*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule EO12866_Formaldehyde-TPCs_NPRM_EA_2012-03-20.docx



### Draft document as submitted for review under EO 12866/13563.



## Economic Analysis of the Third-Party Certification Framework for the Formaldehyde Standards for Composite Wood Products Proposed Rule

RIN 2070-AJ44



## EO 12866 REVIEW DRAFT

Economic and Policy Analysis Branch Economics, Exposure and Technology Division

Office of Pollution Prevention and Toxics Office of Chemical Safety and Pollution Prevention U.S. Environmental Protection Agency



## March 2012*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 

### Acknowledgment

EPA acknowledges the analytical and draft prepar ation support of Abt Associates Inc. of Cambridge, Massachusetts in the preparation of this report, provided und er Contract No. EP-W08-10.

Notice

This is not an official guidance documen t and should not be relied upon to determine applicable regulatory requirements. This document was prepared to provide economic information for the rulemaking process, and to meet various administrative and legislative requirements. Due to the nature of the information available to EPA, the document contains various assumptions that may not reflect the regulatory

determinations that an indivi dual firm or organization would make were it to apply the rule's requirements to its specific circum stances. Persons seeking information on specific regulatory requirements should consult 40 CFR Part 767, and the preamble for the regulatory action.

Mention of the names of specific companie s, organizations, or entities does not constitute an endorsement by EPA.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule i 

### Table of Contents

1 Summary of Economic Analysis .........................................................................................1

2 Certification System .......................................................................................................... ...6 2.1 Certification System Framework ...........................................................................................6 2.2 Profile of Third Party Certifie rs and Accreditation Bodies ..................................................10

3 Costs of the TSCA Title VI TPC Rule ..............................................................................16 3.1 Proposed Rule Requirements ...............................................................................................1 6 3.2 Wage Rates Used in the Analysis ........................................................................................17

3.3 Costs to Accreditation Bodies ............................................................................................. .18 3.4 Third-Party Certifier Costs ............................................................................................... ....20

3.5 Total Cost to TPCs ........................................................................................................ .......29 3.6 Total Costs of the Rule for U.S. Accrediting Bodies and TPCs ..........................................30

4 Impact Analyses ............................................................................................................... ...32 4.1 Paperwork Reduction Act Analysis .....................................................................................32 4.2 Regulatory Flexibil ity Act Analysis .....................................................................................33 4.3 Unfunded Mandates Reform Act (UMRA) ..........................................................................37

4.4 Executive Order 13132 - Federalism ...................................................................................38 4.5 Executive Order 13175 - Tribal Implications ......................................................................38

4.6 Executive Order 13045 - Protection of Children .................................................................38 4.7 Executive Order 13211 - Energy Effects .............................................................................38 4.8 National Technology Transfer and Advancement Act .........................................................39

4.9 Executive Order 12898 – Environmental Justice .................................................................39 Appendix A: Wage Rates Appendix B: Recordkeeping and Reporting Burdens*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 1 

### 1 Summary of Economic Analysis 1

2

3 This report presents an economic analysis of the U.S. Environmental Protection Agency 4 (EPA)’s proposed Third Party Ce rtification rule. The Formal dehyde Standards for Composite 5 Wood Products Act, which created Title VI of the Toxic Substances Control Act (TSCA), 6 established formaldehyde emission standards for composite wood products (hardwood plywood, 7 medium-density fiberboard, and particleboard) sol d, supplied, offered for sale or manufactured in 8 the United States. Under TSCA Tile VI, ma nufacturers of composite wood products must 9 comply with specific formaldehyde emission standa rds, and their compliance must be verified by 10 a third party certifier (TPC). 11

12 Third-party certification invol ves a process by which a produ ct, process or service is 13 reviewed by a reputable and qua lified independent third-party to verify that a set of norms, 14 criteria, claims, practices or standards are be ing met. The standards used in a third-party 15 certification process are typical ly voluntary consensus standards developed by nationally or 16 internationally recognized st andards-producing organizations or industry groups. TPCs are 17 overseen by accreditation bodies (ABs), which pr ovide an impartial verification of the 18 competency of the TPCs. 19

20 The proposed TPC rule establishes a framew ork whereby ABs accredit TPCs so that the 21 TPCs may certify composite wood produc t manufacturers under TSCA Title VI. The proposed 22

rule identifies the roles a nd responsibilities ABs and TPCs, as well as the criteria for 23 participating in the program. Under the propos ed framework, participa ting ABs would accredit 24 TPCs, audit TPCs, maintain records on their accredited TPCs, and report to EPA on TPCs’ 25 activities. TPCs would be responsible for activ ities such as regularly auditing manufacturers, 26 conducting and verifying formaldehyde emissions te sts, and ensuring that manufacturer quality 27 assurance and quality control pro cedures and testing comply with the requirements set forth in 28

the TSCA Title VI rule. 29

30 Under the TSCA Title VI rule, participati ng accrediting bodies will need to familiarize 31 themselves with the rule (in the first year), submit an application and enter into a recognition 32 agreement with EPA (in the first year and every th ree years thereafter), a nd provide notifications 33 and reports and keep records (every year). As shown in Table 1-1, accreditation bodies are 34 expected to incur costs of $1,685 in the firs t year, $1,070 in years w ith reapplication and 35 recognition agreement resubmissions, and $633 in other years. 36

37 Table 1-1: Costs per Accrediting Body

Type of Cost Cost (2010$) First Year Reapplication Years 1 Non-Reapplication Years Rule Familiarization $615 $0 $0 Application or Rea pplication Process $88 $88 $0 Prepare Recognition Agreement $349 $349 $0
EPA Notification $57 $57 $57
TPC Notification $12 $12 $12 Recordkeeping $308 $308 $308 Reporting $256 $256 $256 Cost per Accrediting Body $1,685 $1,070 $633*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 2 1 Accreditation bodies are required to r eapply to the program every three years. 38 Eight accreditation bodies in the U.S. are a ssumed to participate in the TSCA Title VI 39 program. As shown in Table 1-2, total annual co sts to U.S. accreditation bodies are estimated to 40 be $13,480 in the first year, $8,560 in years when accrediting bodies must reapply to the 41 program, and $5,064 in other years. Annualized costs are estimated at $6,204 to $6,222 per year, 42 depending on the discount rate. 43

44 Table 1-2: Total Costs for U.S. Accrediting Bodies

Type of Cost Cost (2010$) First Year Reapplication Years 1 Non-Reapplication Years Cost per Accrediting Body $1,685 $1,070 $633 Number of U.S. Accrediting Bodies 8 8 8 Total Costs for U.S. Accrediting Bodies $13,480 $8,560 $5,064 Annualized Costs (30 years, 3 percent) $6,204 Annualized Costs (30 years, 7 percent) $6,222

1 Accreditation bodies are required to r eapply to the program every three years. 45 TPCs participating in the TSCA Title VI program will need to conform to several 46 voluntary standards and guides by the Internationa l Organization for Stan dardization (ISO) and 47

International Electrotechnical Commission (IEC). Accreditations can cost TPCs up to $25,000 48 obtain and $5,000 per year to maintain, but most TPCs will already have all the necessary 49

accreditations. TPCs will also have to familiari ze themselves with the rule and submit an 50 application to the TSCA Title VI program (in the first year); reapply to the program (every two 51 years); and submit notifications and reports and ma intain records (every year). As shown in 52 Table 1-3, TPCs that already have all accreditatio ns in place will incur an estimated cost of 53 $2,090 in the first year, $1,475 in re application years, and $983 in non-reapplication years. 54

TPCs that need to obtain an additional accredi tation will incur an estimated cost of $27,090 in 55 the first year, $6,475 in reapplication years and $5,983 in non-reapp lication years. 56

57 Table 1-3: Costs per TPC

Type of Cost Cost (2010$) First Year Reapplication Years 2 Non-Reapplication

Years

Have
Accred. Need
Accred. Have
Accred. Need
Accred. Have
Accred. Need
Accred.

Accreditation 1 $0 $25,000 $0 $5,000 $0 $5,000
Rule Familiarization $615 $615 $0 $0 $0 $0 Application or Rea pplication Process $492 $492 $492 $492 $0 $0 Manufacturer Notification and Recordkeeping $773 $773 $773 $773 $773 $773 Annual Report and Notifications of Changes $210 $210 $210 $210 $210 $210 Cost per TPC $2,090 $27,090 $1,475 $6,475 $983 $5,983

1 Two-thirds of TPCs are assumed to be accredited for all three standards require d by the rule (ISO/IEC Guide 65, 17020, and 17025) and thus incur no cost for accreditation or reaccreditati on. One-third of TPCs will need to become accredited (and maintain accreditation) for one additional st andard at a cost of $25,000 in the first year and $5,000 per year in subsequent ye ars.
2 TPCs are required to reapply every two years. CARB TPCs are grandfathered in for the first year. 58 Nine TPCs in the U.S. are assumed to participate in the TSCA Title VI program. Six of 59 them are assumed to already have all the nece ssary accreditations, while three are assumed to 60

need to obtain and maintain an additional accre ditation. As shown in Table 1-4, total annual 61 costs to U.S. TPCs are estimated to be $93,810 in the first year, $28,275 per year in reapplication 62*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 3 years, and $23,847 per year in the remaining year s. Total annualized costs are estimated at 63 $27,917 to $28,760 per year, depending on the discount rate. 64

65*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 4 66

67

Table 1-4: Total Costs for U.S. TPCs

Type of Cost Cost (2010$) First Year Reapplication Years 2 Non-Reapplication

Years

Have
Accred. Need
Accred. Have
Accred. Need
Accred. Have
Accred. Need
Accred. Cost per TPC $2,090 $27,090 $1,475 $6,475 $983 $5,983 Number of U.S. TPCs 6 3 6 3 6 3 Total Cost by Accreditation Status $12,540 $81,270 $8,850 $19,425 $5,898 $17,949 Total Costs for U.S. TPCs $93,810 $28,275 $23,847 Total Annualized Costs (30 years, 3%) $27,917 Total Annualized Costs (30 years, 7%) $28,760

1 Two-thirds of TPCs are assumed to be accredited for all three standards require d by the rule (ISO/IEC Guide 65, 17020, and 17025) and thus incur no cost for accreditation or reaccreditation. One-third of TPCs will need to become accredited (and main tain accreditation) for one additional standard.

2 TPCs are required to reapply every two years. CARB TPCs are grandfathered in for the first year. 68

Table 1-5 summarizes the estimated costs at tributable to the proposed rule. The 69 estimated total cost is $107,290 in the first year. Total subseq uent year costs range from $28,911 70 to $36,835 depending on whether it is a reapplicati on year for ABs and TPCs. Annualized costs, 71 calculated over a 30-year peri od at three and seven percent discount rates, are $34,121 to 72 $34,983. 73

74 Table 1-5: Summary of Costs to U.S. Accreditation Bodies and TPCs (2010$)

Type of Cost U.S. ABs U.S. TPCs All Affected

U.S. Firms Have Necessary

Accreditation Need Additional

Accreditation Per Firm Costs: Year 1 $1,685 $2,090 $27,090 - Per Firm Costs: Subsequent Years $633 to $1,070 $983 to $1,475 $5,983 to $6,475 - Number of Affected Firms 8 6 3 17 Total Year 1 Costs $13,480 $12,540 $81,270 $107,290

Total Costs: Subsequent Years $5,064 to $8,560 $5,898 to $8,850 $17,949 to $19,425 $28,911 to $36,835 Total Annualized Costs (30-Years, 3 percent discount rate) $6,204 $7,212 $20,706 $34,121

Total Annualized Costs (30-Years, 7 percent discount rate) $6,222 $7,130 $21,630 $34,983

75

The rule will affect an estimated nine small entities in the U.S. – four accreditation bodies 76

and five TPCs. Some of the small entities are ex pected to be businesses, and others to be non77 profit organizations. The rule’s impacts on small entities are analyzed by determining the ratio 78 of costs to revenues for small businesses, and th e ratio of costs to expenses for small non-profit 79 organizations. The cost impacts are then categorized as being under one percent, between one 80 and three percent, and over three percent. 81

82 As shown in Table 1-6, there five small non-pro fits predicted to be affected by the rule, 83 all of which are estimated to have cost impacts of less than one percent of expenses. Four small 84 businesses are predicted to be affected by the ru le; two of them are estimated to have cost 85 impacts of less than one percent of revenues, and two are estimate d to have cost impacts between 86 one percent and three per cent of revenues. No small entities are predicted to have cost impacts 87 over three percent. 88*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 5 89 Table 1-6: Summary of Small Entity Impacts

Entity Type Number of U.S. Entities

that are Small Estimated Number of Small Entities with Impacts

Under One

Percent Between One and

Three Percent Over Three Percent

TPCs Non-profit 2 2 0 0

Business 3 1 2 0

ABs Non-profit 3 3 0 0

Business 1 1 0 0

Combined Non-profit 5 5 0 0

Business 4 2 2 0

Total 9 7 2 0 90

91*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 6 

### 2 Certification System 92

93 2.1 Certification System Framework 94

95 The certification system under the proposed TSCA Title VI TPC rule is based on a 96

framework of international sta ndards organizations and existing voluntary consensus standards, 97 accreditation and inspection oversight organi zations, accrediting bodi es, and third party 98 certifiers, as described below. See Figure 1 fo r a diagrammatic approach to the relationships 99 between the organizations in th e certification system framework. 100

101 The certification system under the TSCA Title VI TPC rule will be similar, although not 102 identical, to that under the Ca lifornia Air Resources Board’s (CARB) Air Toxics Control 103 Measure (ATCM) to reduce formaldehyde emissi ons from composite wood products. Under the 104 CARB ATCM, manufacturers of composite wood products must ha ve their compliance with the 105 emission standards verified by a TPC approved by CARB. The CARB ATCM requires TPCs to: 106 verify that composite wood pr oduct manufacturers are complyi ng with the quality assurance 107 requirements; verify formaldehyde emission test results; work w ith manufacturers to establish 108 quality control limits for each product type and production line; provide independent inspections 109 and audits of manufacturers and records; use laboratories that are certified by an accreditation 110 body that is a signatory to th e International Laboratory Accr editation Cooperation Mutual 111 Recognition Arrangement; and provide an annual re port to CARB. In order to implement the 112 ATCM, CARB directly evaluates and approves TPCs seeking to participate in the program. 113

114 2.1.1 International Standards Organizations 115

116 The International Organiza tion for Standardization, known as ISO, is a non-governmental 117 international standard-setting body comprising repr esentatives from various national standards 118 organizations. The organization promulgates worl dwide proprietary industrial and commercial 119

standards. The International Electrotechni cal Commission (IEC) is a non-profit, non120 governmental international sta ndards organization that prepar es and publishes International 121 Standards for electrical, electr onic and related technologies. Th e IEC cooperates with the ISO 122 when appropriate. The use of the ISO/IEC pr efix covers publications from ISO/IEC Joint 123 Technical Committee on Information Technology, as well as conformity assessment standards 124 developed by ISO’s committee on conformity assessment (CASCO). 125

126

The ISO/IEC standards relevant to the TSCA Title VI TPC rule include ISO/IEC Guide 127 65, which specifies requirements for bodies opera ting product certificati on systems; ISO/IEC 128 17011, which specifies general requirements fo r accreditation bodies accrediting conformity 129 assessment bodies; ISO/IEC 17020, which specifies requirements for competence of calibration 130 and testing laboratories; and ISO/IEC 17025, wh ich specifies the general requirements for 131 laboratories to demonstrate they are competent to conduct testing and/or calibrations, including 132 sampling. 133

134 2.1.2 Accreditation and Inspection Oversight Organizations 135

136*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 7 Accreditation and inspection ove rsight organizations ensure that their accreditation body 137 members only accredit laboratories that are compet ent to do the work they undertake and are not 138 subject to conflicts of intere st. They also esta blish mutual recogn ition arrangements among 139

accreditation bodies to ensure that the results from accredited laboratories will be accepted 140 anywhere in the world. Examples of accred itation and inspection oversight organizations 141 include the International Accreditation Forum, Inc. (IAF), and the In ternational Laboratory 142 Accreditation Cooperation (ILAC). 143*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 8 Figure 1. TSCA Tile VI Proposed Third-Party Certification Framework 144

