DRAFT 

March 31, 2011

—Does not contain TSCA CBI—

Prepared by: 

Economic and Policy Analysis Branch 

Economics, Exposure and Technology Division 

Office of Pollution Prevention and Toxics 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue 

Washington, D.C. 20460 

 _ 

Economic Analysis for the Proposed Biotechnology 

Exemptions Rule for Trichoderma reesei and 

Bacillus amyloliquefaciens 
 ii

Contributors 

The EPA analysts responsible for this report are Carol Rawie and Stephanie Suazo of the Economic and 

Policy Analysis Branch; Economics, Exposure and Technology Division; Office of Pollution Prevention 

and Toxics. Analytical and draft preparation support was provided by Abt Associates Inc. under EPA 

Contract No. EP-W-08-010. 
 iii

Abstract 

EPA proposes to list Trichoderma reesei (T. reesei) strain QM6a and its derivatives, and Bacillus 

amyloliquefaciens (B. amyloliquefaciens), as candidates for Tier I and Tier II exemptions from full 

reporting for new chemicals under the Toxic Substances Control Act (TSCA). The exemptions fall under 

TSCA Section 5(h)(4). EPA proposes to add the two microorganisms to the existing list at 40 CFR 

725.420 of ten recipient microorganisms that are candidates for exemptions from the requirement to 

submit a Microbial Commercial Activity Notice (MCAN). EPA is proposing these exemptions in 

response to industry petitions. The candidate microorganisms and their uses would need to meet certain 

requirements to qualify for an exemption. Qualifying microorganisms would require an abbreviated Tier I 

or Tier II submission, with less lead time before commercial production, as compared with the MCAN.

T. reesei and B. amyloliquefaciens are both used in enzyme production. The use of intergeneric T. 

reesei has been increasing due to its use in fuel ethanol production from corn and cellulosic biomass. 

Other uses for the enzymes from the microorganisms include pulp and paper, textile production, laundry 

detergents, and specialty chemical production. 

The benefits of the proposed rule include both quantified savings in submission costs, and nonquantified benefits due to faster development of improved microorganisms. The proposed rule is 

expected to reduce submission-related costs for both industry and the Agency. EPA estimates that 

industry will save approximately $1.98 million over a ten-year period and the Agency will save 

approximately $3.68 million, for a total savings to society of $5.66 million over ten years, before 

discounting. This assumes that over ten years, firms would submit 60 Tier I notices and three Tier II 

notices for T. reesei and B. amyloliquefaciens. 

In addition, the simpler submissions with their reduced EPA review periods -- especially the Tier I 

submissions -- are expected to increase innovation in the biotechnology market. Industrial, institutional, 

and household consumers would benefit from more cost-effective products, such as detergent enzymes, 

made using new T. reesei and B. amyloliquefaciens strains. T. reesei strains modified to enhance 

production of enzymes that degrade biomass could help bring down costs of producing cellulosic ethanol, 

which may lead to lower greenhouse gas emissions and less global climate impact as compared with corn 

ethanol or gasoline. 

Because T. reesei, strain QM6a and its derivatives, and B. amyloliquefaciens are safe, wellcharacterized organisms, there is not expected to be any increased health or environmental risk associated 

with the proposed rule. Comment [ccr1]: PLACEHOLDER 

PENDING RISK ASSESSMENT. 
 iv

Table of Contents 

Contributors ................................................................................................................................................ ii

Abstract ....................................................................................................................................................... iii

Table of Contents ....................................................................................................................................... iv

List of Tables and Figures ......................................................................................................................... vi

Executive Summary ................................................................................................................................. viii

Chapter 1. Introduction .............................................................................................................................. 1

1.1 Statutory Authority .......................................................................................................................... 1

1.2 Regulatory History ........................................................................................................................... 1

1.3 Statement of Need ............................................................................................................................ 3

1.4 Organization of the Report ............................................................................................................... 3

Chapter 2. Regulatory Requirements, Affected Entities, and Substitutes for the Modified 

Microorganisms ........................................................................................................................................... 4

2.1 Overview of Regulatory Requirements............................................................................................ 4

2.2 Microorganisms and their Uses ....................................................................................................... 4

2.2.1 Trichoderma reesei ............................................................................................................. 5

2.2.2 Bacillus amyloliquefaciens ................................................................................................. 6

2.3 Overview of the Regulated Community .......................................................................................... 8

2.3.1 Enzyme Producers .............................................................................................................. 8

2.4 Overview of Indirectly Affected Entities ....................................................................................... 11

2.4.1 Enzyme Customers ........................................................................................................... 11

2.4.2 Ethanol Producers and Consumers ................................................................................... 11

2.5 Substitutes for the Modified Microorganisms ............................................................................... 11

2.5.1 Alternatives to Intergeneric T. reesei ................................................................................ 11

2.5.2 Alternatives to Intergeneric B. amyloliquefaciens ............................................................ 12

Chapter 3. Health, Safety, Environmental Risks ................................................................................... 13

3.1 Health, Safety, and Environmental Risks Associated with T. reesei ............................................. 13

3.1.1 Rule case: Only T. reesei, QM6a Strain and Derivatives Are Listed ............................... 13

3.1.2 Rule option: All T. reesei Strains Are Eligible for Exemptions ....................................... 13

3.2 Impacts if Entire T. reesei Species is Eligible for Exemption ....................................................... 14

3.3 Health, Safety, and Environmental Risks Associated with B. Amyloliquefaciens ......................... 14

Chapter 4. Benefits of the Proposed Rule ............................................................................................... 16

4.1 Industry Cost Savings .................................................................................................................... 16

4.1.1 Method for Estimating Compliance Cost and Burden ...................................................... 16

4.1.2 Labor Costs per Hour ........................................................................................................ 18

4.1.3 Rule Familiarization Cost per Firm .................................................................................. 19

4.1.4 Report Preparation, Submission and Recordkeeping Unit Cost ....................................... 20

4.1.5 Estimating the Number of Submissions and Submitting Companies ............................... 27

4.1.6 Base Case and Change in Industry Burden and Cost due to the Proposed Rule for T. 

reesei and B. amyloliquefaciens ....................................................................................... 32

4.2 Health, Environmental, Consumer and Other Benefits .................................................................. 38
 v

4.2.1 Benefits of Reduced Delays in Bringing Products to Market and Increased Market Entry

 .......................................................................................................................................... 38

4.2.2 Health, Environmental and Other Benefits of Improved Microbe Strains ........................ 41

4.2.3 Benefits of Improved B. Amyloliquefaciens Strains ......................................................... 43

4.3 Limitations of the Analysis ............................................................................................................ 43

4.3.1 Uncertainties in the Number of Tier I and Tier II Submissions ........................................ 44

4.3.2 Uncertainties in Cost Estimates ........................................................................................ 46

4.3.3 Uncertainties regarding Innovation Benefits .................................................................... 47

Chapter 5. Agency Burden and Cost Savings ......................................................................................... 48

5.1 Methodology for Estimating Agency Costs ................................................................................... 48

5.2 Agency Costs per Submission ....................................................................................................... 48

5.2.1 Agency Wage Rates .......................................................................................................... 48

5.2.2 Federal Cost per MCAN Submission ............................................................................... 49

5.2.3 Agency Cost per Tier I and Tier II Submissions .............................................................. 50

5.3 Change in Agency Cost due to Exemptions for T. reesei and B. amyloliquefaciens ..................... 51

5.3.1 Agency First-Year Cost Savings ....................................................................................... 51

5.3.2 Agency Ten-Year Cost Savings ........................................................................................ 52

5.3.3 Uncertainties in Agency Cost Estimates ........................................................................... 52

Chapter 6. Summary of Social Costs and Benefits................................................................................. 55

6.1 Social Cost Savings and Other Benefits ........................................................................................ 55

6.1.1 Quantified Social Cost Savings ........................................................................................ 55

6.2 Health, Safety, and Environmental Costs and Benefits ................................................................. 57

6.2.1 Benefits of New Intergeneric T. reesei and B. amyloliquefaciens .................................... 57

6.2.2 Benefits of Reducing the Cost of Cellulosic Ethanol ....................................................... 57

6.2.3 Rule Costs and Risks ........................................................................................................ 57

Chapter 7. Additional Analyses ............................................................................................................... 59

7.1 Regulatory Flexibility Act (RFA) .................................................................................................. 59

