*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

1 EO12866_Rin2070-AD30_Part158W-FRM_EA_2012-05-24clean

EO 12866_Antimicrobial Data Requirements_RIN 2070

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FINAL ECONOMIC ANALYSIS OF CHANGES IN for the FINAL RULE: DATA REQUIREMENTS FOR ANTIMICROBIAL PESTICIDES (RIN 2070-AD30)

Prepared by:

Economic Analysis Branch Biological and Economic Analysis Division Office of Pesticide Programs U.S. EPA

Prepared for:

Antimicrobial Division and Field and External Affairs Division Office of Pesticide Programs U.S. Environmental Protection Agency 1200 Pennsylvania Ave, NW Washington, DC 20460

August 8 , 2011 May 24, 2012*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

2 Table of Contents 1 Executive Summary ............................................................................................................. ... 4 2 Problem Statement ............................................................................................................. ..... 6 2.1 Overview of Antimicrobial Pesticid e Usage, Exposure, and Effects ............................... 6 2.2 Nature of Market Failures Inherent from Pesticide Producer and User Behavior ........... 7 2.3 Overview of the Rule ....................................................................................................... 8 2.4 Statutory Authority for the rule ........................................................................................ 9 2.5 Current Regulation ......................................................................................................... 10 2.6 Description of the Part 158 W Rule ............................................................................... 11 2.7 Types of Data Requirement Changes in the Rule .......................................................... 16 3 Regulatory Options ............................................................................................................ ... 17 3.1 Selected Option—Final Rule ......................................................................................... 17 3.2 Codification of Current Practices ................................................................................... 18 3.3 Conventional Data Requirement fo r Antimicrobial Pesticides ...................................... 19 4 Profile of the Regulated Community .................................................................................... 20 4.1 Size of the Antimicrobial Industry ................................................................................. 20 4.2 Firms with Registration Actions (2000-2005) ............................................................... 20 4.3 Estimation of the Number Fi rms Impacted by the Rule................................................. 22
5 Economic Impacts on Pesticide Registrants Du e to Change in Data Requirements ............ 23 5.1 Step 1. Expected Cost of each Data Requirement (C X Dur ) ............................................ 25 5.2 Step 2. Expected Cost per Registration Action (R X

ur ) .................................................. 29 5.3 Step 3. Incremental ( Δ R) and Newly Imposed Costs per Registration Action ............. 31 5.4 Step 4. Expected Industry-Wide Impacts ( ∆ A) ............................................................. 33
5.5 Step 5. Incremental Cost per Firm ................................................................................ 35 5.6 Applicator Exposure Test Costs ..................................................................................... 36 6 Registration Review ........................................................................................................... ... 39 6.1 Step 1. Expected Cost of each Data Requirement ......................................................... 40 6.2 Step 2. Costs per Registration Review .......................................................................... 42 6.3 Step 3. Incremental Costs .............................................................................................. 42 6.4 Step 4. Industry Wide Cost ........................................................................................... 42 6.5 Step 5. Cost per Firm ..................................................................................................... 42
7 Small Busine ss Impacts ........................................................................................................ 43 7.1 Regulatory Overview ..................................................................................................... 43 7.2 Categorization of Small Businesses ............................................................................... 43 7.3 Estimation of the Number of Small Businesses ............................................................. 43 7.4 Small Business Impacts for New and Existing Registrations ........................................ 44 8 Benefits Due to Changes in Data Requirements ................................................................... 46 9 Limitations and Uncertainties of the Economic Analysis ..................................................... 48 10 Consideration of Pa perwork Burden ..................................................................................... 50*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

3 References

Appendix A. Data Required for New Active Ingr edient Antimicrobial Registrations. Appendix B. Data Requirement Probabilities for Antimicrobial Pesticides Appendix C. Data Requirement Costs for Antimicrobial Pesticides Appendix D. Changes in Data Requirements and Costs Appendix E. Glossary

LIST OF TABLES AND CHARTS

Table 2-1: Data Disciplines Table 2-2: Types of Registra tion Actions and Descriptions Table 4-1: Distribution of Antimicrobial Registrants According to the NAICS Code
Table 4-2: Antimicrobial Product Registrants: Number of Firms and Revenues in the Large and Small Categories Table 5-1: Revised Unit Test Costs Table 5-2

. : Example of Estimating Cost of Five Data Requirements Table 5-3: Six Use-Site Groups Groupings for the Economic Analysis Table 5-4

. : Expected Cost of Data Requirements (C R ) and Registration Actions (R R ) by Registration Type and Use Grouping According to the Rule Table 5-5. Expected Incremental Cost of Registration Actions Table 5-6. Calculati on of Industry Cost Table 5-7: Total Indus try Cost per Year Table 5-8: Applicator Expos ure Data Requirements Cost Table 5-9: Applicator Exposure Testing Cost by AEATF Table 6-1: Estimation of Data Requirement Costs of New Tests in Registration Review of New Tests not Anticipated When the Economic Anal ysis of the Registration Review Process Was Completed Table 7-1: Estimated Small Busine ss Impacts for New Registrations Table 7-2: Small Firm Impact of Newl y Imposed Tests in Registration Review Table 7-3: Estimated Small Business Impacts— New Registrations plus Registration Review Table 9

- 1: Antimicrobial Registrant Paperwork Burden and Co sts per Registration Action Table 9

- 2: Agency Antimicrob ial Paperwork Burden and Costs*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

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## 1 Executive Summary

The U.S. Environmental Protection Agency (EPA) is updating and revising its data requirements for the registration of antimicrobial pe sticides. In this rule, the Agency collectively refers to antimicrobial pestic ides, antifoulant coatings and paints, and wood preservative pesticides, as antimicrobials.

The revisions to the data requirements are ne eded to more adequately protect the general population as well as sensitive subpopulations, to increase the Agency's knowledge of the human health and environmental fate and effects of antim icrobial pesticide produc ts, and to help ensure that antimicrobial regulatory d ecisions reflect current scientif ic knowledge and current Agency regulatory practices. This Final Economic Analys is evaluates the potential benefits and costs expected as a result of regist rations and registration reviews o ccurring after the final rule’s effective date.

This rule establishes a separate listing of the data requirements for antimicrobial pesticides in subpart W of part 158. The subpart W format does not di ffer greatly from the format of the data requirements for conventiona l pesticides promulgated in 2007 but does differ in the substance of the data requirements applicable to antimicrobials. Antimicrobial uses were covered in the original part 158 (now part 161), which was promulgated in 1984 and developed primarily for agricultural pesticid es. Use patterns specific to antim icrobials were not specified in the original part 158. As a result, it has been difficult at times for applicants to determine which data requirements apply to antimicrobials withou t extensive consultation with and interpretation from the Agency. Additionally, the current re gulations for antimicrobials (part 161) no longer reflect the state of the science of risk assessment, thus leadi ng to frequent consultations and incomplete submissions, which lead to increased tr ansaction costs for industry and the Agency to identify the appropriate data required. Clearer, more transpar ent information to applicants should help to clarify the data required for a regulatory decision.

Therefore, after the promulgation of th e data requirements in 158W, specific to antimicrobials, data submissions to EPA are more likely to contain the data needed for EPA to make regulatory decisions. Future consultations will be better focused, for example, on how to fulfill a particular data requirement, or how to conduct a specific study rather than on what studies to conduct. Focused consultations will help reduc e the burden on the regulated community associated with understanding and submitting complete submission packages to EPA.

In this final rule for part 158W, EPA is:

 Adding newly codified data requirements, whic h are not currently esta blished in part 161, but are considered in current practice on a case-by-case basis.

 Changing some of the existing data requireme nts, such as a change from conditionallyrequired to required, a change in the number of test species, or expanding the number of use patterns for which the test is required.

 Adding new data requirements, which have ne ver been required or have rarely been required in current practice, on a case-by-cas e basis, and have not been routinely*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

5 considered during the Agency’s evaluation of the data needed for the purpose of risk

assessment.

 Eliminating the requirement for the chronic non -rodent study currently established in part 161.

These changes in data requirements affect th e cost of data requirements for both existing registrations going through registration review as well as new registrations.

EPA estimates the incremental costs of the ch anges above for new registrations under this rule in chapter 5 of this document. Incremen tal costs are the additional costs of the rule compared to the baseline, which is defined as costs of the data requirements under part 161. The newly imposed cost, which is the difference between the rule and the current practice 1 , is estimated at $7.2 million per year. The total annual industry incremental cost from the baseline to the rule

, is estimated to be $8.2 million per year for 15 new registrations. The average incremental cost per registration action of all types applicable to this EA is about $549,000. The average incremental cost per fi rm under this rule having a re gistration action during 2000 – 2005 would have been about $722,000 ove r this six-year period.

Based on comments received during the public comment period on the proposed rule, changes were made to the final rule since the proposed rule and are re flected in this final economic analysis (EA). These changes include:

 Three new data requirements we re added: simulation tests to assess the biodegradability of chemicals discharged in wastewater, si mulation test – aerobic sewage treatment: activated sludge units, and nature of the residue on surfaces.

 One proposed new data requirement will not be codified: non-dietary ingestion exposure.

 Some data requirements for certa in use patterns were change d from not required (NR) or conditionally required (CR) to required (R), while others were changed from R to CR.

The changes described in the three bullets above were made in response to comments and therefore the incremental cost from the proposed rule (with the revised test co sts) to the final rule (with the same test costs) is an increase of about 25%. In response to comments on the EA for the proposed rule, the Agency updated some of the te st costs. EPA also revised its cost estimates for generating applicator exposure data for antimi crobial pesticides: See section 5.6. These cost revisions have the largest impact on the cost of the rule.

The cost of the data requirements of antimicrobials going through registration review were not estimated in the EA for the proposed ru le because EPA considered these costs to be covered in the registration review EA. However, eleven new tests have b een added in the part 158W rule that were not considered in the registra tion review rule EA. EPA estimates the cost of these new data requirements as pa rt of registration review to be about $6.8 million per year for the industry. The tota l incremental cost of the rule in cluding registration review and new registrations is about $15 million per year.

1 Current practice is the baseline (CFR part 161) plus data requirements that have been imposed on a case-by-case basis, 2000-2005.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

6 As required, EPA conducted an analysis of the impact of this final rule on small businesses. EPA’s analysis showed that only ab out 26 small firms (or a little over 5% of the total number of potentially impacted small firms) are expected to experience a cost increase representing 1% or more of gross sales. Thus, EPA concludes that the fina l rule will not have a significant impact on a substantial number of small entities (businesses).

In this analysis, EPA provides a qualitative discussion of the benefits, which are not quantifiable in the same monetary terms as the co sts. In general, before manufacturers can sell pesticides in the United States, EP A must evaluate the pesticides thoroughly to ensure that they meet federal safety standards in FIFRA and FFD CA that were established to protect human health and the environment. EPA grants a "regis tration" or license that permits a pesticide's distribution, sale, and use onl y after the company meets th e scientific and regulatory requirements. In evaluating a pesticide registra tion application, EPA assesses a wide variety of potential human health and environmental effects a ssociated with use of the product. Applicants, or potential registrants, must ge nerate or provide the scientific data necessary to address the identity, composition, potential adve rse effects, and environmental fate of each pesticide. The information provided by the data requirements in this final rule allow EPA to evaluate whether an antimicrobial pesticide meets the applicable statutory standards.



## 2 Problem Statement

2.1 Overview of Antimicrobial Pestic ide Usage, Exposure, and Effects

Antimicrobial pesticides are used to control microbiological contamination and deterioration in industrial, commercial, and he alth care applications and consumer products. Antimicrobial products contain a bout 275 different active ingredient s and are marketed in several types of formulations, including sprays, liquids, concentrated pow ders, and gases. Each year, about $1 billion are spent on a variety of different types of antimicrobial products. More than 5,000 antimicrobial products are curre ntly registered with the EPA a nd sold in the marketplace. Nearly 60% of antimicrobial pr oducts are registered as public health products (as defined at FIFRA 2(gg)) to control infectious microorga nisms in hospitals and other health care environments (EPA, 20 1 0 a 4 ). Public health products are intended to control microorganisms infectious to humans in any inanimate envir onment. The common public health antimicrobial products include sterilants, disinf ectants, and sanitizers. Non-public health products are sold and distributed for use to contro l growth of algae, odor-causing bacteria, bacteria which cause spoilage, deterioration or fouling of materials and microorganisms infecti ous only to animals. Other examples of non-public health products incl ude those products used in cooling towers, jet fuel, paints, and treatments for textile and paper products (EPA 20 1 0 a 4 ).

Antimicrobials play an important role in public health and safety. While intended to provide health benefits of pathogen control or removal and, in some cases, safety benefits of materials preservation, they also involve risks of potential efficacy failure and exposure hazards to humans and the environment. Therefore, the effectiveness and proper use of antimicrobial pesticides are of wide spread concern (EPA 2010 b a ).*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

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### 2.2 Nature of Market Failures Inhere nt from Pesticide Producer and User Behavior

It is generally accepted by economists that regulatory intervention is justified in the presence of market failure, that is, when the mark et fails to function efficiently. In the case of antimicrobial pesticides, the most salient source of market failure is externalities. An externality is a cost or benefit resulting from an economic tr ansaction that is borne or received by parties not directly involved in the trans action. When the individuals in volved in the transaction do not consider external costs and benefits, the market fails to function efficiently.

In the case of antimicrobial pesticides, exte rnalities arise because some of the costs (e.g. post-application exposure and ecologi cal effects) associated with antimicrobial use are not borne by those involved in the production, sale and use of the antimicrobial pesticides. For example, after an antimicrobial product is used, and then disposed of down- the drain, the antimicrobial can get into wastewater and destroy the beneficial microbes in wastew ater treatment plants that are used to treat wastewater. Such damages are exte rnal to the market, because they are not borne by those using and therefore benefiting from the antimicrobials, but inst ead are borne by those paying for wastewater treatment. Similarly, an tifoulants and wood preservatives can leach into the water and the environm ent, and have the potential to pro duce ecological effects on non-target organisms. Statutory authority allows the Agen cy to correct these market failures by imposing pesticide regulatory standards th at ensure their safe use.