145
International Standards 146 Organizations 147
Develop consensus-ba sed international 148
standards for quality management 149
and conformity assessment 150
151

152 Accreditation and Inspection 153 Oversight Organizations 154
Ensure competency of Accrediting 155

Bodies and their conformance with 156

international standards: 157

 Ensures AB conformance to 158

ISO/IEC 17011 1 159

 Ensure ABs are qualified to oversee 160

TPC conformance to ISO/IEC Guide 65 161

ISO/IEC17020 and/or ISO/IEC 17025 162
163

164 Accrediting Bodies 165
Ensure competency of TPCs; verify 166
accuracy of emission test procedures; 167
monitor quality assura nce programs, audit 168
and inspect TPCs and panel producers: 169

 Management systems conform to 170

ISO/IEC 17011 171

 Ensure TPC conformance to 172
applicable ISO/IEC Guides & Standards 173 174 175 Third Party Certifiers 176
Ensure that panel producers are in 177
compliance with statutory 178
formaldehyde emission standards: 179

 Management systems conform to 180

ISO/IEC Guide 65 181

 Conform to applicable ISO/IEC 182

Guides & Standards for 183
Product & Laboratory Certification 184
and Inspections 185 186 Composite Wood 187

Product Panel Producer 188 189

1 ISO/IEC 17011 – General Requirements for Accreditatio n Bodies Accrediting Conformity Assessment Bodies 190

2 MLA – IAF’s Multilateral Recognition Arrangement requires AB signato ries to demonstrate they are capable of accrediting product certification 191
bodies in conformance with ISO/IEC Guide 65 – General Requirements for Bodies Operating Product Certification Systems and ISO/I EC 17020 – 192
General Criteria for the Operation of Vari ous Types of Bodies Performing Inspection. 193

3 MRA – ILAC’s Mutual Recognition Arrangement requires AB signatori es to demonstrate they are capable of accrediting testing labo ratories in 194

conformance with ISO/IEC 17025 – General Requirements for the Competence of Testing and Calibr ation Laboratories. 195
196 International Organization for Standardization (ISO)

International Electrotechnical Commission (IEC)

International Accreditation Forum, Inc (IAF) or equivalent organization

 Ensures AB conformance to

ISO/IEC 17011 1

 Require member ABs to be a signatory to MLA 2 International Laboratory Accreditation Cooperation (ILAC) or equivalent organization

 Ensures AB conformance to

ISO/IEC 17011 1

 Require member ABs to be a signatory to MRA 3

AB Type #3

Product & Lab Accrediting Body

 Recognition Agreement

with EPA

 Signatory to IAF MLA and ILAC MRA or equivalents

 Ensure TPC conformance to ISO/IEC Guide 65, ISO/IEC

1 70 2 0 & I SO/ IE C 1 70 2 5 AB Type #2 Laboratory Accrediting Body

 Recognition Agreement

with EPA

 Signatory to ILAC MRA or equivalent

 Ensure TPC conformance

to ISO/IEC 17025 AB Type #1

Product Accrediting Body

 Recognition Agreement

with EPA

 Signatory to IAF MLA or equivalent

 Ensure TPC conformance

to ISO/IEC Guide 65 &

ISO/IEC 17020

TPC #2
Accredited by AB #3 (acting as

both Product AB & Lab AB) TPC #1 Accredited by AB #1 (Product AB) & AB #2 (Lab AB)

Panel Producer #4 Certified by TPC #2 Panel Producer #3 Certified by TPC #2 Panel Producer #2 Certified by TPC #1 Panel Producer #1 Certified by TPC #1*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 9 197

2.1.3 Accreditation Bodies 198
199 An accreditation body (AB) is an organization th at provides an impartial verification of 200 the competency of a laboratory or TPC. In the context of formaldehyde and composite wood 201 products, ABs ensure that TPCs can verify the acc uracy of the emission test procedures used by 202 composite wood product manufacturers to conduc t formaldehyde emissions tests; monitor 203 manufacturer quality assurance programs; and pr ovide independent audits and inspections of 204 manufacturers’ mills and testing facilities. Th ere are ABs located throughout the world. ABs in 205 the U.S. that are IAF or ILAC signatories in clude the AIHA Laboratory Accreditation Program 206 (AIHA-LAP), the American Association for La boratory Accreditation (A2LA), the American 207 National Standards Institute (ANSI), Forensic Quality Services (FQS), the International 208 Accreditation Service (IAS), the Laboratory Accreditation Bureau (L-A-B), the National 209 Voluntary Laboratory Accreditation Program (NVLAP), and Perry Johnson Laboratory 210 Accreditation, Inc. (PJLA). 211

212 The proposed TSCA Title VI TPC rule requires ABs to be either a signatory to IAF’s 213 Multilateral Recognition Arrangement (MLA) or the equivalent for inspection and lab 214 competency; ILAC’s Mutual R ecognition Arrangement (MRA) or the equivalent for product 215 certification competency; or both. An AB that is an IAF signatory is responsible for ensuring 216 that the TPC is in conformity with ISO/IEC Guide 65 and ISO/IEC 17020. An AB that is an 217 ILAC signatory is responsible for ensuring that a TPC is in conformity with ISO/IEC 17025. 218

219 Thus, TPCs will need to be accr edited by two ABs unless their AB is a signatory to both 220 ILAC and IAF (or equivalent oversight bodies). In the TSCA Title VI program, a Product AB is 221 an organization that is a signato ry to the IAF MLA or the equiva lent, and that can verify the 222 accuracy of the test procedures and facilities used by manufacturers to conduct tests, monitor 223 manufacturer quality assurance and quality contro l programs, and provide a udits and inspections. 224 A Laboratory AB is an organizati on that is a signatory to the IL AC MRA, or the equivalent, and 225 that is qualified to verify that testing and calibration labor atories can operate a quality 226 management system, are technically competent, and are able to genera te technically valid 227

emissions results. 228

229 2.1.4 Third Party Certifiers 230

231 The third-party certifiers (T PCs) are responsible for activiti es such as regularly auditing 232 manufacturers, conducting and verifying formal dehyde emissions tests, and ensuring that 233 manufacturer quality assurance and quality cont rol procedures and testing complies with TSCA 234 Title VI TPC rule. Specific requirements include verifying that composite wood product 235 manufacturers have adequate quality assuranc e controls and are complying with quality 236 assurance and quality cont rol requirements; verifying quality c ontrol test results compared with 237 ASTM E-1333-96 test results by having laboratorie s conduct quarterly test s and evaluate test 238 method equivalence; reviewing applications fr om manufacturers for reduc ed testing; working 239

with manufacturers to establish quality control limits, and, if a pplicable, other limits for each 240 product type and production line; informing manuf acturers of criteria th at will be used to 241 determine if product lots are consistently ex ceeding the applicable quality control limit; 242 inspecting and auditing manufact urers and their records at l east quarterly; using a testing 243*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 10 laboratory or laboratories that comply with ISO/IEC 17025; certifying composite wood product 244 types that comply with requirements under TS CA Title VI; following ISO/IEC Guide 65; 245 following ISO/IEC 17020 in the carrying out of thei r inspections of the manufacturers; providing 246 an approved TPC number (supplied by the accredi ting AB) to the manufacturer for labeling and 247 recordkeeping; and using laborator ies that participate in an annual inter-laboratory comparison or 248 proficiency testing program. 249

250 In the example shown in Figure 1, TPC #1 is accredited by two ABs: AB #1 (which is a 251 signatory to the IAF MLA and acts as the Product AB) and AB #2 (which is a signatory to the 252 ILAC MRA and acts a Laboratory AB). TPC #2 is accredited by a single AB, AB #3, which is a 253 signatory to both the IAF MLA and the ILAC MRA and acts as both a Product AB and a 254 Laboratory AB. 255

256

257 2.2 Profile of Third Party Certif iers and Accreditation Bodies 258

259 2.2.1 Third Party Certifiers 260

261 CARB has approved nine TPCs located in th e U.S. (although most of these U.S. TPCs 262 provide services internationally) . Two of these TPCs are non-pr ofit organizations, and the rest 263

are businesses. Table 2-1 lists the domestic TPCs approved by CARB, their NAICS code, the 264 type of organization, the sales volume or expend itures and the number of employees for the TPC 265 or its parent organization, the U.S. Small Business Administration’s size threshold for the 266 NAICS code, and the TPC’s small entity status. 267

268 This analysis assumes that 9 U.S. entities will act as TPCs under the TSCA Title VI 269 program, and uses existing CARB TPCs as a pro xy for their size and characteristics, but that 270

does not mean that all of the CARB TPCs will beco me TPCs under Title VI. In reality, some of 271 the CARB TPCs may choose not to participate in the federal program, and/or new entities may 272 apply that are not part of the CARB program. 273

274

Size information was available for four of the nine U.S. TPCs, including the two non275 profits. The size of the TPCs ranges from a non-profit with 10 employees and $1.6 million in 276 expenditures to a business with 2,500 employees in 125 offices with parent company that 277 manages $3.1 billion in assets. 278

279 Under the Regulatory Flexibility Act (RFA), unless an agency establishes an alternate 280 definition, the term “small organization” mean s any not-for-profit en terprise which is 281 independently owned and operated and is not domi nant in its field. The RFA does not provide 282 any guidance on how to judge whether an organizati on is dominant in its field. Non-profit TPCs 283 and accreditation bodies perform the same ac tivities (such as conducting and verifying 284 formaldehyde emissions tests, accrediting, and auditin g) as their for-profit counterparts. In order 285 to interpret the RFA criteria for small organizatio ns and treat all affected entities consistently, 286 this analysis determines the si ze status of non-profits by applying the SBA size thresholds for the 287 NAICS codes the non-profits are classified in. 288

289*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 11 Based on the data in Table 2-1, the two U.S. TP Cs that are non-profits are classified as 290 small entities, and two of the businesses are classi fied as large. The size status for five CARB 291 TPCs could not be determined using the data in Table 2-1, so the small entity analysis in Section 292 4.2 estimates a generic distribution of sizes based on Census data fo r the relevant NAICS codes. 293

294

TPCs come from a diverse set of industries – the six U.S.-based CARB TPCs for which 295

Dun & Bradstreet listed an industr y classification fall into five di fferent NAICS codes. Thus, the 296 firms that are likely to seek TPC accreditation may be very different from each other in terms of 297 size, organization, and financial condition. Tabl e 2-2 presents key industry summary statistics 298 for these NAICS codes. However, the domestic TPCs approved by CARB represent a very small 299 share of the 142,000 firms in these industries. And comparing Table 2-1 and Table 2-2, the 300 CARB TPCs appear to be larger than the average firms in these industries. Thus, these Census 301 statistics may not be representative of current CARB TPCs or potential new TSCA Title VI 302

TPCs. 303

304 Table 2-1: CARB-Approved Third Part y Certifiers Based in the U.S.

Company Name NAICS

code Organization Type Annual Sales

Volume or Expenditures 1

(millions $) Total Employees SBA Size

Threshold: Revenues ($ Millions) or Employees Small Entity

Status

Certification Services International, LLC Unknown Unknown Unknown Unknown Unknown Unknown

Composite Panel

Association North America, Inc. (CPA) 813910 Non-Profit $3.0 14 $7.0 Small

Forestwood Industries, Inc. Unknown Unknown Unknown Unknown Unknown Unknown

Hardwood Plywood

and Veneer Association (HPVA) 813910 Non-Profit $1.6 10 $7.0 Small

NTA Incorporated 541330 Private Company $5.4 80 $4.5 Large

PFS Corporation

541611 Private Company Unknown According to company website,

more than 100

employees $7.0 Unknown

Professional Service Industries, Inc. (PSI), owned by Olympus

Partners Unknown Private Company Unknown, but Olympus Partners

website reports they manage $3.1

billion in assets. Unknown, but PSI website reports they have more

than 2,500 employees in 125

offices Unknown Assumed to be large

because of

reported

assets.

Scientific

Certification Systems (SCS) 541380 Private Company Unknown SCS web site lists 87 employees $12.0 Unknown

TIMBERCO (dba TECO) 561990 Private Company Unknown 31 $7.0 Unknown

1 Annual sales volume is reported for businesses, and annual expenditures are reported for non-profits Sources: California Air Resources Board 2011 (list of TPCs), Dun & Bradstreet 2011 (s ales volume and employees for businesses and NAICS codes for all entities), Internal Revenue Service 2010 (expenditures and employees for non-profits), U.S. Small Busi ness Administration 2010 (size standards), and company web sites for PS I, PFS, and SCS for data on their sales volume and employees.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 12 305

306 Table 2-2: Industry Summary Statistics for NAICS Identified for U.S. Third Party Certifiers

NAICS Firms Establishments Revenues ($1000) Number of Employees Average

Revenues per Firm ($1000) Average Employees per Firm 541330 - Engineering services 47,714 58,391 $187,531,866 977,031 $3,930 20 541380 - Testing laboratories 5,288 6,549 $12,386,831 106,618 $2,342 20 541611 - Administrative management consulting services 59,612 61, 583 $67,994,053 351,829 $1,141 6 561990 - All other support services 12, 888 14,539 $20,897,346 195,544 $1,621 15
813910 - Business associations 16,418 17,028 $22,482,137 116,055 $1,369 7 Total 141,920 158,090 311,292,233 1,747,077 $2,193 12 Note that TPCs could potentially be classified in additional NAI CS as well; as a result, this list may not be comprehensive. Sources: U.S. Census Bureau 2010a; U.S. Census Bureau 2010b; U.S. Census Bu reau 2010c; U.S. Census Bureau 2010d 307 Because Executive Order 12866, the Regulatory Flexibility Act, and the Unfunded 308

Mandates Reform Act are all focused on entities locat ed in the U.S., this analysis estimates costs 309 and small entity impacts based on the expected number of domestic entities. But because the 310 approval requirements for information collecti on requests under the Paperwork Reduction Act is 311 not limited to U.S. entities, the reporting and recor dkeeping burden of the rule is calculated for 312 both foreign and domestic entities. Therefore, the analysis estimates the number of TPCs and 313 ABs in other countries that are expected to participate in th e Title VI program. 314

315 As shown in Table 2-3, there are a total of 27 CARB approved TPCs outside of the U.S., 316 bringing the total number of CARB approved TP Cs to 36. For the purpose of calculating 317 reporting and recordkeeping burden under the Pa perwork Reduction Act in Section 4.1, this 318 analysis assumes that there will be 9 domestic and 27 foreign TPCs under the Title VI program, 319 the same number as under the CARB program. 320

321 Table 2-3: CARB-Approved Third Party Certifiers by Country
Country Where TPC is Located Number of TPCs

Australia 1

Austria 1 Belgium 1

China 5 Czech Republic 1

Denmark 1

France 1 Germany 4 Hong Kong 3

Indonesia 1 Italy 3

New Zealand 1

Poland 1 Spain 1

Sweden 1

Taiwan 1

Sub-total for TPCs outside the U.S. 27

United States 9

Total 36 Source: California Air Resources Board 2011 322*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 13 2.2.2 Accreditation Bodies 323

324 There are eight ABs in the U.S. that are cu rrently IAF or ILAC signatories. Table 2-4 325 lists these domestic ABS, their NAICS code, th e type of organization, the sales volume or 326 expenditures and the number of employees for the AB or its parent organization, the U.S. Small 327 Business Administration’s size threshold for the NAICS code, and the AB’s small entity status. 328 It is not known which of these organizations accredit CARB TPCs for one or more of the 329 relevant ISO/IEC standards (Guide 65, 17020, or 17025). 330

331 This analysis assumes that 8 U.S. ABs will participate in the TSCA Title VI program, and 332

uses the characteristics of the ABs in Table 2-4 as proxies to estimate the impacts of the rule. 333 This assumption may overestimate the number of af fected entities, because some ABs that are 334 IAF or ILAC signatories may not choose to participate in the TSCA Title VI program. 1 And it is 335 unlikely that additional bodies will become signatories as a result of the TSCA Title VI TPC 336 rule, because becoming a signatory to IAF, IL AC, or an equivalent organization is a time337 intensive process that may take up to a year to complete (Personal Communication with IAS 338 2011). 339

