1 ECONOMIC ANALYSIS 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

March 13, 2013 1

1 The date has been c orrected from May 24, 2012, to March 13, 2013. Only the date has been corrected : no other changes were made to the document.2 Table of Contents

1 Executive Summary

................................ ................................ ................................ ................ 4

2 Problem Statement

................................ ................................ ................................ .................. 6

2.1 Overview o f Antimicrobial Pesticide Usage, Exposure, and Effects

............................... 6

2.2 Nature of Market Failures Inherent from Pesticide Producer and User Be havior

........... 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 for 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 Firms Impacted by the Rule

................................ ................. 22

5 Economic Impacts on Pesticide Registrants Due 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 Im posed 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 Business Impacts

................................ ................................ ................................ ........ 43

7.1 Regu latory 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 Anal ysis

................................ ..................... 48

10 Consideration of Paperwork Burden

................................ ................................ ..................... 503 References

Appendix A. Data Required for New Active Ingredient 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

Table 2

- 1: Data Disciplines

Table 2

- 2: Types of Registration 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 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 . Calculation of Industry Cost

Table 5

- 7 : Total Industry Cost per Year

Table 5

- 8 : Applicator Exposure Data Requirements Cost

Table 5

- 9 : Applicator Exposure Testing Cost by AEATF

Table 6

- 1: Estimation of Data Requirement Costs in Registration Review of New Tests n ot Anticipated When the Economic Analysis of the Registration Review Process Was Completed

Table 7

- 1: Estimated Small Business Impacts for New Registrations

Table 7

- 2: Small Firm Impact of Newly Imposed Tests in R egistration Review

Table 7

- 3: Estimated Small Business Impacts

— New Registrations plus Registration Review4 

## 1 Executive Summary

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

The revisions to the data requirements are needed to more adequately protect th e general population as well as sensitive subpopulations, to increase the Agency's knowledge of the human health and environmental fate and effects of antimicrobial pesticide products , and to help ensure that antimicrobial regulatory decisions reflect current scientific knowledge and current Agency regulatory practices

. This Final Economic Analysis evaluates the potential benefits and costs expected as a result of registration s and registration reviews occurring 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 differ greatly from the format of the data requirements for conventional 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 pesticides. Use patt erns specific to antimicrobials 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 w ithout extensive consultation with and interpretation

fro m the Agency . Additionally, t he current regulations for antimicrobials (part 161) no longer reflect the state of the science of risk assessment, thus leading to frequent consultations and incomplete submissions, w hich lead to increas ed transaction costs f or industry and the Agency to identify the appropriate data required

. Clearer, more transparent information to applicants should help to clarify the data required for a regulatory decision.

Therefore, after the promulgation of the 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 t o conduct a specific study rather than on what studies to conduct. Focused consultations will help reduce the burden on the regulated community associated with understanding and submitting complete submission packages to

EPA.

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

• Adding newly codified data requirements, which are not currently established 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 conditionally

required 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 never been required or have rarely been required in current practice, on a case

- b y

- case basis, and have not been routinely5 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 the cost of data requirements for both existing registrations going through registration review as well as new registrations.

EPA estimate s the incremental costs of the changes above for new registrations under this rule in chapter 5 of this document. Incremental 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 2 , 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 $ 5 49 ,000. The average incremental cost per firm under this rule having a registration action during 2000

– 2005

would have be en about $ 722

, 000 over 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 reflected in this final economic analysis (EA). These changes include:

• Three new data requirements were added: simulation tests to assess the biodegradability of chemicals discharged in wastewater, simulation 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 certain use patterns were changed 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 costs) to th e final rule (with the same test costs) is an increase of about 2 5 %. In response t o comments on the EA for the proposed rule, the Agency updated some of the test costs

. EPA also revised its cost estimates for generating applicator exposure data for antimicrobial pesticides: See section 5.6

. These cost
revisions have the largest impac t 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 rule because EPA considered these costs to be covered in the registration review EA. However , eleven new tests have been added in the part 158W rule that were not considered in the registration review rule EA. EPA estimate s t he cost of these new data requirements as part of registrat ion review to be about $6.8 million per year for the industry. The total incremental cost of the rule including registration review and new registrations is about $15 million per year.

2 Current practice is the baseline (CFR part 161) plus data requirements that h ave been imposed on a case

- by

- case basis, 2000

- 2005.6 As required, EPA conducted an analysis of the impact of this final rule on small businesses. EPA’s analysis showed that o nly abou t 2 6 small firms (or a little over 5 % of the total number of potentially impacted small firms) are expected to experience a cost increase

represent ing 1% or more of gross sales. Thus, EPA concludes that the final 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 costs. In general, before manufacturers can sell pesticides in the United States, EPA must evaluate the pesticides thoroughly to ensure that they meet federal safety standards in FIFRA and FFDCA that were established to protect human

health and the environment. EPA grants a "registration" or license that permits a pe sticide's distribution, sale, and use only after the company meets the scientific and regulatory requirements. In evaluating a pesticide registration application, EPA assesses a wide variety of potential human health and environmental effects associated w ith use of the product. Applicants, or potential registrants, must generate or provide the scientific data necessary to address the identity, composition, potential adverse 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 Pesticide Usage, Exposure, and Effects

Antimicrobial pesticides are used t o control microbiological contamination and

deterioration in industrial , commercial, and health care applications and consumer products. Antimicrobial products contain about 275 different active ingredients and are marketed in several types of formulation s , including sprays, liquids, concentrated powders, 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 currently registered with the EPA and sold in the ma rketplace. Nearly 60% of antimicrobial products are registered as public health products (as defined at FIFRA 2(gg)) to control infectious microorganisms in hospitals and other health care

environments (EPA, 2004 ). Public health products are intended to control microorganisms infectious to humans in any inanimate environment. The common public health antimicrobial products include steril ants , disinfectants, and sanitizers

. Non

- public health products are sold

and distributed for use to control growth of algae, odor

- causing bacteria, bacteria which cause spoilage, deterioration or fouling of materials and microorganisms infectious only to animals. Other examples of non

- public health products include those products used in cooling towe rs, jet fuel, paints, and treatments for textile and paper products ( EPA 2004 )

.

Antimicrobials play an important role in public health and safety. While intended to provid e health benefits of pathogen control or removal and, in some cases, safety benef its 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 widespread concern ( EPA 2010a ).7 

### 2.2 Nature of Market Failures Inherent 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 market 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 transaction that is borne or received by parties not directly involved in the transaction. When the in dividuals involved in the transaction do not consider external costs and benefits, the market fails to function efficiently.

In the case of antimicrobial pesticides, externalities arise because some of the costs (e.g.

post

- application exposure and ecol ogical 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 wastewater treatment plants that are

used to treat wastewater. Such damages are external to the market, because they are not borne by those using and therefore benefiting from the antimicrobia ls, but instead are borne by those paying for wastewater treatment. Similarly, antifoulants and wood preservatives can leach into

the water and the environment

, and have the potential to produce ecological effects on non

- target organisms. S tatutory autho rity allows the Agency to correct these market failures by imposing pesticide regulatory standards that ensure their safe use.

The final rule helps the Agency to correct the market failure by requiring that registrants of antimicrobial pesticide s provi de the Agency with adequate information to make pesticide regulatory decisions that mitigate externalities by protecting the general population, sensitive subpopulations, and the environment. The data requirements in the final rule reflect current

scienti fic knowledge and Agency practices.