The final rule helps the Agency to correct th e market failure by requi ring that registrants of antimicrobial pesticides provide the Agency with adequate information to make pesticide regulatory decisions that mitigate externalitie s by protecting the gene ral population, sensitive subpopulations, and the environment. The data re quirements in the final rule reflect current scientific knowledge and Agency practices.

Antimicrobial uses were covered in the or iginal part 158, which was promulgated in 1984 and developed primarily for agricultural pesticides . Use patterns specific to antimicrobials were not specified in the original part 158. As a result, it has been di fficult at times for applicants to determine which data requirements apply to anti microbials without extens ive consultation with and interpretation from the Agency. Additi onally, the current regul ations (part 161) for antimicrobials no longer reflect th e state of the science of risk assessment, thus leading to frequent consultations and incomplete submissions , which lead to increased transaction costs for industry and the Agency to identif y the appropriate data require d. Clearer, more transparent information to applicants should help to clarif y the data required for a regulatory decision.

Therefore, after the promulgation of th e data requirements in 158W, specific to antimicrobials, data submissions to EPA are more likely to contain the data needed for EPA to make regulatory decisions. Future consultations will be better focused, for example, on how to fulfill a particular data requirement, or how to conduct a specific study rather than on what studies to conduct. Focused consultations will help reduc e the burden on the regulated community associated with understanding and submitting complete submission packages to EPA.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

8 

### 2.3 Overview of the Rule

Although this rule concerns only data requireme nts for antimicrobials, it is part of a larger effort to update and improve all of the data requirements in 40 CFR part 158. Since the data requirements set out in the original part 158 (now part 161) we re first published in 1984, every disciplinary area and requirement has been reconsidered and revised by EPA in practice. These changes have been needed because th e state of the science underlying the data requirements has advanced, and because the Agen cy has learned in many specific registration actions that additional or differe nt data are necessary to make sound regulatory decisions. These case-by-case decisions to impose additional data requirements have been made in accordance with current §161.75, which allows the Agency to impose additional data requirements beyond EPA’s codified data requirements to insure that the pesticide meets the standard for registration; this standard is discussed in the rule preamble. The Agency has discussed its need to update the data requirements for antimicrobial pesticides in many public foru ms, such as meetings of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Scientific A dvisory Panel (SAP), a scientific peer review mechanism required by section 25(d) of FIFR A. Also, EPA made presentations at the Antimicrobial Workshops sp onsored by the Biocides Panel of the American Chemistry Council. However, these additional da ta requirements, while frequently imposed on a case-by-case basis, have not been codified through the rulemaking process.

Subpart W, which covers data requirements for antimicrobial pesticides, does not differ greatly in format from the data requirements promulgated for conventional pesticides in 2007, but does differ in the substance of the data requirements applicable to antimicrobials. Antimicrobial uses were covered in the origin al part 158 (now part 161), which was developed primarily for agricultural pesticides. Since us e patterns specific to antimicrobials were not specified in the original 1984 data requirements, part 161 often doe s not fully describe the data requirements a registrant or applicant must potentially fulfill to maintain or obtain an antimicrobial registration. Determining which da ta requirements apply to antimicrobials has at times required registrants and applicants for regist ration to engage in exte nsive consultation with and to seek interpretation from the Agency.

EPA recognizes that during early implem entation of 40 CFR Part 158W not all application packages may have all of the newl y-required data. Therefore, during early 40 CFR Part 158W implementation, EPA will accept for review and evaluation application packages that may not have all of the newly required data in appropriate cases supported by adequate justification. This early implementation peri od could extend up to two years post-promulgation for situations in which a more time-intensive new study is missing but could be less for other situations. The registrant should address the i ssue of timing (i.e., why the data are not yet submitted and when the data can be submitted) w ith respect to any missing newly-required data, in their justification.

Products Covered by This Rule

This rule is intended to apply to:

 Antimicrobial pesticides, as defined in FIFRA sec. 2(mm)

 Pesticide products for antimicrobial uses in or on food or feed*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

9  Antifoulant coatings and paints

 Wood preservatives

 Pesticide products intended to be manufactured into the above.

Although wood preservatives, and antifoulan t paints and coatings bearing nonantimicrobial claims are excluded from the defi nition of “antimicrobial” in section 2(mm), the environmental and health concerns raised by the us e of these pesticides are the same, whether or not a wood preservative or antifoulant is intended to control or ganisms other than microbiological organisms. In this rule, the Ag ency is collectively referring to antimicrobial, antifoulant coatings and paints, and wood pr eservative pesticides, as antimicrobials.



### 2.4 Statutory Authority for the rule

This action is issued under the authority of sections 3, 4, 5, 10, 12, and 25 of The Federal Insecticide, Fungicide and R odenticide Act (FIFRA) as ame nded (U.S.C. 136-136y) and section 408 of The Federal Food, Drug and Cosme tic Act (FFDCA) (21 U.S.C. 346a).

A. FIFRA
Under FIFRA, every pesticide product must be registered with EPA or specifically exempted from registration before being sold or distributed in the United States. Under FIFRA, an applicant for registration or registrant must demonstrat e that, among other things, the pesticide product will not cause “unreasonable adverse effects” to humans or the environment. This safety determination requires the Agency to consider any risks of th e use of the pesticide and weigh this against any benefits. EPA must determine that the standard for registration contained in FIFRA is met be fore granting a registration.

1. Registration. Section 3 of FIFRA contains the requirements for registration. Specifically, FIFRA sec. 3(c)(2) provides EPA br oad authority, before and after registration, to require scientific testing and submission of the resulting data to the Agency by registrants and applicants for registration of pesticide products. An applicant for registration must furnish EPA with substantial amounts of data on the pesticide, its composition, toxicity, potential human exposure, environmental propertie s and ecological effects, as we ll as information on its efficacy in certain cases. Although the data requirement s are imposed primarily as a part of initial registration, EPA is authorized und er FIFRA sec. 3(c)(2)(B) to re quire a registrant to develop and submit additional data to maintain a registration.

2. Reregistration. FIFRA sec. 4 requires that EPA reregister each pesticide product first registered before November 1984. This date wa s chosen based upon the fact that pesticides registered since 1984 were subject to the pa rt 158 requirements of the 1984 regulation. Reregistration is considered complete for activ e ingredients since all of the Registration Eligibility Decision Documents have been signed. However, both confirmatory Data Call-Ins (DCIs) for active ingredients and product specific DCIs for produc t level data continue to be issued.

3. Registration Review. The Food Quality Protection Act mandated a new program: registration review. Changes in science, public policy, and pest icide use practices occur over*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

10 time. Through the new registration review program , the Agency will periodi cally reevaluate all registered pesticides to assure that they c ontinue to meet the statutory standard of no unreasonable adverse effects. In 2006, registration review began to replace EPA’s reregistration program. The scope and depth of the Agency's revi ews will be tailored to the circumstances, so reviews will be commensurate with the complexity of the issues associated with each pesticide.

B. FFDCA

FFDCA mandates that EPA determine the leve l of pesticide chemical residues in food and feed that will be safe for human consump tion. The safety standard set under FFDCA sec. 408(b) and (c) defines safe as “a reasonable certai nty that no harm” will result from exposures to pesticide chemical residues. The aggregate a nd cumulative exposure assessment requirements in FFDCA sec. 408 dictate the broad nature and scop e of EPA risk assessments under this provision and the types and amounts of data needed to dete rmine that the FFDCA safety standard is met.

Under FFDCA sec. 408, EPA is authorized to establish tolerances fo r pesticide residues in food and feed, or to exempt a pesticide from the requirement of a tolerance, if warranted. References to tolerances include tolerance exem ptions since the standards and procedures for both are the same. The new safety standard ap plies to tolerances in a number of regulatory situations, including:

• Tolerances that support registration under FIFRA; • Tolerances for imported products which are established to allow importation of pesticide-treated commodities, but for which no U.S. registration is sought; • Time-limited tolerances which are established for FIFRA sec. 18 emergency exemptions; and • Temporary tolerances established for e xperimental use permits under FIFRA sec. 5.

C. Linking FIFRA and FFDCA safety standards

Under FIFRA sec. 2(bb), a pesticide use th at results in residues in food that is inconsistent with, or does not meet, the FFDCA sec. 408 safety standard poses an "unreasonable adverse effect" under FIFRA that precludes new or continued registration. Given this linkage between registration and tolerances, it makes sens e for EPA to define data requirements for both purposes: the data required to support a determ ination of “reasonable certainty of no harm” under FFDCA are, as to pesticide us es that result in residues in f ood, an integral part of the data needed for an “unreasonable adverse effects” de termination under FIFRA. Consequently, when promulgated, these data requirements would enco mpass the basic data requirements for both registration and tolerance-setting determinations . EPA will retain its authority to require additional data on a case-by-case basis.



### 2.5 Current Regulation

The requirements for antimicrobials were form erly listed in part 158 of Title 40 of the Code of Federal Regulation (CFR). In 2007, EPA promulgated final rules establishing new data requirements for conventional pesticides, biochemi cal pesticides and microbial pesticides. As part of those actions, EPA preserved the original (1984) part 158 data re quirements to provide regulatory coverage for antimicrobial pesticid es until the Agency could promulgate a final*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

11 regulation. To accomplish this, EPA transferred intact the original 1984 data requirements of part 158 into a new part 161, enti tled “Data Requirements for Antim icrobial Pesticides.” Part 161, which applies only to antimicrobial pesticides , contains the existing data requirements for antimicrobial pesticide chemicals, and will be removed as part of codifying part 158W.



### 2.6 Description of the Part 158 W Rule

In 40 CFR part 161 data requirements for antim icrobials are specified. The final rule codifies current practices, expa nds some data requirements be yond current practices, and adds some new requirements. The data requirements are organized by scientific discipline. The specific data required within each data category depends on various factors, including the use pattern and type of registration action as described below.

A. Data Requirements by Discipline

When registering an antimicrobial product, th e applicant must subm it data to support the registration, as specified in 40 CF R part 161. Table 2-1 lists the ei ght disciplines of data that may be required, depending on the ty pe of product being registered.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

12 Table 2-1: Data Disciplines
DATA DISCIPLINE DESCRIPTION Nontarget Organism Tests of the effect s of the product on mammalian, avian, and aquatic animal species are required to determine whether the product poses an ecological hazard to animals that may come in contact with the product. Nontarget Plant Protection Tests of the effects of the product on plant species are required to determine whether the product poses an ecological hazard to plants that may come in contact with the product. Environmental Fate Information on the trans port and dissipation of the chemical in water, air, and soil is required to determine whether the product persists in the environment and where it is likely to concentrate. Toxicology Tests of acute, subchronic, a nd chronic toxicity and carcinogenicity are required to determine whether the product may pose a hazard to humans. Information on metabolism of products in the body may also be required. Human Exposure Because individuals may be exposed to the product both during application of the product and afte r application, information about possible dermal and inhalation expo sure as well as information on how the product is used is required for registration. Product Chemistry Tests of product identity and composition, delineation of methods of analysis, and tests of physic al and chemical properties are required to identify the product. Residue Chemistry To determine whether the chemical may be found in plants, livestock, and fish that may be used for food, a variety of information may be required, incl uding a proposed safe level in food. Product Performance Products must maintain a specified level of pe rformance or efficacy associated with the claims made on the product label, which is generally defined as a specified pe rcentage of organisms that the product must kill. Tests to dete rmine whether the product meets the specified level of perf ormance are required.

B. Data Requirements for Antimicrobials by Use Pattern

A significant change in this rule from the ex isting data requirements in part 161 is the introduction of 12 use patterns sp ecific to antimicrobials. In the proposed rule the Agency discussed that these 12 use patterns have been in use for some years. Having use patterns specific to antimicrobials makes it easier to determine which requirements apply to which antimicrobial products. The 12 use patterns are ba sed on similarity of use, purpose, pesticidal function, the nature of the exposur e, and/or, in some cases, applic ation methods. Since there is much variety in pesticide chemistry, exposure, and hazard, the requirements are designed to be flexible. Test notes to the da ta requirements tables explain th e conditions under which data are typically needed. Essentially, the data requirements identify the questions that the applicant will*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

13 need to answer regarding a pesticide product before the Agency can make its registration decision. The 12 use patterns are as follows:

1 . Agricultural premises and equipment . This use pattern includes many indirect food uses with mostly indoor use sites.

 farm and farm animal premises such as animal houses and pens (including milk houses), parlors, stalls, and barns

 equipment such as forks, shovels, scrape rs; halters, ropes, other restraining equipment; racks, mangers, feeders, waterers, troughs, and fountains

 food handling equipment such as milking equipment.

2. Food handling/storage establishm ents, premises, and equipment . This use pattern also includes many indirect food uses due to the treatm ent of food contact surfaces, and the resultant human exposures. All use sites are indoor.

 food or feed processing plants

 eating establishments such as restaurants and cafeterias

 food storage or distribution facilities

 commercial transportation vehicles, shipping and storage containers

 food or feed stores and markets

 vending machines.

3 . Commercial, institutional and i ndustrial premises and equipment. This use pattern includes non-food contact areas of commercial sites. Typically antimicrobial pesticides would be applied to ceilings, doors, door knobs, fixtures, floors, light sw itches, stairs, walls, windows, and woodwork as part of routine cleaning practi ces. This use pattern includes both indoor and outdoor uses. Some of the uses have the potentia l for significant exposure due to the repetitive nature of certain exposures, and therefore may be considered as high human exposure.

