations operating in the U.S. and thus under EPA's jurisdiction. Only those organizations handling nanoscale materials with TSCA-covered applications are subject to the rule.
The NMSP ICR (EPA, 2007) estimated that at the time of its publication, the population of organizations involved in the manufacture or application of nanomaterials was approximately 600, based on an estimate of the size of the global nanotechnology industry from the National Science Foundation (NSF) (Roco, 2005). Due to the age of these data and their limitations, this report provides updated estimates of the number of U.S.-based nanomaterials manufacturers, processors, and distributors and the relative size of these firms.
Three sources were used to estimate the number of U.S.-based nanomaterials firms and to construct a representative selection of firms used to estimate both the number of large and small businesses and the number of nanomaterials supplied by each firm. The sources are:
*       Lux Research: Nanotech Report(TM), 5th ed. (2007)
*       BCC Research: Nanotechnology: A Realistic Market Assessment (2008)
*       Nanowerk: Company & Labs Directory (2009)
These sources are described in more detail in the sections below.
Lux Research Nanotech Report(TM)
The Lux Research Nanotech Report(TM) (Lux Research, 2007) is a market research report covering the field of nanotechnology. The Nanotech Report describes four categories of products: nanomaterials, nanointermediates, nano-enabled products, and nanotools. For each product in these categories, the Nanotech Report provides properties, fabrication methods, key applications, environmental/health/safety concerns, and general market descriptors such as market size, market drivers, and market challenges. For select products, it also shares major market players and patents. The report suggests that there are over 1,500 nanotechnology companies worldwide but does not provide details regarding estimation methods.
The Nanotech Report also profiles 121 nanotechnology companies worldwide. Eighty-four of these companies (69.42 percent) are based in the U.S., and of these U.S. companies, 31 companies (36.90 percent) are involved in the manufacture of nanomaterials.
Lux describes its selection of 121 nanotechnology companies as "a representative sample of companies across regions, sectors, and company types." As such, multiplying the base estimate of nanotechnology companies worldwide (1,500) by the percent of the group that are based in the U.S. (69.42 percent) and by the percent of identified U.S. companies in that group that are nanomaterials manufacturers (36.90 percent) produces an estimate of 384 nanomaterials manufacturers in the U.S.
This estimate is limited for several reasons. Lux Research does not describe the methodology used to arrive at the estimate of 1,500 nanotechnology companies worldwide, nor does it describe sampling methods that would verify the representativeness of the sample. Further, Lux acknowledges that the sample in its report includes the best known companies by design, but it does not specify any other selection criteria. EPA believes the slightly larger worldwide estimate derived from the BCC Research Nanotechnology Report (described in the following section) is a more reliable estimate for the purposes of this analysis. EPA also recognizes the inherent limitations of the Lux sample; however, given the report's description of its sample, EPA assumes the sample to be representative of the overall number of U.S. nanomaterials manufacturers.
BCC Research Nanotechnology Report
The BCC Research report Nanotechnology: A Realistic Market Assessment (BCC Research, 2008) is also a market research report covering the field of nanotechnology. The report divides the nanotechnology market into three segments: nanomaterials, nanodevices, and nanotools. It then discusses the nanotechnology market's size and structure, funding sources, and environmental, health, and safety concerns and regulation in general terms.
Due to the poorly defined and evolving nature of the nanotechnology market, the BCC report acknowledges that sizing the market is difficult, if not impossible. It suggests that estimates of the number of companies with "nanotechnology activities" worldwide can be as high as 1,600.
The report refers to a sample of 165 nanotechnology companies profiled by BCC Research and provides summary information on this sample; however, the report does not include the companies in the sample. Of the 165 companies in the sample, 112 companies (67.88 percent) are based in the U.S. Additionally, of the full 165 company sample, 125 companies (75.76 percent) are nanomaterials manufacturers. However, the report does not specify how many or what percent of the U.S. companies are specifically involved in the manufacture of nanomaterials. Combining the reported percentages yields an estimate of 85 companies in the sample (51.42 percent of the sample) that are U.S. nanomaterials manufacturers.
Multiplying the estimated total number of nanotechnology companies worldwide (1,600) by the percent of the sample that are based in the U.S. (67.88 percent) and by the percent of the sample that are nanoscale materials manufacturers (75.76 percent) suggests an estimated 823 U.S. nanoscale materials firms.
This estimate is potentially limited for two reasons. BCC Research does not describe the methodology used to arrive at the high-end estimate of 1,600 companies with "nanotechnology activities" worldwide, nor does it explain its method for selecting a subset of these nanotechnology companies to profile in its report. Thus, the set of profiled companies may not be a representative sample. EPA recognizes the inherent limitations of this sample; however, based on EPA best professional judgment, the Agency considers 823 companies to be a reasonable, and potentially high-end, estimate of the number of U.S. nanomaterials firms for the purposes of this analysis.
Nanowerk Company & Labs Directory
Nanowerk (Nanowerk, 2009) is an online resource for information on nanotechnology and nanoscience. The site provides an introduction to nanotechnology in layman's terms, nanotechnology news coverage, general information about the nanotechnology market, and disclosure of the environmental, health, and safety concerns around nanotechnology. It also claims to maintain "the most extensive industry database" of nanomaterials suppliers in its Company & Labs Directory.
The Company & Labs Directory lists manufacturers and suppliers in five categories of nanomaterials: Carbon Nanotubes, Fullerenes, Fibers and Wires, Nanoparticles, and Quantum Dots. The database provides each company's name, a brief description, and country of origin. According to aggregate statistics found on the website, the database contains 262 companies, 120 of which are identified in the listing as U.S. companies. Many of these companies manufacture several nanomaterials and are therefore listed in multiple nanomaterials categories.
