EPA seriously underestimates its costs under TSCA and lowballs industry fees as a result

Richard Denison, Ph.D.is a Lead Senior Scientist.  Stephanie Schwarz, J.D., is a Legal Fellow.

Yesterday EDF filed extensive comments on the Environmental Protection Agency’s (EPA) proposal for the last of the so-called “framework rules” called for under the 2016 amendments to the Toxic Substances Control Act (TSCA).  This rule, once finalized, will establish the “user fees” Congress authorized EPA to collect from chemical manufacturers and processors to help defray EPA's costs for implementing TSCA.

The 2016 Lautenberg Act amendments to TSCA greatly expanded both EPA authorities and responsibilities under TSCA.  These extended to chemical testing; conducting risk reviews of new chemicals and prioritizing and conducting risk evaluations of existing chemicals; managing potential or identified risks of both new and existing chemicals; collecting, reviewing and providing access to chemical information; and reviewing confidential business information (CBI) claims asserted by companies when submitting information to EPA.

To determine the level of user fees, EPA is first required to determine its full costs to exercise these authorities and carry out these responsibilities.  Fees are then to be set so as to recoup 25% of those costs or $25 million annually, whichever is lower.  Separate fees are to be collected to cover EPA’s costs to conduct risk evaluations of chemicals companies request, apart from risk evaluations EPA initiates.

So it is vital that EPA fully and as accurately as possible account for its costs, and that it set fees that meet the intent and letter of the law.

Unfortunately, EPA’s proposed rule falls far short of the mark.  EPA has severely underestimated its baseline program costs, both by omitting costs for some relevant activities altogether and by understating the extent or actual cost of other activities.  In some cases EPA set fees at a low level based only on industry’s request that it do so or by invoking factors that are not consistent with the law.  In the proposal and supporting documents, EPA has provided scant detail or conflicting information on how it calculated many of its costs, making it difficult or impossible for stakeholders to know whether EPA’s estimates are at all accurate.

As a result of these flaws, EPA has set some fees at levels below those required by TSCA and the resulting funds will not be sufficient to recoup the costs TSCA authorized EPA to defray through user fees.

This post will highlight some of the many concerns and questions we discuss in detail in the comments we have submitted.  

Cost omissions or under-estimates

  • When estimating costs under section 4, EPA has significantly underestimated the amount of testing EPA will need to require to fill information gaps and fulfill its expanded obligations under the Lautenberg Act.
  • When estimating costs under section 5, EPA failed to account for several activities necessary to carrying out section 5, such as pre-notification consultations, and has underestimated the costs of others, such as the development of orders and significant new use rules. EPA has also inconsistently stated its obligation under TSCA to review reasonably foreseen as well as intended conditions of use of new chemicals.
  • With respect to prioritization under section 6, EPA has failed to include any costs associated with identifying potential candidates for prioritization; and has provided no breakdown of or basis for its cost estimate for prioritization.
  • With respect to risk evaluations under section 6, EPA relied on the costs of risk evaluations under the old law, and EPA failed to increase those estimates to reflect EPA’s new, broader obligations under the Lautenberg Act.
  • With respect to risk management actions under section 6, EPA provides estimates far lower (65% lower) than the costs of prior, narrower actions, based on unspecified “efficiencies.”
  • With respect to the costs of collecting, processing, and reviewing information under TSCA, EPA has failed to include any estimates beyond the cost of reviewing confidential business information (CBI) claims under section 14. As a result, EPA has ignored the costs associated with activities such as reporting rules under section 8.
  • EPA’s estimated costs under section 14 are unreasonably low (as much as five-fold lower) compared to EPA’s prior budget estimates for these activities under the old law, and EPA has failed to account for its many new duties under this section as amended by the Lautenberg Act. EPA has provided no estimate whatsoever as to how many CBI claims it receives or must review, and omits any costs associated with providing access to CBI to qualified persons or to providing public access to information that does not qualify for protection from disclosure.

Missing or unjustifiably low fees

Manufacturer-requested risk evaluations

In the proposed rule, EPA assumes without basis that the cost of conducting a manufacturer-requested risk evaluation will be 67% of the cost of conducting a risk evaluation EPA initiates, and has therefore proposed charging a proportionally lower fee than it would otherwise.  Its discounted fee for such risk evaluations does not recover EPA’s full costs, in violation of the Lautenberg Act, and reflects arbitrary and capricious reasoning.

EPA omits any mention, let alone the costs, of conducting risk evaluations for two persistent, bioaccumulative and toxic (PBT) substances that were exempted from expedited risk management based on manufacturer requests that EPA conduct risk evaluations of them.

First ten chemicals

EPA has stated it will not collect any fees for the first ten chemical undergoing risk evaluations.  EPA must charge fees to recoup costs for the work remaining to be completed on the risk evaluations for the first ten chemicals that are currently underway, as well as the costs of any associated risk management under section 6.  The cost of those risk evaluations and risk management activities is a significant portion of EPA’s near-term total budget, and EPA must ensure that it is collecting fees for the portions of those activities that remain to be undertaken.

Testing

EPA’s proposed fee structure provides for disproportionately low fees for testing relative to those for new chemical reviews under section 5 and risk evaluations under section 6.  EPA has done so merely based on the request of the industry.  EPA should set fees for testing, and more generally, in a manner that is proportional to the costs of the underlying activities.

Conclusion

Based on EDF’s review of the proposed rule and the other materials EPA has provided in the docket, it appears that EPA has failed to fully account for its costs of “carrying out sections 4, 5, and 6, and of collecting, processing, reviewing, and providing access to and protecting from disclosure as appropriate under section 14 information under [TSCA],” as required by the law.  As a result, it has established fees at levels that will not provide the agency with the extent of dedicated funding from fees that Congress intended and that TSCA authorized.

 

This entry was posted in EPA, Health Policy, Industry Influence, TSCA Reform and tagged , . Bookmark the permalink. Both comments and trackbacks are currently closed.