4 . Residential and public access premises. This use pattern includes mostly nonfood areas, although it includes f ood handling areas in homes. Some of the uses have the potential for significant exposure due to the re petitive nature of certain ex posures, and therefore may be considered as high human exposur e. Most uses are indoor.

 premises, contents, and equipment of homes, apartments, mobile homes and shelters

 public areas, public buildings, or public rooms.

 commercial kennels, or living qua rters of pets, zoo animals, race horses, or laboratory animals.

5 . Medical premises and equipment. This use pattern is considered to be indoor nonfood. Some of the uses have the potential for repeated exposure and therefor e may be considered as high human exposure. This includes medical wa ste, which is defined as any solid waste that is generated in the diagnosis, treatment, or immu nization of human beings or animals, in research pertaining thereto, or in the pr oduction of biologicals including but not limited to culture and stocks, pathological wastes, human bl ood and blood products, and sharps.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

14  hospital or medical environments such as cl inics, dental offices , nursing homes, sick rooms, morgues, and veterinary clinics

 non-critical medical equipment such as bedpans, basins or furniture.

6 . Human drinking water systems . Human drinking water systems include any methods used to provide potable water from raw water supplies. This use pa ttern is considered to be high exposure due to the potential for human exposures via drinking water, as well as dermal exposures to the treated water.

 public water systems

 individual water systems

 emergency water systems

 water purifier units

 individual water systems (private wate r systems of individual homes, farms, institutions, camps, resorts, and industrial plants).

 emergency water systems for the public, camp ers, travelers, military and fishermen.

7 . Materials preservatives . Materials preservatives are antimicrobial chemicals added during industrial processes to prevent the growth of micro-organisms. This use pattern includes food and non-food, and indoor and outdoor uses.

8 . Industrial processes and water systems . Certain antimicrobial chemicals, known as microbiocides, are used to control the growth of bacteria, fungi, and algae in water systems. For “once-through” systems, the wate r is not re-used, and is theref ore released into the aquatic environment or a wastewater treatment plant af ter a single cycle through the system. However, for many uses of water in industr ial plants, the treated water is re-used repeatedly within the system, recirculating in the system multiple times until released into the aquatic environment or a wastewater treatment plant. Both “once-thr ough” and recirculating water systems have the potential for environmental exposure when the tr eated water is released to the environment.

9 . Antifoulant Paints and Coatings . Antifoulants are coatings and paints applied to boat hulls and bottoms, crab and lobster pots, and unde rwater structures or equipment to control the growth of freshwater or marine fouling organisms. Antifoulant coatings have the potential for high environmental exposure most particularly fo r marine environments. Included within this use pattern is ballast water, that is, the water that is pumped in and out of the ballast tanks as the ship’s weight changes due to loading and unloading of cargo.

10 . Wood preservatives. Wood preservative products are those which claim to control wood degradation problems due to fungal rot or decay, sapstain, molds, or wood-destroying insects. This use pattern has th e potential for high exposure fo r both humans and the environment with mostly outdoor use sites. Certain uses can be food uses. The types of wood, and the products that can be manufactured with this treated wood include:

 freshly cut logs or lumber

 seasoned building materials*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

15  utility poles, fence posts and rails

 structural members

 structures and dwellings

 transportation vehicles (truck beds and support structures)

 crop containers

 lawn furniture and decks

 playground equipment

 garden/landscape timbers

 log homes.

11 . Swimming pools . Products in this use pattern tr eat the water systems of swimming pools, jacuzzis and hot tubs for control of bacteria or algae. This use patt ern is considered to be high human exposure. Under routine use little or no environmental exposure is expected, as the water in these pools, jacuzzis or hot tubs is considered to be separated from the natural environment. However, if draining is neede d, depending on the volume of water and the location of the pool or hot tub, it is possibl e that the waters could drain into a storm-drain or directly into soil.

12 . Aquatic areas . Products in this use pattern are designed to control or kill slimeforming bacteria, fungi, or algae in lakes, ponds, streams, drainage ditches and other bodies of water. In addition to the poten tial for environmental exposure, there is the potential for human exposure via drinking water if the intake pipe for a drinking water treatment plant is in a treated body of water or downstream from that body of wate r, or through recreational activities such as swimming. Treated water could also be us ed in crop and/or li vestock production.

In response to comments, EPA notes that it is no longer using the terms “high human exposure” and “low human exposure” as table h eaders for the Antimicrobial Toxicology Data Requirements Table. Nor is EPA using the te rms “high environmental exposure” and “low environmental exposure” as table headers for the Antimicrobial Nontarget Organism Data Requirements Table, the Nontarget Plant Pr otection Data Requirements Table, or the Environmental Fate Data Requirements Table. However, EPA also notes that terms such as “high human exposure, “low human exposure, “high environmental exposure” and “low environmental exposure” can be appropriate when discussing a particular antimicrobial use. A statement that a particular use results in, for example, “high environmental exposure” provides information and alerts the reader that more data is likely to be needed, rather than less data.

C. Data Requirements by Type of Registration Action

In addition to differences in the site where an antimicrobial pesticide is used, a second reason that data requirements may differ depends on the type of registrati on being sought. Table 2-2 shows how registrations are gr ouped in those categor ies that are relevant to this EA.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

16 Table 2-2: Types of Registrati on Actions and Descriptions

TYPE OF REGISTRATION DESCRIPTION

New Active Ingredient An application for re gistration of a new product that contains an active ingredient that is not included in any currently registered product. Major New Use An application for regi stration of a new product that includes a proposed or additional use patt ern that is not currently registered for one or more activ e ingredient(s) contained in the product. “New use” is defined in 40 CFR 152.3. Major New Use Amendment An amendment of an existing product regist ration that includes a proposed or additional use pa ttern that is not currently registered for one or more activ e ingredient(s) contained in the product. “New use” is defined in 40 CFR 152.3.

There are other categories, which are not expe cted to incur costs unde r this rule, such as me-too registrations. Me-too regist rations are products that are ve ry similar to products that are already registered and can cite the data of those existing products.

D. Registration Review

The economic analysis that supported the pr oposed rule for 158W data requirements focused on new pesticide registrations. Howe ver, based on comments received, EPA has now estimated the additional data cost s in registration review, which is the process of periodically reviewing currently registered pe sticides to assure that they continue to meet the statutory standard of no unreasonable adverse effects.

When registration review was proposed, EPA prepared an economic analysis of that program. The registration review EA estimate of data requirement costs for existing antimicrobial pesticides was based on what would likely be required for a sample of antimicrobial active ingredients including all test s that have been required in current practice whether or not in 40 CFR 158. However, pa rt 158W includes new te sts, which were not anticipated when the economic anal ysis of the registration review process was completed. This final economic analysis for part 158W addresses th e additional data costs associated with these new tests in Chapter 6 of this economic analysis.



### 2.7 Types of Data Requirement Changes in the Rule

Since 1984, when 40 CFR part 158 (current 40 CFR part 161) was first promulgated, EPA’s data requirements have evolved along with the general scientific understanding of the potential hazards posed by pesticid es. In the final rule, EPA is:

1. Adding newly codified data requirements, whic h are not currently esta blished in part 161, but are considered in current practice on a case-by-case basis. 2. Changing some of the existing data requirements such as a change from conditionallyrequired to required, a change in the number of test species, or expanding the number of use patterns for which the test is required.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

17 3. Adding new data requirements, which have ne ver been required or have rarely been required in current practice, on a case-by-cas e basis, and have not been routinely considered during the Agency’s evaluation of the data needed for the purpose of risk

assessment. 4. Eliminating the requirement for the chronic non -rodent study currently established in part 161.



## 3 Regulatory Options

The Agency compared the costs and benefits of the three options in order to determine the most appropriate approach. The goal is to arrive at a structur e and process for data requirements so that the Agency receives su fficient data to inform the decision for any registration action, while not imposing unnecessary impacts on pesticide registrants. These impacts include the direct cost of generating the data as well as less tang ible costs brought about by uncertainty in registration requirements. The three options are as follows.



### 3.1 Selected Option—Final Rule

The Agency is updating its regulations by:

 Adding newly codified data requirements, whic h are not currently esta blished in part 161, but are considered in current practice on a case-by-case basis.

 Changing some of the existing data requirements such as a change from conditionallyrequired to required, a change in the number of test species, or expanding the number of use patterns for which the test is required.

 Adding new data requirements, which have ne ver been required or have rarely been required in current practice, on a case-by-cas e basis, and have not been routinely considered during the Agency’s evaluation of the data needed for the purpose of risk

assessment.

 Eliminating the requirement for the chronic non -rodent study currently established in part 161.

A. Benefits
The final rule will enhance EPA’s ability to make sound regulatory decisions and help prevent the registration of pesticide products that may have unreasona ble adverse effects on human health and the environment. The Agen cy believes that having the appropriate data ultimately leads to better risk management decision s due to more realistic risk estimates that use fewer conservative assumptions. This option wo uld be more efficient than the current 40 CFR part 161, because the data requirem ents, specific to antimicrobial s, would be known in advance, specifically as they apply to antimicrobial pest icides, thereby reducing uncertainty and possible delay in generating and submitting required data. By codifying these data requirements, many of which are currently applied on a case-by-case basis, the antimicrobial indu stry can, along with other partners in the regulate d community, attain a better un derstanding of and can more efficiently participate in the pesticide registrati on process. The clarity derived from having data requirements specific to antimicrobials may be esp ecially important to small firms and new firms entering the industry who may have less experience dealing with EPA than the larger firms or those firms that routinely work with the Agency.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

18 Data provided under the new requirement s are intended to lead to increased understanding of the potential for exposure as well as the chemical and toxicological properties of pesticides. By adding new requirements, the Agency can evaluate risks that had not been previously identified, and use the registration process to mitigate these risks. EPA is using a tiered approach. If the lower-tiere d data indicate a need of furt her data to resolve the issues raised by the results of the lower-tiered study(ie s), the Agency will require higher-tiered data (indicated in the tables as CR – conditionally requ ired) when appropriately triggered. Such an approach works to provide EPA with the data ne eded to add significant information and value to the decision, while ensuring that the registration meets statutory safety standards, and without automatically requiring the generation of higher-t iered data without consideration of factors which may negate the need for a study.

B. Costs
Under the option (the final rule) the incremental cost fo r the part 158 subpart W data requirement changes for an average of 15 antimicr obial registration actions per year is estimated at $8.2 million 2 per year as explained in Chapter 5. The average increm ental cost per registration action is about $549,000 3 . The average incremental cost per firm having a registration action during 2000 – 2005 would have been about $722,000 4 over this six-year period.



### 3.2 Codification of Current Practices

This option codifies the Agency’s current prac tices, and is similar to the selected option except it does not include new requirements and changes in existing requirements, which the Agency does not currently impose.

A. Benefits

Like the selected option, this option would be more efficient in terms of process than no new rule at all, because most of the data requirements would be known in advance, thus avoiding delays in generating and submitting data. Howeve r, this option would not provide EPA with all data that the Agency has found to be necessary to understand and measure the potential risks to human health and the environment from exposure to antimicrobial pesticides. Since EPA would not have codified data requirements for all da ta needed, there would be fewer benefits as compared to the selected option.

2 The incremental cost is the cost of the data requirements under the final rule, $19.3 million, minus what they were under the baseline (part 161), $11.1 million.

3 The annual incremental cost of the rule divided by an average of 15 registration actions per year.

4 The incremental cost of the rule divided by 64 firms that had registration actions, 2000-2005.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

19 B. Costs
The incremental cost, which is the differen ce between the baseline (part 161) and current practice, for this option is estimated in Chapter 5 to be about $1 million per year for the industry (Table 5. 8 7 ). This cost is small, relative to th e selected option, because many of the newly codified studies required under the selected opti on have not been required in current practices.



### 3.3 Conventional Data Requirement for Antimicrobial Pesticides

The other option the Agency analyzed is to require that conventional pesticide data requirements be extended to antimicrobial pesticides.

A. Benefits

To simply adopt the conventional requirement s would impose a situ ation much like the status quo. Data requirements w ould not be well adapted to the antimicrobial use patterns, and applicants would continue to have difficulty in interpreting the requirements. The Agency would continue to consider the differences between conventional use patterns and antimicrobial use patterns, and specify how the data requirements apply to antimicrobial pesticides on a case-bycase basis. This option would be less efficient than the selected option and the low cost option because the data requirements would have to be interpreted for the applicability to antimicrobials.

B. Costs
This option is evaluated for the average cost of a single registrati on action of a new active ingredient for the groupings defined in Table 5-3. EPA does not have information on the total costs for registration actions for major new uses and amendments for co nventional pesticides, because the economic analysis for the rule on th e data requirements for conventional pesticides, part 158, (EPA, 2007) only estimated the incremental co sts, not the total costs. The costs of data requirements for conventional pesticides are typi cally much higher than those for antimicrobial pesticides because conventional pesticides typi cally have outdoor uses and food uses which require a much more extensive set of data require ments at higher test costs. For instance, the cost per registration action of a new antimicrobi al pesticide active ingr edient would average under the rule about $1.5 million for lower e xposure uses, and about $4.8 million for higher exposure uses, while for a conventional pesticide th e cost for a new active ingredient registration ranges from about $4.4 million to $12 million (EPA, 2007).*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

20 

## 4 Profile of the Regulated Community

The objective of this profile of the regulated community is to provide data for analyzing the economic impacts of the rule on the indus try. Data on revenues, both by firm and by product, are reported in this profil e. To be consistent with the guidelines for the Small Business Regulatory Enforcement Fairness Ac t (SBREFA) analysis, this profil e reports data at the highest level of multi-layered corporate organizations, called the parent or “ultimate” firm.