7.2 Unfunded Mandates Reform Act (UMRA) ................................................................................... 60

7.3 Paperwork Reduction Act (PRA) ................................................................................................... 60

7.3.1 Industry Burden ................................................................................................................ 60

7.3.2 Government Burden .......................................................................................................... 61

7.4 Executive Order 13132 - Federalism ............................................................................................. 61

7.5 Executive Order 13045 – Children’s Health .................................................................................. 61

7.6 Executive Order 13175 – Consultation and Coordination with Indian Tribal Governments ......... 61

7.7 Executive Order 13211 – Energy Supply, Distribution, or Use ..................................................... 62

7.8 National Technology Transfer Advancement Act ......................................................................... 62

Chapter 8. References ............................................................................................................................... 63
 vi

List of Tables and Figures 

Table ES-1-1: Summary of Costs and Benefits of the Proposed Rule for T. reesei and B. 

amyloliquefaciens ................................................................................................................................ xi 

Table 2-1: Regulatory Requirements of MCANs and Tier I/Tier II Exemptions ......................................... 4 

Table 4-1: Base Case and Change in Industry Cost (Year 1 Summary) ..................................................... 17 

Table 4-2: Base Case and Change in Industry Cost (10 Year Summary) ................................................... 18 

Table 4-3: Derivation of Loaded Wage Rates for the Private Manufacturing Sector in 2009$ .................. 19 

Table 4-4: Additional Cost per Company of Rule Familiarization ($2009) ............................................... 20 

Table 4-5: Hours Burden per Respondent by Submission Type and Labor Category ................................ 23 

Table 4-6: Total Hours Burden per Respondent by Submission Type and Cost Component ..................... 24 

Table 4-7: Total Costs per Respondent by Submission Type and Cost Component .................................. 25 

Table 4-8: MCAN Submissions for B. amyloliquefaciens and T. reesei October 1, 1998 through 

September 30, 2010 ............................................................................................................................ 28 

Table 4-9: All MCAN, Tier I, and Tier II Exemption Notices, FY1998 through Present .......................... 29 

Table 4-10: All Tier I and Tier II Submissions from 1998 through 9/30/2010 .......................................... 30 

Table 4-11: Nonconfidential Submissions for Microbes Listed at §725.420 through 9/30/2010 ............... 31 

Table 4-12: Assumed Number of Companies Making First-Time Tier 1/Tier 2 Submissions for B. 

amyloliquefaciens and T. reesei over a 10-Year Period ...................................................................... 31 

Table 4-13: Estimated Numbers of MCAN, Tier I, and Tier II Submissions for B. amyloliquefaciens and 

T. reesei over a 10-Year Period .......................................................................................................... 32 

Table 4-14: Total Industry Burden for Rule Familiarization (Year 1) ........................................................ 33

Table 4-15: Base Case and Change in Industry Burden Hours (Year 1) .................................................... 33 

Table 4-16: Base Case and Change in Industry Cost (Year 1) ................................................................... 34 

Table 4-17: Base Case and Change in Industry Hours Burden (All Years) ................................................ 35 

Table 4-18: Base Case and Change in Industry Cost in Thousands of Dollars ($2009) (All Years) .......... 37 

Table 5-1: Agency MCAN and Tier I/Tier II Regulatory Activities .......................................................... 48 

Table 5-2: Derivation of Loaded Agency Wage Rates ($2009).................................................................. 49 

Table 5-3: Agency Burden Hours and Cost per MCAN, Tier I, and Tier II Submission ($2009) .............. 51 

Table 5-4: Base Case and Change in Agency Burden Hours (Year 1) ....................................................... 52 

Table 5-5: Change in Agency Cost (Year 1) ............................................................................................... 52 

Table 5-6: Agency Burden Hours Reduction due to Rule (All Years) ....................................................... 54 

Table 5-7: Agency Cost Reduction due to Rule - Thousands of Dollars ($2009) (All Years) ................... 54 

Table 6-1: Change in Total Burden Hours to Society Due to Rule............................................................. 56 

Table 6-2: Change in Total Costs to Society Due to Rule .......................................................................... 56 

Table A-1: Base Case and Change in Industry Burden Hours (Year 2) ................................................... A-1 

Table A-2: Base Case and Change in Industry Burden Hours (Year 3) ................................................... A-2 

Table A-3: Base Case and Change in Industry Burden Hours (Year 4) ................................................... A-2 

Table A-4: Base Case and Change in Industry Burden Hours (Year 5) ................................................... A-3 

Table A-5: Base Case and Change in Industry Burden Hours (Year 6) ................................................... A-3 

Table A-6: Base Case and Change in Industry Burden Hours (Year 7) ................................................... A-4 

Table A-7: Base Case and Change in Industry Burden Hours (Year 8) ................................................... A-4 

Table A-8: Base Case and Change in Industry Burden Hours (Year 9) ................................................... A-5 

Table A-9: Base Case and Change in Industry Burden Hours (Year 10) ................................................. A-5 

Table A-10: Base Case and Change in Industry Cost (Year 2) ................................................................. A-6 

Table A-11: Base Case and Change in Industry Cost (Year 3) ................................................................. A-6 

Table A-12: Base Case and Change in Industry Cost (Year 4) ................................................................. A-7 

Table A-13: Base Case and Change in Industry Cost (Year 5) ................................................................. A-7 

Table A-14: Base Case and Change in Industry Cost (Year 6) ................................................................. A-8 
 vii

Table A-15: Base Case and Change in Industry Cost (Year 7) ................................................................. A-8 

Table A-16: Base Case and Change in Industry Cost (Year 8) ................................................................. A-9 

Table A-17: Base Case and Change in Industry Cost (Year 9) ................................................................. A-9 

Table A-18: Base Case and Change in Industry Cost (Year 10) ............................................................. A-10 

Figure 1: Simplified cellulosic ethanol production process .......................................................................... 7 

Figure 2: Simplified corn-based ethanol dry mill production process ...................................................... B-1 
 viii

Executive Summary 

EPA proposes to add Trichoderma reesei (T. reesei), strain QM6a and its derivatives, and Bacillus 

amyloliquefaciens (B. amyloliquefaciens) to the list at 40 CFR 725.420 of recipient1 microorganisms 

eligible for Tier I and Tier II exemptions from Microbial Commercial Activity Notice (MCAN) Reporting 

under Section 5(h)(4) of the Toxic Substances Control Act (TSCA). 

In 1997, under the authority of TSCA Section 5, EPA promulgated a final rule, “Microbial Products 

of Biotechnology,” that described reporting requirements for microorganisms. Under this rule, EPA 

requires companies to submit an MCAN to EPA 90 days prior to commercial production of a “new” 

microorganism, unless the activity is eligible for one of the specific exemptions. A “new” microorganism 

is one modified with genetic material from another genus and not listed on the TSCA Inventory.2

 The 

MCAN submitter must provide EPA with a description of genetic construction, phenotypic and ecological 

characteristics, and by-products of the microorganism, as well as production volume, worker exposure 

data, environmental release information and any test data in the submitter’s possession. 

For new microorganisms being manufactured for introduction to commerce, there are two exemptions 

from MCAN requirements: Tier I and Tier II exemptions. 

Ten microorganisms were listed at 40 CFR 725.420 as eligible for Tier I and Tier II exemptions under 

the 1997 Final Biotechnology rule. Under provisions of that rule, EPA has received two requests to add 

additional microorganisms to the list; Trichoderma reesei (T. reesei), strain QM6a and its derivatives, and 

Bacillus amyloliquefaciens (B. amyloliquefaciens). These requests follow the procedures specified in § 

725.67(iii) regarding listing under § 725.420. 

T. reesei is a fungus used in the production of industrial enzymes, which has the capacity to produce 

large amounts of cellulase enzymes (BIO and ETA, 2010). Applications include cellulases for corn-based 

ethanol, textiles, pulp and paper processing, and biopolymer production. It may also have a significant 

role in the manufacture of cellulosic ethanol. B. amyloliquefaciens is a bacterium that is used for 

production of enzymes and specialty chemicals (Novo Nordisk, 1997). B. amyloliquefaciens enzymes are 

used in laundry and dishwasher detergents, textile processing, and other areas (Novo Nordisk, 1997, p.2, 

Aehle, 2007 and Uhlig, 1998). Both microorganisms have applications not subject to TSCA jurisdiction, 

such as food and animal feed (Genencor, 2006, Genencor, 2005, page 6). B. amyloliquefaciens is 

registered as a pesticide (EPA, 2000a). 

