A sea of red herrings is behind opposition to EPA’s proposal to enhance chemical reporting

Richard Denison, Ph.D., is a Senior Scientist. Allison Tracy is a Chemicals Policy Fellow.

With the chemical industry and now Congressional Republicans mounting a last-minute effort to derail the EPA’s long-time-in-coming enhancements to its Inventory Update Reporting (IUR) rule (see our last post), it’s worth examining their main objections.  That examination reveals a sea of red herrings.  Here are a few of the smelliest ones, discussed in detail in this post:

Red herring #1:  EPA has failed to indicate how it will use the information it collects.

Red herring #2:  Small businesses would be excessively burdened.

Red herring #3:  More frequent reporting is a “needless” burden on the industry.

Red herring #4:  EPA is expanding the IUR from data reporting to data-gathering.

Red herring #5:  EPA’s requirement for retroactive reporting is unfair.

Red herring #6:  Requiring electronic reporting is too inflexible.

[NOTE:  Because the draft final version of the IUR rule is still in OMB review and hence not public, these comments – like the industries’ and Congressional Republicans’ complaints – are necessarily based on EPA’s proposed rule.]

Red herring #1:  EPA has failed to indicate how it will use the information it collects.

The Upton/Shimkus letter we blogged about yesterday repeatedly asserts that EPA “fails to detail how the additional data will be used to improve chemical management programs at EPA or further the Agency’s mission.”

This claim is patently untrue, as even a cursory review of EPA’s proposed rule makes immediately evident.  See for yourself; here’s a sampling:

  • Page 49656: EPA will use enhanced information to “better identify, and where appropriate, manage risks associated with chemical substances;” and it will publish information to better inform the public about chemical safety and risks.
  • Pages 49658-59: EPA lists four primary goals covering both utility to the agency and to the public through collection and dissemination of the IUR information; EPA specifies that information collected will be able to be used by both EPA and other federal agencies to improve risk screening.
  • Page 49659: The enhancements will supply EPA with exposure-related information that is needed to understand risk and prioritize chemicals, and to which they do not currently have access.  EPA identifies information gaps that have limited its ability to carry out its mission under the existing chemicals program and the High Production Volume (HPV) Chemical Challenge.
  • Pages 49663-64: EPA provides its justification for changing the trigger for reporting as a result of fluctuations, noting major gaps in the data it received previously on processing and use of HPV chemicals.
  • Pages 49671-72: EPA provides its justification for using the reporting standard of “known or reasonably ascertainable” and need for the resulting information.
  • Page 49675: EPA provides its justification for changing the reporting frequency and need for the resulting information.
  • Page 49677: EPA provides its justification for changing the reporting frequency and need for the resulting information.

Red herring #2:  Small businesses would be excessively burdened.

This argument conveniently ignores that small businesses are exempt from nearly all reporting under the current IUR (see 40 CFR 710.59), and that EPA proposes to maintain this exemption under the enhanced IUR.  These facts were clearly stated in EPA’s proposed rule (p. 49684).

Small businesses are defined by EPA as those with annual sales of less than $40 million and less than 100,000 pounds per year per site of a chemical – a production volume four times higher than the IUR reporting threshold of 25,000 pounds per year per site – or annual sales of less than $4 million.

The only exceptions are for the small subset of chemicals subject to certain EPA rules issued under TSCA section 4, 5 or 6, where if a small business produces or imports such a chemical, it is obligated to report information for that chemical under the IUR.  EPA analyzed the cost burden associated with its proposed enhanced IUR rule.  Here’s what it found:

“EPA analyzed potential small business impacts from this proposed rule using both the SBA employee size standards and the TSCA sales-based definition of small business. EPA estimates that 466 small firms potentially would be affected by this proposed rule using the employment-based definition, and 280 small firms potentially would be affected using the sales-based definition. Based on costs annualized over a 4-year period and average sales data for the parent companies, EPA estimated that the cost-to-sales ratio of the proposed rule would be less than 0.1% for an average small company subject to the rule. For a company to have a cost-to-sales ratio larger than 1%, company sales would have to be less than $1.02 million. Because the small businesses affected by the proposed rule have average sales of more than $412.7 million under the employment-based definition, and $11.8 million under the sales-based definition, small entities will not be affected by the proposed amendments to the IUR rule at a cost-to-sales ratio of greater than 1%.” (emphases added)

Red herring #3:  More frequent reporting is a “needless” burden on the industry.

The current IUR requires reporting only once every five years and then only for a single year in each five-year cycle.  EPA’s proposed rule (p. 49663+) provided extensive justification for the need for more frequent reporting, based on the enormous year-to-year fluctuations in production volumes for individual chemicals that severely hamper EPA’s ability to understand how many and which chemicals are actually in commerce.  This in turn affects its ability to effectively prioritize chemicals, a key industry demand.