Data from EPA’s Office of Pesticide Programs Information Network (OPPIN) and financial data from Dun & Bradst reet (2006) were used in this analysis. EPA used the Dun & Bradstreet (D&B) Market Spectrum database to obtain firm size and financial data for our analysis of the impacts of the rule on indivi dual firms (Dun & Bradst reet, 2006). D&B is a comprehensive source of financial information on entities, including firm locations, sales, and primary business classifications under North Amer ican Industrial Classi fication System code (NAICS). Antimicrobial firms fall under a wide variety of industrial activities, as currently indicated by the NAICS codes.



### 4.1 Size of the Antimicrobial Industry

EPA identified 846 companies having one or more FIFRA Section 3 or FIFRA Section 24(c) antimicrobial pesticide registrations in EPA’s OPPIN database in 2007. Companies with the same parent companies were consolidated and treated as one. EPA estimates that there are about 750 unique parent antimicrobial firms. The Small Business Administration (SBA) definition of company size is based on annual sales and the number of employees. This definition of size varies with a company’s NAICS code. Based on the SBA definition of a small business and the Dun & Bradstreet company data , EPA estimates that approximately 67% (500 out of 750) of the firms are small businesses.



### 4.2 Firms with Registration Actions (2000-2005)

From 2000 through 2005, EPA estimates that 72 pa rent companies submitted registration actions, of all types, for antimicrobial pesticid es. Of the 72 registrants, sales and employment
data were available from the D&B database for 57 parent companies. Th e distribution of the 57 antimicrobial registrants according to the NAI CS codes is presented in Table 4-1.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

21 Table 4-1: Distribution of Antimicrobial Registrants According to the NAICS Code

NAICS Code Sector Description Number of Parent Companies 325 Chemical Manufacturing 29
424 Merchant Wholesaler s, Nondurable Goods 7 423 Merchant Wholesalers, Durable Goods 4 333 Machinery Manufacturing 2 326 Plastics and Rubber Products Manufacturing 2
Other Sectors * 11 None given 2

Total 57

Source: Calculated from 2006 Dun & Bradstreet data and EPA OPPIN database. *These eleven sectors include a variety of manufacturing sectors such as wood products, and of support sectors such as building material and fuel suppliers.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

22 

### 4.3 Estimation of the Number Fi rms Impacted by the Rule

While the above sample of 57 antimicrobial parent firms was used to characterize the antimicrobial industry that ha s had registration actions from 2000 to 2005, it does not indicate how many firms are likely to be impacted by the ru le. Some types of registration actions do not
incur data costs or can involve citation of data from other registration actions.

In the time period for which EPA has availa ble registration data (2000 to 2005), there were 72 firms that had registration actions of all t ypes. Of these 72 firms, EPA estimates that 64 parent firms had antimicrobial registrations that woul d have incurred additional costs under the rule because these were registrations of new ac tive ingredients, major new uses, and major new use amendments. (The other eight registration actions were the type that would not incur additional data costs.) Of the 64 firms, EPA coul d determine the size of 41 firms, of which 16 or 39% are small. Projecting this proportion to al l 64 firms, EPA estimates that 25 firms incurring registration costs due to the rule meet the SBA definition of a small business.

Table 4-2 breaks down for those 41 antimicrobial firms that could be sized by large and small categories, and reports their average and to tal annual revenue, and their average number of employees.

Table 4-2: Antimicrobial Pr oduct Registrants: Number of Firms and Revenues in the Large and Small Categories Entity Size

Category
SBA-Defined
Sizes* Total Companies

(number) Total
Revenue for
All Companies

(millions) Average
Revenue

per Company (millions) Average
Number of Employees per Company (number) Large 25 $514.6 $20.6 31,567 Small 16 $0.5 $0.03 45 All firms 41 $515.1 $12.6 19,266

Source: Calculated from 2006 Dun & Bradstreet data and EPA OPPIN database. *The definition of the size categories is determined by each company’s NAICS code. See Table 4.1.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

23 

## 5 Economic Impacts on Pesticide Registrants Due to Change in Data Requirements

This chapter describes the data requirement s and method used to assess the incremental cost of compliance with the rule for new registrations. This analysis was done in the following six steps:

Step 1 Determine the expected cost of each data requirement Step 1a. Determine the unit tests costs of each data requirement Step 1b. Determine the probability (percent of registration actions that tests are likely to be required) of the data requirements per registration action Step 2. Determine the expected costs per registration action Step 3. Determine the expected incr emental costs per registration action Step 4. Determine the incremental industry-wide impacts Step 5. Determine the average incremental impact per firm Step 6. Determine the incremental impact per small firm as a percent of sales

The unit test costs (Step 1a) are multiplied by the probability of the data requirements (Step 1a) to estimate the expected cost of each data requirement (S tep 1). The expected costs of all the data requirements are summed to estimate the expected costs of registration actions (Step 2) for each type of action and use pattern. The expected costs of registration actions for the baseline are subtracted from thes e costs as required by the rule to estimate the incremental costs per registration action (Step 3). The incrementa l costs per registration action are multiplied by the number of registration actions per year for th e industry to get the industry-wide incremental impacts (Step 4), which is divided by the number of firms to get the average incremental impact per firm (Step 5). The incremental costs per sma ll firm are divided by the firms’ sales revenue to estimate the distribution of incremental impacts per small firm as a percent of sales revenue (Step 6), which is disc ussed in chapter 7.

Greater detail on the methodology is in the rest of this section, as well as Sections 5.1 through 5.5 for Steps 1 – 5. Section 5.6 presents the analysis of the applicator exposure data costs, which are estimated using two different methods.

Further Explanation On How Data Requirement Costs Are Calculated

The expected annual cost of a data requireme nt to the industry for a use and registration type (new active ingredient or major new use) is the product of three factors: unit test cost, test probability, and the number of regist rations in the industry per year for the registration type and use. That is:

Industry Cost of a data requirement = Unit test cost x test probabi lity x number of registrations*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

24 These costs are summed for all data requireme nts, uses, and registration types to get the total annual cost of the data requirements for the industry. The terms used here are explained as follows:

Data requirement —specific information, typi cally the results of a specified test, that is required under specified conditions. Unit test cost —the cost of performing a test to fulfill a data requirement. Test probability —the probability of the test being required for a registration. This probability varies by the type of regi stration and by the pesticide use. Use —the use to which an antimicrobial is applied, such as food, nonfood, industrial, antifoulant, and wood preser vative. See Table 5-3. Registration type —new active ingredient, major new use registration or amendment. See Table 2-2. Number of registrations in the industry per year for the registration type and use.

The method of cost calculation is explained more precisely in the following steps:

Step 1. Expected cost of a data requirement = unit test cost × test probability.

C X Dur = T D × P X Dur
where C Dur = the expected cost of data requirement D on use pattern u for registration type r.
T D = the unit test cost of data requirement D.
P Dur = the test probability of data requiremen t D for use pattern u and registration type r. Superscript X refers to: R for rule; C for current practice; B for baseline.

Step 2. Expected cost of a registration action = the sum of the expect ed cost of data requirements.
R X

ur = ∑ C X Dur where
R

ur = the expected cost of a registration acti on for use pattern u and registration type r. ∑ C Dur = the sum of the expected costs of all data requirements for use pattern u and registration type r.

Step 3. Incremental cost of a registra tion action = the cost of the re gistration action according to the rule minus the baseline co st of the registration action.

Δ R ur

= R R

ur − R B

ur where The prefix Δ refers to incremental: Δ R ur

= the expected incremental cost of R ur . R R

ur

= the expected cost of R ur according to the rule.
R B

ur = the expected cost of R ur according to the baseline, CFR part 161.

Step 4. Incremental industry-wide cost of the da ta requirements = the sum of the data requirements for all registra tion types and use patterns.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

25 Δ A = ∑ ( Δ R ur × N ur ) where Δ A = Incremental antimicrobial industry- wide cost of the data requirements
N ur = the number of registrations for the industry on use patter n u for registration type r. ∑ ( Δ R ur × N ur ) = the sum of the expected incremental co sts of all registration actions for all use

patterns and registration types.

The following alternative way to calculate the in dustry-wide cost provides the number of tests and cost of each data requirement for the industr y per year while providing a check on the above calculation:



### θ D = ∑ ( P Dur × N ur )

A R = ∑ ( 

### θ D × T D ) where 

### θ D = number of tests required for da ta requirement D in the industry ∑ ( P Dur × N ur ) = the sum of the expected number of te sts for all use patterns and registration types for data requirement D. A R = Antimicrobial industry-wide cost of the data requirements ∑ ( 

### θ D × T D ) = the sum of the expected cost of all the tests required in the industry for all data requirements. This calculation can also be done for the base line in order to calculate the industry-wide incremental cost of the data requirements

Δ A = A R – A B

Step 5. Average i ncremental impact per firm = incremen tal industry-wide cost of the data requirements divided by the number of impacted firms = Δ R/F, where F = the number of firms impacted. Because of the unique nature of applicator exposure studies, which are scenario specific rather than chemical specific, the method of co st calculation for these studies, explained in section 5.6, does not follow these steps.



### 5.1 Step 1. Expected Cost of each Data Requirement (C X Dur 

### )

The expected cost of a data requirement is th e unit test cost times th e probability that the test would be required.

A. Unit Test Costs (T D )

In order to demonstrate that a pesticide m eets the statutory standard for a registration, registrants must submit or cite test results or other information so that EPA can conduct appropriate risk assessments. The unit test co sts represent the costs of complying with the specific data requirements, which depend on the type of product and use pattern.

EPA has, over a period of years, surveyed te sting laboratories to obtain estimates of the cost of conducting specific studies that would be required for antimicrobial, conventional, and*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

26 other pesticides. To do this, EPA contacts fewer than 10 laboratories to obtain or update cost data for different test require ments conducted by testing labs. Laboratories were asked to identify the minimum and maximum cost for each guideline based on a set of predetermined protocols. Understanding that th e lab costs could vary considerab ly based on the study protocol chosen by the lab, EPA often esta blished two protocols, a high cost protocol and a low cost protocol, for each guideline in order to bracket the costs. To establish the protocols, EPA initially identified the various study design opt ions for each study based on the Office of Chemical Safety and Pollution Pr evention (OCSPP) guidelines. In -house labs of the registrant were not surveyed, although many of the larg er companies may have them. For-profit laboratories have significant similarities in how they cost the testing they sell. In-house laboratory costs might be lower or highe r than an independe nt testing lab.

The Agency collected low and high cost estim ates from actual testing labs for each guideline. For each data requirement, the Agency averaged the low cost estimates and high cost estimates provided by the various laboratories. The average unit test cost used in this EA is the average of the low and high average cost estimates. The estimated costs of complying with individual tests range from $233 (product identity and composition) to $1.5 million (carcinogenicity). Estimated average antimicrobial data requirement test costs are provided in Appendix C.

The estimates vary within a lab, between la bs, and the year the estimate was made. During the public comment period estimates were provided that differed from EPA’s estimates. To verify the validity of EPA’s cost estimates , EPA resurveyed labs for 30 selected data requirements. The criteria for selecting which test costs to update include how changes in estimates would impact on the cost of the rule, the magnitude of the differences between EPA’s and the estimates provided during the commen t period, and the age and source of EPA’s estimates. Table 5-1 lists the 30 tests for wh ich costs were updated, and compares the new revised estimates to the estimates used in th e economic analysis suppor ting the proposed rule. While some of these revisions decreased the cost of the tests, most were increased. The largest increase was nearly $300,000 while the largest decrease was almost $200,000. How these revisions affect the cost of the rule depends on how frequently thes e tests are required. In this analysis, these new unit test cost estimates, other test cost update s since the proposed rule 5 , plus exposure test cost revisions incr eased the incremental cost of th e rule by about 87% compared to the proposed rule. See Table 5-7 for more detail s on the effect of the revised unit test costs on the rule.

5 The Office of Pesticides Programs maintains a database of unit test costs. Individual test costs are updated as needed.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

27 Table 5-1: Revised Unit Test Costs

Test Guideline Test Name Average Unit Test Cost
Proposed Rule Revised by EPA in 2010

835 Environmental Fate
835.1110 Activated Sludge Sorption Isotherm $10,051 $19,733 835.1230 Adsorption/desorption $23,750 $42,741 835.2120 Hydrolysis $25,230 $41,938 835.2410 Photodegradation on soil (soil photolysis) $42,350 $73,979 835.3110 Ready Biodegradability $10,364 $8,667 835.3220 Porous Pot Test $41,413 $33,000
835.4200 Anaerobic soil metabolism $71,250 $150,167 835.4300 Aerobic aquatic metabolism $44,475 $102,200 835.4400 Anaerobic aquatic metabolism $80,900 $107,224

850 Ecological Effects Tests 850.1735 Whole sediment acute invertebrates - freshwater $20,250 $21,903 850.4250 Vegetative vigor, Tier II - dose response $24,500 $36,963
850.4300 Terrestrial field $111,863 $44,000 850.4450 Aquatic field $220,000 $28,500 850.5400 Aquatic plant growth (algal) Tier II - dose response $35,155 $14,426 850.6800 Modified Activated Sludge, Respiration Inhibition Test $5,126 $4,292 none Whole sediment chronic invertebrates freshwater & marine $51,350 $64,757

860 Residue Chemistry 860.1400 Irrigated crops $18,000 $87,500 860.1500 Crop field trials $163,667 $83,650 860.1520 Processed food/feed $35,000 $89,925

870 Health Effects 870.3250 90-day dermal toxicity $137,094 $132,130 870.3700 Prenatal developmental toxicity study - rat $76,844 $117,053 871.3700 Prenatal developmental toxicity study - rabbit $76,844 $166,653 870.3800 Reproduction and fertility effects $378,469 $393,307 870.4100 Chronic toxicity

- – nonrodent $950,000 $757,910 870.6200 Acute neurotoxicity

- – rat $89,596 $155,600 870.6300 Developmental neurotoxicity $406,904 $702,500

875 Occupational and Residential Exposure 875.1300 Inhalation outdoor exposure $164,286 $450,000 875.2200 Soil residue dissipation $83,125 $253,733

875.2300 Indoor surface residue dissipation $3 5,000 $75,427 875.2600 Biological monitoring $166,875 $375,000*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

28 B. Test Probabilities (P X Dur )
The probabilities or percent of actions that te sts are likely to be required were determined as follows:

1. Current Practices . These probabilities were based on a sample of 70 actual registration actions out of 90 registration actions that are relevant to this EA during the six year period of 2000 through 2005. The time period (2000 – 2005) was chosen since the analysis for this EA was started in 2006. Data indicating which tests were required were not ava ilable for the other 20 actions. Appendix A shows these requirements for a sample of new active ingredient registrations from 2000 through 2005.