The Nanowerk databases are compiled from publicly available information on nanotechnology manufacturers' websites. According to Michael Berger of Nanowerk (Berger, 2009), the lists are regularly maintained and updated with new findings. Although it claims to be the most comprehensive source available, the Company & Labs Directory is a "best effort undertaking" rather than a comprehensive listing of all suppliers. Notably, the databases exclude companies not known to Nanowerk and companies without publicly listed information.
Conclusion: Estimate of Regulated Community and Representative Selection
As noted above, EPA considers the 823 companies, estimated using BCC Research's data, to be a reasonable estimate of the current number of U.S. nanomaterials firms for the purposes of this analysis. This estimate reflects probable growth in the population since EPA's judgment in the NMSP ICR (EPA, 2007) that the population at that time was approximately 600 companies. Due to uncertainty in predicting the future nanomaterials market, EPA assumes that the number of U.S. nanoscale materials firms remains constant over the analysis period; however, the number of nanomaterials handled by each reporting firm is assumed to double over the analysis period of 10 years (see section 2.4 for more details).
This analysis uses a selection of firms assumed to be representative of firms in the market to estimate the percent of U.S. nanomaterials firms that are large or small businesses and to estimate the number of nanomaterials manufactured, processed, or sold by large and small businesses. To construct this selection, EPA compiled a list of the U.S. nanomaterials manufacturers profiled by Lux Research and Nanowerk. To avoid duplicates, the Agency considered companies found in both sources to be the same if they had identical or similar names and/or addresses. Based on this method, the selection includes 12 companies defined by Lux Research as nanomaterials firms, 101 companies defined by Nanowerk as nanomaterials firms, and an additional 19 companies defined by both Lux and Nanowerk as nanomaterials firms, for a total of 132 companies in the selection.
 Estimated Number of Large (non-Small) and Small Business
The general exemptions to TSCA 8(a) reporting (as described within the statute itself) apply to the proposed rule, including exemptions for small businesses that eliminate the reporting and recordkeeping requirements under the rule. Under TSCA regulations, according to 40 CFR 704.3, a manufacturer of a chemical substance is defined as small if it meets either of the following criteria: (1) total annual sales of the company, combined with those of any parent company, are below $40 million and annual production volume (including importation volume) at each facility is less than or equal to 100,000 pounds; or (2) total annual sales of the company, combined with those of any parent company, are below $4 million. Based on EPA's experience with NMSP and PMN submissions, a small business exemption that allows manufacturers not to report quantities of nanoscale materials up to 100,000 pounds would exclude a large proportion of potential reporting under the rule. For the purposes of this rule, EPA therefore proposes that the definition of "small business" be any company whose annual sales, when combined with that of a parent, are less than $4 million.
To estimate the number of small and large businesses in the  total number of U.S. nanomaterials firms, EPA matched the selection described above to the Dun & Bradstreet (D&B) corporate database to identify company and parent company sales, measured the percentage of companies defined as small and large within the group, and applied these percentages to the estimate of the total number of firms. The specific procedures and results of the analysis are described in the following sections.
Search and Matching Procedure
EPA attempted to obtain sales data from the Dun & Bradstreet corporate database for the 132 companies in the selection described above, following a rigorous search and matching procedure. The procedure began with a basic search by company name for each company in the selection. Companies for which the initial search returned a single match were checked for a U.S. address and considered positively matched. Companies for which the initial search returned multiple matches were subsequently filtered by zip code. Companies not found in the D&B database were considered unmatched.
As noted above, the relevant small business definition for this rulemaking considers the sales of the parent company when classifying a subsidiary as a small business. Therefore, for the matched companies identified in the D&B database as subsidiaries of a parent company, the parent company's sales were recorded. For all other matched companies, the company's sales were recorded. The complete D&B search and matching procedure is described in further detail in Chapter 8.
A total of 103 companies in the selection were found in the D&B database. Of these, 83 companies have no parent company, and 20 companies have a parent company; however, one of the parent companies was already a member of the selection, thus reducing the matched subset to 83 + 20  -  1 = 102 companies. An additional two companies were identified as joint ventures, and one company was verified closed. Twenty-six companies remained unmatched against the D&B database.
Annual sales data were obtained from the D&B database and internet-based searches for 95 of these 102 companies. Using these data, the companies in this selection can be categorized as large or small businesses under the TSCA 8 definition of small business.
Results and Analysis
Of the 95 nanomaterials manufacturers and parent companies with observed annual sales, 61 companies (64.2 percent of this subset) meet the small business definition with less than $4 million in reported annual sales, and 34 companies (35.8 percent of this subset) do not meet the small business definition, having $4 million or more in reported annual sales. These results are provided in Table 2-1.
Table 2-1: Small Business and Large Business Characteristics of Subset
                              Population Category
                                Sales Threshold
                       Actual Number of Firms in Subset
                               Percent of Subset
                               Small Businesses
                                < $4 million
                                      61
                                     64.2%
                               Large Businesses
                                >= $4 million
                                      34
                                     35.8%
                                     Total
                                      --
                                      95
                                     100%
Source: D&B, 2009; Lux Research, 2007; Nanowerk, 2009.