Antimicrobial uses were covered in the original 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 difficult at times for applicants to determine which data requirements apply to antimicrobials w ithout extensive consultation with and interpreta tion from the Agency . Additionally, t he current regulations (part 161) for

antimicrobials no longer reflect the state of the science of risk assessment, thus leading to frequent consultations and incomplete submissions, w hich lead to increas ed transaction costs for industry and the Agency to identify the appropriate data required

. Clearer, more transparent information to applicants should help to clarify the data required for a regulatory decision.

Therefore, after the promulgation of the d ata 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 re quirement, or how to conduct a specific study rather than on what studies to conduct. Focused consultations will help reduce the burden on the regulated community associated with understanding and submitting complete submission packages to

EPA.8 

### 2.3 Overview o f the Rule

Although this rule concerns only data requirements 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 1 61) were first published in 1984, every disciplinary area and requirement has been reconsidered and revised by EPA in practice. These changes have been needed because the state of the science underlying the data requirements has advanced, and because the A gency has learned in many specific registration actions that additional or different 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 forums, such as meetings of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Scientific Advisory Panel (SAP), a scientific peer review mechanism required by section 25(d) of FIFRA. Also, EPA made presentations at the Antimicrobial Workshops sponsored by the Biocides Panel of the American Chemistry Council. However, these additional data requirements, while frequently imposed on a

case

- by

- case basis, have not been c odified 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 substan ce of the data requirements applicable to antimicrobials. Antimicrobial uses were covered in the original part 158 ( now part 161 ) , which was developed primarily for agricultural pesticides. Since use patterns specific to antimicrobials were not specified in the original 1984 data requirements, p art 161 often does not fully describe the data requirements a registrant or applicant must potentially fulfill to maintain or obtain an antimicrobial registration. Determining which data requirements apply to ant imicrobials has at times required registrants and applicants for registration to engage in extensive consultation with

and to seek interpretation from the Agency.

EPA recognizes that during early implementation of 40 CFR Part 158W not all application pa ckages may have all of the newly

- 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 adeq uate justification . This early implementation period 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 issue of timin g (i.e., why the data are not yet submitted and when the data can be submitted) with 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 feed9 • Antifoulant coatings and paints

• Wood preservatives

• Pesticide products intended to be manufactured into the above.

Although wood preservatives, and antifoulant paints and coatings bearing non

antimicrobial claims are excluded from the definition of “antimicrobial” in section 2(mm), the environmental and health concerns raised by the use of these pesticides are the same, whether or not a wood preservative or anti foulant is intended to control organisms other than microbiological organisms. In this rule, the Agency is collectively referring to antimicrobial, antifoulant coatings and paints, and wood preservative pesticides, as antimicrobials.



### 2.4 Statutory Authority f or the rule

This action is issued under the authority of sections 3, 4, 5, 10, 12, and 25 of The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) as amended (U.S.C. 136

- 136y) and section 408 of The Federal Food, Drug and Cosmetic Act (FFDCA) (2 1 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 dem onstrate 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 the use of the pesticide and weigh this against any benefits. EPA must determine that the standard for registration contained in FIFRA is met before granting a registration.

1. Registration. Section 3 of FIFRA contains the requirements for registration. Specifically, FIFRA sec. 3(c)(2) provides EPA b road 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 subst antial amounts of data on the pesticide, its composition, toxicity, potential human exposure, environmental properties and ecological effects, as well as information on its efficacy in certain cases. Although the data requirements are imposed primarily as a part of initial registration, EPA is authorized under FIFRA sec. 3(c)(2)(B) to require a registrant to develop and submit additional data to maintain a registration.

2. Reregistration. FIFRA sec. 4 requires that EPA reregister each pesticide produ ct first registered before November 1984. This date was chosen based upon the fact that pesticides registered since 1984 were subject to the part 158 requirements of the 1984 regulation.

R eregistration is considered complete f or active ingredients since a ll of the Registration Eligibility Decision Documents have been signed. However, both confirmatory Data Call

- Ins (DCIs) for active ingredients and product specific DCIs for product level data continue to be

issued.

3 . Registration Review. The Food Q uality Protection Act mandated a new program: registration review . Changes in science, public policy, and pesticide use practices occur over10 time. Through the new registration review program, the Agency will periodically reevaluate all registered pesticid es to assure that they continue 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 reviews will be tailored to the circumstance s, so reviews will be commensurate with the complexity of the issues associated with each pesticide.

B. FFDCA

FFDCA mandates that EPA determine the level of pesticide chemical residues in food and feed that will be safe for human consumption. The safety st andard set under FFDCA sec

. 408(b) and (c) defines safe as “a reasonable certainty that no harm” will result from exposures to pesticide chemical residues. The aggregate and cumulative exposure assessment require ments in

FFDCA sec. 408 dictate the broad n ature and scope of EPA risk assessment s under this provision

and the types and amounts of data needed to determine that the FFDCA safety standard is met.

Under FFDCA sec. 408, EPA is authorized to establish tolerances for pesticide residues

in food and f eed, or to exempt a pesticide from the requirement of a tolerance, if warranted. References to tolerances include tolerance exemptions since the standards and procedures for both are the same. The new safety standard applies to tolerances in a number of r egulatory 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

- l imited tolerances which are established for FIFRA sec. 18 emergency exemptions; and • Temporary tolerances established for experimental use permits under FIFRA sec. 5.

C. Linking FIFRA and FFDCA safety standards

Under FIFRA sec. 2(bb), a pesticide use that 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 preclude s new or continued registration. Given this linkage between registration a nd tolerances, it makes sense for EPA to define data requirements for both purposes: the data required to support a determination of “reasonable certainty of no harm”

under FFDCA are , as to pesticide uses that result in residues in food, an integral part of the data needed for an “unreasonable adverse effects” determination under FIFRA. Consequently, when promulgated, these data requirements would encompass the basic data requirements for both registration and tolerance

- setting determinations. EPA will r etain its authority to require

additional data on a case

- by

- case basis.



### 2.5 Current Regulation

The requirements for antimicrobials were formerly listed in part 158 of Title 40 of the

Code of Fed eral Regulation (CFR). I n 2007, EPA promulgated final rules esta blishing new data requirements for conventional pesticides, biochemical pesticides and microbial pesticides. As part of those actions, EPA preserved the original (1984) part 158 data requirements to provide regulatory coverage for antimicrobial pesticides until the Agency could promulgate a final11 regulation. To accomplish this, EPA transferred intact the original 1984 data requirements of part 158 into a new part 161, entitled “Data Requirements for Antimicrobial 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 antimicrobials are specified. Th e final rule codifies current practices, expands some data requirements beyond current practices, and adds some new requirements. The data requirements are organized by scientific discipline. The specific data required within each data cate gory 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, the applicant must submit data to support the registration, as spec ified in 40 CFR part 161. Table 2

- 1 lists the eight disciplines of data that may be required, depending on the type of product being registered.12 Table 2

- 1: Data Disciplines

DATA DISCIPLINE DESCRIPTION Nontarget Organism Tests of the effects 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 transport 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, and chronic toxicity and carcinogenicity are required to determine whether the product may pose a hazard t o 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 after application, information about possible dermal and inhalat ion exposure 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 physical and chemical properties are required to ide ntify 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, including a proposed safe level in

food.

Product Performance Produc ts must maintain a specified level of performance or efficacy associated with the claims made on the product label, which is generally defined as a specified percentage of organisms that the product must kill. T ests to determine whether the product meets the specified level of performance are required

.

