REGULATORY IMPACT ANALYSIS OF 

 AMENDMENTS TO REGULATIONS FOR TSCA SECTION 5 

 PREMANUFACTURE NOTIFICATIONS 

 

 

 

 

 

 

 

 

 

 

 Prepared by 

 Susan Krueger 

Regulatory Impacts Branch 

Economics, Exposure and Technology Division 

Office of Pollution Prevention and Toxics 

U.S. Environmental Protection Agency 

September 9, 1994 
 i 

 

TABLE OF CONTENTS

 Page

List of Tables ............................................................................................................................................... iii 

List of Figures............................................................................................................................................... iv 

Executive Summary .............................................................................................................................. ES-1 

I. INTRODUCTION................................................................................................................................... I-1 

A. Background and Scope........................................................................................................... I-1 

B. Executive Order 12866 ........................................................................................................... I-4 

C. Structure of this Analysis ........................................................................................................ I-5 

II. METHODOLOGY........................................................................................................................ II-1 

A. Direct Costs of Compliance ................................................................................................... II-1 

B. Quantification of Direct Societal Costs and Benefits ............................................................ II-3 

C. Effects on New Chemical Introduction................................................................................... II-7 

D. Health Implications of Regulatory Alternatives ...................................................................... II-7 

III. CURRENT TSCA SECTION 5 PROGRAM: BASE CASE DESCRIPTION .......................................III-1 

A. Current New Chemicals Program ...........................................................................................III-1 

B. Baseline Submissions.............................................................................................................III-8 

C. Industry Baseline Unit Costs...................................................................................................III-9 

D. Baseline Government Review Unit Costs.............................................................................III-24 

E. Total Baseline Costs.............................................................................................................III-29 

IV. POLYMER EXEMPTION AMENDMENT............................................................................................IV-1 

A. Amendment Description..........................................................................................................IV-1 

B. Polymers Eligible Under the Amendments .............................................................................IV-3 

C. Industry Per Unit Costs...........................................................................................................IV-3 

D. Government Per Unit Costs....................................................................................................IV-7 

E. Comparison with Base Case and Sensitivity Analysis............................................................IV-8 

V. PROCEDURAL AMENDMENT.............................................................................................................V-1 

A. Amendment Description...........................................................................................................V-1 

B. Submissions.............................................................................................................................V-5 

C. Industry Per Unit Cost..............................................................................................................V-7 

D. Government Per Unit Cost.......................................................................................................V-8 

E. Comparison with Base Case and Sensitivity Analysis...........................................................V-11 

VI. LOW VOLUME AND LOW RELEASE/LOW EXPOSURE EXEMPTIONS AMENDMENT.................VI-1 

A. Amendment Description..........................................................................................................VI-1 

B. Submissions............................................................................................................................VI-3 

C. Industry Per Unit Costs...........................................................................................................VI-6 

D. Government Per Unit Costs..................................................................................................VI-10 

E. Comparison with Base Case and Sensitivity Analysis..........................................................VI-14 

F. Low Release/Low Exposure Exemptions..............................................................................VI-17 

VII. NON-5(e) SIGNIFICANT NEW USE RULE AMENDMENT ........................................................VII-1 

A. Amendment Description.........................................................................................................VII-1 

B. Submissions...........................................................................................................................VII-2 
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TABLE OF CONTENTS (Continued)

 Page

C. Industry Per Unit Costs..........................................................................................................VII-2 

D. Government Per Unit Costs...................................................................................................VII-3 

E. Comparison with Base Case and Sensitivity Analysis...........................................................VII-3 

VIII. IDENTIFICATION AND ANALYSIS OF REGULATORY OPTIONS...............................................VIII-1 

A. Total Preferred Option Costs ................................................................................................VIII-1 

B. Polymer Exemption Amendment Options.............................................................................VIII-3 

C. Procedural Amendment Options...........................................................................................VIII-4 

D. Low Volume Exemption and Low Release/Low Exposure Exemption 

 Amendment Options...............................................................................................................VIII-5 

IX. EFFECTS OF THE AMENDMENTS ON SMALL ENTITIES ............................................................ IX-1 

A. Small Entity Definition........................................................................................................... IX-1 

B. Number of Small Entities ...................................................................................................... IX-2 

C. Regulatory Flexibility Analysis and Impacts on Small Businesses ....................................... IX-4 

X. EFFECTS OF THE AMENDMENTS ON INNOVATIVE ACTIVITY .................................................... X-1 

A. Overview of the Potential Effects on Innovation ................................................................... X-1 

B. Summary of Important Implications ....................................................................................... X-3 

REFERENCES.......................................................................................................................................... R-1 

Appendix A. Labor Rates for Industry and Agency Cost Calculations ......................................................A-1 

Appendix B. Presentation of Data Used to Calculate Time Requirements 

 for Submission of a Full PMN Notification ......................................................................B-1 
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LIST OF TABLES

Page

Table ES-1. Summary of Amendments............................................................................................. ES-3 

Table ES-2. Summary of Quantified Savings for Preferred 

 Option.......................................................................................................................... ES-6 

Table ES-3. Summary of Quantified Savings Per Amendment............................................................. ES-6 

Table III-1. Baseline Notices Received ..................................................................................................III-10 

Table III-2. Industry Costs for PMN Submissions...................................................................................III-11 

Table III-3. Estimated Industry Labor Requirements for PMN (Rev. 1-91) Submission.........................III-13 

Table III-4. Baseline Industry Unit Costs for Polymer Exemption Submissions .................................III-16 

Table III-5. Estimated Industry Labor Requirements for Baseline Polymer Submission........................III-17 

Table III-6. Baseline Industry Unit Costs for LVE Submissions..............................................................III-19 

Table III-7. Estimated Industry Labor Requirements for Baseline LVE Submission ..............................III-21 

Table III-8. Estimated Industry Labor Requirements for 

 Baseline Bona Fide Submission ......................................................................III-22 

Table III-9. Baseline Industry Unit Costs for Bona Fide Notices ............................................................III-23 

Table III-10. Baseline Agency Unit Costs for PMN Review....................................................................III-25 

Table III-11. Baseline Agency Unit Costs for Polymer Exemption Review.............................................III-27 

Table III-12. Baseline Agency Unit Costs for Low Volume Exemption Review......................................III-28 

Table III-13. Total Quantified Baseline Costs.........................................................................................III-30 

Table IV-1. Projected Polymer Exemption Submissions..........................................................................IV-4 

Table IV-2. Industry Unit Costs for Amended Polymer Exemption Reporting and Recordkeeping .........IV-6 

Table IV-3. Comparison of Base Case and Amended Costs for Polymer Exemption..............................IV-9 

Table V-1. Estimated Industry Labor Requirements for 

 Amended Bona Fide Submission........................................................................V-9 
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LIST OF TABLES (Continued)

Page

Table V-2. Industry Unit Costs for Amended Bona Fide Notices ............................................................V-10 

Table V-3. Comparison of Base Case and Amended Costs for Procedural Amendments .....................V-12 

Table VI-1. Projected LVE Submissions ..................................................................................................VI-4 

Table VI-2. Projected LoREX Exemptions ...............................................................................................VI-7 

Table VI-3. Industry Unit Costs for Amended LVE Submissions..............................................................VI-8 

Table VI-4. Estimated Labor Requirements for Amended LVE Submission .............................................VI-9 

Table VI-5. Industry Unit Costs for LoREX Exemption Submissions .....................................................VI-11 

Table VI-6. Estimated Labor Requirements for LoREX Exemption Submission................................VI-12 

Table VI-7. Agency Unit Costs for Amended LVE Review.....................................................................VI-13

Table VI-8. Agency Unit Costs for LoREX Exemption Review...............................................................VI-15 

Table VI-9. Comparison of Costs for Base Case and Amended LVE ....................................................VI-16 

Table VI-10. Comparison of Costs for Base Case and Amended Costs for LoREX Exemption ............VI-18 

Table VII-1. Amended Agency Unit Costs for PMN Review Due to the Non-5(e) SNUR 

Amendment.................................................................................................................................VII-4 

Table VIII-1. Total Quantified Costs for Preferred Option of New 

Chemicals Program Amendments ...................................................................VIII-2 

Table IX-1. Employee Size Category for Companies Submitting PMNs in 

 FY89................................................................................................................. IX-3 

Table IX-2. Annual Sales of Companies Submitting PMNs in FY89 ...................................................... IX-5 
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LIST OF FIGURES

Page

Figure III-1. Total Notices Received by OPPT ....................................................................................... III-2 
 ES-1 

EXECUTIVE SUMMARY

This analysis provides economic support for four amendments to regulations promulgated under 

the authority of Section 5 of the Toxic Substances Control Act (TSCA). TSCA Section 5 requires that 

manufacturers and importers of chemicals determine if the chemical of interest is on the TSCA Inventory 

and, if it is not, submit certain information to EPA ninety days prior to first commercial manufacture or 

import. EPA examines the information within the ninety days and responds to the submitter if the chemical 

is determined to present an unreasonable risk to human health or the environment. The Agency has 

developed exemptions to these reporting rules under the authority of Section 5(h)(4) of TSCA to reduce or 

remove the burden of premanufacturing notification (PMN) requirements for chemical substances 

determined not to pose a substantial risk. These exemptions include an exemption for certain polymers, a 

low release/low exposure exemption, and a low volume exemption. In addition, the Agency has 

developed revisions to a procedure, called "bona fide intent to manufacture," which enables submitters to 

determine if a chemical of interest is listed on the confidential portion of the TSCA Inventory. 

The four amendments to the reporting rules are based on Agency knowledge and experience with 

the New Chemicals Program. The amendments improve program efficiency without compromising 

protection of human health or the environment. As the Agency has acquired knowledge of chemicals, 

categories of chemicals that are not expected to pose a risk to human health and the environment have 

been developed. In addition, methods to reduce or eliminate the exposure to chemicals which do pose a 

risk to human health have been developed. The Agency also has identified other areas within the New 

Chemicals Program where other protections and efficiencies can be obtained. 

The amendments include an expansion of the polymer exemption criteria with minimal reporting 

requirements and certain recordkeeping provisions; the introduction of a low release/low exposure 

(LoREX) exemption; an expansion of the low volume exemption; an expedited follow-up rule (generic 

expansion of the non-5(e) significant new use rule (SNUR)); and several procedural PMN Rule 

amendments. The four amendments are further summarized in Table ES-1. 

The polymer amendment expands the current exemption by 1) allowing a greater number of 

polymers to be eligible; 2) eliminating the pre-manufacture notice requirement and amending the 

recordkeeping requirement; and 3) reducing the annual reporting requirements to a single letter per 

submitter. 
 ES-2 

The LoREX exemption category is new to the program. It encourages pollution prevention by 

permitting faster commercialization of chemical substances meeting stated release and exposure criteria. 

This exemption is expected to reduce the number of consent orders the Agency negotiates under Section 

5(e) of TSCA, as many of the companies normally subject to that process can take the steps necessary to 

reduce or eliminate releases and exposures without the intervention of the Agency and without waiting the 

two to six months normally required to negotiate such consent orders. 

The low volume amendment expands the low volume exemption to allow a greater number of 

submitters to take advantage of it by increasing the volume requirement from 1,000 kg/yr to 10,000 kg/yr. 

It also provides the Agency with thirty days for review, compared to 90 days for a regular submission and 

21 days for the current exemption. 

The non-5(e) SNUR amendment allows workplace protection and hazard communication 

provisions to be included in expedited non 5(e) SNURs. This would allow elimination of the Section 5(e) 

Consent Order development process for PMN cases involving those types of provisions, thereby reducing 

the 
 ES-3 

Table ES-1. Summary of Amendments 

Change Expected Effect 

Polymer Exemption:

- Expands criteria for eligibility 

- Requires annual notification requirements 

- Amends recordkeeping requirement 

- Adopts the OECD international definition 

of "polymer" 

- Increased number of polymers eligible for 

exemption 

- Increased manufacture of polymers meeting the 

Agency's "low risk" criteria 

- Increased protection of human health and the 

environment 

- Minimize notification and review costs 

- Elimination of delay time required to comply with 

regulation 

Procedural PMN Rule:

- Amends the "two percent" reporting rule 

for polymers, increasing the flexibility in 

polymer names 

- Requires standard Chemical Abstracts 

nomenclature in Section 5 submissions 

and bona fide Inventory search requests 

- Revises bona fide Inventory search 

procedures 

- Requires multiple copies of submissions 

- Requires notice of commencement form 

- Reduced polymer submissions 

- Increased flexibility in polymer manufacturing 

process 

- Expedited searches of the TSCA Inventory 

- Increased number of correct submissions 

- Decreased use of Agency resources to determine 

correct chemical identity and to make confidential 

business information (CBI) copies 

- Increased protection of CBI 

- Expedited Agency review of submissions 

Low Volume Exemption and Low Release/Low Exposure (LoREX) Exemption:

- Raises the limit eligible for exemption from 

1,000 to 10,000 kg per year 

- Introduces a new exemption category 

- Increases the Agency review time from 

21-days to 30-days 

- Requires use of PMN form 

- Establishes "binding" practices 

- Increased number of substances eligible for 

exemption 

- Reduced delay time for agency review (in case of 

substances not previously eligible for exemption) 

- Increased use of pollution prevention practices to 

reduce exposure and release 

- Reduced volume of Section 5(e) consent orders 

- Reduced Agency resource commitments 

- Increased introduction of low-risk new chemicals 
 ES-4 

Non-5(e) Significant New Use Rule (SNUR):

- Allows Agency to use expedited 

rulemaking procedures to impose worker 

protection and hazard communication 

requirements for certain substances 

- Reduced number of Section 5(e) consent orders 

- Elimination of time required to develop a Section 

5(e) consent order 

- Submitter can commence commercial manufacture 

sooner 

- Reduced use of Agency resources 
 ES-5 

resources and time required to develop regulatory provisions for those PMN cases by two to six months or 

more. 

The procedural amendment allows for more accurate chemical review, greater protection of 

confidentiality, decreased opportunities for compliance problems, and greater flexibility for polymer 

manufacturers. Specific topics included in the amendment are: a requirement to use specific 

nomenclature for chemical names, a modification of the 2% rule for naming polymers, revised 

requirements for TSCA Inventory search requests (bona fides), a requirement to submit multiple copies of 

submissions, a requirement to use notice of commencement forms, and the inclusion of language to allow 

future electronic submissions. 

Overall, these amendments are expected to exempt a larger proportion of premanufacture notices 

(PMNs) from full review; to shift certain fixed costs to PMN submitters; to reduce burdens for 5(e) consent 

order development; and to streamline the PMN review process by reducing the number of submissions 

requiring full review, reducing bona fide TSCA Inventory search requests, and reducing incomplete or 

incorrect submissions. Industry will have greater flexibility in their development and marketing schedules 

since fewer chemicals will have to go through the full PMN process and fewer 5(e) consent orders will be 

issued. 

Of the options considered, EPA believes that the best option is represented by the incorporation of 

all four amendments already discussed. The majority of the benefits of this option are in the form of 

reduced costs as compared to the current Section 5 requirements; the savings, based on the net 

quantified costs, to industry, government, and society as compared to the current regulations are listed for 

three scenarios in Table ES-2. 

 In addition to the quantified cost reductions presented in the table, there are other cost 

reductions and benefits that have not been quantified. These include increased innovation due to less 

restrictive regulations, increased confidential business information protection associated with the 

increased burden of proof for bona fide applications, greater industry control over the use of pollution 

prevention practices, and greater industry control over their schedule due to the various reductions in 

delay time. 

The contribution to the quantified savings vary based upon the particular amendment under 

consideration. Table ES-3 lists the savings, split into industry and government savings, for the 
 ES-6 

amendments. Although costs have been quantitative for the non-5(e) SNUR amendment, it should be 

noted that the effect of the non-5(e) SNUR amendment is very dependent on industry reaction to some of 

the other amendments. Overall, the non-5(e) SNUR amendment is expected to reduce the number of 5(e) 

consent orders, reducing the time and resources required to develop regulatory provisions and allow 

commencement of commercial manufacture of the chemical substance earlier than would be possible 

under current requirements. 
 ES-7 

Table ES-2. Summary of Quantified Savings for Preferred Option 

($ millions, annual) 

 1000 Submission 

 Scenario 

 2000 Submission 

 Scenario 

 3000 Submission 

 Scenario 

Low High Low High Low High 

Industry 5.3 8.0 10.6 16.0 15.9 24.0 

Government 0.5 0.9 1.0 1.8 1.5 2.7

Total Society 5.8 8.9 11.6 17.8 17.4 26.7 

Table ES-3. Summary of Quantified Savings Per Amendment 

($ million, annual) 

1000 Submission 

Scenario 

2000 Submission 

Scenario 

3000 Submission 

Scenario 

 Low High Low High Low High 

Polymer Exemption Amendment 

 Industry 4.7 6.8 9.4 13.5 14.2 20.3 

 Government 0.2 0.4 0.4 0.8 0.6 1.2 

Procedural Amendment 

 Industry -0.2 -0.2 -0.3 -0.4 -0.5 -0.5 

 Government 0.1 0.1 0.1 0.2 0.2 0.2 

LVE and LoREX Amendment 

 Industry 0.7 1.3 1.4 2.6 2.0 3.9 

 Government 0.2 0.2 0.3 0.4 0.5 0.6 

Non 5(e) SNUR 

 Industry 0.1 0.1 0.1 0.2 0.2 0.3 

 Government 0.2 0.2 0.3 0.4 0.5 0.6 
 I-1 

 

I. INTRODUCTION

 This document presents the regulatory impact analysis (RIA) for four 

amendments to new chemical reporting requirements under the Premanufacture 

Notification (PMN) program. The purpose of this analysis is to provide 

objective information on the costs and benefits of the various amendments to 

the reporting requirements currently in place under Section 5 of the Toxic 

Substances Control Act (TSCA). This cost/benefit information is needed for 

RIAs as stipulated under Executive Order (EO) 12866. This introduction 

provides a brief history of the implementation of TSCA Section 5 and the PMN 

program, summarizes the requirements of Executive Order 12866, and briefly 

overviews the remainder of the analysis. 

 A. Background and Scope

 Section 5(a) of TSCA requires that manufacturers and importers of new 

chemicals submit information to EPA at least 90 days before such manufacture 

or importation begins. Section 5(d)(1) of the Act specifies that this 

submission shall include the following information, to the extent that it is 

reasonably ascertainable: 

!trade name, chemical identity, and molecular structure; 

!proposed categories of use; 

!estimates of the amount to be manufactured or imported for each 

proposed category of use; 

!a description of the byproducts resulting from manufacture, 

processing, use, or disposal; 

!estimates of the number of workers exposed and the duration of their 

exposure; and 

!a description of the proposed method of disposal. 
 I-2 

 

In addition, the submission must contain any test data that concerns the 

environmental and health effects of the new chemical, and which is in the 

submitter's possession or control, as well as descriptions of any other data 

concerning such effects that are known to, or reasonably ascertainable by, the 

notice submitter. 

 Section 5(h) provides for exemptions from the information requirements 

for certain new chemicals. Four primary types of exemptions are addressed in 

the statute: 

!test marketing exemptions; 

!exemptions from the requirement to submit health and safety data; 

!exemptions for research and development chemicals; and 

!exemptions by rule (upon application) for chemicals that will not pose 

an unreasonable risk of injury to human health or the environment. 