Multiplying the percent of U.S.-based nanomaterials manufacturers that meet the small business definition (64.2 percent) by the previously estimated number of U.S.-based nanomaterials manufacturers (823 companies) yields an estimate of 528 small business nanomaterials firms and a complementary estimate of 295 large (non-small) business nanomaterials firms.
Table 2-2: Estimated Number of Small Business and Large Businesses
                                   Category
                                Sales Threshold
                      Est. Number of Nanomaterial Firms
                                   Percent
                               Small Businesses
                                < $4 million
                                      528
                                     64.2%
                               Large Businesses
                                >= $4 million
                                      295
                                     35.8%
                                     Total
                                      --
                                      823
                                     100%
Source: BCC Research, 2006; D&B, 2009.

Based on these estimates, 295 firms are expected to submit chemical reports each year under the proposed rule. EPA assumes that the number of nanomaterials firms will remain constant over the next ten years. EPA has conducted an alternative analysis, presented in Section 6.1 that accounts for potential growth in the number of firms manufacturing nanomaterials.

 Estimated Number of Nanomaterials per Company
In the NMSP ICR (EPA, 2007), EPA estimated that large businesses participating in the NMSP would submit information on two nanomaterial products. This section presents updated estimates of the number of nanomaterials per firm that will be subject to the proposed rule.
To estimate the number of nanomaterials per firm, EPA researched the 34 large businesses in the D&B-matched subset (of 95 companies), compiled a list of nanomaterials supplied by each large business, excluded specific nanomaterials without TSCA uses, and calculated the median number of nanomaterials per firm. The specific procedures and results of the analysis are described below.
Nanomaterial Identification Procedure
The identification of the nanomaterials produced by each large business was performed by manual examination of online product offerings. This procedure captured both nanomaterials supplied for direct sale and nanomaterials supplied as a component in a larger product. The procedure only captured nanomaterials with verified TSCA uses, based on the industries and applications advertised on each manufacturer's website. The final count distinguishes nanomaterials by chemical and physical structure, as well as size at the nanoscale. The count also distinguishes nanomaterials identified as distinct products by their manufacturers. As defined in this chapter, to qualify as a nanomaterial, at least 10 percent of a chemical substance has to exist in a form with two or more dimensions at the nanoscale.
Of the 34 large business nanomaterials firms identified, 26 had product information available on a company website. Of these, 23 firms manufactured nanomaterials for TSCA-related uses. The number of identified TSCA-related nanomaterials manufactured per firm varied widely, from one nanomaterial up to 66 nanomaterials.
Results and Analysis
The median number of TSCA-related nanomaterials per large business in the reduced selection for this analysis (n = 23) is 13 nanomaterials. EPA considers 13 nanomaterials per reporting business to be a reliable estimate for the purposes of this analysis, as small businesses are exempt from the requirements of this rule. The proposed rule also exempts chemicals with strictly research and development (R&D) applications. The estimates presented in this section include chemicals for R&D applications, and estimates presented in the following section exclude them.
R&D Exclusion
The general exemptions to TSCA 8(a) reporting (as described within the statute itself) apply to the proposed rule including exemptions for chemicals with strictly research and development applications.
In the NMSP Interim Report (EPA, 2009b), EPA identified a total of 234 unique existing nanomaterials from various sources including the NMSP. Of these, 91 nanomaterials (38.89 percent) were found to be "commercially relevant," defined as being commercially available in five or more forms such as unique sizes or chemical and physical structures. The remaining 143 nanomaterials (61.11 percent) were considered produced for research and development applications.
EPA therefore estimates a current average of 5.06 nanomaterials (38.89 percent of 13 nanomaterials) with commercial relevance per reporting business. As previously mentioned, the total number of nanomaterials subject to the proposed rule is assumed to double over the analysis period of 10 years. As a result, it is assumed that nanomaterials firms will report on approximately 0.56 additional nanomaterials per year.
Table 2-3: Estimated Nanomaterials per Firm, with R&D Exclusion
                              Population Category
                            Nanomaterials per Firm
                             R&D Exclusion (%)
                             R&D Exclusion (#)
                  "Commercial" Nano-materials per Firm[a]

                                  First Year
                               Subsequent Years
                             Reporting Businesses
                                      13
                                    61.11%
                                     7.94
                                     5.06
                                     0.56
Notes:
a The total number of nanomaterials subject to the proposed rule is assumed to double over the analysis period of 10 years. As a result, it is assumed that nanomaterials firms will report on approximately 0.56 additional nanomaterials per year.
Source: D&B 2009; EPA, 2007; EPA, 2009b; Company websites.

  -  Industry Compliance Costs
 Introduction
This chapter presents estimates of the total costs that nanomaterial manufacturers and other entities may incur due to the requirements included in the proposed rule and discusses the method used to measure each.
 Wage Rates
The proposed rule involves activities that may require efforts by employees in three labor classifications: managerial, technical, and clerical. Costs for each activity are calculated by estimating the labor hours required in each labor category and multiplying those burdens by the wage rate for each labor category. This section presents the estimated wage rate in each labor category.
Loaded wage rates for managerial, technical, and clerical personnel are derived by combining data on wages and fringe benefits with estimates of overhead rates following the methodology described in "Wage Rates for Economic Analysis of the Toxics Release Inventory Program" (EPA, 2002b). Wage and fringe benefit data for each labor category are calculated using the December 2013 quarterly estimates from the Employer Costs for Employee Compensation (ECEC) Supplemental Tables available on the BLS website (BLS, 2014). The loaded wage rate for managerial labor is $77.82; for technical labor, $64.55; and for clerical labor, $30.35. Table 3-1 presents the basic data used to calculate the loaded wage rates for all three categories of labor, and Appendix A provides more detailed information on the estimation of these wage rates.
Table 3-1: Loaded Industry Wage Rates, 2013$
Labor Category
Base Wages[a]
Fringe Benefits[a] + Overhead Factor[b]
Loaded Wages
                                  Managerial
                                    $46.25
                                     1.68
                                    $77.82
                                 Professional/
                                   Technical
                                    $38.16
                                     1.69
                                    $64.55
                                   Clerical
                                    $18.05
                                     1.68
                                    $30.35
Notes:
[a] Wage rates and fringe benefits are calculated  using the December 2013 quarterly estimates from BLS (2014).
[b] An overhead rate of 17% of base wages is used here, based on methodology and assumptions in EPA (2002a) and EPA (2002b).
Source: BLS, 2014.
 Unit Industry Compliance Costs
Rule Familiarization
The proposed rule requires reporting businesses and their staff to become familiar with the 8(a) rule and its various requirements. Rule familiarization is estimated to require 0.55 hours of technical labor and 0.27 hours of managerial labor. This burden is equivalent to the rule familiarization burden estimated in the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009a), because the reporting requirements for the proposed information collection rule are similar to those required by a PMN form. Since this analysis assumes that no additional nanomaterials firms enter the market over the 10-year analysis period, rule familiarization costs are only incurred in the first year of the rule. As shown in Table 3-2, the labor cost associated with rule familiarization is $56.51.
Table 3-2: Industry One-Time Cost Estimate to Familiarize with the Rule (2013$) (per Firm)
                              Reporting Activity
                        Clerical Labor (at $30.35/hour)
                       Technical Labor (at $64.55/hour)
                       Managerial Labor (at $77.82/hour)
                               Total Labor Cost

                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
Rule Familiarization
                                       0
                                    $0.00
                                     0.55
                                    $35.50
                                     0.27
                                    $21.01
                                     0.82
                                    $56.51
Source: BLS, 2014; EPA, 2009a.