B. Data Requirements for Antimicrobials by Use Pattern

A significant change in this rule from the existing data requirements in part 161 is the introduction of 12 use patterns specific to antimicrobials . In the proposed rule t he Agency discussed that these 12 use patterns have been in use for some years. Having use patterns specific to antimicrobials make s it easier to determine which requirements apply to which antimicrobial products. The 12 use patterns a re based on similarity of use, purpose, pesticidal function, the nature of the exposure, and /or , in some cases, application methods. Since there is

much variety in pesticide chemistry, exposure, and hazard, the requirements are designed to be

flexible. T est notes to the data requirements tables explain the conditions under which data are typically needed. Essentially, the data requirements identify the questions that the applicant will13 need to answer regarding a pesticide product before the Agency can ma ke its registration

decision

. The 12 use patterns are as follows:

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

• farm and farm animal premises such as animal houses and pens (in cluding milk houses), parlors, stalls, and barns

• equipment such as forks, shovels, scrapers; halters, ropes, other restraining equipment; racks, mangers, feeders, waterers, troughs, and fountains

• food handling equipment such as milking equipment.

2. Food handling/storage establishments, premises, and equipment . This use pattern also

include s many indirect food uses due to the treatment of food contact surfaces, and the resultant human exposures. All use sites are indoor.

• food or feed processing pla nts

• 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 industrial premises and equipment. This use pattern

includes non

- food contact areas of commercial sites. Typically antimicrobial pesticides would be applied to ceilings, doors, doorknobs, fixtures, floors, light switches, stairs, walls, windows,

and wood work as part of routine cleaning practices. This use pattern includes both indoor and outdoor uses. Some of the uses have the potential for significant exposure due to the repetitive nature of certain exposures, and therefore may be considered as high hu man exposure.

4 . Residential and public access premises. This use pattern includes mostly nonfood areas, although it includes food handling areas in homes. Some of the uses have the potential for significant exposure due to the repetitive nature of cer tain exposures, and therefore may be considered as high human exposure. 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 li ving quarters of pets, zoo animals, race horses, or laboratory

animals.

5 . Medical premises and equipment. This use pattern is considered to be indoor non

food. Some of the uses have the potential for repeated exposure and therefore may be considere d as high human exposure. This includes medical waste, which is defined as any solid waste that is generated in the diagnosis, treatment, or immunization of human beings or animals, in research pertaining thereto, or in the production of biologicals inclu ding but not limited to culture and stocks, pathological wastes, human blood a nd blood products, and sharps.14 • hospital or medical environments such as clinics, dental offices, nursing homes, sick rooms, morgues, and veterinary clinics

• n on

- 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 pattern 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 water systems of individua l homes, farms, institutions, camps, resorts, and industrial plants).

• emergency water systems for the public, campers, travelers, military and fishermen.

7 . Materials preservatives . Materials preservatives are antimicrobial chemicals added during indu strial 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 water is not re

- used, and is therefore released into the aquatic environment or a wastewater treatment plant after a single cycle through the system. However,

for m any uses of water in industrial 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

- through” and recirculatin g water systems have the potential for environmental exposure when the treated 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 underwater structures or equipment to control the growth of freshwater or marine fouling organisms. Antifoulant coatings have the potential for high environmental expos ure most particularly for 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 preservat ives. 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 the potential for high exposure for both humans and the environment

w ith 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 materials15 • 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 treat the water systems of swimming pools, jacuzzis and hot tubs for control of bacteria or algae. This use pattern is considered to be high human exposure. Under routine use little or no environmental exposure is expected, as the water in these pools, j acuzzis or hot tubs is considered to be separated from the natural environment. However, if draining is needed, depending on the volume of water and the location of the pool or hot tub, it is possible that the waters could drain into a storm

- drain or dire ctly into

soil.

12 . Aquatic areas . Products in this use pattern are designed to control or kill slime

forming bacteria, fungi, or algae in lakes, ponds, streams, drainage ditches and other bodies of water. In addition to the potential for environmenta l 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 water, or through recreational activities such as swimming. Trea ted water could also be used in crop and/or livestock production.

In response to comments, EPA notes that it is no longer using the terms “high human exposure” and “low human exposure” as table headers for the Antimicrobial Toxicology Data Requirements T able. Nor is EPA using the terms “high environmental exposure” and “low environmental exposure” as table headers for the Antimicrobial Nontarget Organism Data Requirements Table, the Nontarget Plant Protection 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

stat ement 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 d ifferences in the site where an antimicrobial pesticide is used, a second reason that data requirements may differ depends on the type of registration being sought

. Table

2

- 2 shows how registrations are grouped in those categories that are relevant to thi s EA.16 Table 2

- 2: Types of Registration Actions and Descriptions

TYPE OF

REGISTRATION DESCRIPTION

New Active Ingredient An application for registration of a new product that contains an active ingredient that is not included in any currently registered product. Major New Use A n application for registration of a new product that includes a proposed or additional use pattern that is not currently registered for one or more active ingredient(s) contained in the product. “New use” is defined in 40 CFR 152.3. Major New Use Amendment An amendment of a n existing product r egistration that includes a proposed or additional use pattern that is not currently registered for one or more active ingredient(s) contained in the prod uct

. “New use” is defined in 40 CFR 152.3.

There are other categories , which are not expected to incur costs under this rule, such as

me

- too registrations. Me

- too registrations are products that are very 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 proposed rule for 158W data requirements focused on new pesticide registrations. However, based on comments recei ved, EPA has now

estimated the additional data costs in registration review, which is the process of periodically reviewing currently registered pesticides 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

antimi crobial active ingredients including all tests that have been required in current practice

whether or not in 40 CFR 158. However, part 158W includes new tests, which were not anticipated when the economic analysis of the registration review process was c ompleted. This final economic analysis for part 158W address es the 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 CF R part 161) was first promulgated, EPA’s data requirements have evolved along with the general scientific understanding of the potential hazards posed by pesticides. In th e final rule, EPA is:

1. Adding newly codified data requirements, which are not current ly established 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 conditionally

required to required, a change in the number of test species, or expanding the n umber of use patterns for which the test is required.17 3. Adding new data requirements, which have never been required or have rarely been required in current practice, on a case

- by

- case basis, and have not been routinely considered during the Agency’s evaluation of the data needed for the purpose of risk

assessm ent.
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 structure and process for data requirements so that the Agency receives sufficient data to inform the decision for any registration action, while not imposing unnecessary impacts on pesticide registrants. These impacts include the direct co st of generating the data as well as less tangible 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 requi rements, which are not currently established 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 conditionally

required to required, a change in the number of te st species, or expanding the number of use patterns for which the test is required.

• Adding new data requirements, which have never been required or have rarely been required in current practice, on a case

- by

- case basis, and have not been routinely

consider ed 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 w ill enhance EPA’s ability to make sound regulatory decisions and help prevent the registration of pesticide products that may have unreasonable adverse effects on

human health and the environment. The Agency believes that h aving the appropriate data

ultimate ly leads to better risk management decisions due to more realistic risk estimates that use

fewer conservative assumptions

. This option would be more efficient than the current 40 CFR part 161, because the data requirements

, specific to antimicrobials, wou ld be known in advance

, specifically as they apply to antimicrobial pesticides, 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 industry can , along with other partners in the regulated community, attain a better understanding of and can more efficiently participate in the pesticide registration process. Th e clarity derived from having data

req uirements specific to antimicrobials may be especially 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.18 Data provided under the new requirements 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 n ot been previously identified, and use the registration process to mitigate these risks. EPA is using a tiered approach. I f the lower

- tiered data indicate a need of further data to resolve the issues raised by the results of the lower

- tiered study(ies)

, the Agency will require higher

- tiered data (indicated in the tables as CR

– conditionally required) when appropriate ly triggered

. Such an approach works to provide EPA with the data needed to add significant information and value to the decision, while en suring that the registration meets statutory safety standards , and without automatically requiring the generation of higher

- tiered data without consideration of factors which may negate the need for a study

.