340

Five of the domestic ABs th at are IAF or ILAC signatori es are non-profit organizations, 341 so this analysis assumes that five similarly sized non-profit ABs will participate in the TSCA 342 Title VI program. Under the Regulatory Flexibil ity Act (RFA), unless an agency establishes an 343 alternate definition, the term “small organization” means any not-for-prof it enterprise which is 344 independently owned and operated and is not domi nant in its field. The RFA does not provide 345 any guidance on how to judge whether an organizati on is dominant in its field. Non-profit TPCs 346 and accreditation bodies perform the same ac tivities (such as conducting and verifying 347 formaldehyde emissions tests, accrediting, and auditin g) as their for-profit counterparts. In order 348 to interpret the RFA criteria for small organizatio ns and treat all affected entities consistently, 349 this analysis determines the si ze status of non-profits by applying the SBA size thresholds for the 350 NAICS codes the non-profits are classified in. Th is results in an estima te that three small non351 profits and one small business will participat e in the TSCA Title VI program as ABs. 352

353

1 For example, Forensic Quality Services does not appear to accredit any labs providing produ ct or environmental testing, and states that its mission is “to provide training, education, quality assurance management and accreditation for providers of forensic science testing se rvices to federal, state and local law enforcement ag encies” (IRS 2010). So FQS seems unlikely to serve as an accrediting body for TPCs testing formaldehyde from composite wood products.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 14 Table 2-4: U.S. Accreditation Bodi es that are IAF or ILAC Signatories

Company Name NAICS

code Organization Type Sales Volume / Expenditures ($ Millions) 1 Total Employees SBA Size

Threshold:

Revenues ($ Millions) or

Employees Small Entity

Status

AIHA Laboratory Accreditation Programs, LLC 2 561990 Non-Profit $14.9 63 $7.0 Large

American Association For Laboratory Accreditation 813920 Non-Profit $10.6 48 $14.0 Small

American National Standards Institute (ANSI) 813910 Non-Profit $31.3 122 $7.0 Large

Forensic Quality Servic es, Inc. 541990 Non-Profit $0.6 4 $7.0 Small

International Accreditation Service (IAS) 813319 Non-Profit $2.5 54 $7.0 Small

Laboratory Accreditation

Bureau 541712 Private Company $0.4 6 500 employees Small

National Voluntary Laboratory Accreditation Program (NVLAP), operated by the

National Institute of Standards and Technology (NIST) - Federal

Government - - - Large

Perry Johnson Laboratory

Accreditation Inc. 3 541618 Private Company $17.0 147 $7.0 Large

Notes: 1. Sales volume da ta are presented for businesses. Expenditu re data are presented for non-profits. 2. Size data for AIHA Laboratory Accredit ation Programs, LLC is based on the size of the parent organization, the American Industrial Hygiene Association (AIHA). 3. Sales volume and employee size data fo r Perry Johnson Laboratory Accreditation Inc. include D&B sales and employee data for "Perry Johnson Laboratory Accreditation" and the American Business Directory sales data for the related companies "Perry Johnson Inc" and "Perry Johnson Registrars". Sources: American Business Directory 2011 (s ales and employee data for Perry Johnson Inc. and Perry Johnson Registrars), Dun & Bradstreet 2011 (business sales volu mes and employee data and NAICS codes for all entities), Inter nal Revenue Service 2010 (non-profit expenditures and employees ), U.S. Small Business Administratio n 2010 (size standards), and company web sites for AIHA and Perry Johnson for relati onships among entities in their family tree.. 354 Table 2-5 lists the foreign countries with CARB-approved TPCs, the ILAC or IAF 355 signatory ABs in that country, and their status as signatori es for ISO/IEC Guide 65, 17020, and 356 17025. It is not known which ABs these CARB-appr oved TPCs use. However, every country 357 with a CARB approved TPC also has an AB that is an IAF or ILAC signatory, and most of the 358 ABs are signatories to all three relevant ISO/IE C standards. The exceptions are Australia, New 359 Zealand, and Hong Kong, each of which lacks an AB that is a signatory for ISO/IEC Guide 65. 360 However, there is a joint AB for Australia a nd New Zealand that is a signatory for ISO/IEC 361 Guide 65, and there is an AB in China that is a signatory for ISO/IEC Guide 65. Therefore, each 362 foreign TPC could use a local AB for the TSCA Title VI program. 363

364

There are a total of 17 ABs shown in Table 2- 5 that are IAF or ILAC signatories and are 365 located in foreign countries with CARB-appr oved TPCs. While EPA does not know whether 366

these ABs accredit CARB TPCs or whether some CARB TPCs use ABs located outside their 367 own country, for the purpose of calculating repo rting and recordkeeping burdens under the 368 Paperwork Reduction Act, the analysis in Sectio n 4.1 assumes that there will be 17 foreign ABs 369 that participate in the TSCA Title VI program. 370*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 15 371 Table 2-5: Summary of IAF or ILAC Signatory Accreditation Bodies in Foreign Countries with
CARB TPCs

Country Number of CARB-approved

TPCs in Country Accreditation Body ISO/IEC

Guide 65 ISO/IEC

17020 ISO/IEC

17025

1. Australia 1 National Association of Testing Authorities, Australia (NATA) X X

2. Australia and

New Zealand Joint Accreditation System of Australia and New Zealand (JAS-ANZ) X

3. Austria 1 Bundesministerium fur Wirtschaft, Familie und Jugend (BMWA) X X X

4. Belgium 1 Belgian Accreditation Structure (BELAC) X X X

5. China 5 China National Accreditation Service for Conformity Assessment (CNAS) X X X

6. Czech Republic 1 Czech Accreditation Institute (CAI) X X X

7. Denmark 1 Danish A ccreditation (DANAK) X X X

8. France 1 Comite Francais d’Accreditation (COFRAC) X X X

9. Germany 4 Deutsche Akkreditie rungsstelle GmbH (DakkS) X X X

10. Hong Kong 3 Hong Kong Accreditation Service (HKAS) X X

11. Indonesia 1 National Accreditation Body of Indonesia (KAN) X X X

12. Italy 3 Sistema Italiano di Accreditamento (ACCREDIA) X X X

13. New Zealand 1 International Accreditation New Zealand (IANZ) X X 14. Poland 1 Polish Centre for Accreditation (PCA) X X X

15. Spain 1 Entidad Nacional de Acreditacion (ENAC) X X X

16. Sweden 1 Swedish Board for Accreditation and Conformity Assessment (SWEDAC) X X X

17. Taiwan 1 Taiwan Accred itation Foundation (TAF) X X X

Result: there are a tota l of 17 ABs that are IAF or ILAC signatories in foreign countries with CARB-approved TPCs
Sources: IAF; ILAC; CARB 372

373*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 16 

### 3 Costs of the TSCA Title VI TPC Rule 374

375 This section describes the proposed regulat ory requirements for accreditation bodies and 376 TPCs and presents the estimated costs fo r obtaining and mainta ining accreditation. 377

378 3.1 Proposed Rule Requirements 379

380 EPA is proposing to administer the TPC pr ogram by developing recognition agreements 381 with accreditation bodies. The ABs would then pro cess TPC applications and oversee the TPCs. 382

383 3.1.1 Requirements for Accreditation Bodies 384

385 As described in Section 2.1, the proposed rule would require ABs to be either a signatory 386 to the International Laboratory Accredita tion Cooperation (ILAC) Mutual Recognition 387 Arrangement (MRA) or the equivalent for insp ection and lab competen cy, the International 388 Accreditation Forum, Inc. (IAF) Multilateral Recognition Arrangeme nt (MLA) or the equivalent 389 for product certification competency, or bot h. EPA would also require that ABs: 390

391

 Conform with ISO/IEC 17011, which lists the basic criteria for an international 392 accrediting body who reviews and audits the TPC 2 ; 393

 Submit an application to enter into a recognition ag reement with EPA. The 394 application would include their contact information; documentation of their IAF 395 MLA, ILAC MRA, or equivalent signator y status; and a description of any other 396 qualifications related to performing pr oduct or laboratory accreditation. The 397 recognition agreement would need to be renewed every three years; 398

 Notify EPA in the following instances: loss of signatory status; TPC application; TPC 399 accreditation; TPC compliance failure; organi zation policy or management structure 400 changes that could adversely affect accr editation program; and with checklists and 401 other records documenting compliance with systems audits and on-site assessments; 402

 Notify TPCs if the AB withdraws or is removed from the program; 403

 Maintain records documenting TPC accredita tion applications, and checklists and 404 other records documenting compliance with sy stems audits and on-site assessments. 405 Applications must be retained for a mini mum of five years fro m the date that the 406 TPC’s accreditation terminates; and 407

 Provide an annual report to EPA with the number of TPC applications received; the 408 number of TPCs approved and denied; the names and contact information of all 409 accredited TPCs; the number and locations of systems audits and on-site assessments; 410 and the results of accredited TPC prof iciency testing and inter-laboratory 411 comparisons. 412

413 3.1.2 Requirements for TPCS 414
415

2 In order to become an IAF or ILAC signatory, an AB is revi ewed by its peers to ensure th at it is in compliance with ISO/IEC 17011, as well as to verify that it is qualified to ensure TP C compliance with other voluntary consensus standards. Therefore, it is assumed that IAF or ILAC signatories are already in conformance with ISO/IEC 17011, and

would not incur additional costs for conformance as a result of this rule.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 17 The proposed rule would require that TPCs: 416

417

 Conform to ISO/IEC Guide 65 (general requirements for bodies operation product 418 certification systems) and ISO/IEC 17020 (g eneral criteria fo r the operation of 419 various types of bodies performing inspection); 420

 Use a laboratory that conforms to ISO/IEC 17025 (requirements for competence of 421

calibration and testi ng laboratories); and 422

 Be qualified to administer the approved formaldehyde test methods they will be 423 using. 424

425 EPA would also require the following record keeping and reporting activities for TPCs: 426

427

 Submit an application to the Product accreditation body every two years with 428 domestic contact information; type of composite wood product(s) intended to be 429 certified; and a description of experi ence with ISO/IEC Guide 65, ISO/IEC 17020, 430 and the product(s) the in tended to be certified; 431

 Submit an application to the Laboratory accreditation body every two years with 432 domestic contact information; and a desc ription of experience with test method 433 ASTM E-1333-96 and in evaluating corre lation between tests, performing 434 formaldehyde tests on composite wood produc ts, and operating or using laboratories 435 that comply with ISO/IEC 17025; 436

 Maintain records for five years that do cument the certified manufacturers and 437 products, including those approve d for reduced testing; the results of inspections, 438 audits, and emissions tests; the laborato ries and tests used; and the methods and 439 results for establishing test method correlations; 440

 Provide an annual report to its accrediting body or bodies with a list of manufacturers 441 and products certified during the previous year; a list of non-complying products or 442 events; a list of laboratorie s and tests used by the TPC; and the results of inter443 laboratory comparison or proficiency test s for laboratories used by the TPC; and 444

 Inform accreditation body or bodies within 30 days of any changes in personnel 445 qualifications, procedures, or la boratories used by the TPC. 446

447 3.2 Wage Rates Used in the Analysis 448

449 The proposed rule involves activities that may require efforts by employees in three labor 450 classifications: managerial, technical, and cleric al. Costs for each activity are calculated by 451 estimating the labor hours required in each labor category and multiplying those burdens by the 452 wage rate for each labor category. This secti on summarizes the estimated wage rate in each 453 labor category. Additional details are provided in Appendix A. 454

455 Loaded wage rates for managerial, techni cal, and clerical pe rsonnel are derived by 456 combining data on wages and fringe benefits wi th estimates of overhead rates, following the 457 methodology described in “Wage Rates for Economic Analysis of the Toxics Release Inventory 458 Program” (EPA, 2002b). Wage data for each labor category are provided by the Employer Costs 459 for Employee Compensation (ECEC) Supplemental Tables available on the BLS website (U.S. 460 Bureau of Labor Statistics 2011). The loaded wage rate for managerial labor is $66.78; for 461*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 18 technical labor, $56.31; and for cler ical labor, $25.65. Table 3-1 presents the basic data used to 462 calculate the loaded wage rates for all three categories of labor. 463 Table 3-1: Loaded Industry Wage Rates, 2010$

Labor Category Base Wages Fringe benefits +

overhead factor Loaded Wages Managerial $42.42 a 1.57 b ,c $66.78

Professional/

Technical $36.57 a 1.54 b,c $56.31

Clerical $16.72 a 1.53 b ,c $25.65

Notes:

a Base wages are estimated in the ECEC Supplemental Tabl es (U.S. Bureau of Labor Statistics 2011).

b Fringe benefits are estimated in the ECEC Supplemental Ta bles (U.S. Bureau of Labor Statistics 2011).

c An overhead rate of 17% of base wages is used here, based on methodology an d assumptions in U.S. Environmental Protection Agency 2002a, b.

Source:U.S. Bureau of Labor St atistics 2011, U.S. Environmen tal Protection Agency 2002a, b. 464
3.3 Costs to Accreditation Bodies 465

466 The proposed TSCA Title VI TPC rule requires accreditation bodies to be signatories to 467 IAF, ILAC or equivalent overs ight bodies. The process ofbecoming a signatory is time468 intensive and may take up to a year to comple te, so it is unlikely that additional bodies will 469 become signatories as a result of the TSCA T itle VI TPC rule (Personal Communication with 470 IAS 2011). Thus, costs are estimated assuming that only existing IAF and ILAC signatories will 471 serve as accrediting bodies for the third-party certifiers under this regulation. Therefore, the 472 estimated incremental costs to the accrediting bodies related to the proposed rule will include: 473

474

1. Rule Familiarization: Reading the rule in order to understand the requirements; 475

2. Application Submission: Submitting an application to enter into a recognition 476 agreement with EPA; 477

3. Prepare Recognition Agreement: If the application is approved, enter into a 478 recognition agreement with EPA; 479

4. EPA Notification: Provide EPA with notifications in the following instances: 480 loss of signatory status; TPC application; TPC accr editation; TPC compliance 481 failure; organization policy or management structure changes that could adversely 482 affect accreditation program; and provide checklists and other records 483 documenting compliance with systems audits and on-site assessments; 484

5. TPC Notification: Provide TPCs with notifications if the AB withdraws or is 485 removed from the program; 486

6. Recordkeeping: Maintain records documenting TPC accreditation applications, 487

and checklists and other records documen ting compliance with systems audits and 488 on-site assessments. Applications must be retained for a mi nimum of five years 489

from the date that the TPC’ s accreditation terminates; and 490

7. Reporting: Provide an annual report to EPA with the number of TPC 491 applications received; the number of TP Cs approved and denied; the names and 492

contact information of all accredited TPCs ; the number and locations of systems 493 audits and on-site assessments; and th e results of accredited TPC proficiency 494 testing and inter-laboratory comparisons. 495

496*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 19 Accreditation bodies are requi red to renew their recognition agreement with EPA every 497 three years. This analysis assumes that acc reditation bodies incur application submission and 498 recognition agreement preparation costs in the fi rst year and subsequently every three years 499

thereafter. Costs associated with EPA no tification, TPC notificat ion, recordkeeping and 500 reporting are assumed to be incurred annually. Ru le familiarization is a one -time cost incurred in 501 the first year. As a result, accreditation bodies are expected to incur costs of $1,685 in the first 502 year, $1,070 in reapplication years, and $633 in the non-reapplication years, as summarized below in 503 Table 3-2 and described in more detail in Appendix B (see Table B-1 and Table B-3). This analysis 504 assumes that eight organizations in the U.S. will beco me accreditation bodies, resulting in estimated total 505

annualized costs of $6,204 per year at a three percent di scount rate, and $6,222 per year at a seven 506 percent discount rate. 507

508 Table 3-2: Costs for Accrediting Bodies

Type of Cost Cost (2010$) 1

First Year Reapplication Years 2 Non-Reapplication Years 3

Rule Familiarization $615 $0 $0 Application or Rea pplication Process 1 $88 $88 $0 Prepare Recognition Agreement $349 $349 $0
EPA Notification $57 $57 $57
TPC Notification $12 $12 $12 Recordkeeping $308 $308 $308 Reporting $256 $256 $256 Cost per Accrediting Body $1,685 $1,070 $633 Number of U.S. Accrediting Bodies 8 8 8 Total Costs for U.S. Accrediting Bodies $13,480 $8,560 $5,064 Total Annualized Costs (30 years, 3%) 4 $6,204 Total Annualized Costs (30 years, 7%) 4 $6,222

Notes:

1 See Table B-1 and Table B-3 for detail ed description of these estimates.

2 Under the proposed rule, accreditation bodies are required to reapply every three years. Reapplication is assumed to occur at the end of years 3, 6, 9, 12, 15, 18, 21, 24, 27, and 30.