Form Completion
The proposed rule requires reporters to gather and submit information consisting of all of the reporting elements found on the full NMSP reporting form. The reporting element burden estimates used here are taken from the NMSP ICR (EPA, 2007) with the exception of clerical burden. The burden estimates in the NMSP ICR assume that data elements are reported on a form whereas the proposed rule requires electronic reporting though CDX. The total per-report industry burden of the proposed rule is estimated to be 136.60 labor hours. This burden estimate is presented in Table 3-3 below.
Table 3-3: Industry Burden Estimate to Complete the Proposed Form (per Report)
                               Reporting Element
                                Clerical Hours
                                Technical Hours
                               Managerial Hours
                                  Total Hours
                                       1
Submitter information
                                     0.00
                                     2.00
                                     1.00
                                     3.00
                                       2
Chemical identity information
                                     0.00
                                     7.50
                                     1.00
                                     8.50
                                      3A
Physical properties
                                     0.00
                                     2.00
                                     0.50
                                     2.50
                                      3B
Additional physical properties
                                     0.00
                                     4.00
                                     1.00
                                     5.00
                                       4
Description of uses
                                     0.00
                                     3.00
                                     1.50
                                     4.50
                                       5
Amount of substance to be manufactured/imported
                                     0.00
                                     1.00
                                     1.50
                                     2.50
                                       6
Description of byproducts
                                     0.00
                                     0.50
                                     0.00
                                     0.50
                                       7
Human exposure and environmental release
                                     0.00
                                     52.00
                                     9.50
                                     61.50
                                       8
Physical properties related to understanding and assessing exposures and releases
                                     0.00
                                     4.00
                                     1.00
                                     5.00
                                       9
Overview of lifecycles
                                     0.00
                                     10.00
                                     2.00
                                     12.00
                                      10
Release point control technology
                                     0.00
                                     2.00
                                     0.40
                                     2.40
                                      11
Worker exposure information
                                     0.00
                                     2.00
                                     0.40
                                     2.40
                                      12
Protective equipment or engineering control
                                     0.00
                                     2.00
                                     0.40
                                     2.40
                                      13
Information on cleaning/reuse/disposal of used protective equipment
                                     0.00
                                     1.00
                                     0.20
                                     1.20
                                      14
Additional procedures or other equipment intended to mitigate exposures to nanoscale materials
                                     0.00
                                     1.00
                                     0.20
                                     1.20
                                      15
Description of worker training and hazardous communication
                                     0.00
                                     1.00
                                     0.20
                                     1.20
                                      16
Number of individuals other than workers exposed to the chemical and duration of exposure
                                     0.00
                                     1.00
                                     0.20
                                     1.20
                                      17
Manner or method of disposal for consumer use of products
                                     0.00
                                     2.00
                                     0.40
                                     2.40
                                      18
Test data in the submitter's possession of information on health/environmental effects
                                     0.00
                                     7.20
                                     10.00
                                     17.20
                                                                          Total
                                     0.00
                                    105.20
                                     31.40
                                    136.60
Source: EPA, 2007

Table 3-4 combines the estimated reporting burden and loaded wage rates for all three labor categories to estimate the per-report cost of complying with the reporting requirements.
Table 3-4: Industry Cost Estimate to Complete the Proposed Form (2013$) (Per Report)
                              Reporting Activity
                        Clerical Labor (at $30.35/hour)
                       Technical Labor (at $64.55/hour)
                       Managerial Labor (at $77.82/hour)
                               Total Labor Cost

                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                Form Completion
                                       0
                                    $0.00
                                     105.2
                                  $6,790.37
                                     31.4
                                  $2,443.63
                                     136.6
                                   $9,234.00
Source: BLS, 2014; EPA, 2007.

 Electronic Reporting
The proposed rule would require submitters to register with EPA's Central Data Exchange (CDX) and use the Chemical Information Submission System (CISS) to prepare and submit a data file. CDX is EPA's electronic system for environmental data exchange to the Agency. CDX also provides the capability for submitters to access their data through the use of web services. EPA developed CISS for use in submitting data for TSCA sections 4, 8(a), and 8(d) electronically to the Agency. CISS, a web-based reporting tool, provides user-friendly navigation, works with CDX to secure online communication, creates a completed Portable Document Format (PDF) for review prior to submission, and enables data, reports, and other information to be submitted easily.
EPA believes that electronic reporting reduces the reporting burden for submitters by reducing the cost and time required to review, edit, and transmit data to the Agency. It also allows submitters to share a draft submission within their organization, and more easily save a copy for their records or future use. The resource and time requirements to review and process data by the Agency will also be reduced and document storage and retrieval will require fewer resources.
 EPA estimated that affected facilities would incur additional burden and cost due to the electronic reporting requirements of the proposed rule. This includes costs in the first year to complete a subscriber agreement and register with CDX. Some respondents will incur CDX costs in subsequent years due to employee turnover or compromised electronic signatures. These costs are offset by reductions in reporting and recordkeeping costs due to electronic reporting. Understanding the electronic reporting requirements is expected to be part of rule familiarization discussed in Section 3.4.1 and are not included again in this section.
Some company users who have already registered with CDX to meet other EPA electronic reporting requirements, for example to submit Premanufacture Notices (PMNs) or to report under the Chemical Data Reporting rule (CDR), will not need to register again as a result of this rule. While EPA expects that some nanomaterial manufacturers and processors will have employees who have registered with CDX, there is no way to determine how many new users would need to register as a result of this rule. Therefore, the Agency assumes that all affected submitters would register with CDX and, thus, incur an associated cost. This high-end assumption likely results in an overestimation of the costs associated with the final rule.
When registering with CDX, users are assigned to one of two roles in the CDX system, an Authorized Official or a Support Registrant.
      Authorized Official (AO):  The AO is the person legally responsible for the submission.  The AO is typically a senior official for the respondent. The AO is the only user who can start a new form, or reopen a completed form to begin the amendment process, and is the only user who can electronically sign and submit a form. AOs can also assign Support Registrants to edit and complete forms on his or her behalf. AOs must submit a subscriber agreement to EPA, and register with CDX.
      Support Registrants:  A Support Registrant is a person designated by an AO to submit supporting documents on his or her behalf.  Support Registrants can edit a submission that is created by the AO. Support Registrants are only allowed to edit the submissions to which the AO has granted him or her access. Support Registrants do not have any access rights to create or submit a form.  Once the AO creates a form, they will provide the Support Registrant with a passphrase to access the submission and complete all sections of the form. Once the Support Registrant has finished completing the form, the AO will access the submission, review it, and submit it.  Support Registrants must register with CDX, but do not need to submit a subscriber agreement to EPA.
This analysis uses a simplifying assumption that an average of five employees at each respondent will register with CDX: one manager (who will serve as AO) four technical staff members (who will serve as Support Registrants).
First Year Costs
Respondents will incur electronic reporting costs in the first year to register with CDX, submit a subscriber agreement, contact EPA's CDX Help Desk and perform ongoing problem resolution to resolve problems with their certifications or agreements.
      Subscriber Agreement/Electronic Signature Agreement.  An AO must complete a subscriber agreement in order to establish their identity and their relationship to the entity for which they will submit electronic documents, as well as to document a unique correlation with the device that will be used to create their electronic signature. While users can comply with the subscriber agreement provisions in CDX either by submitting a paper subscriber agreement with a wet-ink signature, or by submitting an electronic signature agreement, this analysis assumes that all will submit electronic signature agreements. Preparing, submitting, and filing a subscriber agreement and an electronic signature agreement is estimated to require an average of 15 minutes of time per registrant (EPA, 2011). Because only an AO must complete the subscriber and electronic signature agreement, this is assumed to be managerial time. In addition, the burden estimate is assumed to include identity verification through a third party electronic verification process that is an available service through CDX.
      CDX Registration.  CDX users will need to register with CDX, which involves selecting a user name and password, providing contact information, and identifying the facility and the registrant's role (e.g., AO or Support Registrant) at the facility.  This is estimated to take an  average of 10 minutes per user (EPA, 2011). Because there are assumed to be one manager and four technical staff registering, this results in an estimate that each respondent (business) will spend 10 minutes of managerial time and 40 minutes of technical time to register with CDX.
      Help Desk.  CDX users are assumed to spend an average of 4 minutes contacting EPA's CDX Help Desk for technical support (EPA, 2011), which results in an estimate of 4 minutes of managerial time and 16 minutes of technical time per respondent.
      Problem Resolution.  Three percent of respondents each year are assumed to spend an average of one hour of technical time working with EPA's CDX Help Desk to resolve problems involving their registrations or agreements (EPA, 2011).
 Subsequent Year Costs
In subsequent years, respondents may incur electronic reporting costs due to employee turnover and compromised electronic signatures as well ongoing problem resolution.
      Employee Turnover.  It is assumed that each year 10 percent of CDX users will be replaced by new employees, who will have to comply with the subscriber agreement and/or CDX registration requirements (EPA, 2011). Thus, in subsequent years 10 percent of AOs will spend 15 minutes of managerial time to complete a subscriber agreement. In addition, 10 percent of all users (both managerial and technical) will spend10 minutes to register with CDX.
      Report Compromised Signature.  Each year 1 percent of respondents are assumed to report a compromised or surrendered electronic signature, which requires the submittal of a new subscriber agreement (EPA, 2011). This will entail 15-20 minutes of managerial time to report the compromised signature and prepare, submit, and file a new agreement, plus an additional 4 minutes contacting the Help Desk for a total of approximately 24 minutes.
      Help Desk.  CDX users are assumed to spend an average of 4 minutes contacting EPA's CDX Help Desk for technical support (EPA, 2011), which results in an estimate of 4 minutes of managerial time and 16 minutes of technical time per respondent.
      Problem Resolution.  Three percent of respondents each year are assumed to spend an average of one hour of technical time with EPA's CDX Help Desk to resolve problems involving their registrations or agreements (EPA, 2011).
Table 3-5 and Table 3-6 present the first year burden and costs and subsequent year labor burden and costs for electronic reporting.
   Table 3-5: Industry Burden and Cost of Electronic Reporting Requirements
                        (First Year, per Firm) (2013$)
                              Reporting Activity
                        Clerical Labor (at $30.35/hour)
                       Technical Labor (at $64.55/hour)
                       Managerial Labor (at $77.82/hour)
                          Number of Annual Activities
                               Total Labor Cost