EDF did its own extensive analysis of the extent of fluctuation by comparing chemicals reported in the last two IUR cycles (2002 and 2006).  Here’s just one of many highlights revealed by our analysis:

About 32% of the organic chemicals reported on the 2002 IUR do not appear at all on the 2006 inventory.  This includes more than 400 organic high production volume (HPV) chemicals each of which had been reported as produced in aggregate volume above one million pounds/year, a finding that cannot possibly be explained by the increase that occurred in the reporting threshold from 10,000 to 25,000 pounds/year/site.

Clearly, these HPV chemicals did not disappear from commerce in that time span, but rather, their production levels fluctuated from one cycle to the next – enough so that the single-year snapshot provided by the current IUR simply completely missed them!

Moreover, EPA’s proposed rule (p. 49664) cited numerous statements from chemical companies where they themselves point to this year-to-year fluctuation and ascribe it to real-world market factors that result in periodic or sporadic production of a chemical.  These factors include “customer-driven demand or other factors (e.g., variation in availability or cost of raw materials, cost of substitute materials, etc.) or chemical substances that are used infrequently and upon request when working with suppliers.”

Red herring #4:  EPA is expanding the IUR from data reporting to data-gathering.

This claim is based on EPA’s proposal to eliminate a lesser reporting standard – which requires reporting of certain information where it is “readily obtainable” – and instead use the standard of “known or reasonably ascertainable.”

Far from being the radical move it is claimed to be, the “readily obtainable” standard was the new kid on the block in the 2002 IUR, a departure from the traditional “known or reasonably ascertainable” standard used under both previous IUR cycles and other EPA reporting and notification programs.  “Readily obtainable” was tested for the first time in the last reporting cycle, and it failed, resulting in massive overuse that produced huge data gaps.  Those gaps, which EPA details in its proposed rule (p. 49671), were so large that EPA concluded:

“EPA is proposing this change to the reporting standard because reporting under the ‘‘readily obtainable’’ reporting standard did not generate sufficiently complete processing and use information, which limited the usefulness of the 2006 IUR processing and use data for screening level reviews.  EPA believes the ‘‘readily obtainable’’ reporting standard was a major reason for the small amount of reporting processing and use data.”

There is considerable irony in the industry’s opposition to this change:  Its indelible mantra that all decisions about chemicals – screening, prioritization and assessment – must be based on risk demands that EPA have good information not only on production but also on processing and use of chemicals, which is vital to understanding the “exposure” half of the risk equation (“risk = hazard X exposure”).

Red herring #5:  EPA’s requirement for retroactive reporting is unfair.

This claim refers to EPA’s proposal that if companies trigger the reporting threshold for 2010 (the principal year in the next reporting cycle), they would need to report production volume information not only for that year but also for the years 2006-2009.  The concern is that companies may not have collected such information because they didn’t know they would have to.

This one sounds like it’s not a red herring, no?  But wait, EPA has in fact a built-in solution to this problem that is at the very core of the proposed enhanced IUR:  To the extent industry is right that this (or any other reporting requirement) is too onerous or difficult to comply with, companies have a strong basis for maintaining that the information is not “known to or reasonably ascertainable by” them, in which case they would not have to report it.  The more onerous the requirement, the stronger basis they would have for invoking that reporting standard as a reason they cannot report.

Now, it seems likely that this situation will result in EPA getting less information in this reporting cycle than in future ones, because some companies won’t have access to the earlier years’ data.  (It hopefully goes without saying that, after this first cycle, affected companies will have no excuse for not reporting for earlier years in the cycle, as they will have had plenty of notice.)  But the alternative is to wait until the next reporting cycle – four or five years from now – for EPA to get any data that allows it to understand and assess the extent and significance of the year-to-year fluctuation in chemical production, and to be able to provide an accurate count and identification of the full range of chemicals in commerce (well, OK, those that are produced above the reporting threshold and not otherwise exempt from reporting).

Red herring #6:  Requiring electronic reporting is too inflexible.

This one makes me wonder which century we recently entered.  The lack of a requirement for electronic reporting in the last IUR wreaked havoc on EPA’s ability to process and provide timely public access to the IUR data.  It also led to major data quality problems – errors – that were introduced into the data in the course of transcribing it from hard copy to electronic databases.  That hurt everyone.

Companies have been on notice for years that this day was coming.  And the notion that some companies wouldn’t already have access to computers and the internet in 2011 is just plain silly.

Then there is the concern that EPA’s data system may not be ready.  That ignores the fact that the very same data system has been in use for several years for other submissions, and EPA has just made its use mandatory for submission of premanufacture notifications for new chemicals.


In conclusion

The American Heritage Dictionary defines “red herring” as:  “something intended to divert attention from the real problem or matter at hand.”

I’ve just discussed six such red herrings – all of which have been served up to slow progress toward upgrading a system intended to provide EPA, the market and the public with better information about chemicals in commerce.  As we noted in our last post, that objective is supposedly something the chemical industry supports.

Which makes me wonder whether that claimed support is the biggest red herring of them all.

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