 Regulations to implement Section 5 reporting requirements for new 

chemical substances were first proposed on January 10, 1979 (44 FR 2242), and 

were reproposed on October 16, 1979 (44 FR 59764). The final rule appeared on 

May 13, 1983 (48 FR 21722) and included a final PMN form. The submission form 

was revised in 1984 and again in early 1991. The 1991 form included 

certification statements in accordance with certain final PMN rules 

promulgated since the form was updated in 1984. It also reformatted some of 

the existing questions, and added some optional sections to include space for 

data on pollution prevention practices and check boxes to allow the submitter 

to indicate a willingness to make certain information on the form binding. 

 Also in 1984, EPA published a TSCA Section 5(h)(4) rule granting 

exemption from Section 5 for persons who manufacture or import certain 

polymers. This rule was developed in response to petitions by the Chemical 
 I-3 

 

Manufacturers Association (CMA), the Synthetic Organic Chemical Manufacturers 

Association (SOCMA), and other industry groups. The final exemption rule was 

published in the Federal Register of November 21, 1984 (49 FR 46066). To be 

manufactured under this exemption the polymer must meet one of two criteria: 

!the polymer has a number-average molecular weight greater than 1,000 

MW; or 

!the polymer is a polyester and is manufactured solely from one or more 

reactants listed in Table in 40 CFR 723.250 (e)(2). 

In addition, certain classes of polymers cannot be manufactured under this 

exemption. These polymers include: 

!cationic polymers as defined under 40 CFR 723.250 (b)(5); 

!polymers containing less than 32 percent carbon; 

!polymers that do not meet the elemental limitations described in 40 CFR 

723.250 (d)(3); 

!biopolymers and their synthetic equivalents as defined under 40 CFR 

723.50 (b)(3); 

!polymers manufactured from reactants containing halogen atoms or cyano 

groups; 

!polymers containing reactive functional groups except under certain 

conditions described in 40 CFR 723.50 (d)(6); and 

!polymers that degrade, decompose, or depolymerize. 

 Submitters applying for this exemption must submit an application 21 

days prior to manufacture or import of an eligible polymer, must file a notice 

of commencement (NOC), and are bound to maximum residual levels of reactants 

and maximum content of low molecular weight species identified in the 

exemption's application. Any increase in residual levels that exceed what was 

originally reported requires submission of a PMN or another exemption 

application. 
 I-4 

 

 In 1985, EPA published a TSCA Section 5(h)(4) rule granting exemption 

from Section 5 reporting requirements for persons who manufacture or import 

chemical substances produced in quantities less than or equal to 1,000 

kilograms per year. This rule was developed in response to petitions by CMA 

and other industry groups. The final exemption rule was published in the 

Federal Register on April 26, 1985 (50 FR 16477). This exemption requires 

notification to EPA 21 days prior to manufacture. Only one holder per 

chemical substance is allowed and the use, site of manufacture, exposure, and 

release controls described in the submission are binding. 

 On April 4, 1982, in response to a petition from CMA and other industry 

groups requesting exemptions from TSCA Section 5 reporting requirements, EPA 

proposed regulations exempting site-limited intermediates (SLIs). After 

receiving public comments, the Agency decided not to pursue an exemption for 

SLIs at that time because it was found that it was not possible to reduce the 

procedural safeguards in the rule, which industry commentors stated were 

overly burdensome, and still make the required 5(h)(4) finding of no 

unreasonable risk. Thus, SLIs were still subject to the full PMN reporting 

process. 

 The Agency is currently implementing amendments that change the 

eligibility and submission requirements for several exemptions from full 

Section 5 PMN reporting, develop a new class of exemption (i.e., low release 

and exposure chemicals including some SLIs), amend certain procedural 

requirements for the submission of Section 5 notices, and amend certain 

provisions of the current expedited rulemaking procedures to allow the Agency 

to write Significant New Use Rules (SNURs) without requiring a Section 5(e) 

Order. 
 I-5 

 

 C. Executive Order 12866

 Executive Order 12866, issued September 30, 1993, requires regulatory 

impact analyses (RIAs) of major regulations and redefines the oversight role 

of the Office of Management and Budget. Major regulations are defined as any 

regulation that is likely to lead to a rule resulting in any of the following: 

!an annual effect on the economy of $100 million or more, or adversely 

affecting a sector of the economy, productivity, competition, 

jobs, the environment, public health or safety, or state, local, 

or tribal governments or communities; 

!a serious inconsistency or otherwise interfering with an action taken 

or planned by another agency; 

!materially altering the budgetary impact of entitlements, grants, user 

fees, or loan programs; 

!raising novel legal or policy issues. 

 Although the direct costs of compliance with Section 5 are not likely to 

trigger the $100 million annual effect criterion, substantial controversy 

exists regarding the effects of Section 5 on indirect costs, including 

innovation in the chemical industry. 

 Because the amendments are intended to reduce EPA and industry overall 

costs, innovation impacts also may be reduced. EPA has chosen to prepare this 

regulatory impact analysis of the TSCA Section 5 amendments to compare the 

costs and benefits of the amendments with existing costs and benefits and 

therefore, to provide some indication of the cost savings. 
 I-6 

 

 E. Structure of this Analysis

 In addition to the introduction, there are nine chapters included in the 

RIA. The remaining chapters of this report are as follows: 

!Chapter II provides a discussion of the methodology used in this 

analysis; 

!Chapter III presents a description of the baseline against which costs 

of the amendments are compared; 

!Chapter IV presents a description of the polymer exemption amendment, 

the resulting estimated changes in cost, and the benefits of the 

amendment; 

!Chapter V presents a description of the procedural amendments, 

estimated effects on societal costs, and benefits of the 

amendment; 

!Chapter VI presents a description of the low volume exemption and low 

release/low exposure exemption (LoREX) amendment as well as the 

estimates of the changes in societal costs and benefits resulting 

from both exemptions; 

!Chapter VII discusses the non-5(e) significant new use rule amendment 

and its effects on societal costs and benefits; 

!Chapter VIII presents an analysis of the costs of various alternative 

regulatory options that have been considered; 

!Chapter IX discusses the impact of the amendments on small businesses; 

and 

!Chapter X discusses the impact of the amendments on innovation. 

Two appendices provide the derivation of the labor rates and the basis for the 

industry time requirements used in this analysis. 
 II-1 

II. METHODOLOGY

The methodology used to develop estimates of the costs and benefits of the amendments is 

briefly described in this chapter. Of concern are both industry and government costs, which, when 

aggregated, provide an estimate of overall societal costs. Benefits are produced mostly by reductions in 

costs resulting from changes to the current Section 5 regulations. 

The following discussion describes what was included in the analysis, how estimates were made, 

and the limitations of those estimates. 

A. Direct Costs of Compliance

The PMN Program imposes direct costs on submitters and EPA that are incurred in filing a PMN 

submission. Direct costs are defined as the initial effects of the program; these costs are in contrast to 

indirect costs, which are the secondary effects of these initial costs in the economic system. For 

submitters, the sources of direct costs affected by the amendments include: 

! submission costs--the direct out-of-pocket costs of compiling and submitting information 

under Section 5. 

! delay costs--the reduction in the present value of the profit stream for the new chemical 

because of delayed introduction into commerce. 

! cost of negotiating restrictive actions-- after the submitter has filed a Section 5 notice, it is 

possible that the submitter will need to take additional actions based on EPA's review. 

This analysis discusses only the costs of negotiating those actions and not the actions 

themselves, which could be affected if the submission is made through the low volume 

exemption or the LoREX exemption. 

Additional costs attributable to compliance with TSCA Section 5, such as costs associated with 

submission of confidential business information (CBI), are not discussed in this analysis because those 

costs are unaffected by the amendments. 

In analyses conducted previously in support of EPA's Section 5 rulemaking (ICF 1983), it was 

observed that there was a great deal of uncertainty (i.e., the variance was high) regarding each of these 

direct costs incurred by submitters. The PMN program has now been in effect for more than 14 years and 

much of the uncertainty has been removed with regard to the costs of submission and review. Years of 

historical PMN submissions have provided an objective set of data for estimating Section 5 submission 
 II-2 

and review costs, but a great deal of uncertainty still exists concerning the magnitude of other types of 

costs. This analysis only provides quantitative analysis of submissions and review-related costs, and does 

not quantify other types of costs, but discusses those costs qualitatively. 

The cost estimates in this analysis focus on the incremental direct costs associated with the 

amendments to the PMN program. These include both the costs that directly contribute to the PMN 

impact (submission of information, delay, and restrictive actions) and the costs to EPA of evaluating the 

information submitted.*

 The cost estimates do not include indirect economic effects that result from 

submitters incurring these direct costs. One of the major indirect economic benefits is the potential effect 

on the level of innovation, which is addressed in Chapter X. Other indirect economic effects, such as price 

effects, are not analyzed because of time and resource constraints. 

Also not included in the estimates of direct costs are the costs of actions induced by Section 5 

rules (as opposed to actions required by Section 5 rules). The major induced action is additional testing 

performed by submitters. Some submitters perform unrequired testing prior to their Section 5 submission 

and include the results with their submission. This activity is not expected to be affected by the 

amendments. 

B. Quantification of Direct Societal Costs and Benefits 

To quantify the changes in direct societal costs resulting from the amendments, estimates of the 

industry compliance cost per submission and the EPA review costs per submission were developed. 

These costs and benefits are then presented on a per 1,000 submission basis. Due to past fluctuations in 

the number of submissions per year, estimates of the future yearly rate of submissions were not made. 

1. Submission Numbers

 

 * Throughout this analysis "PMN impact" refers to all factors (not just measurable costs) that affect a 

submitter's decision to proceed with commercialization of a new chemical when faced with the Section 5 

regulations. 

For the purposes of this analysis, the present level of TSCA Section 5 costs is used as 

the baseline. PMN submissions and exemptions in fiscal year 1989 (FY89) are used to analyze the 

effects of the amendments. FY89 data were chosen because 1989 was the first full year of data available 

since user fees were instituted. Agency records indicate, however, that submitters of full PMN and 

polymer exemption submissions rushed submissions to avoid the user fee. This action, in effect, created 
 II-3 

a large volume for FY88 and a low volume for FY89. In general, however, it is felt that the distribution of 

Section 5 submissions experienced in FY89 is representative. 

Because recent PMN experience has been punctuated by variation in the level of submission due 

to special circumstances, it was decided to avoid predicting future submission volumes and to present final 

conclusions on a per 1,000 submission basis. Scenarios using the distribution of submissions are 

presented for 1,000, 2,000, and 3,000 submissions per year. In addition, to check the validity of the 

distribution assumption, a sensitivity analysis was completed to incorporate FY90 and FY91 data. 

2. Submission Costs

Industry submission costs in this analysis are based on estimates for the labor 

requirements associated with each type of submission under both the baseline and amended exemption 

cases. The following fully loaded labor rates were used to convert these labor requirements to 1993 

dollars: 

! Clerical -- $35.13 per hour; 

! Technical -- $76.91 per hour; and 

! Managerial -- $112.26 per hour. 

The derivation of these labor rates is presented in Appendix A. Industry unit labor requirements for 

preparing the information included in the full PMN form, various amended forms, and other items 

submitted to the Agency were developed based on information provided by the Chemical Manufacturers 

Association (CMA). The derivation of the unit labor requirements, in hours by job category, is presented in 

Appendix B. 

3. Delay Costs*

a. Components of Delay

Delay costs represent the present value of profits delayed as a result of the PMN 

process. Delay costs are specified in profits rather than sales because, while the PMN process imposes 

 

 * This concept was used to support the original rulemaking. A more detailed discussion can be found in 

the "Regulatory Impact Analysis for New Chemical Reporting Alternatives Under Section 5 of TSCA," May 

10, 1983 (ICF 1983). 
 II-4 

delays in revenue streams, it also imposes delays in cost streams. Therefore, the loss attributable to 

delay should consider revenues net of costs. 

Primary delay costs here are defined as the net present value of the profit stream before and after 

delay, not profits foregone. This is an important distinction. Although PMN delay may contribute to new 

chemicals losing sales to existing products, resulting in profits foregone, such losses are secondary effects 

of the PMN process. The primary effect of the process is, in some instances, to delay for 90 days the 

introduction of a new chemical, and thus reduce the value of a certain amount of profit. Since the value of 

profit is greater today than three months from now, the decreased present value of the profit stream 

represents the primary delay costs of the PMN process. 

Additionally, it is easily conceivable that there may be seasonal or single-batch chemicals for 

which demand is immediate and where the 90-day delay alone prohibited the chemical from being 

marketed. However, these are secondary effects that result from delay (and generally insignificant costs 

in the scheme of the total production of the chemical industry), not the primary effect of delay that is being 

quantified in this RIA. 

Thus, the definition of primary delay costs as a reduction in the present value of the profit stream 

is operative here. Delay costs can be broken into two components: pre-submission delay and postsubmission delay. 

Pre-submission delay includes the amount of time it takes a firm to compile and submit a Section 5 notice. 

 Based on previous analyses, a maximum estimate for the pre-submission delay would be one month (ICF 

1983). Such delay would not include any time for the completion of testing. Because Section 5 does not 

require submitters to perform health and safety testing, any delay resulting from testing prior to submission 

would not be attributable to the PMN process. If submitters develop additional health and safety data 

before submitting a Section 5 notice (for whatever reason), they do so voluntarily. Therefore, costs 

attributable to delay due to voluntary testing should not be considered direct costs of the New Chemicals 

Program. Post-submission delay corresponds to time lost during the PMN review period -- a maximum of 

180 days (assuming 5(c) extension). Most submitters voluntarily suspend for 180 days to allow 

development and review of the 5(e) Order. 
For both components, the delay period is defined as the time that the review period adds to the 

critical path for bringing a new chemical to market. If the PMN review can be conducted in parallel with 

other activities along the critical path (in-house development, customer evaluation, etc.), delay could be 

reduced to zero. If no part of the preparation of the PMN or EPA review of the PMN can be conducted in 

parallel with other critical path activities, the cost of delay will approach the present value of delaying the 

profit stream by 120 days (the sum of the pre-and post-submission periods for a full PMN) if no 5(c) 

extension is filed. Although 5(c) actions can extend the delay on individual projects, this analysis assumes 

a full 120-day delay resulting from a PMN submission. This assumption is a simplification given that 

industry is now familiar with the requirements of the New Chemicals Program and in most cases has 

integrated the requirements of submission and review into ongoing practice. 

b. Valuation of Delay

As specified in the previous section, direct costs of PMN delays are defined as a 

reduction in the present value of the profit streams associated with new chemicals. Algebraically, such a 

reduction would be computed as follows: 

PV(p)] r+(1 )

1 -[1=PD t •

 where PD = present value of profits delayed 

 t = amount of time attributable to PMN delay 

 r = average real rate of return (specified in the same time units as t) for new 

chemicals 

 PV(p) = present value (discounted at r) of profit stream associated with the average new 

chemical 

This formula represents the difference between the present value of the profit stream associated with a 

new chemical and the present value of the same profit stream lagged "t" time periods. 

For this analysis, values for t will depend on the submission being considered (120 days in the 

case of a full PMN). However, values for r and PV(p) must be pre-specified. In previous analyses of PMN 

delay costs, low and high annual real rates of return for new chemicals were estimated at 5 and 10 

percent respectively (ICF 1983). These analyses also provided estimates for the present value of the 

 II-5 
 II-6 

profit stream of typical new chemicals. In 1993 dollars these estimates are $690,262 assuming the 5 

percent rate of return and $585,110 assuming the 10 percent rate of return (ICF 1983, BEA 1994). 

4. Review Costs

Agency review cost estimates are based on labor estimates in the New Chemicals 

Program Operating Plan for 1993. The labor requirements are converted to dollars using $88,206 to 

$114,662 for the average cost of a fully loaded full time equivalent (FTE) in the New Chemicals Program. 

 The derivation of this estimate is provided in Appendix A. 

C. Effects on New Chemical Introduction

The general approach used in Chapter X to estimate the effects of the Section 5 program on new 

chemical introduction is to discuss the overall effects of the New Chemicals Program on new chemical 

development and the ways in which the amendments would change those effects. 

D. Health Implications of Regulatory Alternatives

A discussion of the health implications for each of the amendments can be found in the individual 

chapters discussing those amendments. In general, the Agency used information gathered during the 

past fourteen years of the New Chemical Program's operation to determine the characteristics of a 

chemical, its production, or its use which identify no or limited human health risks. This information was 

used to design the amendments. 

The first step in the qualitative comparison of the amendments to the current requirements was 

the identification of the effects that the amendments would have on the introduction of different classes of 

chemicals. The second step was the determination of the relative health effects associated with these 

chemicals compared to the average new chemical. 

The major limitations in this analysis arise from the necessity of predicting what the actions of EPA 

and PMN submitters would be in the hypothetical situation in which alternative requirements for 

submission and review are imposed. Furthermore, the expected health effects information is based only 

on EPA experience in reviewing years of PMN and exemption submissions. 
 III-1 

III. CURRENT TSCA SECTION 5 PROGRAM: BASE CASE DESCRIPTION

For the purposes of this analysis, the current level of requirements under TSCA Section 5 will be 

used as "the baseline" and will refer to the distribution of PMN submissions and exemptions in fiscal year 

1989 (FY89) as the base year. This distribution is used to determine the baseline number of submissions 

in scenarios having 1000, 2000 and 3000 total submissions as described in the methodology section. The 

remainder of this chapter is organized as follows: 

! Section A briefly describes the current requirements associated with the New Chemicals 

Program; 

! Section B describes the submission counts that will be used as a baseline for this 

analysis; 

! Section C provides estimates of the current Industry unit costs for each type of 

submission; 

! Section D provides estimates of the baseline unit costs for Agency review of each type of 

submission; and 

! Section E presents the total quantified baseline costs used in this analysis and discusses 

some of the other unquantified costs associated with the new chemicals program. 

A. Current New Chemicals Program

This section provides a brief overview of the current requirements for new chemicals under 

Section 5 of TSCA. In recent years an average of nearly 2,300 new chemical substances each year were 

reviewed within the New Chemicals Program of the Office of Pollution Prevention and Toxics (OPPT). 

Figure III-1 presents the historical number of submissions that have been reviewed each year. 

Section 5 of the Toxic Substances Control Act (TSCA; Public Law 94-469) requires manufacturers 

of new chemicals to provide the Environmental Protection Agency (EPA) with written notice of their intent 

to produce such substances at least 90 days prior to the date when manufacturing begins. Any 
 III-2 

Figure III-1 
 III-3 

chemical not listed on the TSCA inventory of existing chemicals (the "Inventory")*

 is considered "new" for 

PMN purposes. Currently there are three exemptions to this reporting requirement: the polymer 

exemption, the low volume exemption, and the test market exemption. In addition, procedures to obtain 

information from the Agency (bona fide submissions) and procedures to notify the Agency that 

manufacturing of a submitted chemical has commenced (Notice of Commencement, or NOC) have been 

established. The various aspects of the current New Chemicals program are discussed in the following 

sections. 1. PMN Submission

New chemicals that are not eligible for one of the current exemptions must comply with 

the full PMN submission requirements. The submission form requests the following information: the 

chemical's common and/or trade names, identity and molecular structure, estimated production quantities, 

uses, disposal methods, workplace exposure and release information, and a listing of impurities and 

byproducts. Any data concerning the effect of the chemical on human health or the environment, which is 

in the manufacturer's possession or control, or is known or reasonably ascertainable by the manufacturer 

must also be submitted. Once EPA receives the PMN, it must publish a notice of receipt in the Federal 

Register and conduct its evaluation of the chemical based on the data provided and other available 

information. The submitter may produce the chemical at the completion of a 90-day review period unless 

that review is extended or the right to manufacture or import the chemical is denied. Reviews may be 

extended for an additional 90 days for good cause. 