                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost

                                    Burden
                                     Cost
                               CDX Registration
                                     0.00
                                    $0.00
                                     0.67
                                    $43.25
                                     0.17
                                    $13.23
                                       1
                                     0.84
                                    $56.48
             Electronic Subscriber Agreement/ Electronic Signature
                                     0.00
                                    $0.00
                                     0.00
                                    $0.00
                                     0.25
                                    $19.46
                                       1
                                     0.25
                                    $19.46
                                   Help Desk
                                     0.00
                                    $0.00
                                     0.24
                                    $15.49
                                     0.06
                                    $4.67
                                       1
                                     0.30
                                    $20.16
                              Problem Resolution
                                     0.00
                                    $0.00
                                     1.00
                                    $64.55
                                       0
                                    $0.00
                                     0.03
                                     0.03
                                     $1.94
                                                                         Totals
                                     1.42
                                    $98.04

Table 3-6: Industry Burden and Cost of Electronic Reporting Requirements (Subsequent Years, per Firm) (2013$)
                              Reporting Activity
                        Clerical Labor (at $30.35/hour)
                       Technical Labor (at $64.55/hour)
                       Managerial Labor (at $77.82/hour)
                          Number of Annual Activities
                               Total Labor Cost

                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost

                                    Burden
                                     Cost
                               CDX Registration
                                     0.00
                                    $0.00
                                     0.67
                                    $43.25
                                     0.17
                                    $13.23
                                     0.10
                                     0.08
                                     $5.65
             Electronic Subscriber Agreement/ Electronic Signature
                                     0.00
                                    $0.00
                                     0.00
                                    $0.00
                                     0.25
                                    $19.46
                                     0.10
                                     0.03
                                     $1.95
                                   Help Desk
                                     0.00
                                    $0.00
                                     0.24
                                    $15.49
                                     0.06
                                    $4.67
                                     0.10
                                     0.03
                                     $2.02
                         Report Compromised Signature
                                     0.00
                                    $0.00
                                     0.00
                                    $0.00
                                     0.40
                                    $31.13
                                     0.01
                                     0.00
                                     $0.31
                              Problem Resolution
                                     0.00
                                    $0.00
                                     1.00
                                    $64.55
                                     0.00
                                    $0.00
                                     0.03
                                     0.03
                                     $1.94
                                                                         Totals
                                     0.17
                                    $11.87

Recordkeeping
Reporting businesses will be required to compile and maintain records of the collected information. Based on estimates taken from the Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notification (EPA, 1994) which estimates the burden associated with PMN form completion and submission, estimates of recordkeeping of paper records is expected to require one hour of technical labor, and one hour of clerical labor per report for all reporters. Estimates from this RIA were used in the NMSP ICR (EPA, 2007) to estimate about half the burdens presented in Table 3-3. However, the original PMN burden estimates from the 1994 RIA include recordkeeping costs (EPA, 1994, pages III-13 and III-14). To account for the additional recordkeeping burden not captured by these estimates EPA used the additional two hour recordkeeping burden for polymer exception submissions, which have more stringent recordkeeping requirements than PMNs (EPA, 1994, page IV-6). In addition this two hour burden is consistent with the estimate of 1 to 3 hours of recordkeeping burden per Section 8(a) notice presented in the Information Collection Request for Toxic Substance Control Act Section 8(a) Chemical-Specific Information Gathering Rules (EPA, 2006).
This proposed rule would require electronic reporting, however, which is expected to reduce the recordkeeping burden. EPA assumes that the final rule will reduce recordkeeping burden by half because of the efficiencies in creating and storing documents electronically. The full recordkeeping burden and associated cost estimates are presented in Table 3-7.