B. Costs

Under the option (the final rule) t he incremental cost for the part 158 subpart W data requirement changes for an average of 15 antimicrobial registration actions per year is estimated at $8. 2 million 3 per year as explained in Chapter 5. The average incremental cost per registration

action is about $5 49 ,000 4 . The average incremental cost per firm having a registration action during 2000

– 2005 would have been about $ 722 ,000 5 over this six

- year period

.



### 3.2 Codification of Current Practices

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

A gency 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. However, 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 al l data needed, the re would be fewer benefits as compared to the selected option

.

3 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.

4 The annual incremental cost of the ru le divided by an average of 15 registration actions per year.

5 The incremental cost of the rule divided by 64 firms that had registration actions, 2000

- 2005.19 B. Costs

The incremental cost , which is the difference 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. 7 ). This cost is small, relative to the selected option, because many of the newly codified studies required under the selected option have not been req uired in current practices.



### 3.3 Conventional Data Requirement for Antimicro bial 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 requirements would impose a situation much like the status quo. Data requirements would not be well adapted to the antimicrobial use patterns, and applicants would continue to have difficulty in interpreting the requiremen ts. 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

- by

case basis. This option would be less efficie nt 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 registration action of a new active

i ngredient 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 conventional pesticides, because the economic analysis for the rule on the data requirements for conventional pesticides, part 158, (EPA, 200 7) only estimated the incremental costs, not the total costs. The costs of data requirements for conventional pesticides are typically much higher than those for antimicrobial pesticides because conventional pesticides typically have outdoor uses and food uses which require a much more extensive set of data requirements at higher test costs. For instance, the cost per registration action of a new antimicrobial pesticide active ingredient would average under the rule about $1

. 5 million for lower exposure u ses, and about $ 4.8 million for higher

exposure uses , while f or a conventional pesticide the cost for a new active ingredient registration ranges from about $4.4 million to $12 million (EPA, 2007).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 industry. Data on revenues, both by firm and by product, are reported in this profile. To be consistent with the guidelines for the Small Busines s Regulatory Enforcement Fairness Act (SBREFA) analysis, this profile 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 (OPPI N) and financial data from Dun & Bradstreet (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 individual firms (Dun & Brads treet, 2006). D&B is a comprehensive source of financial information on entities, including firm locations, sales, and primary business classifications under North American Industrial Classification System code (NAICS). Antimicrobial firms fall under a w ide 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

. C ompanies 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 an nual sales and the number of employees. This definition of size varies with a company’s NAICS code. B ased 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 parent companies submitted registration actions, of all types, for antimicrobial pesticides. Of the 72 registrants, sales and employment

data were available from the D&B database for 57 parent companies. The distribution of the 57 antimicrobial registrants according to the NAICS codes is presented in Table 4

- 1.21 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 Wholesalers, 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 i nclude a variety of manufacturing sectors such as wood products

, and of support sectors such as building material and fuel suppliers.22 

### 4.3 Estimation of the Number Firms Impacted by the Rule

While the above sample of 57 antimicrobial parent firms was used to characterize the

antimicrobial industry that has had registration actions from 2000 to 2005, it does not indicate how many firms are likely to be impacted by the rule. Some types of registration actions do not

incur data costs or can involve cit ation of data from other registration act ions.

In the time period for which EPA has available registration data (2000 to 2005), there were 72 firms that had registration actions of all types. Of these 72 firms , EPA estimates that 64 parent firms had antimicrobial registrations that would have i ncurred additional costs under the

rule because these were r egistrations of new active 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 fir ms, EPA could determine the size of 41 firms, of which 16 or 39% are small. Projecting this proportion to all 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 total annual revenue, and their average number of employees.

Table 4

- 2: Antimicrobial Product 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 4.1.23 

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

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

Step 1 Determine the expected cost of each data requirement Step 1 a

. 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 incremental costs per registration action

S tep 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 1 a ) are multiplied by the probability of the data requirements (Step 1a ) to estimate the expected cost of each data requirement (Step 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 these costs as required by the rule to estimate the incremental costs per registration action (Step 3). The incremental costs per registration action are multiplied by the number of registration actions per year for the industry to get the industry

- wide incremental impacts (Step 4)

, which is divided by the number of firm s to get the average incremental impact per firm (Step 5). The incremental costs per small firm a re 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 discussed 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 co st of a data requirement 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 registrations in the industry per year for the registrat ion type and

use. That is:

Industry Cost of a data requirement = Unit test cost x test probability x number of regist r ations24 These costs are summed for all data requirements, 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, typically the results of a specified test, that is required under specified conditions.

Unit test cost

— the cost of performing a test to fu lfill a data requirement. Test probability

— the probability of the test being required for a registration. This probability varies by the type of registration and by the pesticide use.

Use

— the use to which an antimicrobial is applied, such as food, nonfo od, industrial, antifoulant, and wood preservative. 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 follow ing steps :

Step 1. Expected c ost of a d ata r equiremen t = unit test cost × test probability.

C X Dur = T D × P X Dur

where

C D ur = 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 D ur = the test probability of data requirement 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 c ost of a r egistration a ction = the sum of the expected cost of data requirements.

R X

ur = ∑C X Dur where

R
ur = the expected cost of a registration action for use pattern u and registration type r. ∑ C D ur = the sum of the expected cost s of all data requirements for use pattern u and registration

type r

.

Step 3

. Incremental cost of a registration action = the cost of the registration action according to

the rule minus the baseline cost 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 i ndustry

- wide c ost of the data requirements = the sum of the data requirements for all registration types and use patterns

.25 ΔA = ∑( Δ R
ur × N
ur )

where

Δ A = Incremental antimicrobial i ndustry

- wide c ost of the data requirements

N
ur = the number of registrations for the industry on use pattern u for registration type r. ∑ ( Δ R
ur × N
ur ) = the sum of the expected incremental cost s of all registration actions for all use patterns and registration types.

The f ollowing alternative way to c alculate the industry

- wide cost provides the number of tests and cost of each data requirement for the industry per year while providing a check on the above

calculation :



### θ D = ∑( P D ur × N
ur )

A R

= ∑( 

### θ D × T D )

where 

### θ D = number of tests required for data requirement D in the industry ∑( P D ur × N
ur ) = the sum of the expected number of tests for all use patterns and registration types for data requirement D.

A R

= Antimicrobial i ndustry

- wide c ost 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 baseline in order to calculate the industry

- wide incremental cost of the data requirements

ΔA = A R

– A B

Step 5

. Average i ncremental impact per firm = incremental i ndustry

- wide c ost 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 cost 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 the unit test cost times the probability that the

test would be required.