2. Baseline . These probabilities are the same as current practices for tests that are in the current CFR part 161 and were inte nded to apply to antimicrobials to all or specific use patterns. If the test is not in part 161, then it is not in the baseline.

3. Final Rule . These probabilities are calcul ated from data on current EPA registration practices, an d adjusted according to EPA’s scientific judgment. To avoid underestimating the costs of the ru le, the probabilities estimated by this scientific judgment tended to be higher than those estimated in current practice. However, if the probability for a registra tion action type and use site grouping is higher for current practices, then the highe r probability from current practices is used. 6 In addition, some tests were no t required during our sample of registration actions from 2000 through 2005 according to the registration data, but are expected to be required under the rule. 7 Appendix B shows the percentage of actions for which the tests ar e likely to be required by the final rule for new active ingredients and major new use registrations and amendments under the six use-site groupings in Table 5-3.

C. Calculation of Expected Data Requirement Costs (C X Dur )
Table 5-2 below illustrates how expected data requirement costs are calculated for a new active ingredient. Since there are many data requirements for a new registration, only a few select data requirements are shown for this example. The unit test cost, T D , is multiplied by the test probability, P D , to estimate the expected co st of a data requirement, C D . These calculations are done for both the test probabilit ies expected with the rule and for the baseline to estimate the expected cost of the data requirements for the rule, for the baseline, and the difference between the two, i.e. the incremental cost.

6 For example, the 3 tests required for acute testing of avian, and freshwater fi sh and invertebrates are expected to be required 25% of the time for major new use registrations and amendments under the rule. However, the data indicate that such tests were required in current practice 37 .5% of the time for indirect food as a major new use. This 37.5% was used for indirect food use to estimate the cost of the proposed rule.

7 For example, biological monitoring for applicator exposure and post application exposure, and dermal and inhalation post application exposure were not required in current practice, but are expected to be required a small percent of the time (5-10% for most uses depending on the type of registration action) under the rule.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

29 Table 5-2. Example of Estimating Cost of Five Data Requirements

Step 1. Cost of Data Requirements New active ingredient

Test probability P D Data requirement cost C D C D = T D × P D

Guideline Data Requirement Test Costs T D Rule P R D Baseline
P B D Rule C R Baseline C B Incremental Δ C=C R

− C B 870.4100 Chronic toxicity - rodent $757,910 50% 50% $378,955 $378,955 $0 875.1500 Biological monitoring $375,000 10% 0% $37,500 $0 $37,500 850.2100 Avian acute oral toxicity $10,100 100% 50% $10,100 $5,050 $5,050 835.2120 Hydrolysis $41,938 100% 50% $41,938 $20,969 $20,969

860.1340 Residue analytical method for data collection $65,500 60% 0% $39,300 $0 $39,300 Source: Appendix B Note: Only a few data requirements are shown as an exampl e. Much more data are required for a new registration.



### 5.2 Step 2. Expected Cost per Registration Action (R X

ur 

### )

A registration action, applicab le to this EA, is an applic ation from a registrant to: 1. register a product containing a new active ingredient (AI), 2. register a new product with an existing registered AI, but with a major new use, or 3. amend an existing registration of an existing registered product to add a major new use.

To estimate the expected cost of a regist ration action, the expected cost of all data required for the type of registra tion action and use-site grouping sp ecific to the registration action are summed.

The data required for a registration action depend on several fact ors; including the end use and type of registration action. The division of end uses into 12 use patterns more precisely defines the data that will be re quired (see Section 2.6). In the data requirement tables, each data requirement for each use pattern is specified as R (required), CR (conditionally required), and NR (not required). Test notes further specify when data ar e required. Although a product may eventually be registered for several use patterns , this generally occurs as a result of multiple registration actions. During any individual registration action, th is analysis assumes that the product is registered for only one use pa ttern as determined by EPA staff.

For the purposes of this economic assessment, the 12 use patterns are organized into the six groupings as described in Table 5-3. This is because data requirements are similar within each of the six groupings and also the probability th at a test is required can be estimated with a higher degree of confidence when the estimates ar e based on a larger sample in each of the six groupings. Many of the use patterns are spl it between two or more groupings depending on exposure and other characteristics. Because th is analysis considers individual registration actions submitted to the Agency, this EA assumes that each registration action is associated with only one grouping.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

30 Table 5-3: Six Use-Site Groupi ngs for the Economic Analysis USE SITE GROUPINGS USE PATTERNS Higher Exposure Uses Direct Food Uses and Indirect Food Uses ( ≥ 200 ppb) Includes Use Patterns 1, 2, 4, 6, 7, and 12 Food uses include a) fruit and vegetable rinses, b) egg washes, c) indirect food uses with residues greater than 200 parts per billion (ppb), and d) any other uses not already specified which require a tolerance or exemption from the requirement for a tolerance. Indirect Food Uses (< 200 ppb) In cludes Use Patterns 1, 2, 4, 7, and 10 This grouping includes indirect food uses with residues less than 200 ppb.

Higher Exposure Industrial and Other Uses Includes Use Patterns 7 and 11 High exposure uses include metal cutting (metalworking) fluids and swimming pools. Wood Preservatives Includes Use Pattern 10 Uses in Use Pattern 10 include but are not limited to: 1) freshly cut logs or lumber seasoned building materials, 2) utility poles and fence pos ts and rails, 3) structural members, 4) structures, and 5) dwellings. Lower Exposure Uses Lower Exposure Industrial and Other Uses; Includes Use Patterns 1, 2, 3, 4, 5, 7, and 8

Antifoulants Includes Use Pattern 9

Table 5.4 illustrates how the expected cost of data requirements are summed to get the expected cost of regist ration actions. The cost of data requi rements in Table 5-4 are summarized by scientific discip line (rows) and registration type and us e grouping (columns). Each discipline consists of a number of individual data requ irements, where the expected cost of each is calculated as illustrated in Table 5-2, except ap plicator exposure as explained in section 5.6.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

31 Table 5-4. Expected Cost of Data Requirements (C R ) and Registration Actions (R R ) by Registration Type and Use Grouping According to the Rule ,

Source: Appendix B There were no new active ingredient registration actions for food and high exposure during the study period (2000- 2005)



### 5.3 Step 3. Incremental ( Δ R) 

### and Newly Imposed Costs per Registration Action

The incremental cost of a registration ac tion is the difference be tween the cost of a registration action according to this rule and the cost according to the baseline (CFR part 161). Similarly, the newly imposed cost of a re gistration action is the difference between the cost of a registration action according to this rule and the actual cost of the registration action in current practice (2000-2005).
The changes in data required and in the pr obabilities of the data required between the baseline and final rule and current practice and final rule are used to estimate the incremental and newly imposed costs. These changes include:

1. Newly Codified Data Requi rements: Data not required for antimicrobials under part 161, even though most of these data ha ve been currently required in practice on a case-by-case basis.

2. Newly Codified Expanded Use Pattern: In some cases, the rule increases the probability of data required in the tests currently in pa rt 161. Examples include:

a. Data not required in part 161 for certa in use patterns will be required in the rule for these use patterns.
b. Data conditionally required in part 161 would be rou tinely required by the rule for certain use patterns. The requirement s for some use patterns of some data have changed from the proposed rule affecting the te st probabilities. Registration Type: new active ingredient major new use/amendment

Use-site Grouping: Indirect Food Wood Pres AntiFoul Lo Exp Food Indirect Food Hi Exp Wood Pres AntiFoul Lo Exp Expected Cost of Data Re quirements ($1000) C R Product Chemistry $119 $44 $21 $57 $23 $34 $36 $1 $69 $32 Toxicology $3,169 $2,462 $277 $897 $134 $1,364 $426 $97 $144 $439 Applicator Exposure $187 $187 $187 $187 $169 $169 $169 $169 $169 $169 Post Application Exposure $155 $409 $99 $99 $80 $80 $80 $334 $54 $54 Ecological Effects $592 $686 $503 $83 $29 $99 $171 $124 $679 $66 Plant Protection $78 $79 $79 $19 $5 $5 $27 $27 $53 $8 Environmental Fate $501 $812 $761 $109 $58 $69 $206 $320 $613 $87 Residue Chemistry $218 $0 $0 $0 $117 $115 $5 $0 $0 $0 Efficacy $0 $0 $0 $0 $2 $0 $9 $0 $0 $1 Expected Cost of Registration Actions ($1000) Step 2. Sum of the above data requirements
Rule R R

$5,021 $4,679 $1,927 $1,451 $615 $1,934 $1,128 $1,071 $1,780 $856*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

32 c. Some current test notes specifying when data are required have been changed in a manner that expands the applicat ion of the data requirement.

3. Newly imposed data requirements: These requirements and increased probability of data requirements are a s ubset (albeit a large majority) of the newly codified data and newly codified expanded use patter n data requirements that are not currently being imposed on a case-by-case basis. The new data requirements that were proposed a nd are now being codified are:

a. developmental neurotoxicity,
b. immunotoxicity,

c. photodegradation in soil,
d. soil residue dissipation,

e. ready biodegradability study,
f. porous pot study,

g. activated sludge sorpti on isotherm study, and
h. modified activated sludge resp iration inhibition test. Since the proposed rule, based on comments received, three new data requirements have been added

i. simulation tests to assess the biodegra dability of chemicals in discharged wastewater, j. simulation test – aerobic sewage treatment: activated sludge units. and
k. nature of the residue on surfaces.

4. Eliminated: Chronic oral toxicity da ta requirement for non-rodent, which was required in part 161, is no longer required. Therefore, there w ill be a cost saving from eliminating this data requirement. Also, non-dietary ingestion exposure, which was part of the proposed 158W data requirements, has been deleted from the final rule.

5. Differences in Estimated Probabilities. The probability of the data requirements for current practice was determined by data that was actua lly required during 2000-2005. EPA reviewed this informati on and updated the probabilities for the final rule based on EPA’s scientific judg ment. Some of these differences could be caused by differences in the method of estimation betwee n current practice and the final rule, rather than newl y imposed expanded data requirements.

Table 5-5 below illustrates how expected incremental costs of registration actions are calculated by subtracting the cost of registration actions according to the rule from their baseline according to CFR part 161. The baseline and curre nt practice costs of registration actions are calculated the same way as the cost s of registration actions according to the rule as illustrated in Table 5-4 above.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

33 The bottom two rows of Table 5-5 also illust rate how newly imposed costs are calculated by subtracting the cost of registration actions ac cording to the rule from their cost in current practice.

Table 5-5. Expected Incremental Cost of Registration Actions

Source: Appendix B * According to the rule

As shown in Table 5-5, the average incremen tal cost per registration action for new AI higher exposure uses (indirect f ood and wood preservatives) are less than lower exposure uses. Even though data required by the rule for new AI registration actions cost more for higher exposure than lower exposure uses, the incremen tal costs for higher expo sure are less because most of the data that is required by the rule wa s also required in the baseline for these higher exposure uses. Since fewer data were required for lower exposure uses in the baseline (part 161), their incremental costs are higher. Furthe rmore, the chronic non-ro dent study, which costs about $758,000, was required in th e baseline for these higher exposure uses only, but is no longer required under the rule, which further re duces the additional or incremental data requirement costs imposed by this rule on higher exposure uses.



### 5.4 Step 4. Expected Industry-Wide Impacts ( ∆ A)

The industry-wide impacts were calculated by multiplying the incremental costs of the registration actions of each type and use site grouping (Step 3) by the average number of registration actions of each type and use site gr ouping per year for the industry, then summing these costs for all registration action types and us e groupings. This calculation is illustrated in Table 5-6. Registration Type: new active ingredient major new use/amendment

Use-site Grouping: Indirect Food Wood Pres AntiFoul Lo Exp Food Indirect Food Hi Exp Wood Pres AntiFoul Lo Exp Cost of Registration Actions ($1000)
Rule* R R $5,021 $4,679 $1,927 $1,451 $615 $1,934 $1,128 $1,071 $1,780 $856

Baseline R B $4,415 $4,379 $21 $759 $66 $1,437 $386 $0 $1,174 $432 Incremental: Step 3 Δ R= R R

− R B $606 $301 $1,907 $692 $549 $497 $742 $1,071 $606 $424

Current Practice R C $4,466 $4,473 $21 $759 $71 $1,437 $469 $0 $1,760 $535 Newly Imposed Costs

= R R

− R C $555 $207 $1,907 $692 $544 $497 $659 $1,071 $21 $321*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

34 Table 5-6. Calculation of Industry Cost

Source: Appendix B * Based on the actual number of registration actions of those types from 2000 through 2005.