3 Non-r eapplication years are years 2, 4, 5, 7, 8, 10, 11, 13, 14, 16, 17, 19, 20, 22, 23, 25, 26, 28, and 29.

4 Costs are annualized over thirty years for 3 and 7 percent discount rates using the following formula: (present discounted value of 30-year stream-of-costs)*(d iscount rate*(1+ discount ra te)30)/((1+ discount rate) 31 -1). Rule familiarization, application costs, and r ecognition agreement costs are assumed to be incurred immediately and therefore are no t discounted. Other costs are discounted assuming that they are incurred at the end of each year. 509

510*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 20 3.4 Third-Party Certifier Costs 511

512 Costs that TPCs may incur under the proposed rule can be classi fied into five categories: 513 (1) the cost of rule familiari zation, (2) the cost of applying to the accreditation body in order to 514 participate in the TSCA Title VI program, (3) the cost to obtain and maintain any necessary 515 accreditations that the TPC does not already have, (4) the annual cost of providing notifications 516 to manufacturers and of maintaining records, and (5) the cost of providi ng an annual report and 517

other notifications to the AB or EP A. To the extent that requirements in the TSCA Title VI rule 518 are similar to requirements in the CARB rule, CARB-approved TPCs will incur relatively little 519 additional cost to comply with EPA’s rule. 520

521 Under the proposed rule, TPCs are required to apply for re-accreditation every two years. 522 As a result, application and accreditation cost s are incurred every other year. The costs 523 associated with notifications, maintaining record s, and providing an annual report are assumed to 524

be incurred on an annual basis. Rule familiarizati on is a one-time cost incurred in the first year. 525 Each of these types of costs is discussed in more detail in the subsections below. 526

527
3.4.1 TPC Rule Familiarization 528
529

The level of effort associated with ru le familiarization was estimated based on 530 professional judgment, and burden hours were multiplied by the corresponding labor category’s 531 wage rate as derived in Secti on 3.2 (U.S. Bureau of Labor Statis tics 2011) to estimate costs. As 532 shown in Table 3-3 below, the total cost for each firm is estimated to be $615 in the first year. 533

534 Table 3-3: Application Process Burden and Costs for TPCs, by Activity

Activity Clerical

Burden/Cost Technical

Burden/Cost Managerial

Burden/Cost Total

(hours) 1 (2010$) (hours) 1 (2010$) (hours) 1 (2010$) (hours) 1 (2010$) (a) (b) (c) (d) (e) (f) (g)=(a )+(c)+(e) (h)=(b)+(d)+(f) Rule Familiarization 0.00 $0.00 5.00 $281.55 5.00 $333.90 10.00 $615

Notes: 1. Burden hours are base d on best professional judgment. 535 3.4.2 TPC Application Process 536

537 The application process for TPCs includes co mpleting a form with standard information 538 about the firm and also describing the firms experi ence with the ISO/IEC standards. The level of 539

effort for these elements were estimated base d on prior economic analyses (U.S. Environmental 540 Protection Agency 2011), and burden hours we re multiplied by the corresponding labor 541 category’s wage rate as derived in Section 3.2 (U.S. Bureau of Labor Statistics 2011) to estimate 542 costs. As shown in Table 3-4 below, the total cost for each firm is estimated to be $492 in 543 reapplication years and $0 in non -reapplication years. For more information, see Appendix B. 544

545 A TPC must reapply every two years in or der to participate in the TSCA Title VI 546 program. TPCs that are approved by CARB will be grandfathered under the TSCA Title VI rule 547 for one year, provided that they are compliant with all other aspects of the TSCA Title VI rule. 548 To simplify the analysis, costs are calculated as though all Title VI TPCs are grandfathered in for 549 one year, even though some of them may not ha ve been approved by CARB. Thus, costs are 550*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 21 calculated assuming that reapplication occurs ever y other year starting thre e years after the rule 551 is promulgated (i.e., in years 3, 5, 7, 9, etc.). 552*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule22Table 3-4: Application Process Burden and Costs for TPCs, by ActivityActivityClerical Burden/Cost Technical Burden/Cost Managerial Burden/Cost Total(hours)(a)(2010$)1(b)(hours)(c)(2010$)1(d)(hours)(e)(2010$)1(f)(hours)(g)=(a)+(c)+(e)(2010$)1(h)=(b)+(d)+(f)Product Accreditation Body Application SubmissionCompany Information (Name, Address,Telephone Number, and Email Address ofPrimary Contact) and Type of Composite WoodProducts Applicant Intends to Certify20 $0.00 0.04 $2.25 0.02 $1.34 0.06 $3.59Description of TPC's Experience or Ability inProduct Certification and Complying withISO/IEC Guide 6530 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80Description of TPC's Experience in theComposite Wood Product Industry with theProduct(s) Intended to be Certified30 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80Description of TPC's Ability to Inspect andProperly Train and Supervise Inspectors Pursuantto ISO/IEC 1702030 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80Laboratory Accreditation Body Application SubmissionCompany Information (Name, Address,Telephone Number, and Email Address ofPrimary Contact; if foreign, name and address ofan agent for service located in the U.S.)20 $0.00 0.04 $2.25 0.02 $1.34 0.06 $3.59Description of TPC's Experience in Performingor Verifying Formaldehyde Testing onComposite Wood Products30 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80Description of TPC's Experience Operating orUsing Laboratories that Comply with ISO/IEC1702530 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80Description of TPC's Experience with TestMethod ASTM E-1333-96 (2002) and ExperienceEvaluating Correlation between Test Methods30 $0.00 0.83 $46.74 0.51 $34.06 1.34 $80.80TOTAL – REAPPLICATION YEARS 0.00$0.00 5.06 $284.93 3.10 $207.02 8.16 $492TOTAL – NON-REAPPLICATION YEARS 0.00$0.00 0.00 $0.00 0.00 $0.00 0.00 $0Notes: 1. Note that under the proposed rule, TPCs are required to apply for re-accreditation every two years. As a result, reapplication costs are incurred every other year.2. Based on the estimated burden associatedwith reporting “company information” (U.S. Environmental Protection Agency 2011).3. Based on the estimated burden associated with answering substantiation questions when makingplant site confidentiality claims (U.S. Environmental Protection Agency 2011).Source: U.S. Environmental Protection Agency 2011553*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 23 3.4.3 TPCs Obtaining Accreditation for the Required Standards 554

555 Through a series of telephone interviews, repres entatives from six la boratories that have 556 been approved by CARB for formaldehyde testing provided information about the accreditations 557 they already had, and the costs of receivi ng and maintaining the accreditation. Several 558 laboratories also spoke in general terms about the costs of accreditation. The information 559 collected from each laboratory is included in Table 3-5. 560

561 As indicated in Table 3-5, the cost to TP Cs of obtaining accred itation will depend on 562 whether they have the systems and equipment in place to satisfy the accreditation requirements 563 or whether they will have to establish these. Based on the telephone interviews, the initial cost 564 of obtaining a single accredita tion is about $20,000 to $30,000 for each quality system. This 565 analysis uses the mid-point of the range, $25,000, as the cost estimate. The cost would be about 566 three times that if the firm needed to be newly accredited for all three re levant ISO/IEC standards 567 (Guide 65, 17020, and 17025). Based on discussions with the six TPCs, th e analysis assumes 568

that two-thirds of the CARB-certified TPCs will already have all three accreditations in place 569

and that one-third will need to obtain one additi onal accreditation from an AB. As a result, this 570 analysis assumes that one-third of TPCs w ill incur a cost of $25,000 to obtain one additional 571 accreditation, while two-thirds of TPCs will not incur any additional costs associated with 572 obtaining additional accreditations. 573

574 In addition to obtaining the initial accredita tion, the TPCs will need to maintain and 575 renew their systems and testing certifications. (A typical accreditation last s for two years.) Two 576 of the six TPCs provided information on the cost of maintaining and re newing accreditations. 577 They reported costs that ranged from $5,000 to $15,000 per year associated with maintaining 578 certification, such as paying audit fees to th eir AB. Note that the systems and testing 579 certifications for which the laboratories reporte d costs may cover more than the specific 580 formaldehyde testing. Therefore, these estimate s may overstate costs if the labs would incur 581 these costs even if they were not acting as TPCs under TSCA Title VI. Because the audits 582

include tests other than formal dehyde, this analysis uses $5,0 00 (the low end of the costs 583 reported) as the annual reaccreditat ion cost for TPCs that need an additional accreditation. 584

585 As discussed above, based on discussions with the six TPCs, the analysis assumes that 586

two-thirds of the CARB-certified TPCs will alre ady be maintaining all three of the relevant 587 accreditations (i.e., ISO/IEC Guide 65, 17020, and 17025) and that one-third of TPCs will need 588 to maintain a single additional accreditation in order to participate in the TSCA Title VI 589 program. Thus, one-third of TPCs are assumed to incur an annual cost of $5,000 per year in 590 subsequent years for maintaining one additional accreditation, while two-thirds of TPCs will not 591 incur any additional costs associ ated with maintaining additional accreditations because they 592 were already maintaining all of the nece ssary accreditations in the baseline. 593

594 In interviews with TPCs, three said they had excess capacity for additional testing and 595 two said they could easily add extra capacity either by building a dditional chambers or 596 subcontracting the work to accre dited laboratories. For exampl e, one said that while they 597 currently have 3 small chambers, within two mo nths they could add 25 small chambers that 598 would allow them to do 100 tests per day. In addition, it would be possible to add large chamber 599 capacity within a 3-6 month period. The firms in dicated that if the new equipment added were 600*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 24 similar to what they already had in place, th eir accrediting body would allow for desk audit 601 approval (which could be done quickly, instead of requiring a site visit prior to approval, which 602 would take more time). Therefore, this analys is assumes there is adequate existing testing 603 capacity, and that no additional costs for adding a dditional testing capacity will be incurred. 604 605

Table 3-5: CARB TPCs Estimates of Previous Accreditation Costs
Laboratory Estimated Cost of Accreditation Other Information

NSF International 1 About $5,000 for application process and between $5,000 for approval of 10 test processes to $20,000 for approval of 100 test processes. (The tests are grouped in disciplines and priced for each discipline. For this conversation the representative was discussing batteries of tests, for example toys have 10 tests.) Estimated that it would cost about $10,000 every two years to get reaccredited (or $5,000 a year average).

PSI, Inc. $5,000 to $6,000 if laboratory has accreditations, inspections, testing and quality systems in place. Estimated $50,000 to $60,000 to develop th e accreditations, inspections, testing and quality systems if they are not in place.

SCS International Estimated it cost about $9,000 to $15,000 to write manual and complete application. SCS already had the quality system in place. Mentioned that CARB does not require ISO accreditation as long as the laboratory has demonstrated ISO equivalence. Getting ISO accreditation is expensive ($25,000). They do not have a lab but contract the testing portion out to

labs that are ISO 17025 accredited. NTA Incorporated Estimated it cost $10,000 to set up their CARB accredited program. They were already an ISO produc t certification firm.
Forestwood Industries,

Inc For CARB, they needed ISO 17025 and Guide 65 which they did not have. Each cost between $20,000 and $30,000 to get. The application took one day to complete but gathering the information took longer. PFS Corporation PFS is a product testing laboratory and had IAS approval for testing formaldehyde. The cost of a new accreditation is at least $2,550 with $800 for additional fields of testing (formaldehyde could be considered a field) and another $250 for each facility. It costs PFS about $15,000 to get an IAS on-site audit each year although the audit includes more than formaldehyde. The cost for a desk audit to

add an additional small test chamber where existing small chambers have already been approved is $600, but it co sts at least $2,000 for a standard inspection audit.

1 NSF International was approved as a TPC by CARB, but has subsequently withdrawn from the program. Sources: Personal Communication with Forestwood Industries 2011, Personal Communication with NSF International 2011a, b,

Personal Communication with NTA Inc. 2011, Personal Communication with PFS Co rporation 2011, Personal Communication with PSI 2011, Personal Communicatio n with SCS International 2011. 606*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 25 3.4.4 Annual Cost of TPCs Notifications Relating to Manufacturers 607

608 Under the proposed rule, TPCs would have to provide its third-part y certifier number to 609 any manufacturer receiving its TSCA Title VI certification services. And should a TPC 610 withdraw from the program or lose its acc reditation, it would be required to notify all 611

manufacturers that receive its TSCA Title VI certification services. 612

613 Upon request, TPCs must provide EPA with a list of the manufactur ers and their product 614 types certified, the results of inspections, audits, and emi ssion tests conducted for each 615 manufacturer and product type, the list of the TPCs laboratories, test methods, and test results, 616 the methods and results for establishing test me thod correlations and equivalence and the list of 617 manufacturers and products approved for reduced testing. As shown in Table 3-6 below, the 618 sum of these costs is approximately $773 per firm per year in all years. For more information, 619 see Appendix B. 620

621

622

623*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule26624Table 3-6: Annual Burden and Cost to TPCs of Notifications Relating to Manufacturers, by ActivityActivityClerical Burden/Cost Technical Burden/Cost Managerial Burden/Cost Total(hours)(a)(2010$)(b)(hours)(c)(2010$)(d)(hours)(e)(2010$)(f)(hours)(g)=(a)+(c)+(e)(2010$)(h)=(b)+(d)+(f)Notifications to EPAThird Party Certifier Number10 $0.00 0.04 $2.25 0.02 $1.34 0.06 $3.59Withdraw from Program or Lose Accreditation10 $0.00 0.01 $0.56 0.005 $0.33 0.015 $0.90Recordkeeping and Reporting to EPAList of Manufacturers and their Product Types(including Resins Used) Certified by TPC20.75 $19.24 1.5 $84.47 0.75 $50.09 3 $153.79Results of Inspections, Audits, and EmissionTests Conducted for Each Manufacturer andProduct Type20.75 $19.24 1.5 $84.47 0.75 $50.09 3 $153.79List of the TPC's Laboratories, Test Methods(including Test Conditions and ConditioningTime), and Test Results20.75 $19.24 1.5 $84.47 0.75 $50.09 3 $153.79Methods and Results for Establishing TestMethod Correlationsand Equivalence20.75 $19.24 1.5 $84.47 0.75 $50.09 3 $153.79List of Manufacturers and Products Approved forReduced Testing20.75 $19.24 1.5 $84.47 0.75 $50.09 3 $153.79TOTAL 3.75 $96.20 7.55 $425.14 3.775 $252.09 15.075 $773Notes: 1. Based on best professional judgment and rule requirements.2. Based on the estimated burden associated with “recordkeeping” (U.S. Environmental Protection Agency 2011).Sources: U.S. Bureau of LaborStatistics 2011, U.S. Environmental Protection Agency 2011625626*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 27 3.4.5 Cost of TPC Annual Reports and Notifications of Changes 627