A. Unit Test Costs ( T D )

In order to demonstrate that a pesticide meets the statutory standard for a registration, registrants must submit or cite test results or other information so t hat EPA can condu ct appropriate risk assessments . The unit test costs 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 testing laboratorie s to obtain estimates of the cost of conducting specific studies that would be required for antimicrobial, conventional, and26 other pesticides. To do this, EPA contact s fewer than 10 laboratories to obtain or update cost data for different test requirement s 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 the lab costs could vary considerably based on the study protocol chosen by the lab, EPA often established 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 options for each study based on the Of fice of Chemical Safety and Pollution Prevention (OCSPP) guidelines. In

- house labs of the registrant were not surveyed, although many of the larger companies may have them. For

- profit laboratories have significant similarities in how they cost the testin g they sell. In

- house laboratory costs might be lower or higher than an independent testing lab.

The Agency collected low and high cost estimates 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 o f 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 labs , 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 se lecting 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 comment period, and the age and source of EPA’s

estimates. Tabl e 5

- 1 lists the 30 tests for which costs were updated, and compares the new revised estimates to the estimates used in the economic analysis supporting 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 these tests are required. In this analysis, these new unit test cost estimates , other test cost updates since the proposed rule 6

, plus exposure test cost revisions increased the incremental cost of the rule by about 87% compared to

the proposed rule

. See Table 5

- 7 for more details on the effect of the revised unit test costs on the rule.

6 The Office of Pesticides Programs maintains a database of unit test costs. Individual test cos ts are updated as

needed.27 Tab le 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 $35,000 $75,427

875.2600 Biological monitoring $166,875 $375,00028 B. Test Probabilities ( P X Dur )

The probabilities or percent of actions that tests 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 relev ant 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 available 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 intended to apply to antimicro bials 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 calculated from data on current EPA registration practices, and adjusted according to EPA’s scientific judgment. T o avoid underestimating the costs of the rule, the probabilities estimated by this scientific judgment tended to be higher than those estimated in current practice

. However, i f the probability for a registration action type and use site group ing is higher for current practices, then the higher probability from current practices is

used. 7 In addition, some tests were not required during our sample of registration actions from 2000 through 2005 according to the registration data, but are expected to be requ ired under the rule. 8 Appendix B shows the percentage of actions for which the tests are likely to be required by the final rule for new active ingredients and major new use registrations and amendments

under the six use

- site group ing s in Table 5

- 3

.

C. Calc ulation of Expected Data Requirement Costs ( C X Dur )

Table 5

- 2 below illustrates how expected d ata r equirement c osts are calculated for a new active ingredient. Since there are many data requirements for a new registration, o nly 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 cost of a data requirement , C D

. These calculations are done for both the test probabilities expected with the rule and fo r 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

.

7 For example, the 3 tests required for acute testing of avian, and freshwater fish and invertebrates are expected to be required 25% of the time for major new use registrations and amendments under the rule. However, the data

i ndicate 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.

8 For example, biological monitoring for applicator exp osure 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) u nder the rule.29 Table 5

- 2

. Ex am p le 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 a nalytical m ethod

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 example. M uch more data are required for a new registration.



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

ur 

### )

A registration action , applicable to this EA, is an application 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 registration action

, the expected cost of all data required for the type of registration action and use

- site group ing specific to the registration action

are summed

.

The data required for a registration action depend on several factors; 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 are 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

, this analysis assumes that the product is registered for only one use pattern as determin ed b y EPA staff

.

F or the purposes of this economic assessment, the 12 use patterns are organized into the six group ing s as described in Table 5

- 3 . This is because data requirements are similar within each of the six group ing s and also the probability that a test is required can be estimated with a higher degree of confidence when the estimates are based on a larger sample in each of the six

group ing s

. Many of the use patterns are split between two or more group ing s depending on exposure and other char acteristics. Because this analysis considers individual registration actions submitted to the Agency, this EA assumes that each registration action is associated with only one group ing

.30 Table 5

- 3 : Six Use

- Site Group ing s for the Economic Analysis

USE SIT E 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 tole rance. Indirect Food Uses (< 200 ppb) Includes Use Patterns 1, 2, 4, 7, and 10 This group ing includes indirect food uses with residues less than 200 ppb.

High er 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 post s and rails, 3) structural members, 4) structures, and 5) dwellings. Lower Exposure Uses

Low er 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 registration actions. The cost of data requirements in Table 5

- 4 are summarized by scientific discipline (rows) and registration type and use grouping (columns) . Each discipline

consists of a number of individual data requirements, where the expected cost of each is

calcula ted as illustrated in Table 5

- 2, except applicator exposure as explained in section 5.6.31 Table 5

- 4

. Expected Cost of Data Requirements (C R ) and Reg istration 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 action is the difference between the c ost of a registration action according to this rule and the cost according to the baseline (CFR part 161)

. Similarly, t he newly imposed cost of a registration action is the difference between t he

c ost 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 probabilities 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 Requirements : Data not required for antimicrobials under part 161, even though most of these data have be en currently re quired 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 part 161. Examples include:

a. Data not required in part 161 for certain use pa tterns will be required in the

rule for these use patterns.

b. Data conditionally required in part 161 would be routinely required by the rule for certain use patterns. The requirements for some use patterns of some data have changed from the proposed rule affecting the test probabilities

. Registration Type : new active ingredient major new use/amendment

Use

- site Grouping : Indirect

Food Wood

Pres Anti

Foul Lo Exp Food Indirect

Food Hi Exp Wood

Pres Anti

Foul Lo Exp

Expected Cost of Data Requirements ($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 Action s ($1000) S tep 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 $85632 c. Some current test notes specifying when data are required have been changed in a manner that expands the application of the data requirement.

3. New ly imposed data requirements : These requirements and increased probability of data requirements are a subset (albeit a large majority) of the newly codified data and newly codified expanded use pattern data requirements that are not currently being imposed on a case

- by

- case basis

. The new data requirements that were proposed an d are now being codified are :

a. developmental neurotoxicity,

b. immunotoxicity,

c. photodegradation i n soil,

d. soil residue dissipation,

e. ready biodegradability study,

f. porous pot study,

g. activated sludge sorption isotherm study, and

h. modified activated sludge r espiration inhibition test.

Since the proposed rule , based on comments received

, three new data requirements

have been added

i. simulation tests to assess the biodegradability of chemicals in discharged

wastewater,
j. simulation test

– aerobic sewage treatme nt: activated sludge units. and

k. nature of the residue on surfaces.

4. Eliminated: Chronic oral toxicity data requirement for non

- rodent , which was required in part 161, is no longer required. Therefore, there will 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 actually required during

2000

- 2005. EPA reviewed this information and updated the probabilities for the

final rule based on EPA’s scientific judgment

. Some of these difference s could be caused by differences in the method of estimation between current practice and the final rule, rather than newly imposed expanded data requirements

.

Table 5

- 5 below illustrates how expected incremental costs of registration actions are

calcula ted by subtracting the cost of registration actions according to the rule from their baseline according to CFR part 161. The baseli ne and current practice cost s of registration actions are calculated the same way as the costs of registration actions accor ding to the rule as illustrated in

Table 5

- 4 above

.33 The bottom two rows of Table 5

- 5 also illustrate how newly imposed costs are calculated by subtracting the cost of registration actions according to the rule from their cost in current practice.