The above calculation was also done in th e following alternative way to calculate the industry-wide number of tests and cost of each data requirement while providing a check. To estimate the number of times each test is likely to be required for all registration actions per year, the percentage of time each registration action (b y type and use site group ing) is likely to be required is multiplied by the average annual number (of that type and use grouping) of registration actions, then summed for all regi stration action types and use groups. These numbers are multiplied by the unit test costs to get the industry-wide cost of each data requirement per year

, , , and then summed over all data requirements to get the industry-wide cost of the data requirements.

The number (N) of registration and amendmen t submissions by action code was obtained from EPA’s OPPIN database, where registration actions are tracked. This analysis estimates the average annual number of registration submissions based on registration data for antimicrobial pesticides for the years 2000 through 2005.

The OPPIN database provides registration actions by action c ode, so the number of each type is known. The use site groupings relevant to each registration action were identified by staff in the Antimicrobial Di vision. In making these estimates we are assuming that the registration actions in the future under the rule will be similar to the period from 2000 through 2005.

The total annual industry incremental impact per year from baseline ($11.1 million) to rule ($19.3 million) is estimated to be $8.2 milli on per year. Newly imposed data requirements cost, which is the difference between the fina l rule ($19.3 million) and current practice ($12.1 million), is estimated at $7.2 million per year. (Table 5-7)

Table 5-7 shows total estimated industry cost per year, and compares these costs as estimated in the EA for the proposed rule, as revi sed with the new unit test cost estimates, and as estimated in this EA for the final rule. If the re vised unit test costs (Table 5-1) plus exposure and other test cost revisions since th e proposed rule were used to re -estimate the cost of the proposed Registration Type: new active ingredient major new use/amendment

Use Grouping: Indirect Food Wood Pres AntiFoul Lo Exp Food Indirect Food Hi Exp Wood Pres AntiFoul Lo Exp Incremental Cost of Registration Actions

= Δ R $606 $301 $1,907 $692 $549 $497 $742 $1,071 $606 $424 Average Number of Registration Actions per year* = N 0.33 0.50 0.17 1.17 2.00 1.83 2.17 0.33 0.17 6.33 Average Annual Incremental Industry Cost per year ($1000) $202 $150 $318 $808 $1,098 $911 $1,607 $357 $101 $2,685 Total Incremental Industry Cost ($1000) per Year = Δ A = Sum of the above row. Step 4 $8,237*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

35 rule, then the estimated cost of data require ments under the proposed rule increases by about 23%. Since these revised test cost s had almost no effect on the base line, nearly all this increase is in the incremental cost of th ese data requirements, which incr eased by about 87%. The rest of the changes in cost estimates from the proposed rule to the final rule are a result of changes in test probability estimates, the a ddition of three new tests, and th e decision to not codify a data requirement that was proposed. Since these change s increased the cost of the data requirements by another 6.6% and the incremental costs by anothe r 25%, most of the changes in cost estimates from the proposed to the final rule are a result of the revised unit test cost estimates (See Table 5- 1). The total change from the proposed to the final rule is 29% or 112% for the incremental

costs.

Table 5-7: Total Industry Cost per Year

Total Industry Cost per Year ($1,000s) Proposed Rule EA Proposed Rule EA with Revised Test Costs Final Rule EA

Baseline = BL $11,080 $11,085 $11,085 Current Practices = CP $11,726 $12,087 $12,087

Rule = R (% increase from Proposed Rule) $14,961 $18,341 (23%) $19,322 (29%)
Incremental Costs = R – BL (% increase from Proposed Rule) $3,882 $7,257 (87%) $8, 32 7 237 (112%) Newly Imposed Costs = .R – CP $3,236 $6,255 $7,235

Incremental Costs of Codification of Current Practice = CP – BL $646 $1,002 $1,002

* These costs are calculated from in Table 5-6 by multiplying the average cost per registration action by the average number of actions per year of each type and use grouping and summing for all types and use groupings.



### 5.5 Step 5. Incremental Cost per Firm

According to the EPA’s OPPIN database, 64 fi rms involved in the 90 registration actions would have experienced incremental impacts under the rule during the six-year period, 2000- 2005, and would have experienced incremental impact s under the rule. A total annual impact of $8.2 million implies a si x-year total of $ 59.2 49.4 million, suggesting an average impact per firm of about $772,000 over the six-year period. The actual impacts for each firm would vary widely depending on the registration actions for each firm.

While the six year period (2000 – 2005) is a reasonable period of time to obtain average numbers of registration actions per year, it ma y over estimate the average annual impacts per firm. Since a longer period of time would likely ca pture more firms and registration actions with impacts spread over more years, a longer peri od would likely result in less average annual impacts for some firms. This lower annual averag e impact would be true for all firms that have registration actions less fre quently than every six years*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

36 

### 5.6 Applicator Exposure Test Costs

EPA has re-evaluated the costs associated wi th generating applicator exposure data for antimicrobial pesticides. The costs were estimat ed for two different ways of generating data. The first subsection (5.6A below) estimates the costs according to the data requirements in the rule. This is the same methodology as used in th e proposed rule and is explained in detail in sections 5.1-5.5 of this final EA. Note that diffe rent test cost estimates and test probabilities were used from those of the proposed rule. Al so, this re-evaluation is only for applicator exposure, not for post-application exposures.

The second subsection (5.6B) uses a differe nt methodology that relies on the unique nature of applicator exposure studies, and the development of such data through a task force.

A. Based on Test Cost and Probabilities

The baseline in this EA is based on 40 CFR part 161. Since there are no applicator exposure tests in part 161 applicable to antimicrobials, the baseline is zero.

Under this approach, EPA assumes that each applicant would be required to generate a dermal and an inhalation study, either for indoor or outdoor, to support a re gistration action for a new active ingredient or major new use (as described in Table 5-8).*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

37 Table 5-8: Applicator Expo sure Data Requirements Cost

Guideline Data Requirement Test Costs* New Active Ingredie
nt Major New Use Average number of tests / year** Annual Cost to Industry

($1000)
875.1100 or 875.1200 Dermal outdoor exposure or Dermal indoor exposure $450,000 100% 100% 15 $6750

875.1300 or 875.1400 Inhalation outdoor exposure or Inhalation indoor exposure $450,000 100% 100% 15 $6750

875.1600 Data reporting & calculations $7,500 100% 100% 15 .0 $113 Subtotal (These tests would be covered by AEATF exposure testing) $13,613

875.1500 Biological monitoring $375,000 10% 5% 0.9 $322 875.1700 Product use information $3,000 100% 100% 15.0 $45
Total $13,980* The cost for any dermal or inhalation applicator exposure study is considered to be $450,000, based on the resurvey of the test cost for the outdoor inhalation study (Table 5-1). **Based on 15 registration actions per year (2000-2005).

The probabilities of actually generating data are likely to be much le ss, since registrants may be able to cite submitted tests generated for previous registration actions. One way to do that is to form a task force to share data as is described in the next subsection.

B. Based on the Task Force Costs

Particularly for exposure data, re gistrants often use task forces to generate data that are then cost-shared by all the task force member s. The reason cost-sharing works for exposure studies is that many of these e xposure studies are scenario-specifi c, not chemical-specific. For example, the exposure resulting from a spray ca n application could then be used for other antimicrobial registration actions that are also spra y can applications. Rather than each registrant generating data for a particular registration acti on, under the task force concept, an exposure study is a one-time cost. Data and costs will be shared by all task force members. Task force membership allows that member to access a ll taskforce-conducted studies. Additionally, taskforce exposure studies found to be adequa te may simultaneously fulfill three data requirements: dermal exposure, inhalation expo sure, and data reporting and calculations, thus further reducing costs. Histori cally, pesticide registrants have used task forces to generate exposure data. Most registrants choose to join the task force for such studies since costs are lower. However, whether a task force is organize d and whether a registrant participates in a task force can depend on case-by-case considerations. Among the potential considerations that could cause a registrant to generate their own data co uld be certain chemical classes (such as volatile chemicals) or scenarios that fall outside the range of task force data. At this time, EPA is of the understanding that the majority of regist rants will rely on task force data.

The antimicrobial industry has a history of us ing task forces to generate exposure data, which is why the number of applicator exposur e tests in current prac tice (2000-2005) was very low. The Chemical Manufacturers Association (CMA) Task Force provided the first exposure data for antimicrobials. These data we re generated from 1988 to 1992 and are now acknowledged to have many limitations.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

38 As part of its re-evaluation of several an timicrobials, in Rere gistration Eligibility Decision Documents, EPA required additional ex posure data, citing deficiencies in the CMA data. The need for additional exposure data was confirmed by EPA’s SAP in January 2007. Thus, the Antimicrobial Exposure Assessment Task Force (AEATF), sponsored by the American Chemistry Council’s (ACC) Biocides Panel, was formed to generate exposure data to support EPA’s development of improved exposure assess ments for antimicrobials risk analyses and associated regulatory decision-m aking. The AEATF has broad indus try participation (more than 40 companies) and is conducting 19 scenarios.

In this section, EPA assumes that only the AEATF will bear the burden of cost for generating exposure data. Once these exposure data are generated, registra nts participating in the task force arrangement will not have to deve lop their own applicator exposure data to fulfill the applicator dermal and inhalation exposure da ta requirements. Instead task force members can cite to the AEATF exposure data, thus fulf illing the dermal exposure, inhalation exposure, and data reporting and calculations requirements. Registrants woul d still need to submit data to satisfy post-application exposure, biological monitoring, and product use information data requirements.

The cost of AEATF applicator exposure testi ng is estimated in Table 5-9 in the following steps: 1. Determine expenditures per s cenario: The total cost to AEATF per exposure scenario is about $1.8 million, based on a June 17, 2011, letter to EPA (Shah (ACC) and Klein (CSPA)). 2. Account for overhead: Based on information in the task force governing documents, EPA understands that support/overhead costs ar e included in the stated costs. EPA assumes that at least 30% was added for overhead 8 ; therefore, we divide this cost by 1.3 to get an estimate of about $1.4 million fo r each scenario for testing cost only. 3. Multiply by number of exposure scenarios: Since AEATF is testing 19 different exposure scenarios, the to tal cost to the industry will be about $26 million. 4. Annualize costs: The $26 million is a one -time cost, since the AEATF database should replace the need for individual a pplicator exposure te sts for registrants participating in the task for ce for at least 15 years, maybe longer, based on the life of the CMA data. We assume that eventually science will advance and more advanced exposure testing will replace this testing.

a. The average annual industry cost is the total industry cost divided by 15 years, which is about $1.8 million. b. This annual cost does not take into cons ideration the time cost of money. The $26 million cost occurs early and is good fo r at least 15 years. The annualized costs are what the annual payments w ould have to be ($2.2 and $2.9 million) to pay off a loan of about $26 millio n at interest rates of 3% and 7% 9

, respectively.

8 Because the American Chemistry Counc il added 30% in their estimates of unit test cost, we assume the same proportion was added for overhead costs here.

9 The Office of Management and Budget (OMB) suggests using discount rates of both 3% and 7% to estimate present values and annualized values to represent th e social and private discou nt or interest rates.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

39 5. Estimate the average annualized cost per registration action: We estimate about 15 new registration actions (new active ingredients and ma jor uses/amendments) per year based on past history (2000-2005) to estimate the average cost per registration action. The annualized cost of about $147,000 at the 3% interest rate is most of the applicator exposure cost in Table 5-4. The difference is due to the biological monitoring test and product use inform ation not covered by the AEATF exposure studies.

Table 5-9: Applicator Expo sure Testing Cost by AEATF

Step $1000s

1 1-time cost per exposure scenario $1,800

2 1-time cost per exposure s cenario without overhead $1,385

3 Number of exposure scenarios 19
3 Industry cost $26,308

4 Time horizon – years 15
4a Industry cost per year over 15 years $1,754
4b Annualized cost @ interest rate: 4b 3% $2,204 4b 7% $2,888
5 Average number of new regi stration actions per year 15

5 Average annualized cost per regi stration action @ interest rate:
5 3% $147

5 7% $193

C. Conclusion
These two methods of estimating applicator exposure costs illustrate that there are two different ways of meeting data requirements—either individually or through a task force.

Since the task force is a more cost effectiv e way of meeting the applicator exposure data requirements and since the AEATF is generating the a pplicator exposure data th at will be used in the Agency’s risk assessments, the task force co sts are used in estimating the cost of the rule.



## 6 Registration Review

The economic analysis thus far has focused on new pesticide registrations and amendments to existing registrations. However, existing registered antimicrobial pesticides will incur data costs in registration review, which is the process of periodica lly reviewing currently registered pesticides and assuring that they continue to meet the statutory standards for registration.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

40 When registration review was proposed, EPA prepared an economic analysis of that program (EPA, 2005). The registration review EA estimate of data requirement costs for existing antimicrobial pesticides was based on what would likely be required for a random sample of antimicrobial active ingr edients that would be subject to review in the first years of the program. For each pesticide active ingredient in the sample, all te sts that could be needed to conduct a risk assessments consistent with curren t practice were identifie d, whether or not the requirement was listed in part 161. The Registra tion Review EA estimated the average cost of registration review to be over $1.7 million per chemical case, about $1 million per firm, and about $24 million for the industry per year (EPA, 2005). The Registration Review EA represents the baseline for the current analysis.

The new part 158W includes 11 new tests, which were not anticipated when the economic analysis of the registra tion review process was complete d. The data requirement costs of these new tests in registration review are estimated in this sec tion following the same steps as estimating the costs for new registration actions . The analysis is shown in Table 6-1.



### 6.1 Step 1. Expected Cost of each Data Requirement

A. Unit Test Costs

EPA used the same unit test cost estimates for the 11 new tests as was used in the new registration analysis. These costs ar e shown in Column C of Table 6-1.

