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### OCT 17 ?.D#
OFFICE OF CHEMICAL SAFETY AND POLLUTION PREVENTION Phillip McCarter Vice President Nation Ford Chemical 2300 Banks Street Fort Mill, SC 29715

Dear Mr. McCarter:
This letter responds to your submissions to the U.S. Environmental Protection Agency (EPA), dated March 18, 2014, May 16, 2014, and August 7, 2014, which collectively requested that Nation Ford Chemical (NFC) be granted a waiver from the testing and reporting requirements of the "Polyhalogenated Dibenzo-p-Dioxins/Dibenzofurans; Testing and Reporting Requirements" (Dioxins/Furans Test Rule) (52 FR 21412, June 5, 1987) for the import of 2,3,5,6-tetrachloro-2,5- cyclohexadiene-1,4-dione (CASRN 118-75-2) (chloranil). For the reasons set forth below, the EPA is denying your request.

1. Background

Under the Dioxins/Furans Test Rule at 40 CFR 766.32(a)(2)(ii), the EPA may grant waivers from testing if:

In the judgement of EPA, the cost of testing would drive the chemical substance off the market, or prevent resumption of manufacture or import of the chemical substance, if it is not currently manufactured, and the chemical substance will be produced so that no unreasonable risk will occur due to its manufacture, import, processing, distribution, use, or disposal. (In this case, the manufacturer must submit to EPA all data supporting the determination.)

In the March 18, 2014 and May 16, 20141etters, NFC described its intent to directly import chloranil from two manufacturers located in China instead of its current arrangement involving the import of the downstream chemical intermediate, dianil (CASRN 80546-37-9). NFC currently uses dianil, but would like to use chloranil instead, to produce crude pigment violet 23 (PV 23). The proposed direct import of chloranil would allow NFC "to convert the chloranil to PV 23 in a more efficient manner than starting with dianil" (March 18, 2014). In those letters, NFC also provided background on its operations and facilities; estimates of the costs of the required testing and how those costs would affect its current operations and contractual obligations for producing crude PV 23; information related to current testing conducted by a third-party laboratory on the two sources of chloranil intended to be imported; and basic
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### descriptions of the context in which chloranil is imported from India and used by an NFC competitor,

Clariant Chemical Ltd. (Clariant). NFC also stated its preference to import chloranil pursuant to aMemorandum of Understanding (MOU) signed on May 14, 1992, and proposed an alternative thirdparty testing protocol that it stated would ensure that imported chloranil would be low dioxin chloranil. Finally, NFC requested that, if the EPA could not grant the requested waiver, then the agency should finalize a significant new use rule for chloranil, "2,3,5,6-Tetrachloro-2,5-cyclohexadiene-1,4-dione; Proposed Significa.nt New Use of a Chemical Substance," proposed in 1993 (58 FR 27980, May 12, 1993).

In regard to showing that "the cost of testing would drive the chemical substance off the market," NFC's letter dated March 18, 2014 estimated that the cost of testing would be "well over $200,000." NFC also stated that "failing to receive approval to import chloranil will prevent the manufacture or import of this chemical substance unequivocally."
By letter dated July 23, 2014, the EPA asked NFC to clarify whether the cost of testing of chloranil would indeed be prohibitive of chloranil import, given that NFC appeared to be operating under the mistaken belief that the testing requirements needed to be completed, and import approval obtained from the EPA, before NFC could even commence its import. The EPA clarified that the test rule allows for testing to occur after import has begun. The EPA also requested NFC to describe, if possible, the processes for how chloranil was being produced by the two sources in China that NFC planned to purchase from, and how those production processes compared to those used by Clariant's source in India. This second request was intended to determine if NFC may potentially qualify for a testing exclusion under 40 CFR 766.32(a)(1), even if NFC would not qualify for a test waiver under 40 CFR 766.32(a)(2)(ii). NFC responded by letter dated August 7, 2014. NFC's August 7, 20141etter also restated NFC's interest in discussing the MOU and stated "being a signatory to this document, NFC feels that it should be able to import chloranil under the guidelines contained in the MOU and not to have to conduct the D/F Test Rule Testing."

2. VVaiver Request I9ecision



### After reviewing the totality of information provided in NFC's correspondence, the EPA has determined that the information provided is insufficient to meet the conditions for waiver from the testing requirements described at 40 CFR 766.32(a)(2)(ii). Therefore, the EPA is denying NFC's waiver request.

The EPA notes in particular that NFC did not demonstrate how the cost of testing the chloranil it intends to import would drive the chemical substance off the market, or prevent resumption of manufacture or import of the chemical substance. This deficiency is described in further detail below.'