Premanufacture notification also applies to significant new uses of existing chemicals. Should 

EPA find, by rule, that a new use of an existing chemical presents significant new exposure to humans 

and/or the environment, the manufacturer or processor must report through the PMN process. The 90-day 

review period also applies to this case. 

 

 * The Chemical Substance Inventory is a list of all chemicals that were manufactured, imported or 

processed for a commercial purpose since January 1, 1975. The Inventory is maintained under statutory 

authority of Section 8(b) of TSCA. 

2. Polymers

Current regulations under TSCA include two special provisions relating to submissions for 

polymers: an exemption provision and the "two percent rule." 

a. Polymer Exemption
 III-4 

In 1984, EPA published a TSCA Section 5(h)(4) rule granting exemption from 

some of the Section 5 requirements for persons who manufacture or import certain polymers. This rule 

was developed in response to petitions by CMA, Synthetic Organic Chemicals Manufacturers' Association 

(SOCMA), and other industry groups. The final exemption rule was published in the Federal Register of 

November 21, 1984 (49 FR 46066). To be manufactured under this exemption the polymer must meet 

one of two criteria: 

! the polymer has a number-average molecular weight greater than 1000; or 

! the polymer is a polyester and is manufactured solely from one or more reactants listed in 

Table in 40 CFR 723.250 (e)(2). 

In addition, certain classes of polymers cannot be manufactured under this exemption. These polymers 

include: 

! cationic polymers as defined under 40 CFR 723.250 (b)(5); 

! polymers containing less than 32 percent carbon; 

! polymers that do not meet the elemental limitations described in 40 CFR 723.250 (d)(3); 

! biopolymers and their synthetic equivalents as defined under 40 CFR 723.50 (b)(3); 

! polymers manufactured from reactants containing halogen atoms or cyano groups; 

! polymers containing reactive functional groups except under certain conditions described 

in 723.50 (d)(6); and 

! polymers that degrade, decompose, or depolymerize. 

Submitters taking this exemption must submit 21 days prior to manufacture or import of an eligible 

polymer. They are required to keep certain records that verify their eligibility for and compliance with the 

exemption. In addition, submitters must file a Notice of Commencement (NOC) within 30 days of 

beginning manufacturing or import. 

In the 1984 exemption, the Agency discussed its concern for potential health risks such as 

developmental fibrosis of the lung or other pulmonary effects that may result upon inhalation of polymers 

in particulate form. At that time, the Agency believed that such exposure to polymer particulates was 

generally limited and expected to be of low concern. In early 1992, based on additional experience with 

high molecular weight polymers, EPA decided that it would be inappropriate to make a "no unreasonable 
 III-5 

risk" finding for water-absorbing polymers with molecular weights greater than 10,000. In addition, the 

Agency also proposed restrictions to mitigate potential exposure to respirable particulates of water 

insoluble polymers with molecular weights of 10,000 daltons or greater. The Agency does not have 

sufficient data to determine the precise molecular weight and/or structural considerations that may 

facilitate the mechanisms causing toxicity and at that time believed that risks from water insoluble 

polymers with molecular weights as low as 10,000 at respirable concentrations as low as 0.5 mg/m3

 could 

not be ruled out. The Agency also proposed an alternative of placing no restrictions on higher molecular 

weight water insoluble particles and requested public comment. 

b. Two Percent Rule

Identification of new polymers currently is based on the amounts of monomers 

and other reactants used in the reaction, "as charged" to the reaction vessel, and on the dry weight of the 

polymer. This approach was adopted because EPA and industry believed, at the time this approach was 

developed in 1977, that it would be difficult to identify the exact amount of monomers or reactants 

incorporated in the final polymers. All constituents of a polymer must be listed on a notification, but a 

submitter may elect which constituents present at two percent or less will be incorporated into the 

Inventory description of the polymer. Under the two percent rule, some minor structural changes to a 

polymer are permitted without a new submission. The use of additional monomers or reactants will not 

result in a "new" chemical substance if each of the additional monomers or reactants amounts to two 

percent or less of the total molecular weight of the polymers. Often, however, the charged amount of an 

initiator is greater than two percent. In these cases, a new submission would be required. 

3. Low Volume Chemicals

In 1985, EPA published a TSCA Section 5(h)(4) rule granting exemption from Section 5 

reporting requirements for persons who manufacture or import chemical substances in quantities less than 

1,000 kilograms per year. This rule was developed in response to petitions by CMA and other Industry 

groups. The final exemption rule was published in the Federal Register on April 26, 1985 (50 FR 16477). 

Chemicals manufactured at volumes of 1,000 kg or less per 12 month period are eligible for the 

currently existing low volume exemption. This exemption has a 21-day notice to EPA requirement prior to 
 III-6 

manufacture. Only one holder per chemical substance is allowed and the site of manufacture or import, 

use, volume, and all exposure and release controls described in the submission are binding on the 

submitter. 

4. Test Market Chemicals

TSCA Section 5(h)(1) authorizes the Administrator to exempt a new chemical substance 

from the PMN requirements when it is manufactured for test marketing purposes if the proposed test 

market activity does not present an unreasonable risk to human health or the environment. This 

exemption is not affected by the amendments addressed by this RIA and is not discussed further. Test 

Market Exemption submissions are included in the counts provided in the baseline and amended cases for 

completeness. 

5. Submission Procedures

Procedures have been established to allow producers and importers of new chemical 

substances to comply with TSCA. 

a. Determining if a Chemical is Subject to TSCA '5(a)

Manufacturers and importers are responsible for determining whether a 

substance is a new chemical substance under TSCA and, therefore, subject to Section 5(a) notice 

requirements. Submitters are able to determine whether chemicals are new by looking for them on the 

TSCA Inventory, a list of commercially produced chemicals. Substances for which the chemical identities 

are claimed to be confidential, however, are listed only by generic chemical name in the publicly available 

Inventory and it maybe impossible, therefore for the general public to determine whether a specific 

substance consistent with that generic name is really a new or existing substance under TSCA. As a 

special mechanism for enabling a person to know if a given substance matches a confidential chemical 

substance identity, EPA has established procedures to inform persons whether substances they intend to 

manufacture or import are already included on the Inventory. Under these procedures, a person must 

demonstrate a bona fide intent to manufacture or import the substance by submitting information 

stipulated under 40 CFR 720.25(b)(2). A letter to EPA containing the specified information constitutes a 

Notice of Bona Fide Intent to Manufacture or Import for a Commercial Purpose (a Bona Fide Notice). 
 III-7 

If approved for intent, the Chemical Inventory Section of the EPA scans the TSCA database, both 

classified and unclassified sections, to determine whether the chemical is already listed on the Inventory 

or whether it is a new substance. 

If it is determined that the notice is for a new chemical substance, then the manufacturer is 

expected to submit an exemption notice or a PMN for that substance. If the substance is found on the 

Inventory, then the submitter can either commence production immediately or, in certain cases, submit a 

PMN notice if alternate production pathways or quantities are preferred. 

b. Notice of Commencement

If EPA takes no regulatory action on the PMN filing within the review period, the 

submitter may commence commercial manufacture or importation after the review period has expired, 

without further Agency approval. Within 30 days of commencing manufacture or importation, however, the 

manufacturer or importer must file a Notice of Commencement (NOC). The NOC certifies that commercial 

manufacture and/or importation actually has occurred. After receiving an NOC, EPA will add the 

substance to the Inventory. 

B. Baseline Submissions

As discussed in Chapter II, total costs in this analysis are based on three scenarios for the total 

number of submissions (1,000, 2,000, and 3,000). The baseline distribution of these submissions is based 

on the submissions received in FY89. Table III-1 presents the number of each type of submission 

received in that year based on numbers reported in the New Chemicals Program Annual Report and the 

number of submissions that are in the OPPT Regulatory Impacts Branch (RIB) PMN database. The table 

also presents the baseline submission numbers for the 1,000, 2,000, and 3,000 case scenarios. 

In order to test the validity of the projections made using the FY89 data, the distribution presented 

in Table III-1 can be compared to the distribution of submissions received in FY90 and FY91. Although 

the overall number of submissions in these years varied significantly compared to FY89, the distribution 

between PMN and exemption submission agrees very well with the FY89 data set. For example, 

whereas PMNs represented 69 percent of submissions in FY89, they accounted for 70 percent and 74 

percent of submissions in FY90 and FY91, respectively. Furthermore, because these data indicate that 

PMNs may account for slightly higher percent of submissions than is assumed in this analysis, it indicates 
 III-8 

that the baseline costs of the PMN program may be slightly higher and that the amendments could result 

in ever greater societal savings. 

C. Industry Baseline Unit Costs

Each type of submission introduced above imposes certain burdens on the submitters. This 

section estimates the unit costs to industry for each type of submission under the current requirements. 

These estimated costs only include direct costs to submitters. There are additional indirect costs that are 

not quantified in this analysis which may be imposed by TSCA Section 5 requirements. 

1. PMN Unit Cost

The industry cost for a PMN submission has three main components: submission costs, 

delay costs, and user fee costs. Table III-2 shows the 
 III-9 

Table III-1. Baseline Notices Received 

Actual Estimated 

Submission Type 

 FY89 

Submissions 

(Percentage) 

1000 

Submissions 

(Counts) 

2000 

Submissions 

(Counts) 

3000 

Submissions 

(Counts) 

Premanufacture Notices 

69.6 696 1,392 2,088 

Polymer Exemptions 11.3 113 226 340 

Low Volume Exemptions 

17.2 172 345 517 

Test Market Exemptions 

 1.8 19 37 55

TOTAL 100 1,000 2,000 3,000 

Bona Fide Notices 29.7 297 593 890 

Note: The number of Test Market Exemption submissions is provided for completeness. As this 

exemption is not changed by the amendments, no analysis of costs is provided. 

Sources: RIB PMN Database 1991, OTS 1990. 
 III-10 

Table III-2. Industry Costs for PMN Submissions 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 12 422 14 492 

B. Technical ($76.91/hr) 67 5,153 80 6,153 

C. Managerial ($112.26/hr) 16 1,796 20 2,245

 Subtotal 95 $7,371 114 $8,890 

DELAY COSTS $11,253 $18,921 

USER FEE $2,070 $2,070 

TOTAL INDUSTRY PMN UNIT COST $20,694 $29,881 

Sources: ICF 1983, CMA 1991 (Appendix B), CAIR 1990 (Appendix A), BLS 1994. 
 III-11 

labor hours and costs for these three components, and the unit cost for a PMN submission. 

 

a. Submission Costs

Section 5(d) of TSCA specifies PMN data requirements. The current reporting 

form (Rev 1-91) contains sections on general submitter 

information; chemical identity; production, import, and use data; human exposure and environmental 

release; industrial sites controlled by the submitter and those controlled by others; results of test data; 

environmental fate data; and health and environmental effects data. Additional data elements include: 

! certification statements required by user fee rule, low volume exemption, and polymer 

exemption; 

! a request for additional information regarding uses in consumer products; 

! a request for a description of protective equipment and engineering controls used to 

protect workers; 

! expanded environmental release and disposal information; 

! reformat of information on industrial sites controlled by the submitter; 

! an optional page regarding pollution prevention and recycling information; 

! optional boxes for submitters to indicate their willingness to be bound for certain types of 

information. 

Table III-3 presents estimated labor hours for the current PMN reporting form (Rev 1-91). These 

estimates are based on data collected by CMA from its members in response to a request from EPA. The 

CMA data are summarized in Appendix B. The estimates include the time spent reading and becoming 

familiar with the form, gathering the required information and preparing the report, producing sanitized 

responses for items claimed as confidential 
 III-12 

Table III-3. Estimated Industry Labor Requirements for PMN (Rev. 1-91) Submission 

(hours) 

Clerical Technical Managerial

General Instructions 2.0-2.5 1.5-2.0 3.0-4.0 

Certification 0.5a

I. General Information 

 A. Submitter Information 

 B. Chemical Identity Info 1.5-2.0 3.0-6.0 1.0 

 1. Impurities 0.5 

 2. Synonyms 0.25 

 3. Trade Identification 0.25 

 4. Generic Chemical Name 0.5 

 5. By Products 0.5 

 C. Production, Import & Use Information 1.5 2.0-3.0 

 1. Production 1.0 

 2. Use Information 3.0 

 3. Hazard Information 3.0-4.0 

II. Human Exposure 2.5-3.5 6.0-7.0 

 A. Ind. Sites Controlled by the Submitter 

 1. Operation Description 

 a. Identity 1.0 

 b. Type of Operation 1.0 

 c. Amount & Duration 2.0 

 d. Process Description 10.0-12.0 

 2. Occupational Exposure 13.0-14.0 

 3. Environmental Release & Disposal 9.0-10.0 

 B. Industrial Sites Controlled by Others 2.0 10.0-12.0 2.0-2.5 

 1. Operation Description 

 2. Worker Exposure & Environmental Release 

III. List of Attachments 2.0 6.0-8.0 1.0-1.5 

Physical & Chemical Properties Worksheet 0.5 1.5-2.0 0.5 

TOTALS 12.0-14.0 67.0-80.0 16.0-20.0 

a

 The chemical identification for polymers is expected to take longer than for Class 1 substance and this range reflects the low for a class 1 substance 

and a high for a polymer. 

b

 Certification is expected to require a general managerial/legal review of the complete submission. Due to the inconsistency in the CMA responses, 

some of the labor listed under other headings including "General Instructions" may be attributable to this review. 

Source: CMA 1991 
 III-13 

business information, and maintaining a file of the submission. The estimates do not include the costs of 

developing information that is not readily available or performing tests because TSCA does not require 

submitters to develop this information. 

As described above, the processing time for each of these data elements was calculated for 

clerical, technical, and managerial staff. These values were then multiplied by the labor rates and 

summed to estimate the baseline costs as presented in Table III-2. As the table indicates, clerical labor 

accounted for 12 to 14 hours, technical labor accounted for 67 to 80 hours, and managerial labor 

accounted for 16 to 20 hours, resulting in a cost of between $7,371 and $8,890 per form. 

b. Delay Costs

Table III-2 also presents estimates for the cost of delay for a PMN. The estimates 

are based on an estimated total delay (both pre- and post-submission) of 120 days using the methodology 

described in chapter II. As the table indicates, the total delay costs are $11,253 assuming a 5 percent real 

rate of return (low cost case) and $18,921 assuming a 10 percent real rate of return (high cost case). 

c. User Fees

In addition to the labor and delay costs associated with PMN reporting, there is a 

user fee that must be paid by Industry for each submission. The user fee is $2,500 per submission unless 

the business qualifies as a small business in which case the user fee is $100. Companies with annual 

sales less than or equal to $40 million, qualifying them as a small businesses, submitted 18 percent of 

PMN submissions in FY89 (RIB PMN database). Using this percentage, the average user fee paid is 

estimated to be $2,070. 

2. Polymer Exemption Baseline Unit Costs

The industry cost for a polymer exemption submission has four main components: 

submission costs, recordkeeping costs, delay costs, and user fee costs. Table III-4 presents the 

calculation of the Industry unit cost for a polymer exemption from these components that are estimated to 

range between $9,112 and $13,367 per form. 

a. Submission Costs

Reporting for the current polymer exemption submission requires a submitter 

identification, information on the chemical identity, production and use data, a certification that certain 
 III-14 

procedures will be followed, and an acknowledgement statement that the polymer meets the terms of the 

exemption. As shown in Table III-5, this subset of the PMN reporting requirements leads to labor 

requirements for completing and submitting the form ranging from 29.5 to 40 hours. 

b. Recordkeeping Costs

In addition to submission costs, polymer exemption holders must keep records for 

five years from the date of commencement of manufacture. These records must include the date of 

commencement, the volume of production for the first three years, and any information that would be 

included in the exemption submission. These records are kept in addition to the normal records kept with 

a PMN submission which are included in the estimates for submission costs. Table III-4 presents the 

industry burden estimated for this recordkeeping requirement. The estimate includes 0 to 2 hours of 

technical time for system development and 1 to 2 hours of clerical time to maintain the system. These 

costs amount to an industry recordkeeping burden of between $35 and $224. 

 
 III-15 

Table III-4. Baseline Industry Unit Costs for Polymer Exemption Submissions 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 5.0 176 8.0 281 

B. Technical ($76.91/hr) 20.5 1,577 26.0 2,000 

C. Managerial ($112.26/hr) 4.0 449 6.0 674

 Subtotal 29.5 $2,202 40.0 $2,955 

RECORDKEEPING COSTS 

A. Clerical ($32.80/hr) 1.0 35 2.0 70 

B. Technical ($71.80/hr) 0.0 0 2.0 154

 Subtotal 1.0 $35 4.0 $224 

DELAY COSTS $4,805 $8,118 

USER FEES $2,070 $2,070 

TOTAL INDUSTRY POLYMER 

EXEMPTION UNIT COST $9,112 $13,367 

Sources: ICF 1983, CMA 1991 (Appendix B), CAIR 1990 (Appendix A), BLS 1994. 
 III-16 

Table III-5. Estimated Industry Labor Requirements for Baseline Polymer Submission 

(hours) 

Clerical Technical Managerial

General Instructions 5.0-8.0 1.5-2.0 3.5-5.5 

Certification 0.5a

I. General Information 

 A. Submitter Information 

 B. Chemical Identity Info 4.0-6.0 

 1. Impurities 0.5 

 2. Synonyms 0.25 

 3. Trade Identification 0.25 

 4. Generic Chemical Name 0.5 

 5. By Products 0.5 

 C. Use Information 

 1. Use Information 3.0 

 2. Hazard Information 3.0-4.0 

II. Operation Description 1.0 

III. List of Attachments 6.0-8.0 

TOTALS 5.0-8.0 20.5-26.0 4.0-6.0 

a

 Certification is expected to require a general managerial/legal review of the complete submission. Due to the inconsistency in the CMA responses, 

some of the labor listed under other headings including "General Instructions" may be attributable to this review. 

Source: CMA 1991, EPA-IMD 1992.
 III-17 

c. Delay Costs

Table III-4 also presents estimates for the cost of delay for a polymer exemption 

submission. The estimates are derived using the methodology described in Chapter II to convert an 

estimated total delay of 51 days (30 days of pre-submission delay plus 21 days of post-submission delay) 

into a cost. As the table indicates, the total delay costs for a polymer exemption submission are $4,805 

assuming a 5 percent real rate of return (low cost case) and $8,118 assuming a 10 percent real rate of 

return (high cost case). 

d. User Fees

In addition to the labor and delay costs associated with polymer exemption 

reporting, there is a user fee that must be paid by Industry for each submission. The user fee is $2,500 

per submission unless the business qualifies as a small business, in which case the user fee is $100. This 

analysis assumes that small and large companies submit the same proportions of polymer exemption 

submissions as PMN submissions leading to an estimated average user fee of $2,070. 