T able 5

- 5. Expected Incremental Cost of Registration Actions

Source: Appendix B * According to the rule

As shown in Table 5

- 5

, the average incremental cost per registration action for new AI higher exposure uses (indirect food 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 incremental costs for higher exposure are less because most of the data that is required by the rule was 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 . Furthermore, the chronic non

- rodent study , which costs about $758,000, was required in the baseline for these higher exposure uses only , but is no longer required under the rule

, which further reduces 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 b y multiplying the incremental costs of the registration actions of each type and use site group ing (Step 3) by the average number of registration actions of each type and use site group ing per year for the industry, then summing these costs for all registr ation action types and use group ing s. This calculation is illustrated in

Table 5

- 6

. Registration Type : new active ingredient major new use/amendment

Use

- site Grouping : Indirect

Food Wood

Pres Anti

Foul Lo Exp Food Indirect

Food Hi Exp Wood

Pres Anti

Foul Lo Exp

Cost of Registration Action s ($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 $32134 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 the 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 regis tration actions per year, the percentage of time each registration action (by type and use site group ing ) is likely to be required is multiplied by the average annual number (of that type and use group ing ) of registration actions, then summed for all regis tration action types and use groups. These

numbers are multipl ied by the unit test costs to get the industry

- wide cost of each data requirement per year, and then summ ed over all data requirements to get the industry

- wide cost of the data requirements

.

The number (N) of registration and amendment 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 da ta for antimicrobial pesticides for the years 2000 through 2005.

The OPPIN database provides registration actions by action code, so the number of each type is known. The use site groupings relevant to each registration action were identified by

staff in the Antimicrobial Division. 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 imp act per year from baseline ($11.1 million) to
rule ($19.3 million) is estimated to be $8.2 million per year. New ly imposed data requirements cost, which is the difference between the final 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 yea r, and compares these costs as estimated in the EA for the proposed rule, as revised with the new unit test cost estimates, and as

estimated in this EA f or the final rule. If t he revised unit test costs (Table 5

- 1) plus exposure and

other test cost revisions since the 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 Anti

Foul Lo Exp Food Indirect

Food Hi Exp Wood

Pres Anti

Foul 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 $8,23735 rule, then t he estimated cost of data requirements under the proposed rule increases by about

23 %. Since these revised test costs had almost no effect on the baseline, nearly all this increase is in the incremental cost of these data requirements, which increased 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 addition of three new tests, and the decision to not codify a data requirement that was proposed. Since these changes increased the cost of the data requirements by another 6.6 % and the incremental costs by another 2 5 %, 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 $1 8

, 341 ( 2 3 %) $19

, 322 ( 29 %)

Incremental Costs = R

– BL

(% increase from Proposed Rule) $3,882 $7,257 ( 87 %) $ 8

, 2 3 7 (11 2 %) 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 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 firms involved in the 90 registration actions would have experienced incremental impacts under the rule during the s ix

- year period, 2000

- 2005 , and would have experienced incremental impacts under the rule. A total annual impact of $8.2 million implies a six

- year total of $ 49.4 million, suggesting an average impact per firm of about $ 772, 000 over the six

- year period . T he 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 may over estimate the average annual impacts per

firm. Since a longer period of time would likely capture more firms and registration actions with impacts spread over more years , a longer period would likely result in less average annual impacts for some firms . This lower annual average impact would be true for all firms that have registration actions less frequently than e very six years36 

### 5.6 Applicator Exposure Test Costs

EPA has re

- evaluated the costs associated with generating applicator exposure data for antimicrobial pesticides. The costs were estimated for two different ways o f generat ing 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 the proposed rule and is explained in detail in

sections 5.1

- 5.5 of this final EA. Note that different test cost estimates and test probabi lities were used from those of the proposed rule. Also, this re

- evaluation is only for applicator exposure, not for post

- application exposures.

The second subsection (5.6B) uses a different methodology that relies on the unique nature of applicator expos ure 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 registration action for a new active ingredient or major new use (as described in Table 5

- 8 ).37 Table 5

- 8 : A pplicator Exposure 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 $11 3 Subtotal (These tests would be covered by AEATF exposure testing) $13,61 3

875.1500 Biological monitoring $375,000 10% 5% 0.9 $32 2

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 re

survey 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 less, 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 Cost s

Particularly for exposure data, r egistrants often use task forces to genera te data that are

then cost

- shared by all the task force members. The reason cost

- sharing works for exposure

studies is that many of these exposure studies are scenario

- specific, not chemical

- specific. For example, the exposure resulting from a spray can application c ould then be used for other

antimicrobial registration actions that are also spray can applications . R ather than each registrant generating data for a particular registration action , under the task force concept, an exposure study is a one

- time cost. Data and costs will be shared by all task force members. T ask force

member ship allows that member to acce ss all taskforce

- conducted studies. Additionally, taskforce exposure studies found to be adequate may simultaneously fulfill three data requirements: dermal exposure, inhalation exposure, and data reporting and calculations, thus further reducing costs. Historically, 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 fo r ce is organized and whether a registrant participate s in a task

force can depend on case

- by

- case considerations. Among the p otential considerations that could cause a registr ant to generate their own data c ould 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 r ants will rely on task force data.

The antimicrobial industry ha s a history of using task forces to generate exposure data

, which is why the number of applicator exposure tests in current practice (2000

- 2005) was very

low . The Chemical Manufacturers Association (CMA) Task Force provided the first exposure

data for antimicrobials. T h ese data were generated from 1988 to 1992 and are now acknowledged to ha ve many l imitations

.38 As part of it s re

- evaluation of several antimicrobials, in Re registration Eligibility Decision Documents, EPA required additional exposure data, citing deficiencies in the CMA

data. The need for additional exposure data was confirmed by EPA’ s SAP in January 2007. Thus, the A ntimicrobial Exposure Assessment Task Force (AEATF), sponsored by the A merican Chemistry Council’s (ACC) Biocides Panel, was formed to generate exposure data to support EPA’s development of improved exposure assessments f or antimicrobials risk analyses and associated regulatory decision

- making. The AEATF has broad industry 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 th e s e exposure data are generated, registrants participating in the task force arrangement will not have to develop their own applicator exposure data to fulfill the applicator dermal and inhalation exposure data requir ements

. Instead task force members can cite to the AEATF exposure data , thus fulfilling the dermal exposure, inhalation exposure, and data reporting and calculations requirements . Registrants would still need to submit data to satisfy post

- application ex posure, biological monitoring, and product use information data requirements.

The cost of AEATF applicator exposure testing is estimated in Table 5

- 9 in the following

steps:
1. Determine expenditures per scenario: The total cost to AEATF per exposure scena rio 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 are included in the stated c osts. EPA

assumes that at least 30% was added for overhead 9 ; therefore, we divide this cost by 1.3 to get an estimate of about $1.4 million for each scenario for testing cost only.

3. Multiply by number of exposure scenarios: Since AEATF is testing 19 diff erent exposure scenarios, the total cost to the industry will be about $26 million.

4. Annualize costs: Th e $26 million is a one

- time cost, since the AEATF database

should replace the need for individual applicator exposure tests for registrants participating in the task force 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 consideration the time cost of money. The $26 million cost occurs early and is good for at least 15 years. The annualized

costs are what the annual payments would have to be ($2.2 and $2.9 million) to pay off a loan of about $26 million at interest rates of 3% and 7% 10

, respectively.

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

10 The Office of Management and Budget (OMB) suggests using discount rates of both 3% an d 7% to estimate present values and annualized values to represent the social and private discount or interest rates.39 5. Estimate the average annualized cost per registration action : We estimate about 15 new registration action s (new active ingredients and major 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 information not covered by the AEATF exposure

studies.