628 Table 3-7 shows the cost of the required annual report to the accr editation bodies that 629 lists the manufacturers and their pr oducts certified by TPCs during th e previous year, the list of 630 non-complying products or events by manufacturer, the list of laboratories and test methods used 631 by the TPC, and the results of inter-laborator y comparison or profic iency testing for the 632 laboratories used by the TPC. The cost of no tifying the accreditation board of any changes in 633 personnel, procedure, or laboratory changes is also included. The sum of these costs is 634 approximately $210 per firm per year in all ye ars. For more information, see Appendix B. 635*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule28Table 3-7: Annual TPC Burden and Costs for Reporting to Accrediting Body, by ActivityActivityClerical Burden/Cost Technical Burden/Cost Managerial Burden/Cost Total(hours)(a)(2010$)(b)(hours)(c)(2010$)(d)(hours)(e)(2010$)(f)(hours)(g)=(a)+(c)+(e)(2010$)(h)=(b)+(d)+(f)Annual Report to Accreditation BodiesList of Manufacturers and their ProductsCertified by the TPC during the Previous Year(including Resins Used, and the Average andRange of Formaldehyde Emissions byManufacturer, Resin, and Product Type)10.25 $6.41 0.5 $28.16 0.25 $16.70 1 $51.26List of Non-complying Products or Events byManufacturer10.25 $6.41 0.5 $28.16 0.25 $16.70 1 $51.26List of Laboratories and Test Methods Used bythe TPC10.25 $6.41 0.5 $28.16 0.25 $16.70 1 $51.26Results of Inter-Laboratory Comparison orProficiency Testing for the Laboratories Used bythe TPC10.25 $6.41 0.5 $28.16 0.25 $16.70 1 $51.26Accreditation Board NotificationPersonnel Qualification Changes20 $0.00 0.02 $1.13 0.01 $0.67 0.03 $1.79Procedure Changes20 $0.00 0.02 $1.13 0.01 $0.67 0.03 $1.79Laboratory Change20 $0.00 0.02 $1.13 0.01 $0.67 0.03 $1.79TOTAL 1 $25.65 2.06 $116.00 1.03 $68.78 4.09 $210Notes: 1. Estimated as one-third of theburden associated with "recordkeeping" (U.S. Environmental Protection Agency 2011). Revised estimate based on best professionaljudgment.2. Based on the estimated burden associatedwith reporting "company information" (U.S. Environmental Protection Agency 2011).Sources: U.S. Environmental Protection Agency 2011636637*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 29 3.5 Total Cost to TPCs 638

639 3.5.1 Costs per TPC in the First Year 640

641 Table 3-8 presents the estimated costs for TPCs in the first year. There are different cost 642 estimates for TPCs that already have all of the necessary accred itations, and TPCs that need to 643

obtain an additiona l accreditation. 644

645 Table 3-8: Costs per TPC in the First Year

Type of Cost Cost (2010$) 1

TPCs with All Necessary

Accreditations TPCs Obtaining One

Additional Accreditation Rule Familiarization $615 $615 Application Process $492 $492 Obtaining Accreditation $0 $25,000 Manufacturer Notification and Recordkeeping $773 $773 Annual Report and Notifications of Changes $210 $210 TOTAL $2,090 $27,090
646

647 3.5.2 Costs per TPC in Subsequent Years 648
649 Table 3-9 presents the estimated costs incu rred in subsequent years by TPCs. Again, 650

there are different cost estimates for TPCs that already have all of the necessary accreditations, 651

and TPCs that need to obtain an additional ac creditation. And costs differ between years when 652 the TPC must reapply to the accreditation body to participate in the TSCA Title VI program 653 (which occurs every two year s) and the alternate years. 654

655 Table 3-9: Costs per TPC in Subsequent-Years

Type of Cost 1 Cost (2010$) 2

TPCs with All Necessary

Accreditations TPCs Obtaining One

Additional Accreditation Reapplication Process $492 $492 Reaccreditation $0 $5,000 Manufacturer Notification and Recordkeeping $773 $773 Annual Report and Notifications of Changes $210 $210 TOTAL – REAPPLICATION YEARS $1,475 $6,475 TOTAL – NON-REAPPLICATION YEARS $983 $5,983 Notes: 1. Under the proposed rule, TPCs are required to apply for re-accreditation ever y two years. As a result, reapplication and reaccreditation costs are incurred every other year. 2. Costs may not sum due to rounding. 656

657
3.5.3 Total Cost to U.S. TPCs 658
659

Table 3-10 summarizes the total costs to U. S. firms assumed to become TPCs under the 660 TSCA Title VI program. As indicated, the rule is expected to cost the affected TPCs a total of 661 $93,817 in the first year, $28,280 in reapplication y ears, and $23,852 in non-reapplication years. 662

Annualized costs were also calc ulated, over a 30-year period, at three and seven percent discount 663

rates. 664

665*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 30 Table 3-10: Total Costs to U.S. TPCs (2010$)

Cost Component Cost (2010$)

TPCs with All Necessary Accreditation TPCs Obtaining One

Additional

Accreditation Total

Number of Affected Firms 6 3 9 Per Firm Costs: Year 1 $2,090 $27,090 - Per Firm Costs: Reapplic ation Years $1,475 $6,475 - Per Firm Costs: Non-reapplication Years $983 $5,983

- Total First Year Costs $12,540 $81,270 $93,810 Total Reapplication Year Costs $8,850 $19,425 $28,275 Total Non-Reapplication Year Costs $5,898 $17,949 $23,847 30-Year Annualized Costs (3 percen t discount rate) $7,212 $20,706 $27,917 30-Year Annualized Costs (7 percen t discount rate) $7,130 $21,630 $28,760 Note: Costs are annualized over thirty years for 3 and 7 percent discount rates using the following formula: (present discounte d value of 30-year stream-of-costs)* (discount rate*(1+ discount rate) 30 )/((1+ discount rate) 31 -1). Rule familiarization costs are assumed to be incurred immediately and th erefore are not discounted. Other costs are discounted assuming that they are incurred at the end of each year.
666

667 3.6 Total Costs of the Rule for U. S. Accrediting Bodies and TPCs 668

669 This section calculates the total cost for U.S. TPCs and accrediting bodies as a result of 670

the TSCA Title VI TPC rule. While the costs anal ysis is limited to domestic entities, the burden 671 analysis in Section 4.1 includes both foreign a nd domestic entities. 672

673 The different cost components of the rule (initial costs; notif ication, reporting, and 674 recordkeeping costs; TPC reapplication costs; and AB reapplication costs) are incurred at 675

different times and with different frequencies. Figure 2 demonstrates how the different cost 676 components occur over the first nine years, and how they are categorized into five different 677 categories of years, depending on which componen t occurs in that year. These same five 678 categories are used in Table 3-11 and Table 3-12. Table 3-11 presents the per-firm costs for 679 accrediting bodies and TPCs in each of these categories of years. Table 3-12 presents the total 680 costs for the eight U.S. accrediting bodies and nine U.S. TPCs combined. To estimate total 681 costs, per-firm costs were multiplied by the number of affected firms. Annualized costs were 682 also calculated, over a 30-year period, at three and seven per cent discount rates. 683

684 Figure 2. Timing of Cost Components Over the First Nine Years of the Program

Cost Component Year 1 Year 2 Year

3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Initial costs X Notification, reporting, and recordkeeping X X X X X X X X X

TPC reapplication X X X X AB reapplication X X X All TPCs are assumed to have been approved by CARB and thus grandfathered into the federal program for one year, so TPC reapplication occurs every 2 years starting in Year 3. AB reapplication occurs every 3 years starting in Year 3.

Key Description

Initial Applications for ABs and TPCs in Year 1

Non-Reapplication Years for ABs, Non-Reapplication Years for TPCs*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 31 Non-Reapplication Years for ABs, Reapplication Years for TPCs

Reapplication Years for ABs, No n-Reapplication Years for TPCs

Reapplication Years for ABs, Reapplication Years for TPCs
685 Table 3-11: Cost per Year for Accreditation Bodies and Third Party Certifiers (2010$)

Year ABs TPCs Have Necessary

Accreditation Need Additional

Accreditation Per Firm Costs: Year 1 $1,685 $2,090 $27,090
Per Firm Costs: Years 2, 6, 8, 12, 14, 18, 20, 24, 26, 30 (NonReapplication Years for ABs, No n-Reapplication Years for TPCs) $633 $983 $5,983

Per Firm Costs: Years 3, 5, 9, 11, 15, 17, 21, 23, 27, 29 (NonReapplication Years for ABs, Re-Application Years for TPCs) $633 $1,475 $6,475

Per Firm Costs: Years 4, 10, 16, 22, 28 (Reapplication Years for ABs, Non-Reapplication Years for TPCs) $1,070 $983 $5,983

Per Firm Costs: Years 7, 13, 19, 25 (Reapplication Years for ABs, Reapplication Years for TPCs) $1,070 $1,475 $6,475

686

687

688

Table 3-12: Total Costs to U.S. Accreditati on Bodies and Third Party Certifiers (2010$)

Year U.S. ABs U.S. TPCs All Affected U.S.

Firms Have Necessary

Accreditation Need Additional

Accreditation

Number of Affected Firms 8 6 3 17 Total Year 1 Costs $13, 480 $12,540 $81,270 $107,290
Total Costs in Years 2, 6, 8, 12, 14, 18, 20, 24,26, 30 (Non-Reapplication Years for ABs, NonReapplication Years for TPCs) $5,064 $5,898 $17,949 $28,911

Total Costs in Years 3, 5, 9, 11, 15, 17, 21, 23,27, 29 (Non-Reapplication Years for ABs, ReApplication Years for TPCs) $5,064 $8,850 $19,425 $33,339

Total Costs in Years 4, 10, 16, 22, 28(Reapplication Years for ABs, NonReapplication Years for TPCs) $8,560 $5,898 $17,949 $32,407

Total Costs in Years 7, 13, 19, 25 - Reapplication Years for ABs, Reapplication

Years for TPCs $8,560 $8,850 $19,425 $36,835

30-Year Annualized Costs (3 percent discount rate) $6,204 $7,212 $20,706 $34,121

30-Year Annualized Costs (7 percent discount rate) $6,222 $7,130 $21,630 $34,983

Note: Annualized costs are annualized over th irty years for 3 and 7 percent discount ra tes using the following formula: (presen t discounted value of 30-year stream-of-costs)*(discount rate *(1+ discount rate)30)/((1+ discount rate) 31 -1). Rule familiarization, AB application costs, and AB recognition agreement costs are assumed to be incurred immediat ely and therefore are not discounted. Other costs are discounted assuming that they are incurred at the end of each year. 689

690

691

692

693*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 32 

### 4 Impact Analyses 694

695 In addition to the cost analysis presented in Chapter 3, several other types of impacts are 696 important to consider in evalua ting the effects of a regulation. This chapter presents the 697 incremental impact of the proposed TPC Rule on: 698

699

 Paperwork burden, as required by th e Paperwork Reduction Act (PRA); 700

 Financial condition of small entities, as required by the Regulatory Flexibility Act 701 (RFA); 702

 State and Local Governments, as requi red by the Unfunded Mandates Reform Act; 703

 Federalism, as required by Ex ecutive Order 13132–Federalism; 704

 Tribal governments, as required by Executive Order 13175–Consultation and 705 Coordination with Indian Tribal Governments; 706

 The environmental health risk or safety risk to children due to the regulation, as 707 required by Executive Order 13045–Protecti on of Children From Environmental 708 Health & Safety Risks; 709

 Whether voluntary consensus standards are used in its regulatory activities; and 710

 Low income and minority populations, as required by Executive Order 12898. 711

712 4.1 Paperwork Reduction Act Analysis 713

714 This section estimates the burden of reporti ng and recordkeeping for the proposed Third 715 Party Certification rule. It pr esents average annual burden and cost estimates for affected 716 accreditation bodies and third party certifiers over th e first three years of the program. The labor 717 hours and costs per firm are the same as thos e shown in Chapter 3 – the sum of the rule 718 familiarization, application, recordkeeping, and reporting burdens and costs. However, the 719 numbers of firms considered here are greater than in the cost analysis in Chapter 3 because both 720 domestic and foreign firms are included. 721

722 Table 4-1 presents the PRA per-firm labor burdens and costs by the type of affected firm. 723 The total burden and cost are calculated by multiplying the burdens and costs per firm by the 724

number of affected firms. 725

726*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 33 Table 4-1: Total PRA Burdens and Costs (2010$)

Firm Type Number
of Firms Per Firm Burden and Cost Total Burden and Cost

Labor NonLabor
Cost Labor NonLabor
Cost Hours Cost Hours Cost

Year 1 Domestic Accrediting Body 8 31.0642 $1,685 249 $13,480

Foreign Accrediting Body 17 31.1242 $1,688 529 $28,696

Domestic TPC obtaining one additional accreditation 3 37.3250 $2,090 $25,000 112 $6,270 $75,000
Domestic TPC with current accreditations 6 37.3550 $2,092 224 $12,552

Foreign TPC obtaining one additional ac creditation 9 37.3250 $2,090 $25,000 336 $18,810 $225,000

Foreign TPC with current accredit ations 18 37.3550 $2,092 672 $37,656

Year 2 Domestic Accrediting Body 8 12.1442 $633 97 $5,064
Foreign Accrediting Body 17 12.2042 $636 207 $10,812
Domestic TPC obtaining one additional accreditation 3 19.1650 $983 $5,000 57 $2,949 $15,000
Domestic TPC with current accreditations 6 19.1950 $983 115 $5,898
Foreign TPC obtaining one additional accreditation 9 19.1650 $985 $5,000 172 $8,865 $45,000
Foreign TPC with current accred itations 18 19.1950 $985 346 $17,730

Year 3 Domestic Accrediting Body 8 12.1442 $633 97 $5,064
Foreign Accrediting Body 17 12.2042 $636 207 $10,812
Domestic TPC obtaining one additional accreditation 3 27.3250 $1,475 $5,000 82 $4,425 $15,000
Domestic TPC with current accreditations 6 27.3550 $1,475 164 $8,850
Foreign TPC obtaining one additional ac creditation 9 27.3250 $1,477 $5,000 246 $13,293 $45,000
Foreign TPC with current accredit ations 18 27.3550 $1,477 492 $26,586

Three Year Average

Domestic Accrediting Body 8 18.4509 $983.67 148 $7,869.33
Foreign Accrediting Body 17 18.5109 $986.67 315 $16,773.33
Domestic TPC obtaining one additional accreditation 3 27. 9383 $1,516.00 $11,667 84 $4,548.00 $35,000

Domestic TPC with current accredita tions 6 27.9683 $1,516.67 168 $9,100.00
Foreign TPC obtaining one a dditional accreditation 9 27.9383 $1,517.33 $11,667 251 $13,656.00 $105,000
Foreign TPC with current accredita tions 18 27.9683 $1,518.00 503 $27,324.00
All Entities 61 24.0785 $1,299.52 $2,295.08 1,469 $79,271 $140,000
727

728 4.2 Regulatory Flexibility Act Analysis 729

730 This section presents the impact of the cost s of accreditation unde r the proposed TSCA 731

Title VI TPC rule on the financial condition of small entities. The Regulatory Flexibility Act 732 (RFA) of 1980, amended by the Small Busi ness Regulatory Enforcement Fairness Act 733 (SBREFA) of 1996, requires regulator s to assess the effects of regulations on small entities 734 including businesses, no nprofit organizations, and governments. In some instances, agencies are 735 also required to examine regul atory alternatives that may re duce adverse economic effects on 736 significantly impacted small entities. The RFA re quires agencies to prepare an initial and final 737 regulatory flexibility analysis for each rule unless the Agency certifies that the rule will not have 738 a significant economic impact on a substantial nu mber of small entities. The RFA, however, 739 does not specifically define “a significant economic impact on a substantial number” of small 740*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 34 entities. Sections 603 and 604 of the RFA require th at regulatory flexibility analyses identify the 741 types, and estimate the numbers, of small entities to which the rule will a pply; and describe the 742 rule requirements to which small entities will be subject and any re gulatory alternatives, 743 including exemptions and deferral, which would lessen the rule’s burden on small entities. 744