In the Tier I exemption, if certain criteria are met concerning the nature of the introduced genetic 

material and containment of the microorganism, manufacturers are only required to notify EPA 10 days 

before commencing manufacture and to keep certain records. The notice is typically two or three pages, 

with minimal information. A manufacturer is not required to wait for EPA approval before commencing 

manufacture. A manufacturer who meets all of the conditions of the Tier I exemption except for those 

concerning containment may submit a Tier II exemption notice. The Tier II exemption requires 

manufacturers to submit an exemption request with containment and other information (more data than in 

a Tier I notice but less than in the MCAN) at least 45 days prior to commercial production. Unlike the 

case for MCANs and Tier I certifications, under the Tier II exemption, the manufacturer may not proceed 

with production until EPA approves the exemption. 

 

1

 The recipient is the microorganism that receives genetic material. 

2

 However, “introduced genetic material consisting of only well-characterized, non-coding regulatory regions from 

another genus” does not cause an unlisted microbe to be “new” (EPA, 1997b, p.17934). 
 ix

To add a recipient microorganism to the 40 CFR 725.420 list, EPA must find that the microorganism 

does not present an unreasonable health or environmental risk. The finding must take into account 

environmental and public health effects, as well as economic and social consequences, including effects 

on the national economy, small business, and technological innovation (40 CFR 725.67). 

While the proposed rule may increase the probability of environmental or human exposure to a 

harmful or toxic microbe, there is no expected increase in health and safety risk associated with the 

proposed rule, as both organisms are well characterized and are not pathogenic or toxigenic. The 

combined lack of any known safety concerns and the inherent safety of the microorganisms indicate there 

is no increased environmental or health risk expected to be associated with the proposed exemption and 

the reduction in EPA’s regulatory requirements. 

The proposed addition of T. reesei QM6a derivatives and B. amyloliquefaciens to the list of recipient 

microorganisms eligible for Tier I and Tier II exemptions will decrease the regulatory burden of both 

EPA and industry. EPA typically receives several MCANs per year, some of which would be replaced by 

Tier I and Tier II exemptions. Historically, most Tier I and Tier II submissions have been Tier I notices. 

Over the first 10 years of the proposed rule, EPA estimates that the proposed addition of the two 

microorganisms to the list will generate a total cost savings to society of $5.68 million. Industry would 

save approximately $1.98 million and the Agency would save approximately $3.68 million. The 

equivalent, annualized cost savings are expected to be $552,000 and $535,000at a three and seven percent 

discount rate, respectively (see Table 6-2).3

 EPA estimates that there will be a net decrease in burden to 

society of 72,500 hours over a 10-year period (see Table 6-1). Most of the avoided MCAN submissions, 

and thus most of the savings, are likely to be for T. reesei strains. 

In addition to cost savings to both industry and the Agency, the proposed rule is expected to increase 

the rate of innovation in industry. Presently, if a company4

 identifies a promising strain, they must prepare 

and file an MCAN, and wait through a 90-day review period before commercial use, which may include 

“demonstration” or “pilot” scale production. “Demonstration” or “pilot” scale production is conducted 

using small scale commercial volumes, to test the cost effectiveness of the enzyme. Biotechnology 

industry groups have suggested that the burden associated with the MCAN process can make it difficult 

for a company to test multiple strains of a microorganism at the same time (BIO and ETA, 2010). The 

proposed exemption would allow companies to expedite the full demonstration-scale testing process and 

bring products to market more quickly. The rate of innovation is expected to increase especially in cases 

of the Tier I exemption, which has only a brief notice and no requirement to wait for EPA approval before 

commencing commercial production, once the 10 days have elapsed. The expected benefits from 

increased innovation were not quantified for this report. 

Some of the benefits from lower cost or better performing microorganism may accrue to small 

businesses, as developers of the exempt microorganisms, as producers of fermentation chemicals using 

the live microorganisms, or as customers for enzymes from the microorganisms. 

T. reesei may be a key component in bringing down costs of producing cellulosic ethanol through 

fermentation. Cellulosic ethanol is a second-generation biofuel that is made from cellulosic biomass that 

comes from feedstocks like corncobs, switchgrass, woodchips, and other inedible plant fibers. As of the 

writing on this report in late 2010 cellulosic ethanol is not a commercially viable substitute for gasoline or 

corn-based ethanol. Genetically modifying the T. reesei fungus can increase the amount of cellulase and 

 

3

 All values are in year 2009 dollars. 

4

 Through calendar 2010, most or all past MCAN submitters were companies, and “company” or “industry” is often 

used to mean “submitter” in this report. However, future submissions could come from government, academic, or 

other non-industry organizations. 

Comment [ccr2]: PLACEHOLDER 

PENDING RISK ASSESSMENT 
 x

other related biotransformation enzymes produced by the organism, therefore bringing down enzyme 

costs. In addition, modifications of the structure of the enzyme can make it more efficient, requiring less 

of the enzyme to produce the same amount of sugars. Native T. reesei has a limited complement of 

degrading enzymes, but introduction of other useful enzyme genes from intergeneric sources is a useful 

application for this microorganism beyond just increased cellulose production. 

Because enzymes are one of the largest cost components of cellulosic ethanol production, less 

expensive enzymes are necessary for the commercialization of cellulosic ethanol. The proposed rule may 

reduce the costs of producing these enzymes and help reduce cellulosic ethanol cost. In addition, the 

proposed rule may help U.S. progress toward meeting the goals of the Energy Independence & Security 

Act (EISA) of 2007 which require the US to consume 6.6 million gallons of cellulosic ethanol in 2011 

and 500,000 million gallons of cellulosic ethanol in 2012 (EPA, 2010c and EPA, 2010d). 

The production and use of cellulosic ethanol is expected to have lower greenhouse gas emissions, 

which contribute to global climate change, when compared with the production of gasoline and cornbased ethanol. Environmental and health benefits of reducing global climate change were not quantified 

for this report. 

Faster introduction of intergeneric T. reesei and B. amyloliquefaciens may also reduce cost and/or 

improve performance of enzymes and other fermentation products made using the intergeneric 

microorganisms, for other areas subject to TSCA jurisdiction such as textile treatment, laundry and 

dishwashing detergents, and biopolymers. 

The industry application requested that all T. reesei strains be eligible for Tier I/Tier II exemptions. 

However, EPA proposes to list only the T. reesei QM6a strain and its direct derivatives. The QM6a strain 

was isolated in the Solomon Islands from canvas during World War II. All current industrial T. reesei

strains appear to have descended from QM6a, so any loss of economic benefit from restricting the Tier 

I/Tier II exemption listing to QM6a derivatives is likely to be low. 

Table ES-1contains a summary of costs and benefits associated with the proposed rule. 
xi

Table ES-1: Summary of Costs and Benefits of the Proposed Rule for T. reesei and B. amyloliquefaciens

Affected 

Entity Direct and Indirect Costs of the Rule Direct and Indirect Benefits of the Rule 

Industry Minor initial rule familiarization costs of approximately $8,190 over 10 years. 

Simplicity and speed of the Tiered exemptions will reduce industry cost, especially for Tier I notices. $1.98 million cost savings to industry over ten years. Simpler, faster Tier I submissions encourage development of new microorganisms, increase profits, and encourage entry into TSCA-regulated microbial markets. The non-quantified benefits of enhanced innovation may well exceed the quantified cost savings. 

EPA None Rule reduces Agency cost by $3.66 million over ten years, due to fewer MCANs. Consumers None 

Increased innovation in T. reesei and B. amyloliquefaciens may lead to 

more cost-effective products in areas such as fuel ethanol, detergents and textiles, compared with the base case. 

The Environment 

Foregoing MCAN review increases probability that potentially harmful microorganisms could be released into the environment. However, these microorganisms have minimal risk, especially in contained use. The costs of an increase in risk, if any, are not quantified but expected to be negligible and more than offset by the indirect environmental and health benefits. 

T. reesei QM6a exemption may indirectly reduce cost of cellulosic ethanol, leading to reduced greenhouse gas emissions versus gasoline and corn ethanol (EPA, 2010b). This could help mitigate global climate change and its negative environmental impacts. Other indirect environmental benefits include reductions in energy use, water use, wastewater, pumice stone sludge, hydrogen peroxide use; reduced harm to sewage treatment processes and aquatic life. Potential reduced fertilizer and pesticide use if increase in cellulosic biomass volume does not offset the reductions per gallon of ethanol. 