Table 3-7: Industry Cost Estimate to Maintain Records (2013$) (per Report)
                              Reporting Activity
                        Clerical Labor (at $30.35/hour)
                       Technical Labor (at $64.55/hour)
                       Managerial Labor (at $77.82/hour)
                               Total Labor Cost

Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                    Burden
                                     Cost
                                 Recordkeeping
                                      0.5
                                    $15.17
                                      0.5
                                    $32.27
                                       0
                                    $0.00
                                       1
                                    $47.44
Source: BLS, 2014; EPA, 1994.
 Discounting Methods
Discounting refers to the economic conversion of future costs (and benefits) to their present values, accounting for the fact that society tends to value future costs or benefits less than comparable near-term costs or benefits. Discounting is important when the values of costs or benefits occur over a multiple year period and may vary from year to year. Discounting enables the accumulation of the cost and benefit values from multiple years at a single point in time, accounting for the difference in how society values those costs and benefits depending on the year in which the values are estimated to occur.
The proposed rule requires that firms incur a one-time cost related to the reporting and maintenance of records pertaining to each nanoscale material manufactured or processed for redistribution and use in the United States.
Costs are discounted over a 10-year period using rates of three and seven percent. The 10-year analysis period was selected because the number of nanomaterials is assumed to double over the next 10 years. The analysis assumes that first year costs are incurred at the beginning of the period; as a result, costs incurred during the first year do not need to be discounted. Costs accrued in subsequent years are discounted (for the discount rate r = 3 percent and r = 7 percent and t = time in years) back to the beginning of the 10-year period (present value), as follows:
  Present Value=t=110(Undiscounted Value)t(1+r)t

This analysis also presents the 10-year annualized costs of the rule. Conceptually, the annualized cost is equivalent to the level annual payment that one would have to make to pay off a debt equal to the net present value of the costs for a given interest rate (the discount rate). The costs are annualized such that the net present value of the costs is equivalent to a stream of 10 equal payments assuming that all costs are incurred at the end of each year.
Annualized Cost=(PV)*r*(1+r)10(1+r)11-1
                                                                              (

 Total Industry Compliance Costs
As explained in Chapter 2, EPA estimates that 295 reporters will submit chemical reports for an average of 5.06 nanomaterials per firm in the first year of the rule, resulting in approximately 1,493 reports. The total number of nanomaterials subject to the rule is assumed to double over the 10-year analysis period, with an average of approximately 0.56 additional nanomaterials per firm in subsequent years, resulting in annual total of 165 additional reports annually. As indicated in Table 3-9, the total cost of the rule to nanomaterials firms drops from approximately $13.9 million in the first year of the rule to approximately $1.53 million in subsequent years (without discounting). The annualized cost of the rule over the 10-year analysis period is $2.71 million with a three percent discount rate and $2.97 million with a seven percent discount rate.
Table 3-8: Total Annual Industry Burden Hours
                                     Year
                               Number of Firmsa
                               Reports per Firmb
                    Rule Familiarizationc Burden (per Firm)
             Form Completion and Recordkeeping Burden (per Report)
                 Electronic Reporting Requirements (per Firm)d
                             Total Burden Per Firm
                       Total Industry Number of Reportsb
                             Total Industry Burden
                                       1
                                      295
                                     5.06
                                     0.82
                                     137.6
                                     1.42
                                      698
                                     1,493
                                    206,098
                                       2
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       3
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       4
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       5
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       6
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       7
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       8
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                       9
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                      10
                                      295
                                     0.56
                                     0.00
                                     137.6
                                     0.17
                                      77
                                      165
                                    22,755
                                     Total
                                       -
                                     10.10
                                       -
                                       -
                                       -
                                       -
                                     2,978
                                    410,893
Notes:
a EPA assumes that the number of firms remains constant over the analysis period.
b The total number of nanomaterials subject to the rule is assumed to double over the 10-year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.
c Derived in Table 3-2
d Derived from Table 3-3, Table 3-5, Table 3-6, and Table 3-7
Values may not calculate exactly due to rounding

Table 3-9: Total Annualized Industry Costs
                                     Year
                               Number of Firmsa
                               Reports per Firmb
                     Rule Familiarizationc Cost (per Firm)
             Form Completion and Recordkeeping Cost (per Report)d
              Electronic Reporting Requirements Cost (per Firm)e
                             Total Cost (per Firm)
                          Discounted Cost (Per Firm)
                       Total Industry Number of Reportsb
                     Total Industry Cost (Millions 2013$)
                           Industry Discounted Cost
                               (Millions 2013$)

                               3 % Discount Rate
                               7 % Discount Rate

                               3 % Discount Rate
                               7 % Discount Rate
                                       1
                                      295
                                     5.06
                                    $56.51
                                    $9,281
                                    $98.04
                                   $47,021
                                   $47,021
                                   $47,021
                                     1,493
                                    $13.87
                                    $13.87
                                    $13.87
                                       2
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $5,046
                                    $4,858
                                      165
                                    $1.53
                                    $1.49
                                    $1.43
                                       3
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,899
                                    $4,540
                                      165
                                    $1.53
                                    $1.44
                                    $1.34
                                       4
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,757
                                    $4,243
                                      165
                                    $1.53
                                    $1.40
                                    $1.25
                                       5
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,618
                                    $3,965
                                      165
                                    $1.53
                                    $1.36
                                    $1.17
                                       6
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,484
                                    $3,706
                                      165
                                    $1.53
                                    $1.32
                                    $1.09
                                       7
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,353
                                    $3,463
                                      165
                                    $1.53
                                    $1.28
                                    $1.02
                                       8
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,226
                                    $3,237
                                      165
                                    $1.53
                                    $1.25
                                    $0.95
                                       9
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $4,103
                                    $3,025
                                      165
                                    $1.53
                                    $1.21
                                    $0.89
                                      10
                                      295
                                     0.56
                                    $0.00
                                    $9,281
                                    $11.87
                                    $5,198
                                    $3,984
                                    $2,827
                                      165
                                    $1.53
                                    $1.17
                                    $0.83
                                     Total
                                       -
                                     10.1
                                       -
                                       -

                                     2,978
                                       -
                                       -
                                       -

                                                                Annualized Cost
                                    $9,180
                                   $10,081

                                    $2.71
                                    $2.97
Notes:
a EPA assumes that the number of firms remains constant over the analysis period.
b The total number of nanomaterials subject to the rule is assumed to double over the 10-year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.
c Derived in Table 3-2
d Derived from Table 3-3, Table 3-5, Table 3-6, and Table 3-7
e Derived from Table 3-3, Table 3-5, Table 3-6, and Table 3-7
Values may not calculate exactly due to rounding.