745 The TPC rule will affect small businesses and small non-profit organizations. (No small 746 governments are expected to be affected by the TP C rule.) Under the Regulatory Flexibility Act 747 (RFA), a “small business” is determined by the U.S. Small Business Administration’s 748 regulations at 13 CFR 121.201 (which create small bus iness size standards usi ng either a sales or 749 employment threshold, depending on the nature of the industry), unless an agency establishes an 750 alternate definition. And unless an agency esta blishes an alternate definition, under the RFA the 751 term “small organization” means any not-for-prof it enterprise which is independently owned and 752 operated and is not dominant in its field. Th e RFA does not provide any guidance on how to 753 judge whether an organization is dominant in its field. Non-profit TPCs and accreditation bodies 754 perform the same activities (such as conducting and verifying formaldehyde emissions tests, 755 accrediting, and auditing) as their for-profit counte rparts. In order to in terpret the RFA criteria 756 for small organizations and treat all affected enti ties consistently, this analysis determines the 757 size status of non-profits by applying the SB A size thresholds for the NAICS codes the non758 profits are classified in. 759

760 To fulfill the requirements of the RFA, this analysis addresses two basic questions 761 regarding the proposed rule: (1) th e number and type of small en tities potentially affected, and 762 (2) the extent of the rule’s potential economic impact on those entities as measured by the cost763

to-revenue ratio for businesses and the cost-to-e xpenses ratio for small non-profit organizations. 3 764 This ratio is a good measure of enti ties’ ability to afford the cost s attributable to a regulatory 765 requirement, because comparing compliance costs to revenues or expenses provides a reasonable 766 indication of the magnitude of the regulatory bur den relative to a commonly available measure of 767 economic activity. Where regulatory costs repres ent a small fraction of a typical entity’s 768 revenues or expenses, the financial impacts of the regulation on such entities may be considered 769 as not significant. The impact ratios are calcul ated using annualized co sts, because these costs 770 are more representative of the continuing co sts entities face to co mply with the rule. 771

772 4.2.1 Small Entity Impacts for Accreditation Bodies 773

774 As described in Section 2.2.1, five of the ei ght U.S. accreditation bodies that are IAF or 775 ILAC signatories are non-profit organizations, wh ile two are businesses, and one is a federal 776 government agency. Using the size standard thresholds from the U.S. Small Business 777 Administration, three of the non-profits and one of the businesses are classified as “small”. Per778 firm costs were calculated as the quotient of the 30-year annualized costs and the number of 779 affected firms presented in Table 3-2 (i.e., $6,2 04 ÷ 8), which results in an annualized cost 780 estimate of $775 per entity per year. Estimated cost impacts ranged from 0.01 percent to 0.15 781 percent of expenditures for the three small non- profits, and were 0.21 percent of sales for the 782 small business. As a result, no small accredita tion bodies are expected to be significantly 783 impacted by the rule. 784

3 Expenses and revenues were close to each other for the non-profit ABs and TPCs that were analyzed, so either measurement of impacts woul d provide similar results.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 35 785

786 Table 4-2: Small Entity Impacts for U.S. ABs

Type Annualized Costs Per Entity (3% discount rate) Estimated Number of Small Entities with Impacts

Under One

Percent Between One

and Three

Percent Over Three

Percent

Non-profits $775 3 0 0

Business $775 1 0 0

Total 4 0 0
787

788 4.2.2 Small Entity Impacts for Third-Party Certifiers 789
790 The cost of the rule to TPCs depends on whet her the TPC already has all of the necessary 791

accreditations. A TPC with all of the accreditations in place is es timated to incur an annualized 792 cost of $1,202 per year for the required applica tions, reporting, and recordkeeping, while a TPC 793

that needs to obtain an additiona l accreditation is estimated to incur an annualized cost of $6,902 794

per year. 4 795

796

Data were available to make size determin ations for four of the nine U.S. TPCs 797 participating in the CARB program. Using the data in Table 2-1 and the size standard thresholds 798 from the U.S. Small Business Administration, two of these four TPCs are large businesses, and 799 two are small non-profit organizations. The sma ll non-profits are assumed to have all of their 800 accreditations currently in place, and thus incu r a cost of $1,202 per year due to the rule, as 801 shown in Table 4-3. Based on the expenditure data in Table 2-1, both of the small non-profit 802 TPCs have cost impacts of less than 0.1%. 803

804 Table 4-3: Impacts to Small N on-Profit TPCs in the U.S.

Type Annualized Costs Per Entity (3% discount rate) Estimated Number of Small Entities with Impacts

Under One

Percent Between One

and Three

Percent Over Three

Percent

Non-profits $1,202 2 0 0

805 Size information was not located for the remaining five U.S. TPCs. This analysis 806 assumes that 50 percent of the remaining five TPCs are small businesses, which rounds up to 807

three additional firms. Based on the information in Section 3.4.3, the analysis also assumes that 808 two the three will already have all their accreditati ons in place and that one will need to obtain an 809 additional accreditation. As a result, the two TPCs with accreditations in place will incur an 810 estimated annualized cost of $1,202 and the TPC th at needs to obtain an additional accreditation 811 will incur an estimated annualized cost of $6,902. 812

813

Data from the 2007 Economic Census data (U.S. Census Bureau 2007) was used to 814 estimate impacts on the three TPCs that are assume d to be small businesses. The Census data 815 provided the number of firms in different revenue brackets (less than $100,000 per year, 816

4 Based on the information in Table 3-10, $7,212 ÷ 6 = $1,202 pe r year for TPCs that have al l accreditations in place, and $20,706 ÷ 3 = $6,902 per year for TPCs th at need an additional accreditation.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 36 $100,000 to $499,999, $500,000 to $999,999, etc.) for the affected NAICS codes (541330, 817 541380, 541611, and 561990). Revenue thresholds were then back-calculated such that 818 annualized compliance costs created a one or three percent impact . For example, revenue would 819 have to be less than $120,200 in order for a firm w ith all of its accreditati ons to have at least a 820 one percent impact, and less than $40,067 in order to have an imp act of at least three percent. 5 821

822 The next step was to interpolate the numb er of firms below each of these revenue 823 thresholds, assuming that firms are evenly distri buted within a revenue br acket. For example, 824 out of 125,359 firms in these NAICS codes, the Ce nsus reported that 32,987 firms had revenues 825 of less than $100,000, and 49,013 firms had revenues between $100,000 and $499,999. 826 Therefore, as shown in Table 4-4, an es timated 34,967 firms have revenues below $120,200. 6 827

828 In this example, these 34,967 firms represen t 28% of the firms in these NAICS codes. 7 829 Multiplying the two small business TPCs with all necessary accreditations by 28%, and rounding 830 to the nearest whole number, yields the result that one of these firms is estimated to have impacts 831 over the one percent level. Performing a similar calculation for the three percent impact level 832 yields the result that neither of the two small business TPCs with all their accreditations are 833 predicted to have an impact over the three per cent level. So the sec ond TPC with all of its 834 accreditation has an impact of less than one percen t (not shown in Table 4-4). Repeating these 835

calculations for the small business TPC that needs an additional accredita tion yields the result 836 that it is estimated to have a cost impact between one percent and three percent. 837

838

Table 4-4: : Impacts to Small Business TPCs in the U.S.

Firm Type Annualized

Costs Per Firm (3%

discount

rate) Associated Revenue

Thresholds Number of Firms

Below

Threshold 1 Percent of Firms

Below

Threshold 2 Estimated Number

of Small TPCs with

Impacts Over 3

1% Impact 3% Impact 1% Impact 3% Impact 1% Impact 3% Impact 1% Impact 3% Impact

Firms with all

necessary accreditations (n = 2) $1,202 $120,200 $40,067 34,967 13,217 28% 11% 1 0

Firms that need

to obtain one

additional

accreditation (n = 1) $6,902 $690,200 $230,067 84,812 45,737 69% 37% 1 0 Notes: 1. The analysis assumes that firms are distributed evenly within a revenue bracket. 2. The percentage of firms below the thre shold is calculated by dividi ng the number of firms below the threshold by 125,359 (th e total number of firms in NAICS codes 541,330, 541380, 541611, and 561990. 3. The analysis assumes that two of the three small business TPCs will already have accreditations in place and that one will n eed

to obtain additional accreditation. 839 As described in Section 2.2.1, the CARB TPCs app ear to be larger than the average firms 840 in these industries, so Census statistics may underestimate th e revenues and ove restimate the 841 impacts on TPCs (which represent just 0.006 pe rcent of the firms in these NAICS codes). 842

5 For a firm with all of its certifications, compliance co st of $1,202 ÷ 1% impact = $120,200 in revenues, and $1,202 ÷ 3% impact = $40,067 in revenues.

6 32,987 firms under $100,000 + (($120,200 - $100,000) ÷ $499 ,999) x 49,013 firms between $100,000 and $499,999 =

34,967 firms under $120,200.

7 34,967 firms under $120,200 is 28% of the 125,359 total firms.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 37 843 Table 4-5 summarizes the annualized per-firm co sts, and the number of affected number 844 of TPCs with impacts exceeding th e one and three percent levels. Costs are estimated to exceed 845 the one percent level for two small businesses. However, given that these firms have the 846 incentive to seek accreditation only if they can pass through their costs to the firms they are 847 certifying, they are not expected to experience a negative economic impact s as a result of this 848 proposed rule. 849

850 Table 4-5: Small Entity Impacts for U.S. TPCs

Certification Status Annualized Costs Per Entity (3% discount rate) Small Entity Type Estimated Number of Small Entities with Impacts

Under One

Percent Between One

and Three

Percent Over Three

Percent

TPCs with current AB

certification $1,202 Non-profit 2 0 0

Business 1 1 0

TPCs that need to obtain

new AB certification $6,902 Non-profit 0 0 0

Business 0 1 0

Combined Non-profit 2 0 0

Business 1 2 0

Total 3 2 0 851

852 4.2.3 Summary of Small Entity Impacts to ABs and TPCs 853

854 As shown in Table 4-6, there are a total of 9 small entities in the U.S. assumed to be 855 directly affected by the Title VI TPC rule. Five of these are non-pr ofits, all of which are 856 estimated to have cost impacts of less than one percent of expend itures. Four are businesses, two 857 of which are estimated to have cost impacts of less than one percent of revenues, and two of 858 which are estimated to have cost impacts betwee n one percent and three pe rcent of revenues. 859

860 Table 4-6: Summary of Small Entity Impacts to ABs and TPCs

Entity Type Number of U.S. Entities

that are Small Estimated Number of Small Entities with Impacts

Under One

Percent Between One and

Three Percent Over Three Percent

TPCs Non-profit 2 2 0 0

Business 3 1 2 0

ABs Non-profit 3 3 0 0

Business 1 1 0 0

Combined Non-profit 5 5 0 0

Business 4 2 2 0

Total 9 7 2 0 861 4.3 Unfunded Mandates Reform Act (UMRA) 862

863

Title II of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4, establishes 864 requirements for Federal agencies to assess the eff ects of their regulatory actions on State, local, 865 and Tribal governments, and the private sector . Under section 202 of the UMRA, EPA generally 866 must prepare a written statement, including a cost-benef it analysis, for proposed and final rules 867 with “Federal mandates” that might result in expenditures by State, local, and Tribal 868*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 38 governments, in the aggregate, or by the privat e sector, of $100 million or more (when adjusted 869 annually for inflation) in any one year. 870

871 The cost of the proposed TPC rule is well below $100 million per year in any one year. 872 The rule is not expected to affect State, local, and Tribal governments. 873

874
4.4 Executive Order 13132 - Federalism 875

876 Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), directs 877 federal agencies to consider whether a rule ha s federalism implications (i.e. whether it has 878

substantial direct effects on th e states, on the relationship betw een the national government and 879 the states, or on the distribution of power a nd responsibilities among th e various levels of 880 government, as specified in Executive Order 13132). 881

882

The TPC rule does not have a substantial dir ect effects on states or local governments 883 (individually or collectively), on the relationship between the national government and the states, 884 or on the distribution of power and responsibilities among the vari ous levels of government. No 885 state or local governments are expected to become TPCs or accrediting bodies, and thus state and 886 local governments will not incur direct compliance co sts as a result of the rule. The rule does not 887 preempt state or local law, and th e rule is required by statute. 888

889 4.5 Executive Order 13175 - Tribal Implications 890

891 Executive Order 13175, entitled Consultation and Coordination with Indian Tribal 892

Governments (59 FR 22951, November 6, 2000), directs fede ral agencies to consider whether a 893 rule has tribal implicatio ns (i.e. whether it has substantial di rect effects on tribal governments, on 894 the relationship between the Federal government a nd the Indian tribes, or on the distribution of 895 power and responsibilities between the Federal government and Indian tribes). No tribal 896 government is expected to become a TPC or an accrediting body, and thus tribal governments 897 will not incur direct compliance costs as a resu lt of the rule. The rule does not change the 898 relationship between the Federal government and Indian tribes, or change the distribution of 899

power. 900

901
4.6 Executive Order 13045 - Protection of Children 902

903 Under Executive Order 13045, a regulation must be reviewed if the re gulatory action is 904 economically significant and concer ns an environmental health ri sk or safety risk that may 905 disproportionately affect child ren. The proposed TPC rule is not economically significant 906 because it will not have an annual impact on the economy of $100 million or more. 907

908 4.7 Executive Order 13211 - Energy Effects 909

Executive Order 13211, entitled Actions Con cerning Regulations that Significantly 910 Affect Energy Supply, Distribution, or Us e (66 FR 28355, May 22, 2001), directs federal 911 agencies to identify actions that will have a si gnificant adverse energy effect. Adverse effects 912

are defined as: 913

914*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 39  Reductions in crude oil supply in excess of 10,000 barrels per day; 915

 Reductions in fuel production in excess of 4,000 barrels per day; 916

 Reductions in coal production in ex cess of 5 million tons per year; 917

 Reductions in natural gas production in excess of 25 million mcf per year; 918

 Reductions in electricity produc tion in excess of 1 billion kilowatt-hours per year or in 919 excess of 500 megawatts of installed capacity; 920

 Increases in energy use required by the re gulatory action that exceed any of the 921 thresholds above; 922

 Increases in the cost of energy pr oduction in excess of one percent; 923

 Increases in the cost of energy distri bution in excess of one percent; or 924

 Other similarly adverse outcomes. 925

926 The regulations under consideration will not significantly reduce energy production nor 927 significantly increase energy costs. 928

929 4.8 National Technology Transfer and Advancement Act 930

931 Section 12(d) of the Na tional Technology Transfer and Advancement Act of 1995 932 (“NTTAA”), Public Law No. 104-113 (15 U.S. C. 272 note) directs EPA to use voluntary 933 consensus standards in its regul atory activities unless to do so would be inconsistent with 934 applicable law or otherwise impractical. Volunt ary consensus standards are technical standards 935 (e.g., materials specifications, test methods, samp ling procedures, business practices, etc.) that 936 are developed or adopted by voluntary consensu s standards bodies. NTTAA directs EPA to 937 provide Congress, through OMB, explanations when the Agency decides not to use available and 938 applicable voluntary consensus standards. 939

940 This proposed rulemaking involves techni cal standards, and EPA proposes to use 941 voluntary consensus standards. The proposed framew ork of this third party certification program 942 is based on the ability of ABs to review TP Cs for their conformity to ISO/IEC Guide 65, 943 ISO/IEC 17025, and ISO/IEC 17020. Both Product ABs and Laboratory ABs must maintain 944 their conformity to ISO/IEC 17011 and ISO/IEC Guide 65. 945

946
4.9 Executive Order 12898 – Environmental Justice 947

948 Under Executive Order 12898, when promul gating a regulation, EPA investigates 949 whether there are disproportionate ly high and adverse human health or environmental effects on 950 minority and low-income populations. Since this proposed rulemaking addresses the process for 951 accreditation bodies and TPCs, this proposed rule does result in any adverse human health or 952

environmental effects. 953

954

955

956*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 40 957 

### References 958

California Air Resources Board (2011). List of CARB Approved Thir d Party Certifiers. 959

Available at: http://www.arb.ca.gov/toxics/compwood/listoftpcs.htm

. 960

Composite Panel Association (2007). 2007 Nort h American Capacity Report. Available 961

at: 962

Dun & Bradstreet (2011). Company Reports. Proprietary Database. 963

Personal Communication with AHFA (2010) . Conversation between Bill Perdue 964 (American Home Furnishings Alli ance) and Abt Associates Inc. 965