B. Data Requirements per Registration (Test Probabilities).

Since these 11 tests were considered to be newly–required for the proposed rule, and were not considered as part of developing the 2005 economic anal ysis, the requirements for these tests in the first registration revi ew cycle will be the same as they are for a new registration of a new active ingredient. The probabi lities of these new tests being required are the same for all use site groupings except wood preser vatives, food and indirect food uses 10 . As these tests will be required for new active ingredients, they will not be required agai n when the new AI goes through Registration Review in the future if data requirements remain the same. That is, for each chemical, these are likely to be one-time costs. The probabilities, defined as the percentage of registration reviews for which the test is likely to be required in the near future, are shown in Columns D – F of Table 6-1.

10 We were able to reduce the six use site groupings to wood preservatives, food/indir ect food, and other, because the probabilities as estimated by EPA staff for these new test s being required are the same for all use site groupings, except:

 the soil residue dissipation and photodegradation in so il tests are required 100% of the time for wood preservatives only, and

 the nature of residue on surfaces is expected to be required 25% of registration reviews for food and indirect food uses only.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

41 Table 6-1: Estimation of Data Requirement Costs in Registrati on Review of New Tests not Anticipated When the Economic Analysis of the Registration Review Process Was Completed

A B C D E F G H Probability = % of registration reviews test is likely to be required

Test Guideline Test Name Average Unit Test Cost WoodPreservatives Food and Indirect

Food* All Other Average Number of Tests per Year Average Industry Cost per Year

870.6300 Developmental neurotoxicity study $702,500 3% 3% 3% 0.5 $358,275

870.7800 Immunotoxicity $204,400 100% 100% 100% 17.0 $3,474,800

875.2200 Soil residue dissipation $253,733 100% 0% 0% 7.0 $1,776,133

835.2410 Photodegradation in soil (soil photolysis) $73,979 100% 0% 0% 7.0 $517,853

850.6800 Modified Activated Sludge, Respiration Inhibition Test $4,292 100% 100% 100% 17.0 $72,968

835.1110 Activated Sludge Sorption Isotherm $19,733 50% 50% 50% 8.5 $167,726

835.3110 Ready Biodegradability $8,667 50% 50% 50% 8.5 $73,673

835.3220

or 835.3280

or 835.3240 Porous Pot Test

or Simulation Tests to assess the biodegradability of chemicals in discharged

wastewater

or Simulation Test – Aerobic Sewage Treatment: Activated Sludge Units $33,000 50% 50% 50% 8.5 $280,500

None Nature of residue on surfaces $95,000 0% 25% 0% 1.3 $118,750

Number of Registration Reviews per Year ==> 7 5 5 17

Average Cost per Registration Review Case $588,180 $284,217 $260,467

Total number of New Tests per Year 75

Total Annual Cost of Registration Review for these New Tests $6,840,679 * The number of food and indirect food use registration reviews is based on 28% of the sample of 90 new registration actions being for food and indirect food uses.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

42 

### 6.2 Step 2. Costs per Registration Review

The average additional cost of Registrati on Review as a result of the new data requirements in Table 6.1 is estimated to be about $588,000 for a wood preservative, $284,000 for food and indirect food uses, and $260,000 for al l other uses. These cost s are shown near the bottom of Columns D – F of Table 6-1.



### 6.3 Step 3. Incremental Costs

The baseline is the Registration Review EA. Since the 11 new tests were not considered in that EA, the cost of these new tests as estimated in this chapter are the incremental costs of this rule for registration review.



### 6.4 Step 4. Industry Wide Cost

Average annual industry registra tion review cost of these new tests can be calculated by multiplying the average cost per registration re view of each use (wood preservatives, food and indirect food, and all other) by the average number of registration reviews of each use per year, then summing these costs for all uses. EPA’s Antimicrobial Division estimates that about 17 active ingredients, of which about 7 incl ude wood preservatives as a use, (EPA, 2010 c b ) would go through registration review each year.



### Σ ( Average cost per registration review × Average number of registration reviews per year 

### ) (summed over the uses—wood preservative s, food & indirect food, & all other)

As a check and as a method to estimate the industry-wide number a nd costs of the 11 new tests, the industry cost was also calculated by multiplying the average unit test costs (Column C) by the number of times each test is likely to be required per year, (Column G), then summing for all new tests. The number of tests per year is obtained by multiplying the number of registration reviews for each use by their test pr obability and summing over all uses.



### Σ ( unit test cost × Average numbe r of tests required per year 

### ) (summed over all the new tests—Column H, Average Industr y Cost per Year)

The total industry cost of about $6.8 million is sh own in the bottom right corner of Table 6-1.



### 6.5 Step 5. Cost per Firm

The average cost for a firm for each chemical in registration review is estimated as the cost per registration review divi ded by the number of firms with re gistrations of the same active ingredient. For a single firm holding a registration for an AI, the new data requirement cost would be about $260,000

─ $588,000 for a registration review. If more than one firm held a registration for an AI, we assumed that the firms would share the data cost s of that registration review. Although they are not required to share these costs, most do. Chapter 7 will examine the impacts on small firms.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

43 

## 7 Small Business Impacts

EPA concludes that the rule will not have a significant impact on a substantial number of small antimicrobial pesticide registrants. Th is conclusion is based on our finding that the following criteria are met: Fewer than 100 sma ll businesses are likelyto experience an economic impact of 3% or more of gross sales, and less than 20% are likely to experience an economic impact of 1% or more of gross sale s. Our analytical method and conclusions are discussed below.



### 7.1 Regulatory Overview

The Regulatory Flexibility Act (RFA) of 1980 and its 1996 amendment, the Small Business Regulatory Enforcement Fairness Act (SBRE FA), require that speci al consideration be given to the effects of federa l regulations on small business en tities. The RFA and SBREFA require that a determination be made as to whether a regulation will have a significant impact on a substantial number of small entities.



### 7.2 Categorization of Small Businesses

The Small Business Administration (SBA), unde r statute, establishes the definition of a small business. The SBA has set size st andards under the North American Industrial Classification System (NAICS), using various thresholds on employee number and revenue amount, which vary by NAICS code. In determini ng the size of a compa ny, the SBA applies its standards to the parent level of a business entity. Specifically, the SBA treats a firm that has a substantial portion of its assets a nd/or liabilities shared with a pr edecessor entity as part of that predecessor entity. The SBA also makes determinations based on the primary industry of the firm. In this analysis, the firm’s primary NAIC S code is assumed to be its primary industry, and the definition of small business is determin ed by the SBA based on maximum number of employees or sales for small businesses in each industry sector, as defined by a 6-digit NAICS code. Most of the firms in this analysis are in the Pesticide and Other Agricultural Chemical Manufacturing (NAICS code 325320) i ndustry sector. Firms in this sector are considered small if they employ 500 people or fewer.



### 7.3 Estimation of the Number of Small Businesses

EPA estimates that 750 unique parent companie s constitute the total universe of pesticide antimicrobial registrants. See section 4.1. Of these, based on the SBA definition of a small business and the D&B data, EPA estimates th at 500, or approximately 67%, are small businesses.

All of the 500 small antimicrobial pesticide registrants are potentially subject to the regulations. However, based on the available an timicrobial pesticide registration data for 2000- 2005, only a small portion of these re gistrants are likely to be impact ed by the regulation. There are many types of registrations, which are not expect ed to incur costs under this rule, such as metoo registrations. Me-too registrations are produ cts that are very simila r to products that are already registered and can cite the data of those existing pr oducts. Other registrants are formulating a registered pesticid e product into a different product. In these cases, EPA provides*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

44 a “formulator’s exemption” for certain data to registrants that qualify for the exemption. They may need to provide some product information, but most of the “generic” data are generated by the manufacturer of the AI. A ny data required by those qualifying for the exemption are not likely to be changed by this rule. In the tim e period for which EPA has available registration data (2000 through 2005), 64 firms with antimicrobial registra tions would have incurred additional costs under the rule. Of the 64 firm s, EPA estimates that a total of 25 small antimicrobial pesticide registrants woul d have incurred additional co sts under the rule. See section 4.3.



### 7.4 Small Business Impacts for New and Existing Registrations

The incremental costs to antimicrobial regist rants are measured as the increase in test costs per firm between the curren t application of CFR part 161 (the baseline) and the rule. The impact of this rule is expressed as the proporti on of the average annual in cremental costs per firm to the average annual firm sales. These impacts apply to both existing registrations going through registration review and new registrations.

A. New Registrations
As stated above, EPA estimates 25 small businesses antimicrobial registrants with new registrations would have been impacted by th e regulation during the si x-year period of study (2000-2005). We assume that thes e impacts are representative of the future, although in any sixyear period of time, different firms would be impacted. For these small firms, the average incremental cost was estimated based on the number of registration actions by action code, which identifies the type of registration action for each firm, and the average estimated cost associated with each action. The data require ment costs were annuali zed by dividing by six the total costs of the registration actions for each firm during the six-year period, 2000 through 2005. Of these 25 firms, 16 firms have sales data. For each of these 16 firms, the average annual incremental cost was divided by the firm’s annual sa les revenue to estimate th e impact of the test costs as a percent of sa les revenue. The distribution of the impacts of these 16 firms is projected to 25 firms 11 . The results of the analys is are shown in Table 7-1.

Table 7-1: Estimated Small Busine ss Impacts for New Registrations

Incremental Costs as % of Sales Revenue Number of Small Firms* Percent of Small Firms*
0% 475 95.0%

> 0% 25 5.0%

>1% 23 4.7% >3% 22 4.4%

* EPA estimates that there are a total of 500 small pesticide registrants in the antimicrobial industry.

11 For example, 15 of the 16 firms had an impact (incremental cost of data requirements, 2000-2005, as a result of the rule) of over 1% of their sales revenue. Keeping the same proportion, we estimate that about 23 out of 25 firms would have an impact of over 1% of sales revenue.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

45 Table 7.1 shows that 25 small antimic robial firms (5% of the 500 small antimicrobial pesticide registrants that are subject to the rule) are likely to experience an impact greater than zero percent of their sales reve nue for new registrations. While only 5% of small firms are impacted at all, almost 90% (22 firms) of thes e impacted small firms are likely to have impacts greater than 3%, because the incremental cost of most registration actions are costly and these small firms have small sales revenue. The incremental data requirement costs for new registrations for small firms ranges from a bout $424,000 to $1 million over the six-year period (2000-2006). However registra tion review data costs for existing registrations were not considered in the above analysis, but are estimated in the next section

.

A. B. Small Business Impacts for Existing Registrations in Registration Review

The Agency did a screening level estimate of small business impacts based on the same sample of 11 antimicrobial chemical cases that was used in the Registration Review EA (EPA, 2005). As discussed in the Registration Review EA , there were a total of 24 firms that would be subject to the data requirements. Of these 24 firms, two were small by the SBA definition, and data were not available for one firm, which was assu med to be small. Sales revenue for the latter was assumed to be the average of the tw o small firms as shown in Table 7-2.

Since the assessment is screening level, we assumed the higher average cost per registration review from Table 6-1 of $588,180, associated with a wood preservative chemical. If more than one firm held a registration for a chemical case, we assumed that the firms shared the data costs.

Table 7-2: Small Firm Impa ct of Newly Imposed Tests in Registration Review

Sales Revenue of Small Firms Data Cost Number of Firms with same

chemical case Share of Data Costs % of Sales Revenue

$ 4 million $588,180 1 $588,180 14.7% $55 million $588,180 3 $196,060 0.4% $29.5 million* $588,180 1 $588,180 2.0% *Since sales revenue is not available for this firm, it w as assumed to be the average of the above 2 firms.

Table 7

- 3 is the small business impacts for new registrations from Table 7

- 1 plus the impacts for registration review from Table 7

- 2. There are a total of about 250 an timicrobial active ingredients, which would need to go through registration review in 15 years, or almost 17 per year. Most antimicrobial cases have one active ingredient. The sample of 11 cases, as explained above, and the number of firms impacted are scaled up by 50 % to approximate the number of cases in one year. We estimate the average number of small firms antimicrobial registrants impacted by registration review each year to be 4.5 (3 x 1.5), and the number of firms impacted by more than 1% to be 3 (1.5 x 2).

C. Total of New and Existing Registrations

Table 7-3 is the small business impacts for new registrations from Table 7-1 plus the impacts for registration review from Table 7-2.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

46 Table 7-3: Estimated Small Business Impacts – New Registrations plus Registration Review

Compliance Costs as % of Revenue Average per Year
New registrations Registration Review New registrations plus Registration Review

# small firms* # small firms # small firms* % small firms*
0% 475.0 470.5 94.1%
> 0% 25.0 4.5 29.5 5.9%
>1% 23.4 3.0 26.4 5.3%

>3% 21.9 1.5 23.4 4.7% * There are 500 small pesticide antimicrobial registrants. Because the numbers of small firms with any impact were scaled up from samples, (16 scaled up to 25 for new registrations and 3 scaled up by 50% for registration review) the numbers of small firms impacted are not whole numbers.

EPA conclusions in terms of the SBREFA conditions (beginning of Chapter 7) are:

 About 23 small firms antimicrobial registrants (almost 5 %) %, consisting of about 22 firms with new registrations and 1 firm with exis ting registrations(s) in registration review) are likely to experience an economic impact of 3% or more of gross sales, and

 About 26 small firms, ( over 5 % ) About 26 small antimicrobial registrants (over 5%, consisting of about 23 firms with new registra tions and 3 firms with existing registration in registration review) are likely to experience an economic impact of 1% or more of gross sales.

EPA concludes that there would not be a s ubstantial number of small entities that would incur a significant impact under the rule.