3. Low Volume Exemption

Industry costs associated with low volume exemptions (LVEs) that are quantified in this 

analysis are composed of submission costs and delay costs. Table III-6 shows the hours and costs for 

these components, and the derivation of the LVE unit cost. There is currently no user fee for this 

exemption. As the table indicates, the total baseline Industry unit cost for an LVE is between $6,930 and 

$10,919. 

a. Submission Costs

The information required in a low volume exemption submission includes general 

submitter information; chemical identification; 
 III-18 

Table III-6. Baseline Industry Unit Costs for LVE Submissions 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 5.0 176 8.0 281 

B. Technical ($76.91/hr) 19.5 1,500 24.0 1,846 

C. Managerial ($112.26/hr) 4.0 449 6.0 674

 Subtotal 17 $2,125 24 $2,801 

DELAY COSTS $4,805 $8,118 

TOTAL INDUSTRY LVE UNIT COST $6,930 $10,919 

Sources: ICF 1983, CMA 1991 (Appendix B), CAIR 1990 (Appendix A), BLS 1994. 

 
 III-19 

use; site of manufacture or import; a certification that the submitter will only manufacture the substance 

under the terms of the exemption; and test data in the submitter's possession or control. Submitters also 

must notify all processors and industrial users to whom it directly distributes the chemical substance that 

there are use restrictions and exposure controls specified in the exemption application. The estimated 

labor requirements for these activities are presented in Table III-7. 

 Based on the subset of labor requirements from the full PMN form that these data requests 

represent, the labor estimates necessary for the current requirements of a LVE submission are 5 to 8 

hours of clerical labor, 19.5 to 24 hours of technical labor, and 4 to 6 hours of managerial labor. 

b. Delay Costs

Table III-6 also presents estimates for the cost of delay for a LVE submission. 

The estimates are derived using the methodology described in Chapter II to convert an estimated total 

delay of 51 days (30 days of pre-submission delay plus 21 days of post-submission delay) into a cost. As 

the table indicates, the total delay costs for a LVE submission are $4,805 assuming a 5 percent real rate 

of return (low cost case) and $8,118 assuming a 10 percent real rate of return (high cost case). 

4. Bona Fide

Bona fide submissions require: specific chemical identification, a signed statement of 

intent, a description of research and development activities for the chemical and its uses, an elemental 

analysis, and either an x-ray diffraction pattern for inorganic substances or a mass spectrum or infrared 

spectrum for organic compounds. Table III-8 presents the estimated labor requirements for these 

activities. The baseline Industry unit cost per bona fide submission ranges from $833 to $1,057, as 

presented in Table III-9. 
 III-20 

Table III-7. Estimated Industry Labor Requirements for Baseline LVE Submission 

(hours) 

Clerical Technical Managerial

General Instructions 5.0-8.0 1.5-2.0 3.5-5.5 

Certification 0.5a

I. General Information 

 A. Submitter Information 

 B. Chemical Identity Info 3.0-4.0 

 1. Impurities 0.5 

 2. Synonyms 0.25 

 3. Trade Identification 0.25 

 4. Generic Chemical Name 0.5 

 5. By Products 0.5 

 C. Use Information 

 1. Use Information 3.0 

 2. Hazard Information 3.0-4.0 

II. Operation Description 1.0 

III. List of Attachments 6.0-8.0 

TOTALS 5.0-8.0 19.5-24.0 4.0-6.0 

a

 The chemical identification for polymers is expected to take longer than for Class 1 substance and this range reflects the low for a class 1 substance 

and a high for a polymer. 

b

 Certification is expected to require a general managerial/legal review of the complete submission. Due to the inconsistency in the CMA responses, 

some of the labor listed under other headings including "General Instructions" may be attributable to this review. 

Source: CMA 1991, EPA-IMD 1992. 
Table III-8. Estimated Industry Labor Requirements for Baseline 

Bona Fide Submission 

Technical Managerial 

A. Submitter ID negligible negligible 

B. Chemical ID 2 hours 

C. Description of R&D 2 hours 1 hour 

D. Elemental Analysis 2-3 hours 

E. X-ray/infrared/or other 1 hour 

 spectra data. 

F. Signed Certification __________ 1-2 hours 

TOTAL 7-8 hours 2-3 hours 

Note: 2-3 hours of clerical time for all parts estimated based on proportion of 

total PMN requirements 

a

 Certification managerial requirements included time for general review of submission. 

Sources: CMA 1991, EPA-IMD 1992. 

 III-21 
 III-22 

Table III-9. Baseline Industry Unit Costs for Bona Fide Notices 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 2 70 3 105 

B. Technical ($76.91/h) 7 538 8 615 

C. Managerial ($112.26/hr) 2 225 3 337

 TOTALS 11 $833 14 $1,057 

Sources: CMA 1991 (Appendix B), CAIR 1990 (Appendix A), EPA-IMD 1992, BLS 1994. 
 III-23 

D. Baseline Government Review Unit Costs

In addition to Industry costs, the other source of social costs attributable to the New Chemicals 

Program is the cost to EPA of reviewing the submissions. The cost of review varies with the type of 

submission. This section presents the Agency unit costs of review associated with each submission type 

described above. Agency unit costs are generated using estimates of how much time each stage in the 

Agency PMN review process requires. The estimates used in this analysis are based on the 1993 

operating plan. The plan specifies the number of full time equivalents (FTEs) and the number of 

extramural contractor dollars that are required for each stage of the review process as well as the 

expected number of cases to be handled in each stage. Note that for submissions requiring a user fee 

(PMNs and polymer exemptions), the Government's net cost is reduced. These fees represent transfer 

payments from Industry to Government, but are not included in Agency unit costs. 

1. PMN Review

Agency costs associated with PMN review include the following: notice receipt, prenotice 

consultations, CRSS meeting review, SAT, Engineering/Exposure, Exposure/Fate, Focus meeting review, 

Standard Review Functions, Case review by Division Directors, 5(e) Order Development/ 

Negotiation/Review, Post Order Data Review, Order Modifications, Freedom of Information Act Requests, 

CBI Substantiation, New Chemical SNUR Development, and Notices of Commencement. 

Table III-10 presents the unit hour requirements, unit extramural fund requirements, and the 

associated range in costs for each stage of the review process. Labor costs are generated by multiplying 

the hour requirements of each task by the range of the Agency labor rate calculated in Appendix A. 
 III-24 

 

Table III-10. Baseline Agency Unit Costs for PMN Review 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

SAT 0.0006 14 100 66 82 

Engineering/Exposure 0.0015 56 100 188 228 

Exposure/Fate 0.0008 0 100 71 92 

Focus 0.0009 23 100 102 126 

Standard Review Functions 0.0219 511 29 708 876 

Division Directors Meeting 0.0129 113 15 188 239 

Order Development /Negotiation 

Review 

0.0171 22 5 77 99 

Post Order Data Review 0.0886 0 5 391 508 

Order Modifications 0.2167 0 5 956 1,242 

New Chemical SNUR 

Development 

0.0277 85 7 177 228 

Notices of Commencement 0.0012 40 56 82 99 

Freedom of Information Act 

Requests 

0.0333 287 1 32 41 

CBI Substantiation 0.0004 3 56 21 27

 TOTAL $3,940 $4,923 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the 

average time devoted to an activity for all PMNs. 

a

 The cost per FTE is estimated to be between $88,206 and $114,662. 

Sources: OPPT 1993 Operating Plan and Appendix A.
 III-25 

Where necessary, the costs for categories have been prorated by the percentage of total submissions to 

which that cost is attributable. As Table III-10 presents, the total baseline average PMN review cost 

ranges from $3,940 to $4,923. 

2. Polymer Exemption Review Costs

Polymer exemptions are among the first submissions to be dropped from the new 

chemical review process. Only costs associated with notice receipt, prenotice consultations, CRSS 

meeting review, and other costs such as Freedom of Information Act Requests, CBI Substantiation, and 

Notices of Commencement are attributable to polymer exemption submissions. Table IIIB11 presents the 

unit hour requirements and the associated range in labor costs for each category. Where necessary, the 

costs for categories have been prorated by the percentage of total submissions to which that cost is 

attributable. As Table III-11 presents, the total range in polymer exemption review costs ranges from 

$1,016 to $1,203. 

3. Low Volume Exemption Baseline Unit Costs

Low Volume exemptions are granted or denied at the Focus meeting review. Thus, only 

costs associated with notice receipt, prenotice consultations, CRSS meeting review, and other costs such 

as Freedom of Information Act Requests are attributable to low volume exemption submissions. Table III12 presents the unit hour requirements and the associated range in labor costs for each category. Where 

necessary the costs for categories have been prorated by the percentage of total submissions to which 

that cost is attributable. As Table III-12 presents, the total range in low volume exemption review costs 

ranges from $1,081 to $1,285. 
 III-26 

Table III-11. Baseline Agency Unit Costs for Polymer Exemption Review 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

Notices of Commencement 0.0012 40 56 82 99 

Freedom of Information Act 

Requests 

0.0333 287 1 32 41 

CBI Substantiation 0.0004 3 56 21 27

 TOTAL $1,016 $1,203 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the 

average time devoted to an activity for all PMNs. 

a

 The cost per FTE is estimated to be between $88,206 and $114,662. 

Sources: OPPT 1993 Operating Plan and Appendix A.

 
 III-27 

Table III-12. Baseline Agency Unit Costs for Low Volume Exemption Review 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

SAT 0.0006 14 100 66 82 

Focus 0.0009 23 100 102 126 

Freedom of Information Act 

Requests 

0.0333 287 1 32 41

 TOTAL $1,081 $1,285 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the 

average time devoted to an activity for all PMNs. 

a

 The cost per FTE is estimated to be between $88,206 and $114,662. 

Sources: OPPT 1993 Operating Plan and Appendix A.
 III-28 

 4. Bona Fide

The Agency cost of handling bona fides was obtained from the 1993 Operating Plan. 

Each bona fide is estimated to require 0.0013 FTEs of Agency time and approximately $81 in extramural 

funds. Using the previously presented range in cost for an FTE of $88,206 to $114,662, the total Agency 

cost per bona fide is estimated to be between $196 and $230. 

E. Total Baseline Costs

This section presents the total baseline costs used in this analysis. The total quantified baseline 

costs are presented in Table III-13. The numbers in the table are calculated by multiplying the unit costs 

developed in the previous sections C and D with the baseline submission counts presented in section B. 

In addition to the costs captured by the estimates in Table III-13, there are other costs to 

submitters of preparing the PMN form and exemptions that may be affected by the amendments. 

Although these costs may be significant for individual submitters, it has not been possible to quantify these 

costs in such a way as to include them in the analysis. These unquantified costs are identified below and 

are discussed in the remainder of this section: 

! Secondary delay costs; and 

! Industry costs of negotiating '5(e) consent orders. 

1. Secondary Delay Costs

As discussed in chapter II the quantified costs of delay estimated in this analysis only 

account for the primary delay costs. Secondary delay costs may be incurred in the case that a 120 day 

delay alone may prohibit the chemical from being marketed. This would result when the nature of the 

chemical is seasonal, or when a single batch of chemicals has immediate 
 III-29 

Table III-13. Total Quantified Baseline Costs 

 (1993 dollars) 

1000 Submission Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Element Low High Low High Low High 

INDUSTRY

PMN 14,403,024 20,797,176 28,806,048 41,594,352 43,209,072 62,391,528 

Polymer Exemption 1,029,656 1,510,471 2,059,312 3,020,942 3,098,080 4,544,780 

LVE 1,191,960 1,878,068 2,390,850 3,767,055 3,582,810 5,645,123 

Bona Fide 247,401 313,929 493,969 626,801 741,370 940,730 

Subtotal $16,872,041 $24,499,644 $33,750,179 $49,009,150 $50,631,332 $73,522,161 

GOVERNMENT

PMN Submission 2,742,240 3,426,408 5,484,480 6,852,816 8,226,720 10,279,224 

Polymer Exemption 114,808 135,939 229,616 271,878 345,440 409,020 

LVE 185,932 221,020 372,945 443,325 558,877 664,345 

Bona Fide 58,212 68,310 116,228 136,390 174,440 204,700 

User fees -1,674,630 -1,674,630 -3,349,260 -3,349,260 -5,025,960 -5,025,960 

Subtotal $1,426,562 $2,177,047 $2,854,009 $4,355,149 $4,279,517 $6,531,329 

TOTAL QUANTIFIED 

BASELINE COSTS 

$18,298,603 $26,676,691 $36,604,188 $53,364,299 $54,910,849 $80,053,490 

Note: User fees are not listed separately under Industry costs because they are included in the estimated Industry unit costs. 

Source: Tables III-1 through III-12.
 III-30 

demand. While it has not been possible to quantify these costs in the baseline, it should be noted that any 

changes caused by the amendments will mirror the changes in quantified delay costs in terms of their 

direction and relative magnitude. 

2. Industry Costs of Negotiating '5(e) consent orders

Because of the broad range in the types of chemicals as well as the types of controls that 

may be negotiated through Section 5(e) of TSCA, it has not been possible to gather consistent data on the 

costs to industry associated with the negotiation of these consent orders. Without this information, it has 

not been feasible to quantify these costs in the baseline. Because the agency cost associated with 

negotiating these consent orders is included in the costs developed for PMN review, changes in this 

process caused by the amendments will be reflected in the quantified costs and industry costs and should 

be expected to follow the direction of the Agency costs. 
Figure III-1

Total Notices Received by OPPT

Total includes PMNs, low-volume exemptions, test-market exemptions and polymer 

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

0

1,000

2,000

3,000

8

323

620

909

1,379

1,272

1,771

2,223

2,329

2,993

1,537

2,738

1,867

Fiscal Year

Number of Submissions

*

*

exemptions
 IV-1 

IV. POLYMER EXEMPTION AMENDMENT

The polymer exemption amendment is discussed in this chapter according to the following 

organization: 

! Section A briefly describes the polymer exemption amendment as well as alternatives that 

have been considered; 

! Section B presents the projected number of polymer exemption submissions used in this 

analysis; 

! Section C provides estimates of the Industry unit costs for complying polymer exemptions 

under these amendments; 

! Section D provides estimates for Agency unit costs; and 

! Section E presents the total change in quantified costs resulting from this amendment for 

the three submission scenarios analyzed, and discusses the unquantified effects of the 

amendment. 

A. Amendment Description

The amended PMN rule divides polymers eligible for exemption into three sets of eligibility criteria. 

 In general these groups are: 

(1) polymers with number average molecular weight equal to or greater than 1,000 and less 

than 10,000 with oligomer content less than 10 percent below molecular weight 500 and 

less than 25 percent below molecular weight 1,000; 

(2) polymers with number average molecular weight greater than or equal to 10,000 and 

oligomer content less than 2 percent below molecular weight 500 and less than 5 percent 

below molecular weight 1,000; and 

(3) polyester polymers. 

Under the exemption, EPA has adopted a policy whereby manufacturers of polymers eligible for 

exemptions must report to EPA annually the number of polymers commenced under the exemption during 

the past year. The annual report would consist of a single letter per submitter stating the company name, 

the number of polymers commenced during the past year, and the name and telephone number of a 

technical contact for additional information. It is important to note that, although companies must submit 

this report once per year, they may begin manufacturing or importation of polymers that fall within the 

categories covered by this exemption without notifying EPA at the time such manufacturing or importation 

commences. A notice of commencement is not required because substances produced under the 

polymer exemption will not be added to the TSCA Inventory. EPA has also eliminated the User Fee 

previously associated with polymer exemptions. 
 IV-2 

In addition to the preferred option, the rule also describes several alternative options that have 

been considered. These options fall into four categories: 

(1) options related to level of information provided in notifications and the timing of 

submissions; 

(2) option to consider other polymers for exemption; 

(3) eligibility criteria options; and 

(4) an option to include high cationic functional group containing polymers in the exemption. 

The options in each of these categories are discussed below. The costs associated with these options are 

discussed in Chapter VIII. 

The first set of options requires an exemption notice that includes certain basic information on the 

polymer identity and the manufacturer, or no reporting by importers or manufacturers. The second option 

is to exempt certain salts of polymers that are listed on the TSCA Inventory. The third set of options 

considered by the Agency pertain to eligibility criteria that standardize the functional group requirements at 

5,000 equivalent weight, or retain the existing requirements that the submitter provide information such as 

number average molecular weight and residual monomer information to verify that a submitter has met the 

exemption criteria. 

The fourth and final option considered by the Agency included high cationic functional groupcontaining polymers in the exemption. The option states that polymers that contain high percentages of 

amine (low amine equivalent weight) in their structures would be exempt. 

B. Polymers Eligible Under the Amendments

Table IV-1 presents an estimate of the number of polymers eligible for the polymer exemption. In 

FY89, the number of polymer exemptions received was 174. It is assumed that all of the substances that 

qualified for this exemption will continue to qualify for the exemption. In addition, it has been estimated 

that 279 polymers submitted as full PMNs in FY89 would be eligible for the new exemption (ICF Polymer 

PMN database 1990). As a result of EPA's regulatory experience with polymers and the significant 

advantages that are associated with the polymer exemption compared to a PMN, this analysis assumes 

that all eligible polymers would elect to use the polymer exemption instead of submitting a full PMN. Thus, 

the number of FY89 submissions that would fall under the polymer exemption is estimated to be 453 (279 

+ 174). This figure represents 29.5 percent of the submissions received in FY89. For this analysis, 1989 

is used as a representative year and the percentage of eligible polymers in that year is considered to be 
 IV-3 

equal to the percentage of eligible polymers for each subsequent year. Therefore, this analysis projects 

that 295 polymers would be eligible annually for the exemption under the 1,000 submission scenario, 589 

annually for the 2,000 submission scenario and 884 annually for the 3,000 submission scenario. 

C. Industry Per Unit Costs

Under the polymer exemption, there will be no pre-manufacture submission requirements. 

However, an annual report will be required to inform EPA of the number of polymers commenced during 

the previous year under the exemption. Each submitter is required to prepare a single letter each year 

indicating the name of the company, the number of polymers commenced during the past year 
 IV-4 

Table IV-1. Projected Polymer Exemption Submissions 

______________________________________________________________________________ 

FY89 Polymer Exemptions 174 

FY89 Polymer PMN Submissions Eligible for Amended Exemption 279

 Total FY89 Submissions Qualifying for New Exemption 453 

Percent of Total FY 89 submissions 30 

1,000 Submission Scenario Projection 295 

2,000 Submission Scenario Projection 589 

3,000 Submission Scenario Projection 884 

______________________________________________________________________________ 

Note: In total, there were 680 Polymer Submissions in FY89. Therefore, approximately 67 

percent of all polymer submissions would be eligible for an exemption under the 

amendments. 

Sources: RIB PMN Database, ICF Polymer PMN Database 1990, CCD 1991. 
 IV-5 

under the exemption, and the name and telephone number of a technical contact. For this analysis, it was 

assumed that one report would be generated for each polymer. This is most likely an overestimate of the 

number of reports that will be generated. 

In addition, each submitter would be required to retain records that document that the polymer 

meets the eligibility requirements set forth in the exemption. Exemption holders also will be required to 

keep on-site records of commencement and a certification stating compliance with the exemption criteria. 

Recordkeeping requirements apply to all facilities manufacturing polymers eligible for the exemption. As 

stated, retained records must demonstrate compliance with the provisions of the exemption, but the 

Agency believes that most of the information that would be required for these records will be generated 

during the normal manufacturing or import process, and that only minimal burden will be placed on the 

facility to create and maintain these records. 

The labor requirements for preparation of the annual reporting letter are presented in Table IV-2 

and are estimated to be: 0.5 to 1 hour of clerical, technical, and managerial time. The requirements for 

on-site record retention are also presented in Table IV-2 and are estimated to be: 1 to 2 hours of clerical 

time, 1 to 2 hours of technical time, and 0 to 1 hour of managerial time. From Table IV-2, the average unit 

cost per polymer can be estimated as ranging from $224 to $560. 