Worker, Consumer, and Public Health 

Foregoing MCAN review increases the probability that workers and/or consumers could be exposed to potentially harmful microbes. However, there is minimal risk associated with these microorganisms which are intrinsically low-risk and largely deactivated before entering any downstream product. The cost associated with the increase in risks is not quantified. 

The proposed rule may indirectly improve worker and consumer health through the reduction of green house gas emissions, relative to the base case. Lower GHG emissions would mitigate climate change and its public health impacts, which include increased incidents of vector borne diseases and harm from extreme weather events (EPA, 2009a) 

Other Cellulosic ethanol biomass may be grown on land currently used for food crops. 

Lower cost cellulosic ethanol may help meet the goals of the Energy Independence & Security Act. The proposed T. reesei listing could increase 

commercial viability of cellulosic ethanol from nonfood crops produced on marginal lands, with potentially less negative impact on food crops than corn ethanol.

Note: All costs are in $2009. Benefits and costs are relative to the Base Case in which the proposed rule is not promulgated.
 1

1 :Introduction 

1.1 Statutory Authority 

EPA proposes to add Trichoderma reesei (T. reesei) strain QM6a and its derivatives, and Bacillus 

amyloliquefaciens (B. amyloliquefaciens) to the list at 40 CFR 725.420 of recipient5

 microorganisms 

eligible for Tier I and Tier II exemptions from Microbial Commercial Activity Notice (MCAN) reporting. 

The exemptions are allowed under Section 5(h)(4) of the Toxic Substances Control Act (TSCA). 

TSCA Section 5(a)(1) requires that firms notify EPA at least 90 days before they manufacture or 

import for commercial purposes a “new” chemical substance or manufacture, import, or process a 

chemical substance for a “significant new use.” TSCA defines “chemical substance” broadly and in terms 

that cover microorganisms as well as traditional chemicals.6

 Premanufacture Notices (PMNs) are used to 

report new conventional chemicals. MCANs are used to report new microorganisms. TSCA section 

5(h)(4) authorizes EPA to exempt manufacturers, importers, and processors of chemical substances from 

notification requirements. Granting a Section 5(h)(4) exemption requires a determination that the 

activities will not present an unreasonable risk of injury to health or the environment (EPA, 1997b, 

p.17940). Ten recipient microorganisms are already listed as eligible for exemptions under Section 

5(h)(4) from full reporting for new chemicals. This proposed rule adds two more recipient 

microorganisms to the list. 

1.2 Regulatory History 

On April 11, 1997, EPA promulgated a final rule, “Microbial Products of Biotechnology,” covering 

microorganisms (EPA, 1997b). The 1997 rule (codified at 40 CFR 725) establishes specific reporting 

requirements for manufacturers, importers, and processors of microorganisms: any manufacturer, 

importer, or processor of new microorganisms subject to TSCA must file an MCAN with EPA unless the 

activity is eligible for a specific exemption. The 1997 rule establishes Tier I and Tier II exemptions from 

MCAN submission requirements. The Tiered exemptions are codified at 40 CFR 725.424-470. 

EPA’s 1997 biotechnology rule created the MCAN as a notice distinct from the PMN, and 

implemented EPA’s program for oversight of microbial organisms. The rule established reporting 

requirements under TSCA Section 5 for manufacturers and processors of microorganisms subject to 

TSCA that are manufactured for commercial purposes, including research and development (R&D) for 

commercial purposes. The rule also established several mechanisms for reporting to EPA, including 

specific exemptions that provide an alternative reporting mechanism that reduces the amount of 

information to be reported.7

Under the 1997 rule, manufacturers are required to report information to EPA 90 days before 

commencing the manufacture of intergeneric microorganisms not listed on the TSCA inventory, i.e. 

“new” microorganisms. Any manufacturer, importer, or processor of a living microorganism required to 

report to EPA under section 5 of TSCA must file an MCAN with EPA, unless the activity is eligible for 

one of the specific exemptions described in the rule. 

 

5

 The recipient is the microorganism that receives genetic material. 

6

 Parts of this section are quoted or paraphrased from the preamble to the 1997 biotechnology rule (EPA, 1997b, 

pages 17910-17912). 

7

 Parts of this section are quoted or paraphrased from the preamble to the 1997 biotechnology rule (EPA, 1997b, 

pages 17910-17912). 
 2

The rule established two exemptions for new microorganisms being manufactured (after the R&D and 

test marketing stage) for introduction to commerce: Tier I and Tier II exemptions. For both exemptions, 

the recipient (host) microorganism must be listed under 40 CFR 725.420, and the introduced DNA must 

be well-characterized, limited in size, poorly mobilizable, and free of certain sequences (EPA, 1997b, 

p.17912). The 1997 rule describes the toxin-encoding sequences to be avoided (EPA, 1997b, p.17952). 

In the Tier I exemption, if certain criteria are met concerning the microorganism and its containment, 

manufacturers are only required to submit a notice to EPA certifying that they are manufacturing a new 

microorganism that qualifies for this exemption and providing minimal information on waste disposal. A 

manufacturer is not required to wait for EPA approval, and can commence manufacture in 10 days. 

Manufacturers are also required to keep certain records. 

A manufacturer who wishes to modify the containment restrictions but otherwise meets the conditions 

of the Tier I exemption may submit a Tier II exemption request. The Tier II exemption requires 

manufacturers to submit an abbreviated notice describing the containment method and certain other 

information (see Table 2-1). The rule provides for a 45-day period during which EPA reviews the 

proposed containment. Unlike with MCAN submissions or Tier I exemptions, where the manufacture can 

proceed with production if EPA takes no action, the manufacturer submitting under a Tier II exemption 

may not proceed with production until EPA determines that the microorganism will not present 

unreasonable risk and approves the exemption (40 CFR 725.470). 

After a company commences manufacture or import of a microorganism that was the subject of an 

MCAN, it sends EPA a Notice of Commencement (NOC). When EPA receives an NOC, it adds the 

microorganism to the TSCA Inventory of chemical substances. Once listed on the TSCA Inventory, the 

microorganism is no longer legally “new,” and other firms can produce it without notice to EPA.8

 

By contrast, if a “new” microorganism is produced under a Tier I or Tier II exemption, no NOC is 

submitted and it is not listed on the TSCA Inventory. Subsequent producers must follow new chemical 

reporting requirements. 

The 1997 rule designated 10 microbial organisms as eligible for Tier I and Tier II exemptions (40 

CFR 725.420). Through September 2010, EPA received one Tier II submission, 114 Tier I submissions, 

and 33 MCANs. Of the Tier I notices, 87 represented an unusual cluster of similar notices.9

 Not counting 

this unusual cluster, there were 27 Tier I notices. 

 In 1997 Novo Nordisk (now Novozymes)10 applied to make Bacillus amyloliquefaciens eligible for 

Tier I/Tier exemptions under § 725.67 (Novo Nordisk, 1997). Its request was based, in part, on B. 

amyloliquefaciens being very closely related to B. subtilis which was already eligible for the tiered 

exemptions (Novo Nordisk, 1997, cover letter). 

In 2005, Genencor (now part of Danisco) applied to make T. reesei eligible for the exemptions under 

§ 725.67. The Biotechnology Industry Organization and Enzyme Technical Association repeated the T. 

reesei request in 2009, providing supplementary information in a letter dated January 29, 2010. In its 

2010 letter, the industry requested that all strains of T. reesei be listed, not just the commonly used 

derivatives of strain QM6a. (BIO and ETA, 2010) The current rulemaking covers both microorganisms, 

but for T. reesei, only the QM6a strain and its direct derivatives are proposed for listing as candidates for 

tiered exemptions. 

 

8

 If the microorganism is the subject of a Significant New Use Rule (SNUR), subsequent producers must comply 

with the SNUR restrictions to avoid reporting. 

9

 To protect confidentiality of submissions, details are not given here. 10 In 2000, Novo Nordisk was split into three companies, one of which was Novozymes (Novozymes, 2009). 
 3

The proposed rule evaluated in this analysis would add T. reesei strain QM6a and its derivatives and 

B. amyloliquefaciens to the list of recipient microorganisms eligible for exemption at 40 CFR 725.420. 

(For convenience, the T. reesei strain QM6a original isolate together with strains derived from QM6a 

through successive clonal modifications, are sometimes referred to in this report simply as “T. reesei” or 

as “T. reesei QM6a.”) 