  -  Agency Costs
 Introduction
EPA will also incur costs in administering the proposed rule. Specifically, EPA will be required to provide industry and public assistance to facilitate compliance and process submissions. These costs are discussed in Section 4.2.
 EPA Costs
The proposed rule requires EPA to provide industry and public assistance (e.g., provide guidance and facilitate compliance), process submitted reports, and maintain the information technology systems that support these activities. Based on previous estimates of Agency time used in economic analyses of Preliminary Assessment Information Reporting (PAIR) rules, which require Agency activity similar to that required under the proposed rule, it is estimated to take 1.25 labor hours per report to provide industry and public assistance and 3.13 labor hours per report to provide data processing and systems support for a total of 4.38 labor hours per report (EPA, 2003a) when the reporting is accomplished through non-electronic reporting. The electronic reporting required by the proposed rule is expected to result in cost savings to EPA.
This analysis used the same methodology as that in the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009a) to calculate EPA burden savings from electronic reporting. Potential Agency burden savings associated with the electronic reporting of the respective TSCA reports were characterized based on information in the CDX Business Case Analysis regarding the estimated monetary benefit from using CDX. Of the six Program Data Flows studied in the CDX Business Case Analysis, monetary benefits from using CDX as compared to a paper submission baseline were quantified for two flows: TRI (Toxic Release Inventory) and e-NOI (electronic Notice of Intent under the National Pollution Discharge Elimination System). Benefits ranged from eleven percent savings (e-NOI) to 22 percent savings (TRI) compared to the cost of the baseline process. For this analysis, EPA assumed an average annual savings of 16.5 percent. Applying the 16.5 percent annual savings to burden estimates described above results in an estimated 1.25/report for providing industry and public assistance and 3.13/report for data processing and systems support.

Table 4-1: Estimate of Agency Hours for the Proposed Rule
Administrative Activity for All Reporters
Hours
Industry/Public Assistance
                                 1.25 / report
Data Processing and Systems Support Personnel
                                 3.13 / report
Total
                                 4.38 / report
Source: EPA, 2003a.

EPA assumes that, on average, a Federal GS-13, Step 5 full-time equivalent (FTE) will conduct its collection and administrative activities under the proposed rule. The annual 2013 fully loaded salary for a GS-13, Step 5 FTE is $161,446. This estimate includes a base salary of $100,904 plus a 60 percent load increase to account for benefits and overhead (i.e., $60,542). Dividing the fully loaded annual salary by 2,087 hours (i.e., the number of hours in a work year as defined by OPM) yields an hourly FTE wage rate of $77.36. Appendix A provides a detailed description of these calculations.
Multiplying 4.38 hours by the $77.36 hourly FTE wage rate yields a total cost of approximately $339 to administer and process a chemical report. Further, as explained in Chapter 3, approximately 1,493 chemical reports will be filed in the first year of the rule and 165 reports in subsequent years. As shown in Table 4-2, the total Agency hours and costs for the proposed rule are estimated to total 6,539 hours and $0.51 million in the first year of the rule before decreasing to 723 hours and $0.06 million in subsequent years. The annualized costs of the rule over the 10-year analysis period are $0.10 million with a three percent discount rate and $0.11 million with a seven percent discount rate.
     Table 4-2: Agency Cost and Burden Hour Estimate for the Proposed Rule
                                     Year
                                Wage Rate (FTE)
                               Hours per Report
                            Agency Cost per Report
                           Total Number of Reportsa
                                     Total
                       Discounted Cost (Millions 2013$)

                                    (2013$)

                                     Hours
                             Cost (Millions 2013$)
                               3% Discount Rate
                               7% Discount Rate
                                       1
                                    $77.36
                                     4.38
                                     $339
                                     1,493
                                     6,539
                                     $0.51
                                    $0.51
                                    $0.51
                                       2
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.05
                                       3
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.05
                                       4
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.05
                                       5
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.04
                                       6
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.04
                                       7
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.04
                                       8
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.05
                                    $0.03
                                       9
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.04
                                    $0.03
                                      10
                                    $77.36
                                     4.38
                                     $339
                                      165
                                      723
                                     $0.06
                                    $0.04
                                    $0.03
                                     Total
                                       -
                                     43.8
                                       -
                                     2,978
                                    13,046

                                       -
                                       -
                                       -

                                                                Annualized Cost
                                    $0.10
                                    $0.11
Notes:
aThe total number of nanomaterials subject to the rule is assumed to double in the 10-year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 reports per year.
Source: EPA, 2003a; OPM, 2013

  -  Total Social Costs and Sensitivity Analyses
Table 5-1 presents the total social burden and costs of the proposed rule in the first and subsequent years, and the annualized costs discounted over the 10-year period using three and seven percent discount rates. As indicated, the total burden of the rule is expected to be approximately 423,939 hours over the 10-year analysis period, while the annualized costs are expected to be from approximately $2.80 million with a three percent discount rate and approximately $3.08 million with a seven percent discount rate.
Table 5-1: Total Social Burden and Cost of the Proposed Rule
                                     Year
                                Burden (Hours)
                           Discounted Costs (2013$)

                               3 % Discount Rate
                               7 % Discount Rate

                                   Industry
                                    Agency
                                     Total
                                   Industry
                                    Agency
                                     Total
                                   Industry
                                    Agency
                                     Total
                                       1
                                    206,098
                                     6,539
                                    212,637
                                    $13.87
                                    $0.51
                                    $14.38
                                    $13.87
                                    $0.51
                                    $14.38
                                       2
                                    22,755
                                      723
                                    23,478
                                    $1.49
                                    $0.05
                                    $1.54
                                    $1.43
                                    $0.05
                                    $1.48
                                       3
                                    22,755
                                      723
                                    23,478
                                    $1.44
                                    $0.05
                                    $1.49
                                    $1.34
                                    $0.05
                                    $1.39
                                       4
                                    22,755
                                      723
                                    23,478
                                    $1.40
                                    $0.05
                                    $1.45
                                    $1.25
                                    $0.05
                                    $1.30
                                       5
                                    22,755
                                      723
                                    23,478
                                    $1.36
                                    $0.05
                                    $1.41
                                    $1.17
                                    $0.04
                                    $1.21
                                       6
                                    22,755
                                      723
                                    23,478
                                    $1.32
                                    $0.05
                                    $1.37
                                    $1.09
                                    $0.04
                                    $1.13
                                       7
                                    22,755
                                      723
                                    23,478
                                    $1.28
                                    $0.05
                                    $1.33
                                    $1.02
                                    $0.04
                                    $1.06
                                       8
                                    22,755
                                      723
                                    23,478
                                    $1.25
                                    $0.05
                                    $1.30
                                    $0.95
                                    $0.03
                                    $0.98
                                       9
                                    22,755
                                      723
                                    23,478
                                    $1.21
                                    $0.04
                                    $1.25
                                    $0.89
                                    $0.03
                                    $0.92
                                      10
                                    22,755
                                      723
                                    23,478
                                    $1.17
                                    $0.04
                                    $1.21
                                    $0.83
                                    $0.03
                                    $0.86
                                     Total
                                    410,893
                                    13,044
                                    423,939
                                       -
                                       -
                                       -
                                       -
                                       -
                                       -