Because the polymer exemption amendment does not require any reporting prior to 

commencement of manufacture or import, there will be no delay costs attributable to regulation in the 

development, production, and marketing of these substances. Thus, using the methodology described in 

Chapter II, delay 
 IV-6 

Table IV-2. Industry Unit Costs for Amended Polymer Exemption 

Reporting and Recordkeeping (By Polymer) 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

REPORTING COSTS 

A. Clerical ($35.13/hr) 0.5 18 1.0 35 

B. Technical ($76.91) 0.5 38 1.0 77 

C. Managerial ($112.26/hr) 0.5 56 1.0 112

 Subtotal 1.5 112 3.0 224 

RECORDKEEPING COSTS 

A. Clerical ($35.13/hr) 1.0 35 2.0 70 

B. Technical ($76.91/hr) 1.0 77 2.0 154 

C. Managerial ($112.26/hr) 0.0 0 1.0 112

 Subtotal 2.0 $112 5.0 $336 

DELAY COSTS $0 $0 

USER FEE $0 $0 

TOTAL INDUSTRY UNIT COST FOR 

AMENDED POLYMER 

EXEMPTIONS 

$224 $560 

Sources: CMA 1991, CAIR 1990, BLS 1994, ICF Estimates. 
 IV-7 

costs are estimated to be zero for the amended polymer exemption. The annual submission policy for this 

exemption and the elimination of the User Fee make direct industry labor costs for producing the annual 

letter, recordkeeping, and retention of records the only costs associated with the amended polymer 

exemption. 

Additionally, the amended polymer exemption excludes from eligibility all water-absorbing 

polymers having molecular weight of 10,000 daltons or greater and that absorb 20 times their weight in 

water. It has not been possible to predict the number of submissions expected for these types of 

polymers, but the Agency expects that there will not be a significant number of these submissions. 

Finally, there may be costs associated with EPA's authority to provide "notification" of ineligibility 

of an exemption upon receipt of information that leads to a finding of unreasonable risk to human health or 

the environment. While the Agency can make an unreasonable risk finding and revoke an exemption, this 

is an unlikely occurrence. The extreme infrequency of such a finding, in combination with provisions that 

allow submitters to prepare and submit a full PMN without ceasing production, indicate that the costs to 

industry associated with the Agency's revocation authority are not significant. 

D. Government Per Unit Costs

The Agency costs associated with polymer exemptions will be virtually eliminated under the 

amendments to the polymer exemption because the Agency is now receiving only a single letter from each 

submitter which does not require Agency review. Therefore, there are no costs to the Agency associated 

with reviewing submissions under the amended polymer exemption. However, there are minimal costs to 

the Agency associated with receiving and filing reporting letters, as well as logging reports into a 

database. The labor required to complete these tasks is estimated to be 1 hour per submission (1/2 hour 

for letter receipt and processing, and 1/2 hour for database entry). It is possible, however, that some 

additional costs may be incurred at both the regional and federal EPA level. These costs would be 

associated with monitoring and enforcement of compliance with the polymer exemption requirements. 

These costs are not quantified as part of this analysis because of uncertainty regarding the level of 

compliance monitoring, the level of detected compliance violations, the distribution of enforcement duties, 

and lack of information on the types of enforcement activities that will be necessary. The only quantified 

significant costs to the Federal government associated with the amended exemption are those attributable 
 IV-8 

to receipt of submissions and to lost revenues from the elimination of User Fees that currently are 

required. 

E. Comparison with Base Case and Sensitivity Analysis

The total effect of the polymer exemption amendment is summarized in Table IV-3. The projected 

number of polymer exemption submissions under each of the scenarios is multiplied by the unit costs 

derived above. The baseline costs for these submissions are then subtracted to find the change in costs 

resulting from the amendment. The baseline costs are composed of costs attributable to the existing 

polymer exemption submissions and the current PMN submissions that become exemptions under the 

amendments. As the table presents, the polymer exemption amendment results in a total societal savings 

of between $4.9 to $7.2 million in the 1,000 total submission scenario. This total results from between 

$4.7 and $6.8 million in Industry savings and between $0.2 and $0.4 million in Agency savings. The 2,000 

and 3,000 submission scenarios result in total savings to Industry and the Agency 
 IV-9 

Table IV-3. Comparison of Base Case and Amended Costs for Polymer Exemption 

 (1993 dollars) 

1000 Submission Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Category Low High Low High Low High 

INDUSTRY

Amendment 

 Polymer Exemption 66,080 165,200 131,936 329,840 198,016 495,040

Baseline 

 Polymer Exemption 

 PMN 

1,029,656 

 3,766,308 

1,510,471

 5,438,342

2,059,312

 7,511,922

3,020,942

10,846,803

3,098,080 

11,257,536 

4,544,780

16,255,264

Increment -4,729,884 -6,783,613 -9,439,298 -13,537,905 -14,157,600 -20,305,004

GOVERNMENT

Amendment 

 Polymer Exemption 

 User Fees 

12,390 

0 

16,225

0

24,738

0

32,395

0

37,128 

0 

48,620

0

Baseline 

 Polymer Exemption 

 PMN 

 User Fees 

114,808 

 717,080 

-610,650 

135,939

895,986

-610,650

229,616

1,430,220

-1,219,230

271,878

1,787,049

-1,219,230

345,440 

2,143,360 

-1,829,880 

409,020

2,678,112

-1,829,880

Increment -208,848 -405,050 -415,868 -807,302 -621,792 -1,208,632

TOTAL INCREMENT -$4,938,732 -$7,188,663 -$9,855,166 -$14,345,207 -$14,779,392 -$21,513,636

Note: User fees are not listed separately under Industry costs because they are included in the estimated Industry unit costs. Because both polymers 

and PMN submissions require user fees under the baseline, the total quantity of the transfer in not affected by the polymer amendment. 

This table also does not include the costs associated with PMN submissions that are not affected by this amendment. 

Source: Tables III-1, III-2, III-4 IV-1, IV-2, and IV-3.
 IV-10 

combined of between $9.9 and $14.3 million, and between $14.8 and $21.5 million, respectively. 

In addition to these quantified benefits, the polymer exemption amendment would also provide a 

number of unquantified benefits. The expanded exemption criteria would provide industry with more 

flexibility in manufacturing polymers and some submitters may be encouraged to consider minor 

adjustments in the formulation of polymeric materials that would qualify them for exemption status. Under 

the current standards, this flexibility would not be possible. In this way, the amendments may promote the 

development of safer products in order to save on reporting costs. 

Additionally, the polymer definitions in the polymer exemption amendments have been brought 

into line with OECD-accepted definitions used in the international community. This definitional change will 

streamline certain aspects of the submission and subsequent review process while retaining the meaning 

and purpose of the 1984 exemption definition of polymer. 

Another major benefit of the exemption is the removal of a delay period in the development of 

polymers meeting the exemption criteria. Previously, a submission was required 21 days prior to 

manufacture. This 21-day delay period is eliminated under the amendments. In addition, full PMN 

submissions have a 90-day post-submission delay period, which, under the amendment, is also eliminated 

for PMN submissions that will be eligible for the revised 

exemption. This elimination of delay increases the control submitters have over the development, 

marketing, and production schedules of new polymers. 

An additional benefit is that elimination of the need for an Agency review of exempt polymer 

submissions will allow the Agency to focus its resources on higher-risk chemicals. 
 V-1 

V. PROCEDURAL AMENDMENT

EPA is making several procedural changes to the TSCA Section 5 notification process that will 

help to streamline both submitter and Agency activities. This chapter describes those initiatives and 

presents industry and Agency cost estimates associated with the procedural amendments. The chapter is 

divided into five sections, as follows: 

! Section A briefly describes the procedural amendment as well as alternatives that have 

been considered; 

! Section B presents the projected change in the number of submissions resulting from the 

procedural amendment that is used in the analysis; 

! Section C provides estimates of the Industry unit costs associated with the amendment; 

! Section D provides estimates of Agency unit costs for EPA review associated with the 

amendment; and 

! Section E presents the total change in quantified costs resulting from this amendment for 

the three submission scenarios analyzed, and discusses the unquantified effects of the 

amendment. 

A. Amendment Description

In order to achieve further efficiencies and resource savings for both EPA and submitters of 

Section 5 notices, the Agency is implementing seven regulatory initiatives to reduce the administrative 

costs/burdens of the TSCA Section 5 New Chemicals Program. These procedural amendments are: 

(1) requiring that submitters provide the correct chemical identity in Section 5 notices and 

bona fide Inventory search notices; 

(2) revising the bona fide notice requirements for requesting Inventory searches; 

(3) amending the "two percent rule" for polymers to allow submitters greater flexibility in 

determining the amount of monomer or reactant used in the manufacture of a polymer; 

(4) requiring submitters to provide multiple photocopies of Section 5 submissions; 

(5) providing regulatory language to allow the electronic transmission of Section 5 

submissions; 

(6) implementing a standard mandatory form for notices of commencement; and 

(7) notifying submitters that EPA is considering the development of requirements that all 

facilities provide information about their geographic location. 

The remainder of this section will provide further description of each of these amendments. 
 V-2 

1. Correct Chemical Identification

EPA is amending 40 CFR 720.45(a) of the PMN rules to require that submitters of Section 

5 notices and bona fide notices provide the most currently valid Chemical Abstracts (CA) Index name or 

CA preferred name that is consistent with TSCA Inventory listings. A Chemical Abstracts Service (CAS) 

Registry Number consistent with this CA name would also be required, if one exists. Failure to comply 

with this chemical identification requirement would result in the notice being declared incomplete by EPA. 

The chemical identification requirement could be satisfied if the submitter uses the services of CAS, or the 

services of another chemical information organization, service bureau, consultant, or employee that is 

capable of generating correct CA names, chemical structure diagrams or molecular formulae where 

appropriate, and obtaining necessary CAS Registry Numbers. 

The Agency has considered two options that would define how submitters would obtain this 

information. In one option, submitters would be required to obtain the information directly from CAS and 

the Agency would work with CAS to resolve any disagreements regarding the identification. In the other 

option, submitters could use any service or method to obtain the information, but it would then be the 

submitter's responsibility to resolve any disagreements. 

2. Bona Fide Submission Requirements

The Agency is amending 40 CFR 720.25 to revise certain provisions of the procedures to 

establish a bona fide intent. Over the past several years, the number of bona fide notices submitted to 

EPA has steadily increased. At the same time, the Agency has become aware that approximately half of 

the correctly submitted bona fide notices for which EPA notified submitters that substances were not listed 

in the Inventory have never been commercialized. In an attempt to reduce the chances that future bona

fide notices may be submitted without representing definite, well thought-out commercial intentions, the 

amendments revise the requirements for bona fide notices. 

The amendments for bona fide submissions no longer require elemental analysis data or other 

analytical data, except for an infrared spectrum. However, the following additional requirements are being 

implemented: 

! the use of Chemical Abstract Ninth Collective Index nomenclature; 
 V-3 

! more detailed information about research and product or process development activities, 

or alternatively, for importers who have no knowledge of these activities, information 

indicating the country from which the substance will be imported, how long it has been in 

commercial use abroad, and how it is predominantly used outside the U.S.; 

! an estimate of the month and year in which a PMN will be submitted if EPA informs the 

submitter that the substance is not on the Inventory; 

! the location of the facility at which manufacture or importation of the substance is most 

likely to occur; 

! for substances to be manufactured in the U.S. or imported from a foreign facility of the 

same company/corporation, a description or process flow diagram of the most probable 

manufacturing process that would be used to obtain commercial amounts of the 

substance; and 

! for imported substances, a description or process flow diagram of the most probable 

method of processing or using the substance for a commercial purpose. 

3. Polymer Two Percent Rule

The Agency is amending 40 CFR 720.45(a) of the PMN rule and 40 CFR 723.250(f)(2) 

(iv) and 40 CFR 723.250(o)(1) of the polymer exemption rule to allow a manufacturer the option of 

reporting monomers and other reactants on the basis of (a) the "amount charged" to the reaction vessel or 

(b) the amount reacted and incorporated in the manufactured polymer. 

Two alternatives to this amendment were considered. The first alternative was to maintain the 

current "amount charged" 2 percent rule and the second was to amend the current "amount charged" 

requirement to a broader designation of 5 percent charged to the reaction vessel. 

4. Multiple Photocopies

This procedural amendment consists of a change in submission criteria at 40 CFR 720.40 

(d)(2) that will require submitters to provide EPA with one original and two copies of Section 5 notices. 

Submitters also will be required to provide one original and two copies of any test data. 

An alternative to this amendment requires that submitters provide an original and seven copies of 

Section 5 notices for agency review, plus two additional copies of any attachments. 

5. Electronic Submissions

This amendment is designed to promote the use of electronic media for data submission. 

EPA is investigating the use of magnetic tape, floppy diskettes and electronic data interchange as means 

to submit information. Information may be submitted electronically once EPA publishes a format for 
 V-4 

electronic submissions. Persons submitting electronically may still complete and submit on paper the 

certification and submitter identification sections of the PMN form, the list of any attachments, and all 

attachments. 
 V-5 

6. Standard Notice of Commencement Form

This amendment requires all PMN submitters to use a standard one-page form to submit 

a notice of commencement (NOC). This form would automatically be provided to each PMN submitter as 

an attachment to EPA's "Acknowledgement of PMN Receipt" letter sent to submitters shortly after each 

PMN is received. This form has been used voluntarily by many submitters over the past year. In addition 

to information that submitters previously included in an NOC letter, the new NOC form requires the 

following: 

! complete submitter identification, including name and address of both the submitter and 

an authorized official and the name and phone number of a technical contact; 

! generic chemical name; 

! indication of whether the chemical is manufactured or imported; and 

! address of the manufacturing site. 

7. Designation of Geographic Location

The proposal to designate geographic coordinates does not immediately change any of 

the requirements for Section 5 submissions, but provides notice that the Agency is considering the 

possibility of requiring submitters to provide geographic location data (i.e., longitude and latitude 

coordinates) as part of PMN submissions. This proposal is not discussed further in this analysis because 

it has no immediate effect on Industry or Agency costs. 

B. Submissions

Most of the procedural amendments discussed above are not expected to have an effect on the 

number of submissions, but some changes are possible as a result of the bona fide, "two percent rule," 

and NOC amendments. 

1. Bona Fide Submission Requirements

The number of bona fide submissions is expected to decrease moderately as a result of 

the changes to the requirements for these submissions as well as changes to the exemptions. In the past, 

as many as 50 percent of bona fide submissions have not been followed up by either a notice of 

commencement or a PMN (OPPT-IMD 1991). The changes in bona fide reporting (i.e, an increase in the 
 V-6 

amount of information for the bona fide submission) are expected to discourage those who do not truly 

intend to manufacture a chemical from making inappropriate bona fide requests.*

 Although it is uncertain, 

EPA expects the number of bona fide submissions to decrease by about 25 percent (OPPT-IMD 1991). 

Using this estimate, the projected number of bona fide submissions for the 1,000, 2,000, and 3,000 

submission scenarios is 223, 445, and 668, respectively. 

2. Polymer "Two" Percent Rule

As a result of the changes in the two percent rule, it is theoretically possible that some 

submissions for polymers will be avoided because more small changes in composition will be allowed 

without creating a "new" substance. It has not been possible to quantify the number of submissions 

(either PMNs or polymer exemptions submissions) that would be avoided, however. Thus, this analysis 

assumes that the total number of Section 5 notices is the same under the amendments as in the baseline 

(i.e. 1,000, 2,000, or 3,000). 

3. Notice of Commencement (NOC) Forms

The number of NOC forms that will be required is a function of the percentage of 

chemicals for which PMNs are submitted and production is actually commenced. In 1989, 31 percent of 

all chemicals for which PMNs were submitted were commenced. Therefore, it is assumed that industry 

would complete 310 NOC forms in the 1,000 submission scenario, 620 in the 2,000 submission scenario, 

and 930 in the 3,000 submission scenario. 

C. Industry Per Unit Cost

 

 * There may be some additional bona fide submissions resulting from changes in the polymer 

exemption that require monomers included in a polymer to be listed on the Inventory. These submissions 

may offset the expected decrease resulting from the higher cost hurdle somewhat. 

Several of the procedural amendments could affect Industry costs associated with Section 5 

submissions. It has not been feasible, however, to quantify all the changes in cost. The remainder of this 

section discusses the costs that have been quantified. The unquantified effects of the other amendments 

are discussed qualitatively in Section E of this chapter. 
 V-7 

1. Correct Chemical Identification

 The cost of receiving the correct chemical name directly from CAS for the purposes of a 

PMN submission has been estimated to be $70 (OPPT-IMD estimate). This analysis assumes that this is 

representative of determining the correct chemical identification regardless of the source and that this is 

an additional cost under the amendments for all submissions, although in some cases companies may 

already receive chemical identification from CAS and in other cases the same chemical identification may 

be used for more than one submission. 

2. Bona Fide Submissions

The Industry cost of supplying the amended information requirements for a bona fide

submission was estimated by comparing required information elements to those requested in the full PMN 

form. The estimated Industry labor requirements for an amended bona fide notice are presented in Table 

V-1. The Industry unit cost for the amended bona fide would range from $1,400 to $1,625 as presented in 

Table V-2. 

3. Notice of Commencement (NOC) Forms

The estimated labor required for completion of the form was estimated at 0.5 hours of 

clerical and 0.5 hours of managerial time for the low cost scenario, and 1.0 hours of clerical and 1.0 hours 

of managerial time for the high cost scenario. Thus, the cost to industry associated with NOC forms 

ranges from $22,940 to $45,570 for the 1,000 submission scenario. For the 2,000 and 3,000 submission 

scenarios, these ranges are $45,880 to $91,140 and $68,820 and $136,710, respectively. These costs 

reflect incremental costs above the baseline. 

D. Government Per Unit Cost

Just as with Industry costs, several of the procedural amendments could affect Government costs 

associated with Section 5 submissions. It has not been feasible, however, to quantify all the changes in 

cost. The remainder of this section discusses the changes that have been quantified. The unquantified 

effects of the other amendments are discussed qualitatively in section E of this chapter. 

1. Correct Chemical Identification

The Agency costs associated with reviewing Section 5 submissions, including bona fide

submissions, are expected to be reduced as a result of the requirement for correct chemical identification. 
 V-8 

 This requirement is expected to reduce the labor required by the Information Management Division (IMD) 

of OPPT in the prescreening stage by about one half hour. A similar reduction in EPA contractor time, 

resulting in a savings of $29 in extramural funds per submission is expected (OPPT-IMD 1991, BEA 

1994). Thus the total savings per 
Table V-1. Estimated Industry Labor Requirements for 

 Amended Bona Fide Submission 

Technical Managerial Clericala

A. Submitter ID negligible negligible 

B. Chemical ID 2 hours --- 

C. More Detailed Description 3 hours 1 hour 

 of R&D 

D. Estimate of Time to PMN; 1 hour 1 hour 

 Production/Import Value; 

 Site of Manufacture 

E. Process Description 5-6 hours --- 

F. Signed Certificationb --- 2-3 hours 

TOTAL 11-12 hours 4-5 hours 3-4 hours 

a

 3-4 hours of clerical time for all parts estimated based on proportion of total PMN requirements. 

b

 Certification managerial requirements includes time for general review of submission. 

Source: CMA 1991, EPA-IMD 1992. 