1.3 Statement of Need 

This rule is intended to reduce industry and Agency costs associated with the preparation, submission, 

and review of MCANs for new commercial production of T. reesei QM6a and B. amyloliquefaciens. The 

rule will relieve industry of unnecessary reporting and promote innovation. Affected companies would 

have increased flexibility to develop and test multiple strains of these microorganisms at once, potentially 

speeding the development of lower-cost ways to produce chemicals made through fermentation, including 

alternatives to petroleum-based fuels. The rule will also increase economic efficiency by removing 

unnecessary costs in the development of T. reesei and B. amyloliquefaciens. It is expected that the 

Agency review costs would also be reduced. 

1.4 Organization of the Report 

The remainder of this report provides EPA’s economic analysis in support of the proposed rule. The 

regulatory requirements and companies affected are characterized in Chapter 2. Chapter 3 discusses the 

health, safety, and environmental risks of the rule. Chapter 4 discusses the benefits to industry, 

consumers, and the environment of the proposed rule, and Chapter 5 presents the estimates of Agency 

costs savings associated with the administration of the proposed rule. Chapter 6 summarizes the benefits 

of the rule and its net social costs and savings. Chapter 7 provides all additional analyses including: 

 A small entity impact analysis, as required by the Regulatory Flexibility Act (RFA) 

 A burden hour analysis, as required by the Paperwork Reduction Act (PRA) 

 An unfunded mandates statement, as required by the Unfunded Mandates Reform Act 

(UMRA) 

 A discussion of Federalism, as required by Executive Order 13132 

 A children’s health statement, as required by Executive Order 13045 

 A statement of the necessity of consultation and coordination with Indian tribal governments, 

discussion of Federalism, as required by Executive Order 13175 

 An assessment of any impacts on energy supply, distribution, or use, as required by Executive 

Order 13175 

 A discussion of any technological standards as required by the National Technology Transfer 

Advancement Act 
 4

2 :Regulatory Requirements, Affected Entities, and 

Substitutes for the Modified Microorganisms 

2.1 Overview of Regulatory Requirements 

Once Trichoderma reesei strain QM6a and its derivatives, and Bacillus amyloliquefaciens are listed at 

40 CFR 725.420, manufacturers, importers, and processors may submit a Tier I or a Tier II submission. 

Table 2-1 presents a comparison of the regulatory requirements of MCANs and Tier I/Tier II 

exemptions. MCANs require the most information and a 90-day advance notice to EPA. Tier I 

exemptions require minimal information and 10 days notice, while Tier II exemptions require more 

information than Tier I exemptions, and 45 days notice. 
 5

Table 2-1: Regulatory Requirements of MCANs and Tier I/Tier II Exemptions 

MCAN Tier I Exemption Tier II Exemption 

Applies to: “New” non-exempt 

intergeneric microorganisms “New” intergeneric microorganisms listed at CFR 725.420 

Affected entities: (a) Manufacturers and importers of new microorganisms 

(b) Manufacturers, importers, and processors of significant new uses of microorganisms 

Advance notice 

required: ≥90 days ≥10 days ≥45 days 

Reporting 

requirements: 

Information on: 

 Description of 

microorganism 

 Genetic construction of 

microorganism 

 Phenotypic/ecological 

characteristics 

 Byproducts 

 Total production volume 

 Use information 

 Worker exposure/ 

environmental release 

 Test data in submitter’s 

possession

Written certification that 

microorganism meets 

requirements of Tier I 

exemption. 

Plus information on: 

 Waste disposal permit 

 Name/address of manufacturer 

or importer 

 Recipient genus/species 

 Production start date

Written certification that 

microbe meets Tier II 

exemption requirements. 

Plus information on: 

 Waste disposal permit 

 Microorganism identity 

 Total production volume 

 Process/containment 

information 

Existing information showing use 

will not present unreasonable 

risk. 

Characteristic 

requirements: n/a 

DNA introduced into the microorganism must be wellcharacterized, limited in size, poorly mobilizable, and free of 

certain toxic sequences. 

Containment 

requirements: n/a 

Microorganism must be used 

in a structure designed to 

contain with controlled access, 

established safety procedure, 

effective microbial 

inactivation procedures for 

waste disposal and other 

releases, and emergency cleanup procedures. 

Containment must be 

adequate. Specific 

requirements not stated, but 

Tier I containment criteria are 

to be used as guidance. EPA 

will review case by case. 

Restrictions on 

activity: 

Activity cannot commence 

until review period expires 

Activity cannot commence 

until review period expires 

Activity cannot commence 

until EPA approves 

exemption 

Follow-on 

submissions 

required: 

Notice of 

Commencement 

(NOC) within 30 

days of commercial 

production 

n/a 

Source: U.S. Code of Federal Regulations, Title 40, Section 725, Reporting Requirements and Review Processes for 

Microorganisms 

2.2 Microorganisms and their Uses 

2.2.1 Trichoderma reesei 

QM6a and its Derivatives 

T. reesei is a fungus used in industrial applications that has the capacity to produce a large amount of 

cellulase enzymes (BIO and ETA, 2010). Novozymes called it “the world’s most prodigious producer” of 
 6

cellulase enzymes (DOE/JGI, 2008). It has been called a platform technology for heterologous 

expression11, and has been the subject of many MCAN submissions (BIO and ETA, 2009). 

The research for this report did not identify any commercial use of T. reesei strains from isolates 

other than those derived from QM6a. Although industry requested that all of the T. reesei species be 

listed, its 2010 letter stated, “...the current industrial strains of T. reesei appear to have descended from 

the QM6a isolate...” (BIO and ETA, 2010, p. 3). These “clonal” derivatives of the QM6a strain would be 

exempt from MCAN reporting under the proposed rule. 

Because of its ability to produce large quantities of proteins, T. reesei is used extensively in enzyme 

production. 

T. reesei cellulases and xylanases have been used in TSCA applications such as pulp and paper 

processing, detergent, textile, biopolymer, and biofuel applications (Genencor 2005, p.7; BIO and ETA, 

2009, slide 10). It is said to be a dominant source of cellulases for the textile industry worldwide 

(DOE/JGI, 2008). Cellulase enzymes from T. reesei are often used in textile applications such as the 

finishing of cotton, denim, linen, and bast fibers, because of their low cost compared with enzymes from 

other microorganisms (Polaina and MacCabe, 2007, p. 53). Industry called it the “workhorse” in the 

production of biomass conversion industrial enzymes (BIO and ETA, 2010; BIO and ETA, 2009). 

Novozymes called it the organism of choice for producing enzymes to break down biomass to 

fermentable sugars (DOE/JGI, 2008). T. reesei as a host can produce enzymes to convert biomass to 

sugars such as glucose, which in turn can be fermented to produce ethanol, acids, and other metabolites, 

or used directly in organic synthesis (BIO and ETA, 2010, p.7). Alpha-amlyases and glucoamylases from 

T. reesei have applications in corn-based ethanol production (Genencor, 2008 and Danisco Patent, 2009). 

More information on the use of T. reesei in ethanol production is found in Appendix B. 

T. reesei has also been used in food, beverage, and animal feed applications (Genencor, 2005, page 

6), which are under the jurisdiction of the Food and Drug Administration. 

Fourteen MCANs for which T. reesei was publically identified as the species were submitted to EPA 

from June 2003 through September 20, 2010 (see Table 4-8). These 14 MCANs were approximately 41 

percent of all MCANs submitted during this time period. More T. reesei MCANs were submitted than for 

any other species during this time period (EPA, 2010a). 

 

11 “Heterologous expression” refers to the use of T. reesei to express genes from other fungi that make enzymes that 

T. reesei doesn’t produce or is inefficient at producing 
 7

Cellulosic Ethanol Production 

T. reesei has a potentially significant role in the manufacturing of second generation biofuels such as 

cellulosic ethanol. Cellulosic ethanol is ethanol that is produced from cellulose biomass, which includes 

plant material such as woodchips, grasses, sugarcane residues, and other inedible plant fibers (NCEP, 

2003; Verenium, 2010a). By contrast, ethanol from the starchy corn kernels is referred to as “corn 

ethanol.” Cellulosic ethanol and corn ethanol are chemically the same. They differ only in the feedstock 

and the production process. 