## 8 Benefits Due to Change s in Data Requirements

In this chapter, EPA provides a qualitative discussion of the benefits, which are not quantifiable in the same monetary terms as the co sts. In general, before manufacturers can sell pesticides in the United States, EP A must evaluate the pesticides thoroughly to ensure that they meet federal safety standards in FIFRA and FFD CA that were established to protect human health and the environment. EPA grants a "regis tration" or license that permits a pesticide's distribution, sale, and use onl y after the company meets th e scientific and regulatory requirements. In evaluating a pesticide registra tion application, EPA assesses a wide variety of potential human health and environmental effects a ssociated with use of the product. Applicants, or potential registrants, must ge nerate or provide the scientific data necessary to address the identity, composition, potential adve rse effects, and environmental fate of each pesticide. The information provided by the data requirements in this final rule allow EPA to evaluate whether an antimicrobial pesticide meets the applicable statutory standards.

As promulgated, subpart W is intended to im prove the scientific basis for antimicrobial*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

47 pesticide decisions. These efforts are expected to help protect human health and the environment by providing an up-to-date scie ntific framework for identifyi ng and assessing the risks of antimicrobial pesticides sold or di stributed in the United States.

Antimicrobials play an important role in public health and safety. While intended to provide health benefits of pathogen control or removal and, in some cases, safety benefits of materials preservation, they also involve risks of potential efficacy failure and exposure of hazards to humans and the environment. Ther efore, the effectiveness and proper use of an antimicrobial pesticide is determined by EPA ba sed on its evaluation of specific data that is provided as part of registration a nd registration review activities.

This final rule will enhance EPA’s ability to make sound regulatory decisions and help prevent the registration of pesticide products that may have unreasona ble adverse effects on human health and the environment. The Agen cy believes that having the appropriate data ultimately leads to better risk management deci sions, as well as provides the following other benefits:

 More refined assessments mean less uncer tainty and clearer understanding of actual risks. For example, EPA's current applicat or/user exposure data base is not comprehensive, especially regarding exposures to pesticides in indus trial and residential settings. Codifying these data requirements, many of which are currently applied on a case-by-case basis, would allow the Agency to conduct improved exposure assessments for applicators/users. This will benefit workers and consumers by allowing EPA to make better informed regulatory decisions that are neither too string ent nor too lenient.

 Clarity and transparency to regulat ed community means savings. The enhanced clarity and transparency of the information presented in part 158, subpart W will reduce uncertainty for applicants in generating and s ubmitting data that is necessary for EPA to be able to make registration decisions based on data-driven risk estim ates that use fewer conservative assumptions. Applicants may save time and money by understanding which studies are needed to support the use of their product. T hus, the antimicrobial industry will, along with other partners in the regulated community, attain a better understanding of and can more efficiently participate in the pesticide registration process. This should allow products to enter the market earlier, ther eby enabling registration of safer pesticides sooner and potentially reducing risks, as well as increasing profits. The clarity derived from having data requirements specific to antim icrobials may be especially important to small firms and new firms entering the industr y who may have less experience than those firms that routinely work with the Agency.

 EPA information assists other commun ities in assessing pesticide risks. Scientific, environmental, and health communities find pesticide toxicity information useful to respond to a variety of needs. For example, medical professional s are concerned about the health of patients exposed to pesticid es; poison control cent ers make use of and distribute information on toxicity and treatment associated with poisoning; and scientists use toxicity information to characterize the e ffects of pesticides a nd to assess risks of pesticide exposure. Similarly those responsible for protection of nontarget wildlife need*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

48 reliable information about pesticides and assurance that pesticides do not pose an unreasonable threat. These data requirements will help the scientific, environmental, and health communities by increasing the breadt h, quality, and reliability of Agency regulatory decisions by improving their scientific underpinnings.

 Better informed users mean informed risk-reduction choices. Better regulatory decisions resulting from these data requirements also mean that the label will provide better information on the use of the pesticide. A pes ticide label is the user 's direction for using pesticides safely and effectivel y. It contains important inform ation about where to use, or not use, the product, health and safety info rmation that should be read and understood before using a pesticide product, and how to di spose of that product. This benefits users by enhancing their ability to obtain pesticide pr oducts appropriate to their needs, and to use and dispose of products in a manner that is safe and environmentally sound.

 New data requirements recogni ze the unique down-the-drai n uses associated with antimicrobials. For antimicrobial chemicals that go down-the-drain and eventually reach a WWTP (waste water treatment plant), EPA intends to conduct an assessment of the potential impact of the antimicrobial chemi cal on the micro-organisms in the biological treatment processes of a WWTP and the potential for the antimicrobial chemical to pass through the WWTP in the effluent. The fina l rule will minimize costs to states and municipalities by ensuring that antimicrobial pesticide products registered under FIFRA don’t cause water quality problems or harm treatment facilities.

 This rule is a milestone towards the Agen cy’s vision for 21st Cent ury Toxicology and new integrated testing strategies. The Agency’s goal is to use 21st Century science to increase the efficiency and effectiveness of our assessment process. This rule is a launching pad for that vision.



## 8 9 Limitations and Uncertainties of the Economic Analysis

There are a number of uncertainties and limitati ons that potentially affect the results of this analysis including, but not limited to, the following:

 Unit Test Costs : Costs for guideline studies were gath ered from a limited survey of labs, and for a number of studies there is a range of cost estimates. The years when labs were surveyed also varies. The costs for some data requirements, also applicable to conventional pesticides, were surveyed in 2003 and 2005, while others were surveyed more recently, including 30 tests in 2010. In-house labs were not surveyed, although many companies use them. Their costs might be lower or higher than an independent lab. In addition, some of the data requirements ha ve multiple guidelines. Since EPA did not always know which test would be appropriate, given the wide varia tion in use patterns, EPA used the highest cost to insure the costs would not be underestimated.

 Probability of a Test Being Required: In this EA, the percentage of registration actions for which a test is required in current pract ices was estimated with the registration data from 2000 through 2005. For the rule, the Agen cy has also relied upon the scientific*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

49 judgment of EPA staff to produce estimates of how frequently newly generated guideline studies will be required to satisfy the data requirements. The percentages from the baseline were assumed to be the same as curr ent practices if the test was in the current CFR part 161 and intended to apply to antimicr obials. If the test is not in the current CFR part 161, the baseline is zero. In add ition, many of the tests in the rule have not been requested in current practice. Many of these tests are in CFR part 161, and many are not, but in either case these tests were not requested during our registration action sample period of 2000 through 2005. EPA assumed that since these tests are in the rule, the intention was that these tests would o ccasionally be required. EPA relied on the scientific judgment of EPA staff to provide a reasonable estimated percentage for these tests. However, if the probability that a test is required was greater for current practices, than what was estimated for the rule, the larger probability was used.

 Number of Future Requ ested Registration Actions : Actual future requested registration actions may not closely reflect registration data from the past six years that the Agency used as a baseline for its estimate to predict future actions. This uncertainty is a result of a number of factors including unforeseen changes in market s or scientific knowledge. Registration data from 2000 th rough 2005 did not show any trend that could be used to forecast future requested registration actions.

 Sales data : Since sales data were not available for all firm s with registrations (2000- 2005), this analysis was based on a sample a nd projected to the i ndustry. However, EPA cannot determine whether or how much the sa mple represents the total population of antimicrobial firms.

 Structure Activity Relati onship (SAR) Assessments: The Agency has begun to accept on a case-by-case basis the use of SAR techniques to fulfill certain pesticide data requirements. Because OPP has limited expe rience with these SAR techniques, EPA was not able to estimate the potential industry cost savings, but savi ngs are expected to increase over time as EPA gains experience. Therefore, the cost estimates in this document may be over-estimated.

 Cost Incidence: Because data limitations made it difficult to determine precisely when and who bears the costs of da ta requirements, several assumptions were made. EPA was not able to determine whether the net effect of these assumptions results in cost estimates that are overly concentrated in fewer firms or under concentrated in more firms than the actual number of firms.

1. Data Cost Sharing . The analysis assumed that the registrants initiating registration actions would pay the full cost s of the data required by these actions. Since other registrants may compensate them in order to cite this data, the costs of data may be distributed more widely resulting in a larger number of firms incurring smaller costs than estimated.

2. Expected Test Costs . Many of the tests are not required for all registration actions. EPA estimated expected test costs per registration action by multiplying*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

50 the test costs times the percent of time the tests are likely to be required. In reality, specific registration actions which re quire most of the te sts will be more expensive, while others requiring few te sts will be less expensive than the estimated expected costs. Thus, there is a range of costs a firm may incur for the same type of registration action.

3. Annual Average Costs . EPA averaged the costs over six years (2000-2005). However, average annual impacts will be overestimated for firms that average less than one registration action every six years. A longe r time period would likely capture more firms thus spreading the annual impacts over more firms.



## 9 10 Consideration of Paperwork Burden

The information collection activities related to the submission of data to EPA in order to register, amend or retain a new or existing pesticide product or obt ain a tolerance for that product are already approved by OMB under the Pape rwork Reduction Act (PRA), 44 U.S.C. 3501 et
seq . The procedures for submitting data to EPA under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Federal Food, Drug, and Cosmetic Act (FFDCA) are not changed in this final rule, and are already a pproved by OMB in the following ICRs (Information Collection Requests):

1. Tolerance ICR . Data Submission Activities A ssociated with Tolerance Actions (currently approved under OMB Contro l No. 2070-0024 (EPA ICR No. 0597)); 2. Registration ICR. Data Submission Activities Associat ed with the Application for a New or Amended Registration of a Pestic ide (currently approved under OMB Control No. 2070-0060 (EPA ICR No. 0277)); and 3. Reregistration, Special and Registration Review ICR. Data Submission Activities Associated with the Generation of Data fo r Special Review or Registration Review (currently approved under OMB Contro l No. 2070-0174 (EPA ICR No. 2288)).

For the proposed rule, EPA prepared a suppor ting statement for amending an Information Collection Request (ICR), titled “Data Requireme nts for Antimicrobial Pesticides (Proposed Rule)” and identified by EPA ICR No. 2318.01, a copy of which is in the docket for this rule. This amended ICR addressed those changes to the data requirements in the proposed rule that impact the information collection activities related to antimicrobial pesticides covered by these existing ICRs, and documents the changes in burden.

These activities already occu r as part of existing program activities, and are not being changed by this rule. These program activities ar e an integral part of the Agency pesticide program and the corresponding ICRs are regularly renewed every three years as required by the PRA. The total estimated average annual publ ic reporting burden currently approved by OMB for these various activities ranges from 8 hour s to approximately 3,000 hours per respondent, depending on the activity and other factors surrounding the particular pesticide product.

Reregistration is considered complete for activ e ingredients since all of the Registration Eligibility Decision Documents have been signed. However, both confirmatory Data Call-Ins*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

51 (DCIs) for active ingredients and product specific DCIs for produc t level data continue to be issued.

Since the rule adds new data requireme nts, additional DCIs are expected during registration review. We estimate that 75 new test s not anticipated when the economic analysis of the registration review process was completed wi ll be required in Regist ration Review each year as estimated in Table 6-1.

Once the new data requirements are finali zed, the total annual re gistrant paperwork burden and costs for data submission activities for antimicrobial pesticides applicants and registrants will be updated accordingly in the ex isting ICRs during the next, appropriate ICR renewal cycle.

References

ACC presentation; Antimicrobials Exposure As sessment Task force (AEATF) II, Introduction and Background (October 2007) (accessed July 8, 2011) http://www.epa.gov/hsrb/files/meeti ng-materials/jun-24-25-2008-publicmeeting/aeatf_introduction_and_background(10-17-07).pdf

AEATF; Governing Document for a Multi-Year Antimicrobial Chemical Exposure Monitoring Program; page 13 (February 13, 2008) (accessed July 8, 2011) http://www.epa.gov/hsrb/files/meeting-mate rials/apr-9-10-2008-publ ic-meeting/volume-5- AEATF-governing-doc.pdf

Dun & Bradstreet. 2006. Market Spectrum Analysis Portal. Downloaded November 2006.

Office of Management and Budget (OMB). 2003. Circular A-4.

Shah and Klein; Letter to Bradbury and Harri gan-Farrelly; ACC Biocid es Panel/CSPA Followup Regarding Issues with Proposed 158W; pa ge 3 (June 17, 2011) (ACC/CSPA letter in the docket at http://www.regulations.gov ; document EPA-HQ-OPP.2008-0110-0107 ).

U.S. EPA. 20 1 0 a 4 . Antimicrobial Pesticide Products. http://www.epa.gov/pesticides/factsheets/antimic.htm#info

. Last accessed, May 11, 2012.

U.S. EPA. 2010 b a . Regulating Antimicrobial Pesticide. http://www.epa.gov/oppad001

.

U.S. EPA. 2010 c b . OPPIN database.

U.S. EPA. 2007. Economic Analysis of the Change in Data Requirements Rule for Conventional Pesticides. Office of Pesticide Programs

U.S. EPA. 2006a. Memorandum, Part 158W Economic Analysis (EA) Methodology.*** Deliberative Document for E.O. 12866 Review – Do NOT Cite, Quote, or Release ***

52 U.S. EPA. 2005. Economic Analysis of Proposed Procedural Regulations for The Registration Review Of Pesticides (May 2005).

U.S. EPA. 2000. Guidelines for Preparing Economic Analyses.

U.S. EPA. 1994. Economic Impact Analysis of Proposed Effluent Limitations Guidelines and Standards for the Pesticide Formul ating, Packaging, and Repackaging Industry. Office of Water. EPA 821-R-94-003.

Code of Federal Regulations. Parts 158 and 161.

U.S. EPA Proprietary Data

Appendices. See Word file W.EA.Apx A, and Excel file W.EA.Apx BCD. Appendix A. Data Required for New Active Ingr edient Antimicrobial Registrations. Appendix B. Data Requirement Probabilities for Antimicrobial Pesticides Appendix C. Data Requirement Costs for Antimicrobial Pesticides Appendix D. Changes in Data Requirements and Costs Appendix E. Glossary