 V-9 
 V-10 

Table V-2. Industry Unit Costs for Amended Bona Fide Notices 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 3 105 4 141 

B. Technical ($76.91/hr) 11 846 12 923 

C. Managerial ($112.26/hr) 4 449 5 561

 TOTALS 18 $1,400 21 $1,625 

Sources: CMA 1991, CAIR 1990, EPA-IMD 1992, BLS 1994. 
 V-11 

notice is estimated to be between $50 and $57. This savings is applied to all submissions, including bona

fide submissions. 

E. Comparison with the Base Case and Sensitivity Analysis

The procedural amendment affects several cost components relative to the baseline. The 

quantitative effects of requiring correct chemical identities, changes in bona fide submission requirements, 

and preparing the NOC form are illustrated in Table V-3. The total quantified incremental costs to society 

of the procedural amendment is expected to be $98,916 in the high cost case and $103,716 in the low 

cost case for the 1,000 submission scenario.*

 Similarly, the incremental cost is between $197,224 and 

$206,818 in the 2,000 submission scenario, and between $296,140 and $310,534 in the 3,000 submission 

scenario. These quantified costs may be outweighed, however, by the many unquantified benefits 

resulting from this amendment. For example, the requirement of correct chemical identity is expected to 

reduce the number of incorrect submissions, reducing Agency review time as fewer submissions will 

require corrective action. In addition, the use of a consistent nomenclature will also improve the ability of 

Industry and the Agency to determine whether the substance in question is currently on the Inventory. 

The change in requirements for bona fides will provide greater protection of the confidential 

portion of the Inventory by increasing the probability that the submitter has a genuine intent to produce or 

import the chemical. By the time the bona fide is submitted, the submitter should already know the 

information being requested and, therefore should not incur any costs associated with developing new 

information. In addition, EPA will 

 

 * Because the baseline submission costs increase by a greater amount than the amended submission 

costs between the low and high scenarios, the total incremental cost to society is lower in the high labor 

cost scenario than in the low labor cost scenario. 
 V-12 

Table V-3. Comparison of Base Case and Amended Costs for Procedural Amendments 

 (1993 dollars) 

1000 Submission Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Category Low High Low High Low High 

INDUSTRY

 

Procedural Amendments 

 Bona fide submissions 

 Chemical Identificationa

 NOC Forma

312,200

85,610

22,940

362,375

85,610

45,570

623,000

171,150

45,880

723,125

171,150

91,140

935,200 

256,760 

68,820 

1,085,500

256,760

136,710

Baseline 

 Bona fide submissions 247,401 313,929 493,969 626,801 741,370 940,730

Increment 173,349 179,626 346,061 358,614 519,410 538,240

GOVERNMENT

 

Procedural Amendments 

 Bona fide submissions 

 Chemical Identificationa

49,729

-61,150

57,311

-69,711

99,235

-122,250

114,365

-139,365

148,964 

-183,400 

171,676

-209,076

Baseline 

 Bona fide submissions 58,212 68,310 116,228 136,390 174,440 204,700

Increment -69,633 -80,710 -139,243 -161,390 -208,876 -242,100

TOTAL INCREMENT $103,716 $98,916 $206,818 $197,224 $310,534 $296,140

a

 Chemical Identification and NOC Form costs shown are incremental over the baseline. 

Source: Tables III-13 and V-2.
 V-13 

be able to more quickly respond to search requests if the information in the requests is correct and 

complete. 

The use of a standard NOC form will ensure that all required information is reported. In the past, 

a significant number of NOCs have created difficulty for the Agency because they were not recognized as 

NOCs or contained confusing, missing, or unnecessary information. In the long run, the standardized form 

will eliminate these problems and will result in time savings for both submitters and EPA personnel. 

The remaining procedural changes also may affect the costs to both Industry and Government. In 

general, however, these costs have not been quantified because they are not expected to affect overall 

social costs, are expected to be small, or are expected to provide additional flexibility to submitters. For 

example, the requirement for submitters to provide multiple photocopies shifts the burden of making 

additional copies of submissions from EPA to Industry. This analysis has not attempted to estimate the 

cost of producing these additional copies because the cost per submission would be fairly small and for 

society as a whole the cost will be offset by a savings in Government costs. This shift allows EPA to more 

quickly begin its analysis as copying of confidential business information (CBI) requires specific 

procedures which can be very time consuming. 

 The changes affecting the two percent rule and allowing electronic submissions provide additional 

flexibility to Industry. The two percent rule change allows industry to make minor compositional changes, 

providing more manufacturing control to the submitter and possibly reducing the number of submissions. 

One application of this flexibility would be in the use of alternate free radical initiators in the manufacturing 

process without requiring a new submission. 

Another part of the amendment, allowing electronic submissions, also improves the efficiency of 

the review process. Once a submission format is established, electronic submissions are expected to 

facilitate data transfer from submitters to the Agency, improve the accuracy of the submission, and reduce 

the labor required for PMN receipt. 

Finally, the amendment requiring a standardized form for the NOC is not expected to significantly 

increase the Industry costs because Industry is currently required to submit most of the information 

required for the form. Many submitters are using this form for their notices and hence implementation 
 V-14 

costs are likely to be less than those presented in the analysis. The standardization of NOCs also will 

improve the efficiency with which EPA is able to process these forms. 
 VI-1 

VI. LOW VOLUME AND LOW RELEASE/LOW EXPOSURE EXEMPTIONS AMENDMENT

The Low Volume Exemption (LVE) and the Low release/Low exposure (LoREX) Exemption 

Amendment is discussed in this chapter. This section is organized as follows: 

! Section A briefly describes the LVE and LoREX exemption amendment; 

! Section B presents the projected number of LVE and LoREX exemption submissions 

used in this analysis; 

! Section C provides estimates of the Industry unit costs for submitting LVEs and LoREX 

exemptions under these amendments; 

! Section D provides estimates for Agency unit costs for EPA review of the amended LVE 

and LoREX exemption submissions; and 

! Section E presents the total change in quantified costs resulting from this amendment for 

the three submission scenarios analyzed, and discusses the unquantified effects of the 

amendments. 

A. Amendment Description

The two parts of this amendment (1) modify the current low volume exemption and (2) introduce a 

new LoREX exemption. 

1. Low Volume Exemption

Under this proposal the quantity of a substance that may be produced annually under a 

LVE would be raised to 10,000 kg. Any exemptions that are currently held for 1,000 kg will continue to be 

valid. If the manufacturer wishes only to increase production, it would be necessary to reapply for an 

exemption (alternately, a full PMN could be submitted). Chemicals are to be assessed as if the full 10,000 

kg per year were produced, but producers may elect to be assessed at a lower level and be bound to 

produce at a level no higher than that lower level. In the past, only one LVE holder was allowed per 

chemical substance. This amendment allows more than one company to hold an LVE exemption for a 

given substance, provided it is determined that the aggregate release and exposure will not present an 

unreasonable risk. The LVE amendment will have a 30-day notification requirement to EPA prior to 

manufacture instead of the current 21-day requirement. 

Two alternatives to this LVE amendment were considered. One would raise the low volume 

production ceiling to 5,000 kgs. The other would raise it to 25,000 kgs with a toxicity testing requirement. 
 VI-2 

2. Low Release/Low Exposure Exemption

On April 4, 1982, in response to a petition from CMA and other industry groups requesting 

exemptions from TSCA Section 5 reporting requirements, EPA proposed regulations for site-limited 

intermediates (SLIs). After receiving public comments, the Agency decided not to pursue an exemption 

for SLIs at that time because it found that it could not reduce the procedural safeguards in the rule, which 

industry commentors stated were overly burdensome, and still make the required 5(h)(4) finding of no 

unreasonable risk. 

Instead of an SLI exemption, the current exemption covers all chemicals that have low release 

and exposure (LoREX) associated with them. All new chemical substances are eligible for this exemption 

regardless of production volume. Submitters must show that there will be virtually no exposure to either 

consumers or the general public. The submitter also must show that worker exposure will be adequately 

controlled through the use of engineering controls and/or personal protective equipment. Submitters must 

prevent all direct and indirect releases of the exemption substance to surface waters which will result in 

surface water concentrations of the substance above 1 part per billion unless a higher concentration is 

supported by test data. Similarly, ambient air releases from incineration must not yield concentrations 

above 1 μg/m3

 maximum annual average. Releases to landfills must not occur unless it can be 

demonstrated that the substance has a negligible groundwater migration potential. 

Based on nine years of operational experience under the current LVE and the enhanced technical 

assessment capabilities developed in the New Chemicals Program over that time, the Agency believes 

that an exemption covering low release and exposure chemicals can be developed without presenting an 

unreasonable risk of injury to human health or the environment. 

One alternative to the LoREX exemption that has been considered is a more narrowly defined 

exemption for SLIs. The costs associated with this alternative are discussed in Chapter VIII. 

B. Submissions

This section presents the projected number of submissions for the LVE and LoREX exemption 

under the amendments. 
 VI-3 

1. Low Volume Exemption

Table VI-1 presents the calculations estimating the number of 10,000 kg LVEs that are 

projected for the baseline and for the 1,000, 2,000, and 3,000 submission scenarios. In FY89 there were 

265 LVE submissions. In addition, 84 full PMNs for substances with a maximum production volume of 

1,000 kg also were received during FY89. Thus only 75.9 percent (265 ) (265 + 84)) of eligible 

submissions resulted in LVE notifications. PMNs may be submitted instead of LVEs because the 

manufacturer expects to produce higher quantities of the substance in the future. 

Also during FY89, substances with maximum production volumes less than 10,000 kg (including 

the 84 less than 1,000 kg) accounted for 278 full PMN submissions. Adding 278 to the number of 1,000 

kg LVE submissions (265), the total number of submissions eligible for the LVE in FY89 was 543. If the 

same 
 VI-4 

 Table VI-1. Projected LVE Submissions 

______________________________________________________________________________ 

FY89 LVEs 265 

FY89 PMNs with Maximum Volume less than 10,000 kg 278

Total FY89 Submissions Qualifying for 10,000 kg 543 

exemption 

Historical Percent Taking Exemptiona

 75.9

10,000 kg LVEs in: Baseline (FY89) 412 

1,000 submissions scenariob

 268 

2,000 submissions scenariob

 536 

3,000 submissions scenariob

 804 

______________________________________________________________________________ 

a

 There were 84 PMN submissions in FY89 for chemicals with reported production volumes of less than 

1,000 kg. Using this number along with the 265 LVE submissions received, the percentage of qualified 

submissions that used the LVE was 75.9 percent. 

b

 LVEs in the 1,000, 2,000, and 3,000 submission scenarios were projected assuming that 26.8 percent of 

submissions are 10,000 kg LVEs. This is the FY89 ratio of 10,000 kg LVEs to total submissions (412 

LVEs ) 1537 submissions). 

Sources: RIB PMN Database; CCD 1991. 
 VI-5 

percentage of submissions apply for LVEs as under the current exemption requirements, the estimated 

number of 10,000 kg LVEs for the baseline would be 412 (543 x 75.9 percent).*

 This figure represents 

26.8 percent of all submissions received in FY89. Using this percentage, the projected number of LVEs 

for the 1,000 scenario is 268. The projection is 536 and 804 for the 2,000 and 3,000 submission scenarios 

respectively. 

2. Low Release/Low Exposure Exemption

The proportion of submissions that will be eligible for the LoREX exemption has been 

estimated by chemists at EPA based on a review of submissions received in fiscal year 1990 (ETD 1991). 

 This review found that 35 percent of PMN submissions would be eligible for the exemption. An additional 

26 percent of PMN submissions would have been likely to qualify for the LoREX exemption with minor 

process or disposal changes. Based on this information, it is estimated that 31 percent (one-half of 35 

percent plus one-fourth of 26 percent) would apply for the LoREX exemption instead of submitting PMNs 

(ETD 1991). 

 

 * Assuming that both the LVE/LOREX and the Polymer Exemption amendments are adopted, some 

chemicals eligible for an LVE would also be eligible for the polymer exemption. This analysis assumes 

that manufacturers of these chemicals would submit a polymer exemption rather than an LVE. Thus, this 

analysis does not include these chemicals in the submission count for LVEs. 

 Using this information, Table VI-2 presents the projections for LoREX exemptions used in this 

analysis. The number of submissions is first adjusted to account for polymer exemptions and LVEs, and 

then the projected number of LoREX exemptions is calculated. It is reasonable to assume that all eligible 

polymers will choose that exemption because of the reduced submission requirements. This analysis also 

assumes that all eligible low-volume chemicals would choose that exemption over the LoREX exemption 

because of the greater familiarity with the low-volume exemption. In actuality, some low-volume 

chemicals may also qualify for the LoREX exemption and may choose that route since there is no volume 

ceiling. If these chemicals were to choose this exemption, it would not change the estimates of total 

Industry (or Government) costs in this analysis because the submission requirements are the same. This 

assumption may tend to understate the benefits attributed to the LoREX exemption. 

Using these criteria, 200 submissions in the FY89 set would become LoREX exemptions (RIB 

PMN database, CCD 1991, ETD 1991). These 200 submissions represent 13 percent of all FY89 

submissions (200 ) 1,537 total submissions). Using this percentage, the projected number of LoREX 

exemptions is 130 for the 1,000 case, 260 for the 2,000 case, 390 for the 3,000 case. 
 VI-6 

C. Industry Per Unit Costs

1. Low Volume Exemption

The Industry unit cost for an amended LVE is composed of the submission costs and 

delay costs. As presented in Table VI-2, the total industry unit cost for an LVE is estimated to range from 

$13,021 to $18,428. The reporting requirements for the LVE are similar to those required for a full PMN. 

The data elements requested for the full PMN form include: general information such as submitter 

identification, chemical identity, and production, import and use data; human exposure and environmental 

release information both for industrial sites controlled by the submitter and for industrial sites controlled by 

others; and a list of attachments. The best estimate for the labor component of Industry cost for a LVE 

submission is the same as the time required for submission for the current PMN. The labor requirements 

to prepare the above information are presented in Table VI-4. 
 VI-7 

Table VI-2. Projected LoREX Exemptions 

______________________________________________________________________________ 

FY89 Submissions 1537 

Minus projected Polymer Exemption Submission 451 

Minus projected LVEs 412 

Minus Test Market Exemptions 28 

Subtotal of remaining PMNs 646 

Percent of PMNs qualifying for LoREX Exemption 31

Projected LoREX exemptions: FY89 200 

1,000 submission scenarioa

 130 

2,000 submission scenarioa

 260 

3,000 submission scenarioa

 390 

______________________________________________________________________________ 

Sources: RIB PMN Database, CCD 1991. 

a

 LoREX exemptions in the 1,000, 2,000, and 3,000 submissions scenarios were projected assuming that 

13 percent of total submissions are LoREX exemptions. This is the FY89 ratio of LoREX exemptions to 

total submissions (200 LoREX exemptions ) 1537 submissions). 
 VI-8 

Table VI-3. Industry Unit Costs for Amended LVE Submissions 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 12 422 14 492 

B. Technical ($76.91/hr) 67 5,153 80 6,153 

C. Managerial ($112.26/hr) 16 1,796 20 2,245

Subtotal 95 $7,371 114 $8,890 

DELAY COSTS $5,650 $9,538 

USER FEES $0 $0 

TOTAL INDUSTRY UNIT COST FOR 

AMENDED LVE 

$13,021 $18,428 

Sources: CMA 1991, CAIR 1990, BLS 1994. 
 VI-9 

Table VI-4. Estimated Labor Requirements for Amended LVE Submission 

(hours) 

Clerical Technical Managerial

General Instructions 2.0-2.5 1.5-2.0 3.0-4.0 

Certification 0.5a

I. General Information 

 A. Submitter Information 

 B. Chemical Identity Info 1.5-2.0 3.0-6.0 1.0 

 1. Impurities 0.5 

 2. Synonyms 0.25 

 3. Trade Identification 0.25 

 4. Generic Chemical Name 0.5 

 5. By Products 0.5 

 C. Production, Import & Use Information 1.5 2.0-3.0 

 1. Production 1.0 

 2. Use Information 3.0 

 3. Hazard Information 3.0-4.0 

II. Human Exposure 2.5-3.5 6.0-7.0 

 A. Ind. Sites Controlled by the Submitter 

 1. Operation Description 

 a. Identity 1.0 

 b. Type of Operation 1.0 

 c. Amount & Duration 2.0 

 d. Process Description 10.0-12.0 

 2. Occupational Exposureb 13.0-14.0 

 3. Environmental Release & Disposalb 9.0-10.0 

 B. Industrial Sites Controlled by Others 2.0 10.0-12.0 2.0-2.5 

 1. Operation Description 

 2. Worker Exposure & Environmental Release 

III. List of Attachments 2.0 6.0-8.0 1.0-1.5 

Physical & Chemical Properties Worksheet 0.5 1.5-2.0 0.5 

TOTALS 12.0-14.0 67.0-80.0 16.0-20.0 

a

 Certification is expected to require a general managerial/legal review of the complete submission. Due to the inconsistency in the CMA responses, 

some of the labor listed under other headings including "General Instructions" may be attributable to this review. 

b

 These requirements are optional, but the estimates were included since it is expected that most submitters will complete this section. 

Source: CMA 1991 
 VI-10 

As discussed in Chapter II, delay costs represent the reduction in the present value of profits as a 

result of the delayed introduction of a new chemical as a result of the reporting process. Using the 

methodology discussed in Chapter II and assuming a total delay of 60 days including both pre- and postsubmission delays of 30 days for an LVE, the delay costs range from $5,650 to $9,538. As shown in 

Table VI-3, Industry unit cost for an amended LVE submission would range from $13,021 to $18,428 per 

form. 

2. Low Release/Low Exposure Exemption

Table VI-5 presents the Industry unit cost for the LoREX which range from about $13,000 

to almost $18,500. The reporting requirements for the LoREX exemption include all of the same 

information that is required for a LVE, such as submitter identification, chemical identity, and production, 

import and use data; human exposure and environmental release information both for industrial sites 

controlled by the submitter and for industrial sites controlled by others; a list of attachments; and test data 

including environmental fate data and health and environmental effects data. Labor hours required to 

prepare this information are shown in Table VI-6. Delay costs are the same as those presented for the 

LVE. Not included in this analysis are the additional delay costs experienced by those submissions which 

would have been subject to a Section 5(e) order when submitting a full PMN. 