T. reesei can be used to produce enzymes that help break down the cellulose and hemicellulose of 

biomass plant fibers into fermentable sugars. These sugars can, in turn, be used to make ethanol and other 

bioproducts (BIO and ETA, 2010). 

Cellulosic ethanol is believed to have many environmental benefits when compared with its 

alternatives, but as of the writing of this report in late 2010, it was not commercially viable in part due to 

the high cost of enzymes and high capital costs. A 2008 article identified enzymes as the major cost 

component in cellulosic ethanol production (Smith and Suh, 2008). Figure 1 presents where T. reesei

enzymes might be used in one type of production process. 

Figure 1: Simplified cellulosic ethanol production process 

 

2.2.2 Bacillus amyloliquefaciens 

B. amyloliquefaciens is widely used in the production of enzymes and specialty chemicals, according 

to the 1997 Petition requesting that it be listed as a candidate for tiered exemptions (Novo Nordisk, page 

2). It has been used in the production of amylases, enzymes that break down starches, and proteases, 

enzymes that break down proteins (Novo Nordisk, 1997). Primarily it is used in microbial production of 

industrial alpha-amylases. 

Amylases 

TSCA applications of amylases include textile desizing, starch modification for paper sizing, and 

ethanol production (Novo Nordisk, 1997, p.2). The 1997 petition asserted that most commercial 

intermediate-temperature alpha-amylases were from B. amyloliquefaciens (Novo Nordisk, 1997, p.2). 

Since alpha-amylases from B. amyloliquefaciens are fairly heat-stable, it is often the main microbial 

producer of the enzyme for use in the textile industry (Aehle, 2007 and Uhlig, 1998). Alpha-amylases 

from B. amyloliquefaciens and B. licheniformis are the preferred amylases for laundry detergents, because 

Cellulase and hemicellulase 

enzymes from T. reesei

1. 

Biomass 

handling

2. 

Chemical 

Pretreatment 

3. 

Enzymatic 

hydrolysis 

4. Fermentation 

(e.g. S. 

cerevisiae) 

5. 

Ethanol 

recovery 
 8

of how they catalyze degradation of starch stains (Kirk-Othmer, 1994, p. 9-593). They are also used in 

automatic dishwashing detergents (Aehle 2007 p.186). Non-TSCA applications of amylases include use 

in food, brewing, and pharmaceuticals (Haq et al., 2010).12

Proteases 

B. amyloliquefaciens is also used for the industrial production of various proteases, which are 

primarily used in detergents and leather production (Novo Nordisk, 1997, p.2). Detergents are a major 

application for industrial enzymes (LSBU, 2004). Novozymes currently produces one detergent protease, 

a subtilisin, Savinase, which may be from B. amyloliquefaciens (LSBU, 2004)13 The subtilisin enzyme 

produced by B. amyloliquefaciens appears to have less commercial use than a different subtilisin from B. 

licheniformis (Rao et al., 1998). 

Non-TSCA uses 

Proteases from B. amyloliquefaciens also have non-TSCA uses in food and feed applications. B. 

amyloliquefaciens has minor applications in the production of neutrases, which are used for protein 

modifications in food (Kirk-Othmer, 1994). Genencor uses B. amyloliquefaciens to produce its Protex 7L 

enzyme, used for casein, soy, wheat, and animal protein hydrolysis at biological pHs (Genencor, 2006). 

B. amyloliquefaciens is registered as a fungicide and plant growth regulator (EPA, 2000a) and 

continues to be researched for pesticidal uses. It was not determined for this report whether it might be 

used to manufacture enzymes or other fermentation products that would themselves be pesticides. 

(Microorganisms used as pesticides do not fall under TSCA jurisdiction, but microorganisms used to 

manufacture chemicals that are then used as pesticides would fall under TSCA.) 

Extent of use 

The 1997 Petition to list B. amyloliquefaciens as a candidate for Tiered exemptions claims that there 

is broad industrial use for enzymes from B. amyloliquefaciens. However, the petition was submitted over 

a decade ago; evolving technology may have diminished the relative important of B. amyloliquefaciens in 

enzyme production for TSCA uses. Enzymes from B. amyloliquefaciens are used in TSCA applications, 

but the microorganism does not appear to be as common a source for TSCA industrial enzymes as 

bacterial species such as B. subtilis or B. licheniformis. 

Nevertheless, B. amyloliquefaciens continues to be the subject of research and patents. For example 

Novozymes applied for a patent for a strain of B. amyloliquefaciens for biofilm prevention and 

deodorizing (Freepatentsonline, 2010). 

 

12 Due to taxonomic changes, it is not always possible to know from published information whether a commercial 

enzyme is from B. amyloliquefaciens or from another Bacillus species. The 1997 petition stated, “Most of the 

commercially- available intermediate temperature stability alpha amylases today are derived from B. 

amyloliquefaciens strains that were once classified as B. subtilis.” (Novo Nordisk, 1997) The attribution of enzymes 

to B. amyloliquefaciens for this economic analysis does not necessarily reflect EPA scientific opinions on taxonomic 

questions related to B. amyloliquefaciens. 13Some sources list Savinase as being from B. amyloliquefaciens (see for example, LSBU, 2004) while many list it 

for B. lentus (see for example, Uniprot 2010). 
 9

Just one MCAN submitted to EPA since the 1997 biotechnology rule has publically identified B. 

amyloliquefaciens as the species (see Table 4-8).14 It possible the industry has chosen to spend more 

resources in developing intergeneric strains of Bacillus species already eligible for Tier I and II 

exemptions, such as B. subtilis and B. licheniformis, rather than submitting a full MCAN for B. 

amyloliquefaciens. EPA has received non-confidential Tier I submissions for both B. subtilis and B. 

licheniformis. 

2.3 Overview of the Regulated Community 

The proposed rule may affect both current and potential producers of enzymes and other chemicals 

from microorganisms, as well as downstream customers.15 Firms are affected only if the uses are subject 

to TSCA jurisdiction, which excludes medical uses, cosmetics, food and beverages, animal drugs, and 

feed additives (EPA, 1997, page II-3). There appear to be relatively few producers of enzymes from T. 

reesei and B. amyloliquefaciens for commercial uses subject to TSCA jurisdiction. Information was not 

found on firms that use T. reesei or B. amyloliquefaciens to directly produce other chemicals. Ethanol 

producers and other enzyme customers are discussed in section 2.4. 

Currently, based on EPA’s non-confidential information, there are only two companies, Novozymes 

and Genencor (now owned by Danisco), that have submitted MCANs for either T. reesei or B. 

amyloliquefaciens. Of the 14 MCANs submitted to EPA from 1998 through September, 2010 that 

identified T. reesei as the non-confidential species, Novozymes and Genencor accounted for all of the 

non-confidential submitters. (Two MCANs had confidential submitter names (See Table 4-8). However, 

the 2010 industry letter states, “multiple companies are using T. reesei, each of which views T. reesei as 

the preferred recipient microorganism for developing second generation biofuel processes.” (BIO and 

ETA 2010, page 8) Those other firms may also be affected, if they create new intergeneric T. reesei

strains subject to reporting. 

2.3.1 Enzyme Producers 

Novozymes 

Novozymes is likely the world’s largest producer of industrial enzymes, with approximately 47 

percent of the global market in 2009 (Novozymes, 2009). The company was founded in 2000 when Novo 

Nordisk was split into three separate companies, one of which was Novozymes A/S. In addition to 

producing enzymes, Novozymes manufactures microorganisms and biopharmaceutical ingredients 

(Novozymes, 2009). 

Novozymes supplies enzymes for a range of TSCA and non-TSCA applications. It currently supplies 

two enzyme product lines specifically for cellulosic ethanol, as well as enzymes for conventional ethanol 

production (Novozymes, 2010a). Through September 30. 2010, Novozymes (Novo Nordisk, prior to 

2000) submitted three MCANs for T. reesei, or 30 percent of all non-confidential MCANs for T. reesei 

(EPA, 2010a). Two of these Novozymes submissions identified the non-confidential use as ethanol 

production (EPA, 2010a, links for J09-0002 and J09-0004). 