Table 5

- 9: Applicator Exposure Testing Cost by AEATF

Step $ 1000 s

1 1

- time cost per exposure scenario $1,800

2 1

- time cost per exposure scenario 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 registration actions per year 15

5 Average annualized cost per registration action @ interest rate:

5 3% $147

5 7% $193

C. C onclusion

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 effective way of meeting the applicator exposure data requirements and since the AEATF is generating the applicator ex posure data that will be used in the Agency’s risk assessments , the task force costs are used in estim ating 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 periodically reviewing currently registered pesticides and assuring that they continue to meet the statutory standards for registration

.40 When registration rev iew 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 antimicr obial active ingredients that would be subject to review in the first years of the program. For each pesticide active ingredient in the sample, all tests that could be needed to

conduct a risk assessments consistent with current practice were identified, whether or not the requirement was listed in part 161 . The Registration 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.

T he new part 158W includes 11 new tests, which were not anticipated when the economic analysis of the registration review process was completed. The data requirement costs
of these new tests in registration rev iew are estimated in this section following the same steps as estimating the costs for new registration action s. The analysis is shown in Table 6

- 1.



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

A. Unit Test Cost s

EPA used the same unit test cost estimates for the 11 new tests as was used in the new registration analysis

. These costs are 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 analysis , the requirements for these

tests in the first registration review cycle will be the same as they are for a new registration of a

new acti ve ingredient. The probabilities of these new tests being required are the same for all

use site groupings except wood preservatives , food and indirect food uses 11

. 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 t est is likely to be required in the near future

, are shown in

Columns D

– F of Table 6

- 1.

11 We were able to reduce the six use site groupings to wood preservatives, food/indirect food, and other, because the probabilities as est imated by EPA staff for these new tests being required are the same for all use site groupings,

except:

• the soil residue dissipation and p hotodegradation i n soil tests are required 100% of the time for wood preservatives only, and

• the n ature of residue on surfaces is expected to be required 25% of registration reviews for food and indirect food uses only.41 Table 6

- 1: Estimation of Data Requirement Costs in Registration Review of New Tests n ot 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

T est
C ost Wood

Preserv

atives 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

875.22 00 Soil residue dissipation $253,733 100% 0% 0% 7.0 $1,776,133

835.2410 Photodegradation i n 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% 2 5% 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.42 

### 6.2 Step 2 . Costs per Registration Review

The average additional c ost of Registration 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 indire ct food uses, and $260,000 for all other uses. These costs 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 t hese 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 registration review cost of these new tests can be calculated by multiplying the average cost per registration review 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 include wood preservatives as a use, (EPA, 2010b ) 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 p reservatives , food & indirect food, & all other)

As a check and as a method to estimate the industry

- wide number and costs of the 11 new

tests, th e industry cost was also calculated b y 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 probability and summing over all uses.



### Σ ( unit t est cost × Average number of tests required per year 

### )
(summed over all the new tests

— Column H, Average Industry Cost per Year)

The total industry cost of about $6.8 million is shown 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 divided by the number of firms with registrations 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 costs of that registration review. Although they are not requi red to share these costs, most do

. Chapter 7 will examine the impacts on small firms.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. This conclu sion is based on our finding that the following criteria are met: F ewer than 100 small businesses are likely to 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 gros s sales. 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 (SBREFA), require that special considerati on be given to the effects of federal regulations on small business entities. 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), under statute, establishes the definition of a

small business. The SBA has set size standards under the North American Industrial Classification System (NAICS), using various thresholds on employe e number and revenue amount, which vary by NAICS code. In determining the size of a company, 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 and/or l iabilities shared with a predecessor 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 NAICS code is assumed to be its primary industry, and

the de finition of small business is determined 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 Agricultu ral Chemical Manufacturing (NAICS code 325320) industry 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 companies 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 that 500, or approximately 67 %

, are small

businesses

.

All of the 500 small antimicrobial pesti cide registrants are potentially subject to the regulations. However, based on the available antimicrobial pesticide registration data for 2000

- 2005, only a small portion of these registrants are likely to be impacted by the regulation. There

are many ty pes of registrations, which are not expected to incur costs under this rule, such as me

too registrations. Me

- too registrations are products that are very similar to products that are already registered and can cite the data of those existing products. O ther registrants are formulating a registered pesticide product into a different produ ct. In these cases, EPA provides44 a “f ormulator’s exemption” for certain data to registrants that qualify for the exemption

. They may need to provide some product inform ation, but most of the “generic” data are generated by

the manufacturer of the AI. Any data required by those qualifying for the exemption are not likely to be changed by this rule. In the time period for which EPA has available registration data (2000 t hrough 2005), 64 firms with antimicrobial registrations would have incurred

additional costs under the rule. Of the 64 firms, EPA estimates that a total of 25 small

antimicrobial pesticide registrants would have incurred additional costs under the rule

. See

section 4.3.



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

The incremental costs to antimicrobial registrants are measured as the increase in test costs per firm between the current application of CFR part 161 (the baseline) and the rule. The impact of this rule is expressed as the proportion of the average annual incremental costs per firm to the average annual firm sales. These impacts appl y to both existing registrations going through registration review and new registrations.

A. New Registrations

As stated above, EPA estimates 25 small antimicrobial registrants with new registrations

would have been impacted by the regulation during the si x

- year period of study (2000

- 2005)

. We assume that these impacts are representative of the future, although in any six

- year period of time, different firms would be impacted. For these small firms, the average incremental cost was

estimated based on the n umber 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 requirement costs were annualized 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 sales revenue to estimate the impact of the test costs as a percent of sales revenue. The distribution of the impacts of these 16 firms is projected to 25 firms 12 . The results of the analysis are shown in Table 7

- 1.

Table 7

- 1: Estimated Small Business Impacts for New Registrations

I ncremental 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% 2 2 4. 4 %

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

12 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.45 Table 7.1 shows that 25 small antimicrobial 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 revenue for new registrations . While only 5% of small firms are impacted at all, almost 90 % ( 2 2 firms) of these 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 about $ 424 ,000 to $ 1 million over the six

- year period (2000

- 2006)

. However registration review data costs for existing registrations were not
considered in the above analysis, but are estimated in the next section

.

B. Existing Registration s 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 wa s assumed to be small. Sales revenue for the latter was assumed to be the average of the two 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 $588,1 80, 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 Impact 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 was assumed to be the average of the above 2 firms.