 D. Government Per Unit Costs

1. Low Volume Exemption

The Agency cost associated with reviewing amended LVEs will be the same as the costs 

of reviewing a full PMN. Table VI-7 presents Agency unit costs for review of the amended LVE. As the 

table indicates, the range in LVE review unit costs is $1,361 to $1,632. 
 VI-11 

Table VI-5. Industry Unit Costs for LoREX Exemption Submissions 

Low Cost Case High Cost Case 

(hours) (1993 $) (hours) (1993 $) 

SUBMISSION COSTS (wage rate) 

A. Clerical ($35.13/hr) 12 422 14 492 

B. Technical ($76.91/hr) 67 5,153 80 6,153 

C. Managerial ($112.26/hr) 16 1,796 20 2,245

Subtotal 95 $7,371 114 $8,890 

DELAY COSTS $5,650 $9,538 

USER FEES $0 $0 

TOTAL INDUSTRY UNIT COST FOR 

LoREX EXEMPTION 

$13,021 $18,428 

Sources: CMA 1991, CAIR 1990, BLS 1994. 
 VI-12 

Table VI-6. Estimated Labor Requirements for LoREX Exemption Submission 

(hours) 

Clerical Technical Managerial

General Instructions 2.0-2.5 1.5-2.0 3.0-4.0 

Certification 0.5a

I. General Information 

 A. Submitter Information 

 B. Chemical Identity Info 1.5-2.0 3.0-6.0 1.0 

 1. Impurities 0.5 

 2. Synonyms 0.25 

 3. Trade Identification 0.25 

 4. Generic Chemical Name 0.5 

 5. By Products 0.5 

 C. Production, Import & Use Information 1.5 2.0-3.0 

 1. Production 1.0 

 2. Use Information 3.0 

 3. Hazard Information 3.0-4.0 

II. Human Exposure 2.5-3.5 6.0-7.0 

 A. Ind. Sites Controlled by the Submitter 

 1. Operation Description 

 a. Identity 1.0 

 b. Type of Operation 1.0 

 c. Amount & Duration 2.0 

 d. Process Description 10.0-12.0 

 2. Occupational Exposure 13.0-14.0 

 3. Environmental Release & Disposal 9.0-10.0 

 B. Industrial Sites Controlled by Others 2.0 10.0-12.0 2.0-2.5 

 1. Operation Description 

 2. Worker Exposure & Environmental Release 

III. List of Attachments 2.0 6.0-8.0 1.0-1.5 

Physical & Chemical Properties Worksheet 0.5 1.5-2.0 0.5 

TOTALS 12.0-14.0 67.0-80.0 16.0-20.0 

a

 Certification is expected to require a general managerial/legal review of the complete submission. Due to the inconsistency in the CMA responses, 

some of the labor listed under other headings including "General Instructions" may be attributable to this review. 

Source: CMA 1991. 
 VI-13 

Table VI-7. Agency Unit Costs for Amended LVE Review 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

SAT 0.0006 14 100 66 82 

Engineering/Exposure 0.0015 56 100 188 228 

Exposure/Fate 0.0008 0 100 71 92 

Focus 0.0009 23 100 102 126 

Freedom of Information Act 

Requests 

0.0333 287 1 32 41 

CBI Substantiation 0.0004 3 56 21 27

 TOTAL $1,361 $1,632 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the average

time devoted to an activity for all PMNs. This table also does not reflect changes that would result in the Agency review time for LVEs 

that would result from other amendments. 

a

 The cost per FTE is estimated to be between $88,206 and $114,662. 

Sources: OPPT Operating Plan 1993, OTS Annual Report 1990, OPPT-IMD 1991, Kearney-Centaur 1991, OPM 1994.
 VI-14 

2. Low Release/Low Exposure Exemption

Because there is no Agency experience with a LoREX exemption review, this analysis 

assumes that these exemptions will require approximately the 

same level of effort as LVEs. LoREX exemptions, therefore, are dropped from the new chemical review 

process at the Focus meeting review. Only costs associated with notice receipt, prenotice consultations, 

CRSS meeting review, and other costs such as Freedom of Information Act Requests, CBI Substantiation, 

and Notices of Commencement are assumed to be attributable to LoREX exemption submissions. Not 

included in the costs are those costs associated with the 5(e) order process to which some LoREX eligible 

full PMNs would have been subject. Table VI-8 presents Agency unit costs for review of the LoREX 

exemptions. From the table the range in LoREX exemption review unit costs is $1,361 to $1,632. 

 E. Comparison with Base Case and Sensitivity Analysis

1. Low Volume Exemption

Total Industry and Government costs for the amended LVE are calculated by multiplying the 

number of projected LVEs for each submission scenario by the unit costs per submission. Incremental 

costs, calculated by subtracting baseline costs from amended costs, are presented in Table VI-9 for both 

Industry and Government. Baseline costs are the current LVE costs plus the costs of current PMNs that 

will be eligible for the 10,000 kg LVE. 

 As shown in the table, based on the quantifiable costs and benefits, the amended LVE results in cost 

savings for Government, but a cost increase for Industry. For the 1,000 submission case, the Agency 

costs decrease by $704 in the low cost case and $57,532 in the high cost case; however, Industry's costs 

increase by $311,044 in the low cost case and $192,060 in the high cost case. The quantified change in 

societal cost is therefore an increase of 
 VI-15 

Table VI-8. Agency Unit Costs for LoREX Exemption Review 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

SAT 0.0006 14 100 66 82 

Engineering/Exposure 0.0015 56 100 188 228 

Exposure/Fate 0.0008 0 100 71 92 

Focus 0.0009 23 100 102 126 

Freedom of In formation Act 

Requests 

0.0333 287 1 32 41 

CBI Substantiation 0.0004 3 56 21 27

 TOTAL $1,361 $1,632 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the average

time devoted to an activity for all PMNs. This table also does not reflect changes that would result in the Agency review time for LVEs 

that would result from other amendments. 

a

 The cost per FTE is estimated to be between $88,206 and $114,662. 

Sources: OPPT Operating Plan 1993, OTS Annual Report 1990, OPPT-IMD 1991, Kearney-Centaur 1991, OPM 1994.
 VI-16 

Table VI-9. Comparison of Costs for Base Case and Amended LVE 

 (1993 dollars) 

1000 Submissions Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Category Low High Low High Low High 

INDUSTRY

Amendment 

 LVEs 3,489,628 4,938,704 6,979,256 9,877,408 10,468,884 14,816,112

Baseline 

 LVEs 

 PMNs 

1,191,960 

1,986,624 

1,878,068

 2,868,576

2,390,850

 3,952,554

3,767,055

 5,707,271

3,582,810 

 5,939,178 

5,645,123

 8,575,847

Increment 311,044 192,060 635,852 403,082 946,896 595,142

GOVERNMENT

Amendment 

 LVEs 

 User fees 

364,748 

0 

437,376

0

 729,496

0

 874,752

0

1,094,244 

0 

1,312,128

0

Baseline 

 LVEs 

 PMNs 

 User fees 

185,932 

378,240 

-198,720 

221,020

472,608

-198,720

372,945

752,540

-395,370

443,325

 940,293

-395,370

558,877 

1,130,780 

-594,090 

664,345

1,412,901

-594,090

Increment -704 -57,532 -619 -113,496 -1,323 -171,028

TOTAL INCREMENT $310,340 $134,528 $635,233 $289,586 $945,573 $424,114

Note: User fees are not listed separately under Industry costs because they are included in the estimated Industry unit costs for the base case. 

Additionally, this table does not include the costs associated with LVEs that are not affected by this amendment. 

Source: Tables III-1, III-2, III-13, VI-1, VI-5, and VI-7.
 VI-17 

$310,340 in the low cost case and $134,528 in the high cost case. Similarly, for the 2,000 and 3,000 

submission scenarios, societal costs increase by $635,233 and $945,573 in the low cost cases. In the 

high cost cases, for the 2,000 and 3,000 submission scenarios, societal costs increase by $289,586 and 

$424,114, respectively. 

These changes in societal costs do not reflect the unquantified benefits that will result from the 

exemption. Because more chemicals will be exempt from the full PMN process, EPA will be able to shift 

its resources and attention to chemicals produced at levels of greater concern. The revised 

information requirements will help the Agency to speed its review of low volume chemicals and avoid 

delays associated with follow-up calls that have affected previous LVE submissions.*

 Industry will benefit 

from increased flexibility to produce larger volumes and may be able to avoid resubmitting full PMNs for 

chemicals covered by LVEs. Those submitters producing between 1,000 kg and 10,000 kg of a chemical 

will benefit from the amended LVE because they will now be able to submit an LVE exemption in place of 

a full PMN, resulting in savings of between $7,000 and $10,000 per submission. Additionally, because it 

was assumed that only 76 percent of submissions eligible for the LVE exemption would file an exemption, 

it is possible that industry costs may be reduced further if a larger proportion of submitters elect to use the 

LVE exemption for eligible submissions. 

F. Low Release/Low Exposure Exemptions

Table IV-10 presents the change in costs to Government and Industry for the LoREX exemption 

amendment. Because the LoREX exemption is not part of the current rule, however, the baseline cost for 

the LoREX amendment is the cost 

 

 * These delays are not included in the delay cost estimate, which only covers the standard pre- and 

post-submission delays. 
 VI-18 

Table VI-10. Comparison of Costs for Base Case and Amended Costs for LoREX Exemption 

 (1993 dollars) 

1000 Submissions Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Category Low High Low High Low High 

INDUSTRY

Amendment 

 LoREX exemptions 1,692,730 2,395,640 3,385,460 4,791,280 5,078,190 7,186,920

Baseline 

 PMNs 2,690,220 3,884,530 5,380,440 7,769,060 8,070,660 11,653,590

Increment -997,490 -1,488,890 -994,980 -2,977,780 -2,992,470 -4,466,670

GOVERNMENT

Amendment 

 LoREX exemptions 

 User fees 

176,930 

0 

212,160

0

353,860

0

424,320

0

530,790 

0 

636,480

0

Baseline 

 PMNs 

 User Fees 

512,200 

-269,100 

639,990

-269,100

1,024,400

-538,200

1,279,980

-538,200

1,536,600 

-807,300 

1,919,970

-807,300

Increment -66,170 -158,730 -132,340 -317,460 -198,510 -476,190

TOTAL INCREMENT -$1,063,660 -$1,647,620 -$2,127,320 -$3,295,240 -$3,190,980 -$4,942,860

Note: User fees are not listed separately under Industry costs because they are included in the estimated Industry unit costs for the base case. 

Source: Tables III-1, III-2, III-13, VI-2, VI-6, and VI-8.
 VI-19 

of the PMNs that are now eligible for LoREX exemptions. As shown in Table VI-10, the LoREX 

amendment results both in savings for Government and regulatory relief for Industry. Costs to society are 

reduced by approximately $1.1 million to $1.6 million for the 1,000 submission case, and $2.1 to $3.3 

million and $3.2 to $4.9 million for the 2,000 and 3,000 cases, respectively. 

In addition to this quantified benefit, there are additional unquantified benefits that would result from 

LoREX exemptions. Because relatively minute amounts of these substance are released, be it in the form 

of emissions, wastes, or final products, the human health and environmental exposure risks associated 

with this type of chemical are limited. The Agency anticipates that this exemption will encourage the use 

of chemical substances that would qualify and the use of exposure controls and pollution prevention 

practices. In addition, exempting these chemicals will allow the Agency to concentrate its resources on 

chemicals of greater concern. Moreover, this benefit would be achieved without sacrificing EPA control 

over exempted chemicals. 

 
 VII-1 

VII. NON-5(e) SIGNIFICANT NEW USE RULE AMENDMENT

A. Amendment Description

The Non-5(e) Significant New Use Rule Amendment authorizes the Agency to impose all of the 

provisions in 40 CFR Part 721 Subpart B, including worker protection and hazard communication 

requirements, using expedited rulemaking procedures to promulgate "significant new use" rules (SNURs) 

for substances not subject to Section 5(e) Orders. Previously, the types of activities which EPA could 

designate as a significant new use by expedited rulemaking without first issuing a Section 5(e) Order were 

limited primarily to environmental release restrictions. This amendment eliminates the need to develop a 

Section 5(e) Order before promulgating an expedited SNUR in those cases where EPA determines that 

activities described in the PMN submission will not present unreasonable risk. 

Whereas a Section 5(e) Order applies only to the original PMN submitter who signs the Order, a 

SNUR applies to all manufacturers and processors of the chemical substance. The reporting 

requirements of a non-5(e) SNUR also apply to the original PMN submitter because, without a 5(e) Order, 

the PMN submitter is not exempted by 40 CFR 721.45(i). To EPA's benefit, because only one Agency 

action is required instead of two to obtain similar regulatory results, a non-5(e) SNUR is expected to be 

more resource efficient than a combination of a Section 5(e) Order and a SNUR.*

 To industry's benefit, 

avoiding the delay of waiting for issuance of a Section 5(e) Order will generally allow the submitter to 

commence commercial manufacture immediately after the PMN review period. Unlike the case for the 

Section 5(e) Order, production can commence prior to the publication of the SNUR. The Agency would 

work with the submitter in development of the Non-5(e) SNUR terms and expects that such negotiations 

would begin prior to the "Day-83" deadline for EPA to provide formal notification. 

B. Submissions

This amendment is not expected to affect the projected number of submissions under Section 5. 

Fewer submissions will require 5(e) Orders, but because the costs of these orders are included in the 

 

 * Because EPA always promulgates SNURs for substances regulated by Section 5(e) Orders (where 

the substances may present an unreasonable risk) and the efforts necessary for these activities are 

separate, elimination of the Section 5(e) Consent Order process will restrict regulatory burden to SNUR 

development. 
 VII-2 

estimated average unit costs used in this analysis, it is not practical to eliminate 5(e) costs from total 

submission costs. 

C. Industry Per Unit Costs

This analysis does not quantify the costs to submitters of negotiating 5(e) Orders. It should be 

noted, however, that costs will be lower for submissions eligible for non-5(e) SNURs because costs 

associated with commenting on the 5(e) Consent order will not be incurred by the submitter. Additionally, 

manufacture will commence sooner, thereby eliminating the delay costs. 

The delay that will be avoided through use of a non-5(e) SNUR is estimated to range from two to 

six months. This analysis uses an average delay of four months (120 days) to calculate the savings to 

industry associated with elimination of this delay period. The cost of a 120-day delay is $11,253 for the 

low cost scenario and $18,921 for the high cost scenario. These savings will apply to the submissions for 

which a 5(e) Order would have been required in the absence of this amendment. Because the estimated 

percentage of submissions requiring 5(e) Order development is expected to decrease from 5 percent 

under the baseline to 3 percent under these amendments, this cost savings is estimated to apply to 2 

percent of total PMN submissions. 

D. Government Per Unit Costs

Table VII-1 presents amended unit costs for PMN reviews. In addition to the non-5(e) SNUR 

amendment, the table also reflects changes resulting from the LoREX exemption amendment and the 

procedural amendments discussed in Chapters V and VI. As the table indicates, this amendment will 

reduce Agency review costs per PMN to between $3,369 and $4,183, compared to the baseline cost of 

$3,940 to $4,923. 

The Non-5(e) SNUR amendment, the LoREX amendments, and the increased number of LVE 

submissions will all eliminate the need for negotiated 5(e) Orders on PMNs by giving submitters and the 

Agency other alternatives to achieve regulatory terms. As a result of these amendments, the percentage 

of cases requiring 5(e) Order development, post-order data review, and Order modifications are estimated 

to be reduced to 3 percent of total PMN submissions, instead of 5 percent as currently experienced under 

the baseline (ETD 1992). It is not clear what portion of this change is attributable to the non-5(e) SNUR 

amendment; the effect depends on Industry reaction to the various regulatory options available, including 
 VII-3 

the LoREX exemption. For example, the fewer submitters that utilize the LoREX exemption, the greater 

the possibility that a non-5(e) SNUR would be used to replace the current 5(e) process. 

E. Comparison with Base Case and Sensitivity Analysis

The non 5(e) SNUR, LoREX, and procedural amendments will result in savings for both Industry 

and the Agency. The Industry savings have been calculated by multiplying the unit cost savings 

associated with the use of a non-5(e) SNUR by 2 percent of the total number of PMN submissions. 

Therefore, 
 VII-4 

Table VII-1. Amended Agency Unit Costs for PMN Review Due to the Non-5(e) SNUR Amendment 

Review Step 

Time 

Required 

(FTEsa

) 

Extramural Funds 

(1993 dollars) 

Percent of Cases 

Requiring Review 

Step 

Low Agency Cost 

(1993 dollars) 

High Agency Cost 

(1993 dollars) 

Prenotice Consultations 0.0024 4 41 88 114 

Administrative Prescreen / Notice 

Receipt / User Fee 

0.0024 92 100 304 367 

CRSS 0.0025 268 100 489 555 

SAT 0.0006 14 100 66 82 

Engineering/Exposure 0.0015 56 100 188 228 

Exposure/Fate 0.0008 0 100 71 92 

Focus 0.0009 23 100 102 126 

Standard Review Functions 0.0219 511 29 708 876 

Division Directors Meeting 0.0129 113 15 188 239 

Order Development /Negotiation 

Review 

0.0171 22 3 46 59 

Post Order Data Review 0.0886 0 3 234 305 

Order Modifications 0.2167 0 3 573 745 

New Chemical SNUR 

Development 

0.0277 85 7 177 228 

Notices of Commencement 0.0012 40 31 82 99 

Freedom of Information Act 

Requests 

0.0333 287 1 32 41 

CBI Substantiation 0.0004 3 100 21 27

 TOTAL $3,369 $4,183 

Note: Hour requirements do not necessarily reflect the time a particular activity will take for any given submission. Instead they represent the 

average time devoted to an activity for all PMNs. This table also does not reflect changes in the Agency review time for PMNs that result 

from other amendments. 

a

 The cost per full time equivalent (FTE) is estimated to be between $88,206 and $114,662. An FTE is equal to one person employed fulltime, for 

one year, or portions of several person's activities allocated to a certain task that sum to fulltime employment status. 

Sources: OPPT 1993 Operating Plan, OTS 1990 Annual Report, OPPT-IMD 1991, Kearney-Centaur 1991, OPM 1994. 
 VII-5 

the savings to industry associated with the use of non-5(e) SNURs ranges from $64,817 to $108,985 for 

the 1,000 submission scenario, $130,085 to $218,727 for the 2,000 submission scenario, and $195,127 to 

$328,090 for the 3,000 submission scenario. 

To calculate the estimated savings to the Agency that will result from the amendments, the 

number of PMNs expected to submit under this amendment is multiplied by the amended Government unit 

cost and subtracted from the same number of submissions times the baseline unit costs of review. This 

calculation results in an estimated savings of $164,448 to $213,120 for the 1,000 submission scenario, 

$330,038 to $427,720 for the 2,000 submission scenario, and $495,057 to $641,580 in the 3,000 

submission scenario. 
 VIII-1 

VIII. IDENTIFICATION AND ANALYSIS OF REGULATORY OPTIONS

This chapter provides an analysis of the alternatives that were considered for each of the 

amendments discussed in the previous four chapters. The costs anticipated under these alternatives are 

compared to the preferred option, which is defined as the situation in which all of the amendments are 

promulgated simultaneously. Because of data limitations, however, the relative costs and benefits of 

many of these options compared to the preferred option are not quantifiable. 