 

14 EPA receives many submissions where the species and sometimes the genus are declared to be Confidential 

Business Information under TSCA (TSCA CBI), and are not made publically available. To protect confidentiality, 

such notices were not used in determining the numbers of past submissions for T. reesei and B. amyloliquefaciens. 
 10

Novozymes also submitted the sole MCAN since 1997 that publically listed B. amyloliquefaciens as 

the species, (EPA, 2010a), and submitted the 1997 request to list B. amyloliquefaciens as a candidate for 

tiered exemptions. The company produces a detergent protease, Savinase, identified by some sources as 

being from B. amyloliquefaciens (LSBU, 2004).16

 

16 Savinase has also been described as being produced by B. lentus (Uniprot, 2010). 
 11

Genencor (Danisco Division) 

Genencor, a subsidiary of Danisco, is the world’s second-largest producer of industrial enzymes, 

accounting for approximately 21 percent of the world’s industrial enzymes global market in 2009 

(Novozymes, 2009). Like Novozymes, Genencor supplies enzymes for a range of TSCA and non-TSCA 

uses. It is another major manufacturer of T. reesei for use in the production of enzymes for cellulosic 

ethanol processing. 

Genencor/Danisco currently markets one enzyme product line for cellulosic ethanol production, as 

well as enzymes for conventional ethanol production (Danisco, 2010). Danisco has also entered a joint 

venture with DuPont to “develop and commercialize” proprietary technology for cellulosic ethanol 

production (Danisco, 2009). Through September 30, 2010, Genencor/Danisco submitted eight MCANs 

for T. reesei, or 70 percent of all MCANs for T. reesei where the submitter is known from nonconfidential information (EPA, 2010a). One of the submissions identified ethanol as the non-confidential 

application (EPA, 2010, link to J01-0002.) 

Genencor also uses B. amyloliquefaciens. For example, a 1997 patent application assigned to 

Genencor covers a mannanase enzyme from B. amyloliquefaciens with use in bleaching pulp for paper 

production (Genencor patent, 1997). An engineered detergent protease marketed by Genencor, trade mark 

FNA, was produced in B. subtilis but originated from B. amyloliquefaciens (Maurer, 2004, p.330). 

Genencor uses B. amyloliquefaciens to produce enzymes used in the processing of soy, wheat, and animal 

proteins, a non-TSCA use (Danisco, 2010). 

Other Enzyme Producers 

Novozymes and Danisco/Genencor are by far the industry leaders in the production of enzymes for 

biofuel production and other applications. Novozymes and Danisco/Genencor currently make up about 70 

percent of the industrial enzyme market (Novozymes, 2009; Danisco, 2010) and have demonstrated their 

interest in producing T. reesei and B. amyloliquefaciens under exemptions, through their petitions 

(Genencor, 2005; Novo Nordisk, 1997). For that reason, the most immediate economic impacts of the 

proposed rule could concentrate in these two firms. 

However, other companies also develop and produce enzymes and other microbial products, for 

TSCA uses. For example, Verenium Corporation and Iogen Corporation are engaged in the development 

or manufacture of enzymes for use in cellulosic ethanol production (Verenium, 2010a; Iogen, 2010). 

Archer Daniels Midland produces enzymes for captive ethanol production, among other uses (Freedonia, 

2004, p.227). The Enzyme Technical Association website lists additional companies that cultivate 

enzymes for biofuel and other applications (ETA, 2010). 

 Some large companies appearing in earlier lists of enzyme manufacturers have sold part of all of their 

enzyme businesses and so may have little or no current role in enzyme applications subject to TSCA. 

Genencor bought Rhodia’s brewing and enyzme business in 2003 (Genencor, 2003), Solvay’s industrial 

enzyme business in 1996 (Solvay, 1996), and portions of Gist Brocades detergent enzymes business in 

1996 (Ee, 1997). Some suppliers may be primarily in areas not subject to TSCA, such as food, feed, and 

therapeutics. However, even those who mainly supply non-TSCA markets could make submissions for 

TSCA uses. 

Other Producers 

Companies that in the future might use live T. reesei or live B. amyloliquefaciens in their commercial 

processes could be directly affected by the rule. For example, a biochemical producer might grow live 

organisms on-site to generate enzymes as part of its own operations to degrade biomass, as opposed to 

purchasing the enzymes from a supplier. 
 12

2.4 Overview of Indirectly Affected Entities 

2.4.1 Enzyme Customers 

Fuel ethanol producers, textile firms buying enzymes to treat fabric; detergent, paper, and leather 

manufacturers; and other industrial enzyme users may enjoy increased product performance and/or lower 

costs due to the proposed rule. Some of these benefits are likely to be passed down the chain to their own 

customers and to the household consumer. 

2.4.2 Ethanol Producers and Consumers 

Corn ethanol producers may benefit from more cost-effective enzymes. As of November 2010, the 

Ethanol Producers Magazine listed over 200 ethanol plant sites, mostly with corn as the feedstock 

(Ethanol Producers Magazine, 2010). 

Cellulosic ethanol producers are also likely to benefit from the rule. The biological approach to 

cellulosic ethanol production uses enzymatic hydrolysis to break down biomass to fermentable sugars. A 

source of such enzymes is likely to be genetically modified T. reesei, for hydrolysis of cellulose to 

glucose and potentially the hydrolysis of hemicellulose to xylose or other simple sugars. Thus, cellulosic 

ethanol companies are likely to be indirectly affected by the proposed listing for possible MCAN 

exemptions, even if they do not grow the live T. reesei themselves. For example, downstream ethanol 

producers are likely to experience some of the rule’s cost savings in the form of improved enzyme 

performance and lower prices passed down by the enzyme suppliers. Second-order cost savings to ethanol 

producers could then be passed down to ethanol consumers. 

2.5 Substitutes for the Modified Microorganisms 

 If Tier I/II exemptions were not available (the Base Case), the likely alternative would be to submit 

an MCAN instead. Industry could also continue to use existing intergeneric strains that had already 

undergone MCAN review, even though they might not be as productive as the new strains. There are also 

other microbial and non-microbial substitutes for intergeneric T. reesei and B. amyloliquefaciens. 

2.5.1 Alternatives to Intergeneric T. reesei

T. reesei strains not modified in a way that makes them subject to reporting requirements under 

TSCA may be alternatives to new intergeneric T. reesei for the production of cellulase enzymes. 

In addition, other conventional or intergeneric microbial species can produce cellulases. For example, 

cellulases isolated from Aspergillus Niger, Trichoderma viride, Bacillus subtilis, and Humicola insolens

can substitute in some commercial applications for cellulases from T. reesei, according to Genencor’s 

application (Genencor 2005, page 4) 

Conventional T. reesei cannot provide the full range of enzymes needed to break down biomass (for 

example, while it secretes an exceptional quantity of cellulases, it lacks the ability to efficiently produce 

hemicelluloses degrading enzymes to degrade lignin), but it may be modified with genes from other 

microbial species to enhance its ability to degrade biomass (Maheshwari, 2008). An alternative to such 

genetic modification may be to provide mixtures of enzymes from various species (DOE/JGI, 2008). 

The 2010 industry letter asserts that T. reesei has significant benefits over other microorganisms “for 

processing and production of saccharides for biofuels and bioproducts” and that it has exceptional ability 

to secrete large quantities of enzymes and other products (BIO and ETA, 2010, page 8). 

In other application areas, some products that can be produced using enzymes can also be produced 

without using enzymes. For example, the stone-washed denim look can be achieved with enzymes, 
 13

pumice stones, or perlite (Doshi, 2006). Cellulosic ethanol can be produced using non-biological 

approaches, although it is difficult to predict which emerging processes will become cost-effective (see 

Appendix B:). 

2.5.2 Alternatives to Intergeneric B. amyloliquefaciens 

B. amyloliquefaciens strains not modified in a way that makes them subject to reporting requirements 

under TSCA may be alternatives to new intergeneric B. amyloliquefaciens for the production of enzymes. 

In addition, other conventional or intergeneric microbial species can produce the types of enzymes 

that are produced using genetically modified B. amyloliquefaciens. Often these are other Bacillus species. 