' The EPA did not reach the question of whether "the chemical substance will be produced so that no unreasonable risk will occur due to its manufacture, import, processing, distribution, use, or disposal," since NFC did not submit data demonstrating the first of the two required findings under 40 CFR 766.32(a)(2)(ii) (i.e., that cost of testing would be prohibitive to the intended import of chloranil).The EPA conducted an economic analysis that considered the economic evidence NFC supplied (e.g.,

relating to its current operations and contractual obligations for producing crude PV 23 and the potential business effects of being required to pay for testing consistent with the test rule). The EPA evaluated NFC's economic evidence in light of several standard measures of the impacts of chemical testing, including analyses tailored to gauge potential adverse effects for small businesses and the length of time necessary to recoup potential losses. The EPA gave particular consideration to NFC's revenues linked to a toll contract for the production of crude PV 23.

The agency considered the data submitted by NFC (including data claimed as confidential by NFC). The EPA considered these data using approaches designed to analyze potential adverse economic impacts on small businesses and firms. The EPA found a potential for some adverse effects on the profitability (e.g., reduced or lost profit) of NFC's crude PV 23 production line. However, the infortnation provided by NFC did not give the EPA a reasonable basis to determine the likelihood or level of any such potential adverse effect. Thus, NFC did not give the EPA a reasonable basis to determine that NFC would be effectively prevented from importing chloranil if it had to pay for the testing of the imported chloranil as specified under the Dioxins/Furans Test Rule.

For purposes of comparison, the EPA also notes a prior case in which it concluded that the cost of testing 

### would "drive the chemical substance off the market." In this prior decision, the EPA was persuaded by the fact that the "reported value of the product is far less than the anticipated annualized cost of testing." (Undated Letter to Irwin L. Klundt, Vice President, Aldrich Chemical Co., Inc.). While this prior decision does not alter or supersede the applicable waiver standard codified in 40 CFR 766.32(a)(2), and thus does not set the minimum evidence necessary to obtain a testing waiver, the EPA believes the case is noteworthy as an example of submitted evidence that was found to be sufficient under the governing legal standard.

In short, NFC submitted evidence establishing that paying to test the chloranil that it imports (as currently required by 40 CFR Part 766) could have a potentially adverse economic impact on the profitability of NFC's chloranil import activities. But NFC's evidence was insufficient to establish that this impact would likely be large enough to "drive the chemical substance off the market, or prevent resumption of manufacture or import of the chemical substance."

3. AdditionalIssues

With respect to NFC's proposed alternative testing method described in both the March 18, 2014 and May 16, 20141etters, the agency notes that willingness to pursue alternative testing is not a separate basis for obtaining a waiver from the Dioxins/Furans Test Rule, as set forth in 40 CFR 766.32(a)(2)(ii).

With respect to the EPA's request for information regarding the starting materials, process conditions, and reaction conditions used by the chloranil manufacturers in China and India, the agency appreciates NFC's attempt to address the inquiry in its August 7, 2014 letter. However, as NFC acknowledges, the confidential nature of such information complicates the attainment and comparison of specific details.

3As such, NFC did not give the EPA a basis to determine the extent to which the manufacturing

processes used by the manufacturers in China match those of the facility in India that is manufacturing chloranil under a process that has already been tested under the Dioxins/Furans Test Rule.

The agency is mindful of NFC's commitment to the provisions of the 1992 MOU. However, a commitment to adhere to guidelines contained in that MOU is not a separate basis for an exclusion or waiver from test rule requirements, beyond those set forth by rule in 40 CFR 766.32. Nor is it itself evidence sufficient to support an exclusion or waiver determination.

Finally, in regard to NFC's request that the EPA finalize the 1993 chloranil SNUR, the agency appreciates such feedback from stakeholders directly affected by this ongoing rulemaking process. At this time, the decision on how to proceed with the rulemaking is pending. We note, however, that NFC's comment appears to be predicated on the erroneous expectation that a SNUR would effectuate a ban of certain imports of crude PV 23 into the United States. Issuing a SNUR for a chemical substance establishes advance notification requirements respecting certain manufacturing, import, and processing for that substance. It does not effectuate a ban on such activities. See TSCA Section 5(a)(1).

I hope that you find this information helpful. If you have any questions, please feel free to contact Hiroshi Dodahara at (202) 566-0507 or at 

### dodahara.hiroshi@epa.gov

.
Sincerely,

Wendy Cleland-Hamnett Director Office of Pollution Prevention and Toxics

Enclosure

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