The remainder of this chapter discusses various regulatory options that may affect costs and is 

structured as follows: 

! section A presents a summary of the costs associated with the preferred option; 

! section B compares the costs associated with alternatives to the polymer exemption to the 

preferred option; 

! section C compares the costs associated with the procedural amendment alternatives to 

the preferred option; 

! section D compares the costs associated with alternatives to the low volume and low 

release and exposure exemptions amendment to the preferred option; 

A. Total Preferred Option Costs

Table VIII-1 presents the total quantified costs for the preferred option for amendments to 

notification requirements required under the TSCA Section 5 New Chemicals Program. As the table 

indicates, the total quantified costs under these amendments are estimated to be between $13.1 and 

$18.3 million for the 1,000 submission scenario, which represents a societal savings of between $5.8 and 

$8.9 million annually compared to the baseline. Similarly for the 2,000 and 3,000 submission scenarios, 

the total costs are estimated to be between $26.2 and $36.8 million and between $39.3 and $55.1 million, 

and the societal savings are estimated to be between $11.6 and $17.8 million and 
 VIII-2 

Table VIII-1. Total Quantified Costs for Preferred Option of New Chemicals Program Amendments 

 (1993 dollars) 

1000 Submission Scenario 2000 Submission Scenario 3000 Submission Scenario 

Cost Element Low High Low High Low High 

INDUSTRY

 PMNa 5,895,055 8,496,743 11,831,047 17,052,491 17,746,571 25,578,737

 Polymer 

 Exemption 

 66,080 165,200 131,936 329,840 198,016 495,040

 LVE 3,489,628 4,938,704 6,979,256 9,877,408 10,468,884 14,816,112

 LoREX 

 exemption 

1,692,730 2,395,640 3,385,460 4,791,280 5,078,190 7,186,920

 Bona Fide 312,200 362,375 623,000 723,125 935,200 1,085,500

 Chemical ID 

 Change 

85,610 85,610 171,150 171,150 256,760 256,760

 NOC Form 22,940 45,570 45,880 91,140 68,820 136,710

Industry Subtotal $11,564,243 $16,489,842 $23,167,729 $33,036,434 $34,752,441 $49,555,779

Industry Baseline $16,872,041 $24,499,644 $33,750,179 $49,009,150 $50,631,332 $73,522,161

Industry Increment -$5,307,798 -$8,009,802 -$10,582,450 -$15,972,716 -$15,878,891 $23,966,382

GOVERNMENT

 PMNa 970,272 1,204,704 1,947,282 2,417,774 2,920,923 3,626,661

 Polymer 

 Exemption 

 12,390 16,225 24,738 32,395 37,128 48,620

 LVE 364,748 437,376 729,496 874,752 1,094,244 1,312,128

 LoREX 

 Exemption 

176,930 212,160 353,860 424,320 530,790 636,480

 Bona Fide 49,729 57,311 99,235 114,365 148,964 171,676

 Chemical ID 

 Change 

-61,150 -69,711 -122,250 -139,365 -183,400 -209,076

Government Subtotal $1,512,919 $1,858,065 $3,032,361 $3,724,241 $4,548,649 $5,586,489

Government Baseline $1,426,562 $2,177,047 $2,854,009 $4,355,149 $4,279,517 $6,531,329

User Fee Transfer -$596,160 -$596,160 -$1,196,460 -$1,196,460 -$1,794,690 -$1,794,690

Government Increment -$509,803 -$915,142 -$1,018,108 -$1,827,368 -$1,525,558 -$2,739,530

TOTAL QUANTIFIED 

AMENDED COSTS 

$13,077,162 $18,347,907 $26,200,090 $36,760,675 $39,301,090 $55,142,268

TOTAL QUANTIFIED 

INCREMENT 

-$5,817,601 -$8,924,944 -$11,600,558 -$17,800,084 -$17,404,444 -$26,705,912

Note: User fees are not listed separately under Industry costs because they are included in the estimated Industry unit costs. Compared to the 

baseline the transfer is expected to decrease $610,650 in the 1,000 submission scenario, $1,219,230 in the 2,000 submission scenario, and 

$1,829,880 in the 3,000 submission scenario. 

a

 The costs given in this table for PMN submissions include the savings associated with the issuance of non-5(3) SNURs. 

Source: Tables III-13, IV-6, V-3, VI-11, VI-12, and Chapter VII.
 VIII-3 

between $17.4 and $26.7 million respectively. 

B. Polymer Exemption Amendment Options

Several alternatives to the preferred option for the polymer exemption amendments are 

considered. The first alternative would require no reporting on the part of those commencing the 

manufacture or import of polymers meeting the exemption criteria. There would be some on-site 

recordkeeping requirements. Each submitter would be required to retain records that document that the 

polymer meets the eligibility requirements set forth in the exemption. In addition, exemption holders would 

be required to keep records of commencement and a certification stating compliance with the exemption 

criteria. Since most of these records would be generated during the normal manufacturing or import 

process, only minimal burden would be placed on the facility to create and maintain these records. The 

total savings associated with this alternative for the 1,000 submission scenario would be between 

$4,938,732 and $7,188,663. 

The second alternative would exempt certain salts of polymers that are listed on the TSCA 

Inventory. This proposal has the potential to further increase the number of submissions eligible for the 

polymer exemption. This would decrease costs to the submitter and to the Agency associated with the 

review of the substances. Although it is known that the Agency reviewed 500 PMNs of salts of TSCA 

Inventory-listed polymers during FY90, data has not been available on what percentage of these PMNs 

are already captured in the preferred polymer exemption scope. It therefore has not been possible to 

estimate the savings that would result from this option. One other unquantified cost associated with this 

alternative is the increased uncertainty associated with health and environmental effects that would result 

if these polymers were eligible for exemption. 

A third alternative would allow an expedited 21-day review of all polymers not meeting the 

exemption criteria, which could be extended to 90 days, if necessary. Assuming that the information 

requirements for submissions under this option are the same as for a full PMN, the only change in 

quantified costs resulting from this alternative would be reduced delay costs to industry. Using the 

methodology discussed in Chapter II, the value of the 69 days (compared to the base case) that would be 

eliminated from the delay is between $6,448 and $10,803 per submission. Because the polymer 

amendment is estimated to cover 67 percent of all polymers, 148 additional polymers in the 1,000 
 VIII-4 

submission scenario may receive the abbreviated review. Thus, the total savings in the 1,000 submission 

scenario would be between $954,304 and $1,598,844. Data are not available to estimate the number of 

currently exempt submissions that would have had EPA review extended to 90 days. 

The Agency also considered an alternative exemption that would require a manufacturer to notify 

EPA that a polymer is being manufactured under the exemption and provide some basic information on 

the manufacturing process and the chemical identity. This alternative would result in costs to the Industry 

and Government for submission development and review, respectively. For the 1,000 submission 

scenario, compared to the preferred option, this alternative would result in $4,968,749 and $7,160,815 in 

total societal savings. These costs may be offset somewhat by the decreased risk associated with 

increased information provided to EPA, which has not been quantified. 

C. Procedural Amendment Options

The Agency has proposed two alternatives that would define how submitters would obtain the 

correct chemical identification. In one alternative, submitters would be required to obtain the information 

directly from CAS and the Agency would work with CAS to resolve any disagreements regarding the 

identification. In the other alternative, CAS registry numbers would be required for all non-CBI substances 

regardless of whether or not the registry number already exists. It has not been possible to quantify the 

difference in the costs of these two options, however, the estimated $70 fee identified for obtaining the 

identity from CAS is expected to be similar to the cost of obtaining the identification from other sources. 

Furthermore, the number of cases for which there is a disagreement regarding the correct identification is 

small, indicating that additional costs are likely to be insignificant. 

As an alternative to the proposed amendment to the "two percent rule," EPA has considered 

changing to a five percent rule based on the amount charged. Although it is expected that this option 

would increase the number of polymer submissions that could be avoided as well as improve industry 

flexibility relative to the preferred option, uncertainty and the potential for increased risks to human health 

and the environment would also increase. Data limitations have not allowed these effects to be quantified 

for either this alternative or the preferred option. 
 VIII-5 

D. Low Volume Exemption and Low Release/Low Exposure Exemption

 Amendment Options

Two alternatives to the low volume amendment also were considered. One involved raising the 

low volume production ceiling to 5,000 kgs. The other would have raised it to 25,000 kgs with a toxicity 

testing requirement. Assuming the same percentage of eligible submissions elect the low volume 

exemption under these alternatives as under the current exemption, the projected number of LVEs in the 

1,000 total submission scenario would be 224 for the 5,000 kg exemption or 329 for the 25,000 kg 

exemption (RIB PMN Database 1990). There is more uncertainty for the 25,000 kg exemption submission 

projection than for either the 5,000 kg or the preferred option because the requirement for toxicity testing 

may reduce the percentage of submitters electing the exemption. Assuming the same unit costs apply to 

submissions under these alternatives as for the preferred option, the 5,000 kg exemption would result in 

an increased cost of between $252,368 and $450,016 when compared to the preferred option in the 1,000 

submission scenario. The change in cost for the 25,000 kg exemption compared to the preferred option 

could not be calculated because no data on the costs of the required testing are available. It is expected, 

however, that the cost of this testing would result in a significant increase in the total cost for this 

alternative compared to the preferred option. 

One alternative to the proposed LoREX exemption that was considered is a more narrowly 

defined exemption for Site Limited Intermediaries (SLIs). It was estimated that only 0.5 percent of 

submissions would qualify as SLIs. Thus, the number of chemicals eligible for this exemption under the 

1,000 total submission scenario is projected to be 5. As a result of the decreased number of submissions 

eligible for exemption, the societal savings would be reduced by $1,012,400 to $1,573,900 when 

compared to the preferred option. 
 IX-1 

IX. EFFECTS OF THE AMENDMENTS ON SMALL ENTITIES

In September 1980, Congress enacted the Regulatory Flexibility Act (P.L. 96-354), requiring that 

regulatory agencies consider the potential effects of regulations on small entities. According to EPA's 

April 1992 guidelines for implementing the Regulatory Flexibility Act, if small entities are subject to 

proposed regulatory activities, the Agency must develop and consider regulatory alternatives that would 

reduce the impact on small entities. 

This section focuses on the specific impacts that these amendments will have on those small 

entities that would be subject to regulation and examines ways to mitigate these impacts. The first section 

presents small entity definitions, and the second section presents an analysis of the number of small 

entities. Following these sections is a discussion of the requirements of the Regulatory Flexibility Analysis 

and a summary of the regulatory impacts on small entities. 

A. Small Entity Definition

The Federal definition of "small entities" includes small businesses, small not-for-profit 

organizations, and small governmental jurisdictions (USEPA 1982). No small not-for-profit organizations 

and government jurisdictions will be affected by the amendments, and therefore, "small entity" has been 

considered synonymous with small business for this analysis. 

The current definition of small businesses under Section 8(a) of TSCA includes those firms whose 

annual sales, when combined with the annual sales of their parent company, if applicable, are less than or 

equal to $40 million, and that manufacture less than 100,000 pounds of a regulated substance per site. 

Firms that generate $4 million or less in annual sales are considered small businesses regardless of 

production volumes (40 CFR 704.3). 

Additionally, the Office of Policy, Planning, and Evaluation of the USEPA has established 

guidelines for determining small business cut-offs in implementing the Regulatory Flexibility Act (RFA). 

Each 4-digit SIC code is given either a monetary or number of employees limit below which businesses 

are considered to be small businesses. For SIC Major Group 28 -- Chemicals and Allied Products -- either 

500, 750, or 1,000 employees is designated as the small business cut-off depending on the four digit SIC 

code in question (13 CFR 121.601). 
 IX-2 

B. Number of Small Businesses

Although it has not been feasible to definitively establish and quantify the impact on small 

businesses for the various amendments because of data limitations and limited resources available for this 

analysis, the Agency feels that small firms may be affected by the amendments under some options and 

definitions of small business. In order to explore this possibility, data on firm size and sales are used to 

evaluate certain regulatory options that may lessen the economic impact of the amendments on small 

businesses. 

As stated above, the small business cut-off for SIC Major Group 28 -- Chemicals and Allied 

Products -- is based on the number of employees. Depending on the 4-digit SIC code, the cut-off is either 

500, 750, or 1,000 employees. It was not practical to allocate each company to a specific 4-digit SIC 

code, but because there are a significant number of companies with 500 or fewer employees, the data 

indicate a significant portion of the industry can be considered small businesses. Table IX-1 presents the 

company data for each of the 239 companies that reported employee size information for TSCA Section 5 

submissions received in Fiscal Year 1989 (FY89). As the table indicates, 44 percent of companies 

reporting employee data in 1989 had 500 or 
Table IX-1. Employee Size Category for Companies Submitting PMNs in FY89 

Number of Number of Percentage Cumulative Percentage Cumulative 

Employeesa

 Companies of Companiesb Percentage of PMNsb Percentage 

 (companies) (PMNs) 

 0- 500 104 44% 7% 23% 23% 

501- 750 14 6% 50% 4% 27% 

751-1,000 9 4% 54% 2% 29% 

 >1,000 112 47% 100% 72% 100% 

Total 239 100% 100% 

a

 Number of Employees are for the parent company, when applicable. 

b

 Percentages may not add to 100 because of rounding. 

Source: RIB PMN Database. 

 IX-3 
 IX-4 

fewer employees, while 54 percent had fewer than 1,000 employees. These companies accounted for 

between 23 percent and 29 percent of the Section 5 notices received that year. 

Additionally, annual sales information was developed from PMN submissions for companies that 

submitted TSCA Section 5 Notices in FY89. Annual sales data were available for 230 companies that 

submitted at least one PMN in FY89. These companies accounted for 95 percent of the PMNs submitted 

that year. Table IX-2 shows that, of those companies for which specific figures were available, 37 percent 

had annual sales equal to or below $40 million (16 percent of companies had sales less than or equal to 

$4 million), while another 35 percent had sales in excess of $500 million. The firms with annual sales less 

than $40 million accounted for 18 percent of the PMN submissions in 1989. 

The breakdown presented in the both Tables IX-1 and IX-2 illustrates that the regulated industry 

seems to be comprised of large proportions of small and large companies, with a limited number of 

intermediate-sized businesses. Thus, small businesses comprise a significant portion of the industry and 

may be adversely affected by certain regulatory efforts. 

C. Regulatory Flexibility Analysis and Impacts on Small Businesses

According to EPA's Guidelines, a Regulatory Flexibility Analysis must identify options that mitigate 

the effects of the rule on the small business portion of the regulated community. In the previous section, it 

has been shown that there are a significant number of entities that are small businesses. As such, 

regulatory flexibility options that could lessen the impact on this portion of the regulated community must 

be examined. Unfortunately, it was not feasible to establish definitively either the 
Table IX-2. Annual Sales of Companies Submitting PMNs in FY89 

Annual Salesa

 Number of Percentage of Cumulative Percentage Cumulative 

 ($ million) Companies Companiesb

 Percentage of PMNsb Percentage 

 (companies) (PMNs) 

 0-1 16 7% 7% 1% 1% 

 >1-4 21 9% 16% 5% 6% 

 >4-10 14 6% 22% 3% 9% 

>10-20 20 9% 31% 3% 12% 

>20-30 4 2% 33% 3% 15% 

>30-40 9 4% 37% 3% 18% 

>40-100 16 7% 44% 5% 23% 

>100-500 49 21% 65% 11% 34% 

 >500 81 35% 100% 66% 100% 

Total 230 100% 100% 

a

 Annual sales are for the parent company, when applicable. 

b

 Percentages may not add to 100 because of rounding. 

Source: RIB PMN Database. 

 IX-5 
 IX-6 

magnitude of the impact on small businesses, or the proportion of small businesses that would be affected 

by the amendments. The Agency believes, however, that because the focus of the amendments is to offer 

an increased number of exemptions and thus increase the flexibility and decrease the regulatory costs for 

a significant number of new chemicals, any negative impacts on small businesses should be outweighed 

by the cost savings associated with reduced reporting requirements. 

The most important feature of the amendments that may lessen the economic impact on small 

businesses is the increased flexibility that they provide. By offering the opportunity for an exemption to a 

broader range of chemicals, the amendments allow small businesses to reduce their compliance costs 

through decreased submission and delay costs. It is important to note that none of the exemptions are 

mandatory, and if a company decides that it would be better off submitting a full PMN, it is allowed to do 

so, thus avoiding potential impacts of the amendments. In some cases, chemicals may be eligible for 

more than one class of exemption and a company will again be able to select the submission option that it 

feels is most to its advantage. 
 X-1 

X. EFFECTS OF THE AMENDMENTS ON INNOVATIVE ACTIVITY

Compared to current regulations, the amendments are likely to change reporting costs, numbers 

and types of submissions, and the length of delay for product introductions. These changes have direct 

impacts on commercialization and costs, which can spawn indirect effects, such as changes in the nature 

of research, the number of new products developed, and the types of products developed. 

For purposes of this rule, direct changes in the reporting requirements may result in indirect 

effects on innovation for two reasons. First, the reduced overall regulatory requirements and associated 

costs of the amendments may increase the overall profitability of the industry and, thus, encourage both 

capital investment and R&D for new chemicals and related products. Second, by expediting or exempting 

the development of specific types of new chemicals, particular portions of R&D or innovation may be 

encouraged, relative to other chemical types that are not eligible for exemption. 

This chapter examines the indirect or "hidden" effects on innovation in the chemical industry that 

may be a consequence of the direct effects of changing the regulations, and their possible consequences 

for the economy and social welfare. The chapter is divided into two sections as follows: 

! Section A presents an overview of the issues covered in the chapter; and 

! Section B presents selected conclusions relevant to the choice of 

regulatory options. 

A. Overview of the Potential Effects on Innovation 

The potential impacts of the amendments on innovation are briefly outlined in this section. In the 

course of this outline, the methodology of the chapter is introduced. 

1. Direct Effects

Overall, the direct effects of the amendments are a reduction in time and expense 

associated with reporting to the federal government and reduced costs associated with shorter delays in 

bringing new products to market. The direct effects of these amendments on numbers of submissions and 

reporting costs are quantified in Chapters IV through VIII. Several of the provisions are aimed specifically 

at reducing costs and delays for certain submissions. These include: an expanded polymer exemption, a 

low release and exposure (LoREX) exemption, a more flexible polymer identification (two percent) rule, 
 X-2 

and a non-5(e) SNUR provision. 

2. Potential Indirect Effects of the Amendments on

 Innovation

The indirect effects of the amendments on innovation could include changes in the 

number of new products developed and in the raw materials and methods used to create them. Overall, 

the reduced costs and delays associated with the options would suggest that more chemicals would be 

developed. The orientation could shift, however, to products that will be less heavily regulated. 

For example, additional or expanded exemptions to regulation, such as those being implemented 

by EPA (e.g., the low volume exemption, the LoREX exemption, and the polymer exemption), may steer 

R&D and innovation toward safer, as opposed to cheaper, alternatives to existing chemicals. 

These changes in innovation are measured relative to current reporting requirements. Thus, a 

company may refrain from minor product modifications (even if these might benefit customers) to avoid 

delays in commercializing the product caused by current EPA reporting requirements. To some extent, 

however, the polymer exemption amendment and the amended two percent rule decrease reporting 

requirements and increase flexibility, thus reducing this effect. 

In certain instances, additional hurdles in product development may be desirable in cases in which 

reporting significantly reduces risk. The amendments, however, seek to streamline the reporting process 

by shifting the focus from the review of low-risk substances towards the review and management of highrisk substances. This should result in an increase in innovation, without posing an increased risk to 

human health or the environment. 

B. Summary of Important Implications

This chapter contains a number of implications that policy makers should consider in assessing 

the impacts of each of the amendments. 

(1) Given that reporting costs of any particular size are much less likely to cause an otherwise 

profitable project to be canceled if the project is relatively large in magnitude (with large 

expected returns), the innovation impact of the New Chemicals Program would tend to fall 

on smaller or less profitable projects. While the projects lost as a result of increased 

reporting costs are not likely to have provided major private benefits individually, 

cancellation of a large number of small projects could lead to a significant innovation cost. 

 By exempting more low volume projects, the amended exemptions will tend to reduce 

this existing impact of the New Chemicals program on innovation. 
 X-3 

(2) The cases for which a valuable new product is most likely to be abandoned involve long 

delays in commercialization induced by the regulatory review process or a long series of 

reporting steps that impose significant costs at each stage. By taking the steps set forth 

in the amendments, delay and innovation impacts can be averted for any projects not 

posing potential risks to human health or the environment. 

 

In general, the amendments will tend to mitigate any impact that the current reporting 

requirements of TSCA Section 5 have on innovative activity. The amendments reduce the negative 

effects on innovation by reducing the delays and uncertainty that a company may face under the current 

process. The increased flexibility of reporting vehicles also has a positive effect on innovation by allowing 

companies to adjust product development plans more easily.