Personal Communication with BIFMA ( 2010). Brad Miller's (BIFMA) Written 966 Responses to Questions about FSCWPA Impacts on Members. 967

Personal Communication with Forestwood Indus tries (2011). Conversation between Gary 968 Poserina (Forestwood Industries, In c.) and Abt Associates Inc. 969

Personal Communication with IAS (2011). Conversation between Patrick McCullen 970 (International Accreditation Service) and Abt Associates Inc. 971

Personal Communication with KCMA (2010) . Conversation between Richard Titus 972 (Kitchen Cabinet Manufacturers Association) and Abt Associates Inc. regarding 973 written questions a bout FSCWPA Impacts. 974

Personal Communication with NALFA (2010) . Conversation between Dennis Bradway 975 (Mannington Floors and North Amnerican Laminate Floor Association) and Abt 976 Associates Inc. regarding written questions about FSCWPA Impacts. 977

Personal Communication with NSF International (2011a). Conversation between Kerri 978 Levanseler (NSF International) and Abt Associates Inc. 979

Personal Communication with NSF International (2011b). Conversation between Craig 980 Moore (NSF International) and Abt Associates Inc. 981

Personal Communication with NTA Inc. (2011) . Conversation between Dale Arter (NTA 982 Inc.) and Abt Associates Inc. 983

Personal Communication with PFS Corporat ion (2011). Conversation between James 984 Van Schoyck and Ron Reindl (PFS Corporat ion, Inc.) and Abt Associates Inc. 985

Personal Communication with PSI ( 2011). Conversation between Randy Webb 986 (Professional Service Industries, Inc.) and Abt Associates Inc. 987

Personal Communication with SCS International (2011). C onversation between Michael 988 Wolfe (SCS International) and Abt Associates Inc. 989

Personal Conversation with HPVA (2011). C onversation between Kip Howlett (HPVA) 990

and Abt Associates Inc. 991

U.S. Bureau of Labor Statistics (2011). Employer Costs for Employee Compensation: 992 Supplementary Tables: Historical Da ta: December 2006 - March 2011. Available 993

at: http://www.bls.gov/ ncs/ect/ecsuphst.pdf

. 994*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule 41 U.S. Census Bureau (2007). Statistics for U.S. Businesses (SUSB). Number of Firms, 995 Number of Establishments, Employment, Annual Payroll, and Estimated Receipts 996 by Enterprise Receipt Size for the United States, All Industries: 2007. Available 997 at: http://www.census.gov/ epcd/susb/2007/us/US--.HTM 998

U.S. Census Bureau (2010a). Sector 54: EC0754SSSZ4: Professional, Scientific, and 999 Technical Services: Subject Series - Estab & Firm Size: Receipts/Revenue Size of 1000

Firms for the United States: 2007. Available at: 1001 http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&- 1002 ds_name=EC0754SSSZ4&-_lang=en

. 1003

U.S. Census Bureau (2010b). Sector 56: EC0756SSSZ4: Administrative and Support and 1004 Waste Management and Remediation Serv ices: Subject Series - Establishment 1005 and Firm Size: Receipts Size of Firms fo r the United States: 2007. Available at: 1006 http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&- 1007 ds_name=EC0756SSSZ4&-_lang=en

. 1008

U.S. Census Bureau (2010c). Sector 81: EC0781SSSZ4: Other Services (Except Public 1009 Administration): Subject Series - Estab & Firm Size: Receipts/Revenue Size of 1010

Firms for the United States: 2007. Available at: 1011 http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&- 1012 ds_name=EC0781SSSZ4&-_lang=en

. 1013

U.S. Census Bureau (2010d). Sector 31: EC0731I1: Manufacturing : Industry Series: 1014 Detailed Statistics by Industry for the United States: 2007. Available at: 1015 http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&- 1016 ds_name=EC0731I1&-_lang=en

. 1017

U.S. Environmental Protection Agency (1998) . Industry Specific Information Collection 1018 Request (ICR) for the Development of Plywood and Particleboard Maximum 1019

Achievable Control Technol ogy (MACT) Standards. 1020

U.S. Environmental Protection Agency ( 2002a). Economic Analysis for the Amended 1021 Inventory Update Rule: Final Report (EPA-HQ-OPPT-2002-0054-0260). 1022

U.S. Environmental Protection Agency (2002b) . Wage Rates for Ec onomic Analysis of 1023 the Toxics Release Inventory Program. 1024

U.S. Environmental Protection Agency ( 2011). Supporting Statement for a Request for 1025 OMB Review under the Paperwork Reducti on Act: the Final Rule Addendum to 1026 Partial Update of the TSCA Section 8(b) TSCA Inventory Data Base, Production 1027 and Site Reports. 1028

U.S. Internal Revenue Service (2009). Form 990. Return of Organization Exempt from 1029

Income Tax. 1030

U.S. Small Business Administration (2010). Table of Small Business Size Standards 1031 Matched to North American Industry Cla ssification System Codes. Available at: 1032 http://www.sba.gov/content/table- small-business-size-standards

. 1033

1034

1035 6

1037*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule A-1 Appendix A– Wage Rate Calculations 1038

This appendix describes the derivation of the fully loaded wage rates and inflation factors 1039 used in calculating costs of labor , materials, and other inputs. All cost estimates are presented in 1040 fourth quarter, calendar year 2010 dollars, representing the most recent full year of data 1041

available. 1042

1043 The fully loaded unit labor cost for managerial, professional/t echnical, and clerical labor 1044 in the regulated industry and for EPA staff is estimated by adding fringe benefits and overhead 1045 costs to the hourly wage or annual salary for each category following the method described in 1046 Wage Rates for Economic Analysis of the Toxics Release Inventory Program (EPA, 2002b). This 1047 appendix describes the method employed to estima te the fully loaded uni t labor costs for each 1048 labor category and presents the results of the analysis. 1049

1050 Labor categories used in the an alysis correspond to the U.S. Bureau of Labor Statistics 1051 (BLS) Standard Occupational Classification (SOC ) system. In March 2004, BLS began using the 1052 North American Industry Classification System (NAICS) instead of the Standard Industrial 1053 Classification (SIC) System, and the Standard Oc cupational Classification (SOC) system instead 1054 of the Occupational Classification System (O CS). Exhibit A-1 summarizes the crosswalk 1055 between old and new occupational titles, and lists the SOC titles that correspond to the 1056 managerial, professional/technical, and clerical labor categories used in this analysis (Weinstein 1057 and Loewenstein, 2004). 1058

1059

Exhibit A-1: Detail of Labor Ca tegories Used in the Analysis

Labor Category Used in the Analysis BLS Old Title (OCS) BLS New Title (SOC)

Managerial Executive, administrative, and managerial Management, busine ss, and financial

Professional/Technical Professi onal specialty and technical Professional and related

Clerical Administrative support, including

clerical Office and administrative support

Source: BLS (2009); Weinstein and Loewenstein (2004). 1060 Wages and fringe benefit data for managerial , professional/technical , and clerical labor 1061 are from the BLS Employer Costs for Employee Compensation (ECEC) historical data for 1062 December 2006 – March 2011 (BLS, 2011). 8 1063

1064 The costs of fringe benefits such as paid leave and insurance, sp ecific to each labor 1065 category, are taken from the same BLS report (BLS , 2011). Fringe benefits as a percentage of 1066 wages are calculated separately for each labo r category. For example, for December 2010, the 1067 average wage rate for professional/ technica l labor was $36.57, and the average fringe benefit 1068 was $13.52. 9 Therefore, fringe benefits as a pe rcentage of wages were $13.52/$36.57, or 1069 approximately 37 percent (see Exhibit A-2). 1070

8 Past economic analyses used ECEC data series specific to white-collar workers in the manufacturing sector. However,

those data sets were discontinued in March 2007, and these historical data we re the best alternative. In a phone conversation (February 11, 2009), a BLS employee co uld not identify a better data set to use.

9 Past economic analyses have used the term “technical” labor. Here the category is called “profession al/technical” labor,

to make clear how it relates to BLS categories. In 2004, BLS changed from the Occupa tional Classification System, OCS, to the Standard Occupational Classification system, SOC. In the process, the “Professional specialty and*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule A-2 An additional loading factor of 17 percent is applied to wages to account for overhead. 10 1071 This approach is used for consistency with O ffice of Pollution Preven tion and Toxics (OPPT) 1072 economic analyses for two major rulemakings: Wage Rates for Economic Analyses of the Toxics 1073 Release Inventory Program , June 2002 (EPA, 2002b), and the Revised Economic Analysis for the 1074 Amended Inventory Update Rule: Final Report , August 2002 (EPA, 2002a). This overhead 1075 loading factor is added to the benefits loading fa ctor, and the total is then applied to the base 1076 wage to derive the fully loaded wage. For ex ample, the December 2010 fully loaded wage for 1077 professional/technical labor is $36.97 × (1+ 0.37 + 0.17) = $56.31. 1078

1079 Fully loaded costs for managerial and clerical labor are calculated in a similar manner, as 1080

shown in Exhibit A-2. 1081

1082 Exhibit A-2: Derivation of Loaded Industry Wage Rates

Labor Category Data Source for Wage

Information Date Wage Fringe

Benefit Fringes as % wage Overhead as % wage a Fringe +

overhead factor Loaded Wages

(a) (b) (c)=(b)/(a) (d) (e)=(c)+(d)+1 (f)=
(a)*(e)

Clerical BLS ECEC , Private

Professional and Business Services Industries, “Office and Administrative Support” 2 Dec-10 $16.72 $6.09 36.42% 17% 1.53 $25.65

Professional/

Technical BLS ECEC , Private

Professional and Business Services Industries,

“Professional and related“ 2 Dec-10 $36.57 $13.52 36.97% 17% 1.54 $56.31

Managerial BLS ECEC , Private

Professional and Business Services Industries, “Mgt, Business, and Financial” 2 Dec-10 $42.42 $17.15 40.43% 17% 1.57 $66.78

Notes:

a An overhead rate of 17% is used based on assumptions in EPA (2002a) and EPA (2002b).

b Data for this occupational series found in BLS (2011).

technical” category became the “Professional and related” category. However, the coverage of the old and new occupational groups is approximately the same. See the BLS article, “Compa ring Current and Former Industry and Occupation ECEC Series” (Weinstein and Loewenstein, 2004).

10 The change was used in the 2003 PM N SNUR economic analysis (EPA, 2003b). In some earlier reports, the 17 percent

had been applied to wage s-plus-fringe benefits.*** EO 12866 Review Draft – Deliberative – Do Not Quote, Cite, or Release During the Review***