                                                               Annualized Costs
                                    $2.71
                                    $0.10
                                    $2.80
                                    $2.97
                                    $0.11
                                    $3.08
Source: EPA, 2003a; OPM, 2013

 - Sensitivity Analyses
To show the possible range of costs and burden associated with the proposed rule, EPA conducted several alternative analyses that estimate how sensitive the cost and burden estimates presented in Chapter 3 and Chapter 4 are to changes in the estimated number of nanoscale materials and firms subject to the proposed rule. EPA conducted three sensitivity analyses, estimating: 1) costs based on a potential growth in the number of firms subject to the proposed rule over the 10 year period; 2) a low and high cost based on the range of number of reports submitted by a firm in year one; and 3) a low and high cost based the growth rate of the number of nanomaterials over the ten year period
 Annual Industry Growth Rate
In Chapter 3 and Chapter 4, EPA assumes that the number of firms subject to the rule will remain static throughout the period of analysis. As an alternative analysis, EPA estimated the cost to industry and the Agency assuming an annual growth rate of 5.8 percent in the number of firms subject to the rule. The growth rate of 5.8 percent was calculated using the number nanomaterials firms identified in the 2005 NMSP ICR (611) and the number of firms estimated in this report (823) and calculated using the formula below:
Growth Rate=∆Number of FirmsFirms year 1(Number of years)=823-611611(2011-2005)=0.058
Estimated Number of Nanomaterials
To be consistent with the main analysis presented in Chapter 3 and Chapter 4 EPA assumes each firm will submit 5.06 reports in its first year and 0.56 reports in each subsequent year (see Section 2.4). The total number of reports submitted each year is the sum of the first-year reports submitted by new firms and subsequent-year reports submitted by existing firms for a total of 4,354 reports over the 10-year period.

Table 6-1: Estimated Number of Reports (Increased Annual Growth Rate Scenario)
                                     Year
                                Number of Firms
                               Reports per Firm
                                     Total

                                   New Firms
                                Existing Firms
                                     Total
                                  First Year
                               Subsequent Years
                                   New Firms
                                Existing Firms
                                     Total
                                       1
                                      295
                                       0
                                      295
                                     5.06
                                     0.56
                                     1,493
                                       0
                                     1,493
                                       2
                                      17
                                      295
                                      312
                                     5.06
                                     0.56
                                      86
                                      165
                                      251
                                       3
                                      18
                                      312
                                      330
                                     5.06
                                     0.56
                                      91
                                      175
                                      266
                                       4
                                      19
                                      330
                                      349
                                     5.06
                                     0.56
                                      96
                                      185
                                      281
                                       5
                                      20
                                      349
                                      369
                                     5.06
                                     0.56
                                      101
                                      195
                                      297
                                       6
                                      21
                                      369
                                      390
                                     5.06
                                     0.56
                                      106
                                      207
                                      313
                                       7
                                      23
                                      390
                                      413
                                     5.06
                                     0.56
                                      116
                                      218
                                      335
                                       8
                                      24
                                      413
                                      437
                                     5.06
                                     0.56
                                      121
                                      231
                                      353
                                       9
                                      25
                                      437
                                      462
                                     5.06
                                     0.56
                                      127
                                      245
                                      371
                                      10
                                      27
                                      462
                                      489
                                     5.06
                                     0.56
                                      137
                                      259
                                      395
                                     Total
                                       -
                                       -
                                       -
                                       -
                                       -
                                     2,474
                                     1,880
                                     4,354

Industry, Agency and Total Costs
Table 6-2 presents the annual industry labor burden for both new and existing firms. There are 295 firms expected to submit reports in year 1, and a total 489 firms are estimated to submit reports by the end of the 10 year period. Each new firm is estimated to incur 699 labor burden hours in their first year and 77 hours each subsequent year. The total industry labor burden is estimated to be 600,828 hours. The costs per firm and total industry costs are presented in Table 6-3. Total annualized costs are $3.85 million with a 3 percent discount rate and $4.07 million with a 7 percent discount rate.
Agency costs are derived following the method described in Section 4.2. EPA expects that approximately 4,354 reports will be submitted over the next 10 years, resulting in a total Agency burden of 19,071 labor hours. Table 6-4 presents Agency burden and cost estimates for each year over the 10-year period. Annualized costs are expected to be $0.14 million with a three percent discount rate and $0.15 million with a 7 percent discount rate.
The 5.8 percent linear growth rate in the number of nanomaterials firms over a 10-year period is expected to yield a total social burden of 619,898 hours and total annualized social costs of $3.99 million with a 3 percent discount rate ($4.22 million with a 7 percent discount rate).

Table 6-2: Total Annual Industry Labor Burden (Increased Annual Growth Rate Scenario)
                                     Year
                                Number of Firms
                          Total Number of Reports[a]
                Rule Familiarization Burden (Hours per Firm)[b]
        Form Completion and Recordkeeping Burden (Hours per Report)[c]
         Electronic Reporting Requirements Burden (Hours per Firm)[d]
                    Total Burden per Firm (Hours per Firm)
                          Total Industry Burden Hours

                                   Existing
                                      New
                                     Total

                                   Existing
                                      New

                                   Existing
                                      New
                                   Existing
                                      New

                                       1
                                       0
                                      295
                                      295
                                     1,493
                                       0
                                     0.82
                                      138
                                       0
                                     1.42
                                       0
                                      699
                                    206,058
                                       2
                                      295
                                      17
                                      312
                                      251
                                       0
                                     0.82
                                      138
                                     0.17
                                     1.42
                                      77
                                      699
                                    34,657
                                       3
                                      312
                                      18
                                      330
                                      266
                                       0
                                     0.82
                                      138
                                     0.17
                                     1.42
                                      77
                                      699
                                    36,669
                                       4
                                      330
                                      19
                                      349
                                      281
                                       0
                                     0.82
                                      138
                                     0.17
                                     1.42
                                      77
                                      699
                                    38,757
                                       5
                                      349
                                      20
                                      369
                                      296
                                       0
                                     0.82
                                      138
                                     0.17
                                     1.42
                                      77
                                      699
                                    40,923
                                       6
                                      369
                                      21
                                      390
                                      313
                                       0
                                     0.82
                                      138
                                     0.17
                                     1.42
                                      77
                                      699
                                    43,166
                                       7
                                      390
                                      23
                                      413
                                      334
                                       0