There are a total of about 250 antimicrobial active ingredients, which would need to go through registration review in 15 years, or almost 17 per year. Most antimicrobial ca ses 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 antimicrobial registrants impacted b y 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

- 2.46 Table 7

- 3: E stimated 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 sa mples, (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 ter ms of the SBREFA conditions (beginning of Chapter 7 ) are:

• About 2 3 small antimicrobial registrants ( almost 5 % , consisting of about 22 firms with new registrations and 1 firm with existing registrations(s) in registration review ) are likely to experience an economic impact of 3% or more of gross sales, and

• About 26 small antimicrobial registrants ( over 5 %

, consisting of about 23 firms with new registrations 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 substantial 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 costs. I n general, before manufacturers can sell pesticides in the United States, EPA must evaluate the pesticides thoroughly to ensure that they meet federal safety standards in FIFRA and FFDCA that were established to protect human

health and the environment. EP A grants a "registration" or license that permits a pesticide's distribution, sale, and use only after the company meets the scientific and regulatory requirements. In evaluating a pesticide registration application, EPA assesses a wide variety of potenti al human health and environmental effects associated with use of the product. Applicants, or potential registrants, must generate or provide the scientific data necessary to address the identity, composition, potential adverse effects, and environmental f ate 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 improve the scientif ic basis for antimicrobial pesticide decisions. These efforts are expected to help protect human health and the environment47 by providing an up

- to

- date scientific framework for identifying and assessing the risks of antimicrobial pesticides sold or distrib uted 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 ri sks of potential efficacy failure and exposure of hazards to humans and the environment. Therefore, the effectiveness and proper use of an antimicrobial pesticide is determined by EPA based on its evaluation of specific data that is provided as part of re gistration and 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 unreasonable adverse effects on

human health and the envi ronment. The Agency believes that having the appropriate data ultimately leads to better risk management decisions, as well as provides the following other

benefits:

• More refined ass essments mean less uncertainty and clearer understanding of actual

risks

. For example, EPA's current applicator/user exposure data base is not comprehensive, especially regarding exposures to pesticides in industrial and residential settings. Codifying these data requirements, many of which are currently applied on a

case

- by

- c ase 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 stringent nor too lenient.

• Clarity and transparency to regulated 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 submitting data that is necessary for EPA to

be able t o make registration decisions based on data

- driven risk estimates that use fewer conservative assumptions. Applicants may save time and money by understanding which studies are needed to support the use of their product. Thus, the antimicrobial industry

w ill, 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, thereby enabling registration o f safer pesticides sooner and potentially reducing risks, as well as increasing profits. The clarity derived from having data requirements specific to antimicrobials may be especially important to small firms and new firms entering the industry who may ha ve less experience than those firms that routinely work with the Agency.

• EPA information assists other communities in assessing pesticide risks. Scientific, environmental, and health communities find pesticide toxicity information useful to respond to a variety of needs. For example, medical professionals are concerned about the health of patients exposed to pesticides; poison control centers mak e use of and distribute information on toxicity and treatment associated with poisoning; and scientists use toxicity information to characterize the effects of pesticides and to assess risks of pesticide exposure. Similarly those responsible for protection of nontarget wildlife need reliable information about pesticides and assurance that pesticides do not pose an48 unreasonable threat. These data requirements will help the scientific, environmental, and health communities by increasing the breadth, 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 provi de better information on the use of the pesticide. A pesticide label is the user's direction for using pesticides safely and effectively. It contains important information about where to use, or not use, the product, health and safety information that shou ld be read and understood before using a pesticide product, and how to dispose of that product. This benefits users by enhancing their ability to obtain pesticide products appropriate to their needs, and to use and dispose of products in a manner that is s afe and environmentally sound.

• New data requirements r ecognize the unique down

- the

- drain uses associated with

antimicrobials. For antimicrobial chemicals that go down

- the

- drain and eventually reach

a WWTP (waste water treatment plant) , EPA intends to c onduct an assessment of the potential impact of the antimicrobial chemical 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 final rule wil l 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 Agency’s vision for 21st Century T oxicology 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.



## 9 Limitations and Uncertainties of the Economic Analysis

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

• Unit Test Costs : Costs for guideline studies were gathered from a limited sur vey 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 wer e surv eyed 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 variation 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 practices was estimated with the registration data from 2000 through 2005. For the rule, the Agency has also relied upon the scientific judgment of EPA staff to p roduce estimates of how frequently newly generated guideline49 studies will be required to satisfy the data requirements. The percentages from the baseline were assumed to be the same as current practices if the test was in the current CFR part 161 and inte nded to apply to antimicrobials. If the test is not in the current CFR part 161, the baseline is zero. In addition, 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 occasionally be required. EPA relied on the

sci entific 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.

• Numb er of Future Requested 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 markets or scientific knowledge. Registration data from 2000 through 2005 did not show any trend that could be used to forecast future requested registration actions.

• Sales data : Since sal es data were not available for all firms with registrations (2000

- 2005), this analysis was based on a sample and projected to the industry. However, EPA cannot determine whether or how much the sample represents the total population of

antimicrobial firms

.

• Structure Activity Relationship (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 experience with these SAR techniques, EPA was

n ot able to estimate the potential industry cost savings, but savings 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 diffi cult to determine precisely when and who bears the costs of data 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 o r 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 costs 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 the test costs times the percent of time the tests are likely to be required. In50 reality, specific registration actions which require most of the tests will be more expensive, whil e others requiring few tests 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).

Ho wever, average annual impacts will be overestimated for firms that average less than one registration action every six years. A longer time period would likely capture more firms thus spreading the annual impacts over more firms.



## 10 Consideration of Paperwor k 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 obtain a tolerance for that product are already approved by OMB under the Paperwork Reducti on 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 approved by OMB in the following ICRs (Information Collection Requests):

1. Tolerance ICR . Data Submission Activities Associated with Tolerance Actions (currently approved under OMB Control No. 2070

- 0024 (EPA ICR No. 0597));

2. Registration ICR. Data Submission Activities Associated with the Application for a New or Amended Registration of a Pesticide (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 for Special Review or Registration Review (currently approved under OMB Control No. 2070

- 0174 (EPA ICR No. 2288)).

For the proposed rule, EPA prepared a supporting statement for amending an Information Collection Request (ICR), titled “Data Requirements 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 th e 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 occur as part of existing program activities, and are not being changed by this rule. These program activities are 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 public reporting burd en currently approved by OMB for these various activities ranges from 8 hours to approximately 3,000 hours per respondent, depending on the activity and other factors surrounding the particular pesticide product.

R eregistration is considered complete f or active 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 product level data continue to be

issued.51 Since the rule adds new data requirements, additional DCIs are expected during registration review. We estimate that 75 new tests not anticipated when the economic analysis of the registration review process was completed will be required in Registration Review eac h year

as estimated in Table 6

- 1

.

Once the new data requirements are finalized, the total annual registrant paperwork burden and costs for data submission activities for antimicrobial pesticides applicants and registrants will be updated accordingly in the existing ICRs during the next, appropriate ICR renewal cycle.

Referen ces

ACC presentation; Antimicrobials Exposure Assessment Task force (AEATF) II, Introduction and Background (October 2007) (accessed July 8, 2011) http://www.epa.gov/hsrb/files/m eeting

- materials/jun

- 24

- 25

- 2008

- public

meeting/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.e pa.gov/hsrb/files/meeting

- materials/apr

- 9

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- 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 Harrigan

- Farrelly; ACC Biocides Panel/CSPA Follow

up Regarding Issues with Proposed 158W; page 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. 2004 . Antimicrobial Pesticide Products. http://www.epa.gov/pesticides/factsheets/antimic.htm#info

. Last accessed, May 11,

2012.

U.S. EP A. 2010 a

. Regulating Antimicrobial Pesticide. http://www.epa.gov/oppad001

.

U.S. EPA. 2010 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.52 U.S. EPA. 2005. Economic Analysis o f Proposed Procedural Regulations f or 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 Formulating, Packaging, and Repackaging Industry. Office of Water.

EPA 821

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Code o f Federal Regulations. Part s 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 Ingredient Antimicrobial Registrations. Appendix B. Data Requirement Proba bilities for Antimicrobial Pesticides Appendix C. Data Requirement Costs for Antimicrobial Pesticides Appendix D. Changes in Data Requirements and Costs Appendix E . Glossary