March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-1 1083

Appendix B – Recordkeeping and Reporting Burdens 1084

Table B-1 and Table B-2 present the estimat ed per-activity recor dkeeping and reporting 1085 burdens for accreditation bodies and third party certi fiers, respectively. Ta ble B-3 and Table B-4 1086 present the estimated annual frequency of the r ecordkeeping and reporting activity as well as the 1087 associated clerical, technical, and managerial cost . Total costs are calculated as the sum of the 1088
component costs. 1089*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-21090Table B-1: Recordkeeping and Reporting Burdenfor Accreditation Bodies, by ActivityActivity1Per Activity Burden HoursNumber ofAnnual Activities(d)Clerical Technical ManagerialTotal Burden(hours)(a) (b) (c)(e) =(d)*{(a)+(b)+(c)}1. Rule Familiarization 0.00 5.00 5.00 1.00 10.00002. Application SubmissionCompany Information (Name, Address,Telephone Number, and Email Addressof Primary Contact)20.00 0.04 0.021.000.0600Documentation of IAF MLA, ILAC MRA, or Equivalent Signatory Status20.00 0.04 0.02 1.00 0.0600Description of Any Other QualificationsRelated to Experience in PerformingAccreditation of Conformity Assessment Bodies or Third Party Certifiers30.00 0.83 0.511.001.34003. Recognition Agreement41.00 1.00 4.00 1.00 6.00004. EPA NotificationLoss of Status as a Signatory to theIAF MLA, ILAC MRA, or EquivalentOrganization50.00 0.08 0.04 0.05 0.0060Third Party Certifier Applications50.00 0.08 0.04 3.00 0.3600Third Party Certifier Accreditation50.00 0.08 0.04 3.00 0.3600Third Party Certifier Compliance Failure50.00 0.08 0.04 0.33 0.0396Third Party Certifier Accreditation Suspension or Revocation (Product ABs) /Accredited Laboratory Compliance Failure (Laboratory ABs)50.00 0.08 0.04 0.33 0.0396Change to Organizational Policy or Management Structure that Could AdverselyAffect Accreditation Program50.00 0.08 0.04 0.20 0.0240Checklists and Other Records Documenting Compliance with the Requirementsfor Systems Audits and On-site Assessment of Third Party Certifiers50.00 0.08 0.04 1.00 0.1200Change in Name or Address of Domestic Agent (Foreign Entities Only)50.00 0.08 0.04 0.50 0.06005. Third Party Certifier NotificationUnique Tracking Number20.00 0.04 0.02 3.00 0.1800Withdraw from or be Removed from Program20.00 0.04 0.02 0.25 0.01506. RecordkeepingAccreditation Applications60.75 1.50 0.75 1.00 3.0000Checklists and Other Records Documenting Compliance with the Requirementsfor Systems Audits and On-site Assessment of Third Party Certifiers60.75 1.50 0.75 1.00 3.00007. Annual Report to EPANumber of Third Party Certifier Applications Received70.25 0.50 0.25 1.00 1.0000Number of Third Party CertifierApplications Approved and Denied70.25 0.50 0.25 1.00 1.0000The Names and Contact Information ofAll Accredited Third Party Certifiers70.25 0.50 0.25 1.00 1.0000Number and Locations of Systems Audits and On-site Assessments70.25 0.50 0.25 1.00 1.0000Results of Accredited Third Party Certifier Laboratory Proficiency Testing orInter-laboratory Comparisons70.25 0.50 0.25 1.00 1.0000*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-3Table B-1: Recordkeeping and Reporting Burdenfor Accreditation Bodies, by ActivityActivity1Per Activity Burden HoursNumber ofAnnual Activities(d)Clerical Technical ManagerialTotal Burden(hours)(a) (b) (c)(e) =(d)*{(a)+(b)+(c)}Domestic Total in First Year 29.6042Foreign Total in First Year 29.6642Domestic Total in Year 2 and 3 12.1442Foreign Total in Year 2 and 3 12.2042Notes: 1. Under the proposed rule, accreditation bodies are required to submit an application to renew their recognition agreement every three years. As a result,this analysis assumes that accreditationbodies incur application submission and recognition agreement preparation costs in the first yearand subsequently every threeyears thereafter.2. Based on the estimated burden associated withreporting "company information" (EPA 2011).3. Based on the estimated burden associatedwith answering substantiation questionswhen making plant siteconfidentiality claims (EPA 2011).4. Based on conversationswith accreditation bodies.5. Based on the estimated burden associated with reporting "company information" (EPA 2011). Values have been doubled based onbest professional judgment.6. Based on the estimated burden associated with "recordkeeping" (EPA 2011). The rule requires that records be kept for 5 yearsthat show theproduction volume, plant site, and site-limited status of each reported substance.7. Estimated as one-third of the burden associated with "recordkeeping" (EPA 2011). Estimate based on best professional judgment.Sources: (1) U.S. Bureau of LaborStatistics. 2011. Employer Costs for Employee Compensation: Supplementary Tables: HistoricalData: December 2006 - March 2011, and (2)U.S. Environmental Protection Agency. 2011.Supporting Statement for a Request for OMB Review under the Paperwork Reduction Act: the Final Rule Addendum to PartialUpdate of the TSCA Section 8(b) TSCA Inventory Data Base, Production and Site Reports.10911092*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-4Table B-2: Recordkeeping and Reporting Burden for Third Party Certifiers, by ActivityPer Activity Burden Hours Number ofAnnualActivities(d)Total Burden(hours)(e) =(d)*{(a)+(b)+(c)}Activity1Clerical Technical Managerial(a) (b) (c)1. Rule Familiarization 0.00 5.00 5.00 1.00 10.002. Product Accreditation Body Application SubmissionCompany Information (Name, Address,Telephone Number, and Email Addressof Primary Contact) and Type of Composite Wood Products Applicant Intendsto Certify20.00 0.04 0.02 1.00 0.06Description of TPC's Experience or Ability in Product Certification andComplying with ISO/IEC Guide 6530.00 0.83 0.51 1.00 1.34Description of TPC's Experience inthe Composite Wood Product Industry withthe Product(s) Intended to be Certified30.00 0.83 0.51 1.00 1.34Description of TPC's Ability to Inspect and Properly Train and SuperviseInspectors Pursuant to ISO/IEC 1702030.00 0.83 0.51 1.00 1.343. Laboratory Accreditation Body Application SubmissionCompany Information (Name, Address,Telephone Number, and Email Addressof Primary Contact; if foreign, name and address of an agent for service locatedin the U.S.)20.00 0.04 0.02 1.00 0.06Description of TPC's Experience inPerforming or Verifying FormaldehydeTesting on Composite Wood Products30.00 0.83 0.51 1.00 1.34Description of TPC's Experience Operating or Using Laboratories that Complywith ISO/IEC 1702530.00 0.83 0.51 1.00 1.34Description of TPC's Experience with Test Method ASTM E-1333-96 (2002)and Experience Evaluating Correlation between Test Methods30.00 0.83 0.51 1.00 1.344. Manufacturer NotificationThird Party Certifier Number2 0.00 0.04 0.02 1.00 0.06Withdraw from Program or Lose Accreditation2 0.00 0.04 0.02 0.25 0.0155. RecordkeepingList of Manufacturers and their Product Types (including Resins Used) Certifiedby TPC40.75 1.50 0.75 1.00 3.00Results of Inspections, Audits, and Emission Tests Conducted for EachManufacturer and Product Type40.75 1.50 0.75 1.00 3.00List of the TPC's Laboratories, TestMethods (including Test Conditions andConditioning Time), and Test Results40.75 1.50 0.75 1.00 3.00Methods and Results for Establishing Test Method Correlations andEquivalence40.75 1.50 0.75 1.00 3.00List of Manufacturers and Products Approved for Reduced Testing40.75 1.50 0.75 1.00 3.006. Annual Report to Accreditation BodiesList of Manufacturers and their Products Certified by the TPC during thePrevious Year (including Resins Used, and the Average and Range ofFormaldehyde Emissions by Manufacturer, Resin, and Product Type)50.25 0.50 0.25 1.00 1.00*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-5Table B-2: Recordkeeping and Reporting Burden for Third Party Certifiers, by ActivityPer Activity Burden Hours Number ofAnnualActivities(d)Total Burden(hours)(e) =(d)*{(a)+(b)+(c)}Activity1Clerical Technical Managerial(a) (b) (c)List of Noncomplying Productsor Events by Manufacturer50.25 0.50 0.25 1.00 1.00List of Laboratories and Test Methods Used by the TPC50.25 0.50 0.25 1.00 1.00Results of Inter-Laboratory Comparison or Proficiency Testing for theLaboratories Used by the TPC40.25 0.50 0.25 1.00 1.007. Accreditation Board NotificationPersonnel Qualification Changes20.00 0.04 0.02 0.50 0.03Procedure Changes20.00 0.04 0.02 0.50 0.03Laboratory Changes20.00 0.04 0.02 0.50 0.038. EPA NotificationChange in Name or Address of Domestic Agent (Foreign TPCs Only)20.00 0.04 0.02 0.50Domestic Total in First Year 37.325Foreign Total in First Year 37.355Domestic Total in Non-Reapplication Year (Year 2) 19.165Foreign Total in Non-Reapplications Year (Year 2) 19.195Domestic Total in ReapplicationYear (Year 3) 27.325Foreign Total in Reapplications Year (Year 3) 27.355Notes: 1.Under the proposed rule, TPCs are required to apply for re-accreditation every two years. As aresult, application and accreditation costs are incurred every other year.2. Based on the estimated burden associated withreporting "company information" (EPA 2011).3. Based on the estimated burden associatedwith answering substantiation questionswhen making plant siteconfidentiality claims (EPA 2011).4. Based on the estimated burden associated with "recordkeeping" (EPA 2011). The rule requires that records be kept for 5 yearsthat show theproduction volume, plant site, and site-limited status of each reported substance.5. Estimated as one-third of the burden associated with "recordkeeping" (EPA 2011). Estimate based on best professional judgment.Sources: (1) U.S. Bureau of LaborStatistics. 2011. Employer Costs for Employee Compensation: Supplementary Tables: HistoricalData: December 2006 - March 2011,and (2) U.S. Environmental Protection Agency. 2011. Supporting Statement for a Request for OMB Review under the Paperwork Reduction Act: the Final RuleAddendum to Partial Update of the TSCA Section 8(b) TSCA Inventory Data Base, Production and Site Reports.1093*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-6Table B-3: Recordkeeping and Reporting Labor Costs for Accreditation Bodies, by Activity (2010$)ActivityEstimated AnnualFrequency1Clerical Cost2TechnicalCost2Managerial Cost2Total Cost1. Rule Familiarization 1 $0.00 $281.55 $333.90 $6152. Application SubmissionCompany Information (Name, Address, Telephone Number, and EmailAddress of Primary Contact)31 $0.00 $2.25 $1.34 $3.59Documentation of IAF MLA, ILACMRA, or Equivalent SignatoryStatus31 $0.00 $2.25 $1.34 $3.59Description of Any Other Qualifications Related to Experience inPerforming Accreditation of Conformity Assessment Bodies or ThirdParty Certifiers41 $0.00 $46.74 $34.06 $80.80Application Submission Subtotal $883. Recognition Agreement51 $25.65 $56.31 $267.12 $3494. EPA NotificationLoss of Status as a Signatory to the IAF MLA, ILAC MRA, orEquivalent Organization60.05 $0.00 $0.23 $0.13 $0.36Third Party Certifier Application63 $0.00 $13.51 $8.01 $21.53Third Party Certifier Accreditation63 $0.00 $13.51 $8.01 $21.53Third Party Certifier Compliance Failure60.33 $0.00 $1.49 $0.88 $2.37Third Party Certifier Accreditation Suspension or Revocation (ProductABs) / Accredited Laboratory Compliance Failure (Laboratory ABs)60.33 $0.00 $1.49 $0.88 $2.37Change to Organizational Policy orManagement Structure that CouldAdversely Affect Accreditation Program60.2 $0.00 $0.90 $0.53 $1.44Checklists and Other Records Documenting Compliance with theRequirements for Systems Audits andOn-site Assessment of Third PartyCertifiers61 $0.00 $4.50 $2.67 $7.18Change in Name or Address of Domestic Agent (Foreign Entities Only)60.5 $0.00 $2.25 $1.34 $3.59EPA Notification Subtotal (Domestic) $57EPA Notification Subtotal (Foreign) $605. Third Party Certifier NotificationUnique Tracking Number33 $0.00 $6.76 $4.01 $10.76Withdraw from or be Removed from Program30.25 $0.00 $0.56 $0.33 $0.90TPC Notification Subtotal $126. RecordkeepingAccreditation Applications71 $19.24 $84.47 $50.09 $153.79Checklists and Other Records Documenting Compliance with theRequirements for Systems Audits andOn-site Assessment of Third PartyCertifiers71 $19.24 $84.47 $50.09 $153.79Recordkeeping Subtotal $3087. Annual Report to EPANumber of Third Party Certifier Applications Received81 $6.41 $28.16 $16.70 $51.26*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-7Table B-3: Recordkeeping and Reporting Labor Costs for Accreditation Bodies, by Activity (2010$)ActivityEstimated AnnualFrequency1Clerical Cost2TechnicalCost2Managerial Cost2Total CostNumber of Third Party CertifierApplications Approved and Denied81 $6.41 $28.16 $16.70 $51.26The Names and Contact Information of All Accredited Third PartyCertifiers81 $6.41 $28.16 $16.70 $51.26Number and Locations of Systems Audits and On-site Assessments81 $6.41 $28.16 $16.70 $51.26Results of Accredited Third Party Certifier Laboratory ProficiencyTesting or Inter-laboratory Comparisons81 $6.41 $28.16 $16.70 $51.26Annual Report Subtotal $256Domestic Total in First Year$1,685Foreign Total in First Year$1,688Domestic Total in Year 2 and 3$633Foreign Total in Year 2 and 3$636Notes: 1. Based on best professional judgment and rule requirements. Under the proposed rule, accreditation bodies are requiredto submit an application to renewtheir recognition agreement every threeyears. As a result, this analysis assumes that accreditation bodies incur application submission and recognition agreement preparation costs in the first year and subsequently every three years thereafter.2. Based on Employer Costs for Employee Compensation wage and benefit data for private professional and business services industries (BLS 2011a). Clerical costs are estimated using data from the"office and administrative support" occupational group; technical costs are estimated using datafrom the "professional and related" occupational group; and managerial costs are estimated using datafrom the "management, business, and financial" occupational group.3. Based on the estimated burden associated withreporting "company information" (EPA 2011a).4. Based on the estimated burden associatedwith answering substantiation questionswhen making plant siteconfidentiality claims (EPA 2011a).5. Based on conversationswith accreditation bodies.6. Based on the estimated burden associated with reporting "company information" (EPA 2011a). Values have been doubled based onbest professional judgment.7. Based on the estimated burden associated with "recordkeeping" (EPA 2011a). The rule requires that records be kept for 5 years that show the production volume, plant site, and site-limited status ofeach reported substance.8. Estimated as one-third of the burden associated with "recordkeeping" (EPA 2011a). Estimatebased on best professional judgment.Sources: (1) U.S. Bureau of LaborStatistics. 2011. Employer Costs for Employee Compensation: Supplementary Tables: HistoricalData: December 2006 - March 2011, and (2)U.S. Environmental Protection Agency. 2011.Supporting Statement for a Request for OMB Review under the Paperwork Reduction Act: the Final Rule Addendum to PartialUpdate of the TSCA Section 8(b) TSCA Inventory Data Base, Production and Site Reports.10941095*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-8Table B-4: Recordkeeping and Reporting Labor Costsfor Third Party Certifiers, by Activity (2010$)ActivityEstimated AnnualFrequency1Clerical Cost2Technical Cost2Managerial Cost2Total Cost1. Rule Familiarization 1.00 $0.00 $281.55 $333.90 $6152. Product Accreditation Body Application SubmissionCompany Information (Name, Address, Telephone Number, andEmail Address of Primary Contact;if foreign, name and addressof an agent for service located in the U.S.) and Type ofComposite Wood Products Applicant Intends to Certify31.00 $0.00 $2.25 $1.34 $3.59Description of TPC's Experience or Ability in ProductCertification and Complying with ISO/IEC Guide 6541.00 $0.00 $46.74 $34.06 $80.80Description of TPC's Experience in theComposite WoodProduct Industry with the Product(s) Intended to be Certified41.00 $0.00 $46.74 $34.06 $80.80Description of TPC's Ability to Inspect and Properly Train andSupervise Inspectors Pursuant to ISO/IEC 1702041.00 $0.00 $46.74 $34.06 $80.80Product Accreditation Subtotal $2463. Laboratory Accreditation Body Application SubmissionCompany Information (Name, Address, Telephone Number, andEmail Address of Primary Contact;if foreign, name and addressof an agent for service located in the U.S.)31.00 $0.00 $2.25 $1.34 $3.59Description of TPC's Experiencein Performing or VerifyingFormaldehyde Testing on Composite Wood Products41.00 $0.00 $46.74 $34.06 $80.80Description of TPC's Experience Operating or UsingLaboratories that Comply with ISO/IEC 1702541.00 $0.00 $46.74 $34.06 $80.80Description of TPC's Experiencewith Test Method ASTM E1333-96 (2002) and Experience Evaluating Correlation betweenTest Methods41.00 $0.00 $46.74 $34.06 $80.80Laboratory Accreditation Subtotal $2464. Manufacturer NotificationThird Party Certifier Number31.00 $0.00 $2.25 $1.34 $3.59Withdraw from Program or Lose Accreditation30.25 $0.00 $0.56 $0.33 $0.90Manufacturer Notification Subtotal $45. RecordkeepingList of Manufacturers and theirProduct Types (including ResinsUsed) Certified by TPC51.00 $19.24 $84.47 $50.09 $153.79Results of Inspections, Audits, and Emission Tests Conductedfor Each Manufacturer and Product Type51.00 $19.24 $84.47 $50.09 $153.79List of the TPC's Laboratories,Test Methods (including TestConditions and Conditioning Time), and Test Results51.00 $19.24 $84.47 $50.09 $153.79Methods and Results for Establishing Test Method Correlationsand Equivalence51.00 $19.24 $84.47 $50.09 $153.79List of Manufacturers and Products Approved for ReducedTesting51.00 $19.24 $84.47 $50.09 $153.79*** EO 12866 Review Draft – Deliberative – Do NotQuote, Cite, or Release During the Review***March 20, 2012 Economic Analysis for the TSCA Title VI Proposed Rule B-9Table B-4: Recordkeeping and Reporting Labor Costsfor Third Party Certifiers, by Activity (2010$)ActivityEstimated AnnualFrequency1Clerical Cost2Technical Cost2Managerial Cost2Total CostRecordkeeping Subtotal $7696. Annual Report to Accreditation BodiesList of Manufacturers and their Products Certified by the TPCduring the Previous Year (including Resins Used, and theAverage and Range of Formaldehyde Emissions byManufacturer, Resin, and Product Type)61.00 $6.41 $28.16 $16.70 $51.26List of Noncomplying Productsor Events by Manufacturer61.00 $6.41 $28.16 $16.70 $51.26List of Laboratories and Test Methods Used by the TPC61.00 $6.41 $28.16 $16.70 $51.26Results of Inter-Laboratory Comparison or Proficiency Testingfor the Laboratories Used by the TPC61.00 $6.41 $28.16 $16.70 $51.26Annual Report to AB Subtotal $2057. Accreditation Board NotificationPersonnel Qualification Changes30.50 $0.00 $1.13 $0.67 $1.79Procedure Changes30.50 $0.00 $1.13 $0.67 $1.79Laboratory Changes30.50 $0.00 $1.13 $0.67 $1.79Accreditation Board Notification Subtotal $58. EPA NotificationChange in Name or Address of Domestic Agent (ForeignTPCs Only)30.50 $0.00 $1.13 $0.67 $2Domestic Total in First Year$2,090Foreign Total in First Year$2,092Domestic Total in Non-Reapplication Year (Year 2) $983Foreign Total in Non-Reapplications Year (Year 2) $985Domestic Total in Reapplication Year (Year 3) $1,475Foreign Total in Reapplications Year (Year 3) $1,477Notes: 1. Based on best professional judgment and rule requirements. Under the proposedrule, TPCs are required to apply for re-accreditation every two years.As a result, application andaccreditation costs are incurred every other year. 2. Based on Employer Costs for Employee Compensation wage and benefit datafor private professional and business services industries (BLS2011a). Clerical costs are estimated using data from the "office and administrative support" occupational group; technical costs are estimated using data fromthe "professional and related"occupational group; and managerial costs are estimated using data from the "management, business, and financial" occupational group. 3. Based on the estimatedburden associated with reporting"company information" (EPA 2011a). 4. Based on the estimated burden associated withanswering substantiation questions when making plant site confidentiality claims (EPA 2011a).5. Based on the estimated burden associated with "recordkeeping" (EPA 2011a). The rule requires that records be kept for 5 years that show the production volume, plant site, and site-limited statusof each reported substance. 6. Estimated asone-third of the burden associated with"recordkeeping" (EPA 2011a). Estimate basedon best professional judgment.Sources: (1) U.S. Bureau of Labor Statistics. 2011. Employer Costs for Employee Compensation: Supplementary Tables: HistoricalData: December 2006 - March 2011, and (2) U.S. EnvironmentalProtection Agency. 2011. Supporting Statement for a Request for OMB Review under the Paperwork Reduction Act: the Final Rule Addendum to Partial Update of the TSCA Section 8(b) TSCAInventory Data Base, Production and Site Reports1096