For example, alpha-amylase produced commercially from B. licheniformis and B. subtilis may substitute 

for alpha-amylase produced using B. amyloliquefaciens. Currently both B. subtilis and B. licheniformis

are eligible for Tier I and Tier II exemptions from MCAN reporting and Tier 1 submissions have been 

made for both microorganisms. However, because alpha-amylases from B. amyloliquefaciens are fairly 

heat-stable and efficient at the degradation of starch stains, enzymes from B. amyloliquefaciens may be 

preferred to substitutes for some uses (Aehle, 2007, Uhlig, 1998, and Kirk-Othmer, 1994). 
 14

3 :Health, Safety, Environmental Risks 

The main potential cost to society of the proposed rule would occur if the rule increased the 

probability that humans or the environment may be exposed to a harmful microorganism. The MCAN 

review process was designed to ensure that EPA can adequately identify and regulate risk associated with 

microbial products of biotechnology. Under the proposed rule, EPA will no longer conduct a full MCAN 

review for modified strains of T. reesei QM6a or Bacillus amyloliquefaciens, but rather a less extensive 

review for Tier II submissions and no review for Tier I submissions. However, EPA expects the health 

and environmental risks associated with the contained use of these microbes to be minimal. Submitters 

must comply with either Tier I or Tier II requirements, including controls on releases, containment, and 

the introduced genetic material. In addition T. reesei QM6a and Bacillus amyloliquefaciens are 

intrinsically low-risk, well characterized, and have a history of safe use. Therefore EPA expects the risk 

associated with the proposed rule, and costs associated with this risk, to be negligible. 

The proposed rule is expected to reduce overall compliance costs. The resulting cost-saving is 

estimated in Chapter 4 as a benefit of the proposed rule. 

3.1 Health, Safety, and Environmental Risks Associated with T. 

reesei 

3.1.1 Rule case: Only T. reesei, QM6a Strain and Derivatives Are Listed 

EPA is proposing that only the T. reesei QM6a strain and its direct descendent derivatives be listed as 

eligible for exemption under the proposed rule. The industry application requested that all T. reesei strains 

be eligible for tiered exemptions (BIO and ETA, 2010). However, the proposed rule lists only the QM6a 

strain as eligible for the exemptions. The QM6a strain is well defined; all QM6a derivatives came from 

the same ancestor, originally isolated in the Solomon islands in 1944, where it degraded U.S. army tent 

canvas. By contrast, in recent years many new isolates have been called T. reesei and equated with 

Hypocrea jecorina. However, T. reesei and its corresponding teleomorph Hypocrea jecorina are part of a 

current, incomplete, taxonomic revision of the genus Trichoderma, and thus there is potential taxonomic 

confusion .Strains previously referred to as T. reesei , but which are not derived from strain QM6a, may 

be more properly described as Hypocrea jecorina. T.reesei strains may be only a subset of Hypocrea 

jecorina and other strains previously considered as Hypocrea jecorina may be moved to additional new 

genera that do not contain T. reesei strains ( Druzhinina et. al. 2010 and Atnasova et al. 2010). Thus T. 

reesei sensu latto is not well defined. 

There has been sufficient experience with QM6a derivatives to demonstrate their safety. All T. reesei

strains used industrially for commercial production appear to be QM6a derivatives (BIO and ETA, 2010). 

According to the risk analysis prepared for this rulemaking, QM6a derivatives have a long history of safe 

use in industry, with lack of pathogenicity, toxicity, or when contained, ecological harm. 

3.1.2 Rule option: All T. reesei Strains Are Eligible for Exemptions 

The January 29, 2010, industry letter requested that all T. reesei strains be eligible for Tier I/ Tier II 

exemption without limitation as to isolate. It cited lack of documented safety concerns in the published 

literature for T. reesei or for the closely related Hypocrea jecorina. (Page 3 of the industry letter described 

Comment [KW3]: Update when risk 

assessment report is received. 
 15

T. reesei as the asexual form of Hypocrea jecorina.17). It asserted that there is no risk basis for restricting 

the listing of T. reesei to QM6a derivatives only (BIO and ETA, 2010, page 3). However, the taxonomic 

status of strains previously regarded as T. reesei or H. jecorina and confusion over the taxonomic status 

of, especially, H. jecorina prevents EPA from listing all T. reesei species. 

3.2 Impacts if Entire T. reesei Species is Eligible for Exemption 

T. reesei strains in commercial use all appear to be derivatives of the QM6a strain, so that extending 

the eligibility for exemption beyond the QM6a derivatives might have very little commercial effect in the 

near future. In the longer run, limiting tiered exemptions to only the QM6a derivatives may limit future 

innovation with other strains of T. reesei. For example, it is possible that another T. reesei strain might 

turn out to be more economical in some situations as a production organism. If so, some longer term 

benefits might be lost by limiting the immediate exemptions to QM6a derivatives. However, industry can 

still submit MCANs for new intergeneric non-QM6a strains, which mitigates the loss of benefits. 

Resources were not available for this report to explore possible benefits of faster development of T. reesei

strains other than QM6a derivatives. 

Listing all T. reesei strains as eligible for exemptions might lead to the exemption being applied by 

industry to strains that are not clearly in the T. reesei species (for example, some that might be classified 

as Hypocrea jecorina or related new species currently in the process of being described) and that have not 

been evaluated by EPA for risk. At present, taxonomic questions have not been settled within the 

scientific community as to which strains belong in T. reesei, and which belong in H. jecorina (or related 

new species) but not in T. reesei. It is possible that in several years, after taxonomic issues are resolved, 

all of H. jecorina would be listed as eligible for exemption after appropriate consideration of risks and 

benefits. At present, since the only T. reesei with industrial use is QM6a derivatives, society is likely to 

benefit more from early availability of exemptions limited to T. reesei QM6a derived strains, rather than 

waiting several years for a broader listing that may or may not encompass all of H. jecorina18.

3.3 Health, Safety, and Environmental Risks Associated with B. 

Amyloliquefaciens 

The application to place Bacillus amyloliquefaciens on the list of recipient microorganisms eligible 

for exemption from MCAN reporting asserts that B. amyloliquefaciens has a long history of safe use in 

enzyme and specialty chemical industries and that a literature search had found no literature citing B. 

amyloliquefaciens as infectious (Novo Nordisk, 1997). According to the risk analysis for this rulemaking, 

the potential risk associated with using B. amyloliquefacients in fermentation facilities is low, and EPA 

therefore proposes to place the both subspecies of the microorganism on the list under 40 CFR 725.420. 

4 Benefits of the Proposed Rule 

This chapter discusses the main benefits of the proposed rule. Section 4.1 discusses the cost savings 

to industry associated with completing a Tier I or Tier II notice as opposed to an MCAN. Section 4.2 

 

17 A fungus in its asexually reproducing state (anamorph) may have a different name from when it is in its sexual 

state (teleomorph). The January 29, 2010, letter refers to H. jecorina as the teleomorph of T. reesei (page 3). 18 Based on comments by EPA microbiologist Mark Segal, April 9, 2010. 
 16

discusses the direct and indirect health, environmental, consumer, and other benefits associated with the 

proposed rule. 

4.1 Industry Cost Savings 

4.1.1 Method for Estimating Compliance Cost and Burden 

This section analyzes the changes in industry compliance burden and cost associated with listing 

Trichoderma reesei QM6a derivatives and Bacillus amyloliquefaciens at 40 CFR 725.420 as eligible for 

Tier I and Tier II exemptions. EPA calculates the incremental burden and cost savings, of the proposed 

rule by comparing the burden and cost of the current regulatory requirements (Base Case) with the burden 

and cost of the new requirements (Rule Case). 

 Base Case: This is the current regulatory situation, in which T. reesei and B. 

amyloliquefaciens do not qualify for the Tier I or Tier II exemptions. Firms may submit 

MCANs for new intergeneric strains, restrict use to contained19 R&D, or avoid intergeneric 

modifications of those species for TSCA uses. The main analysis in this report assumes firms 

would submit MCANs in the absence of the proposed rule. 

 Rule Case: In the proposed rule, T.reesei strain QM6a and B. amyloliqufaciens would be 

added to the list of microorganisms eligible for Tier I and Tier II exemptions, at 40 CFR 

725.420. Some firms may submit a Tier I or Tier II notice in lieu of an MCAN. Other firms 

may submit Tier I or Tier II notices in lieu of avoiding the TSCA market altogether. The 

main analysis in this report assumes that firms submit a Tier I or Tier II notice in lieu of an 

MCAN. 

The methodology for estimating the change in industry burden and cost can be summarized as 

follows: 

 Unit labor costs. Estimate loaded labor costs per hour for managerial, technical, and clerical 

staff involved in regulatory compliance. 

 Rule familiarization costs per firm. Estimate cost per firm for rule familiarization, based on 

managerial labor requirements and current wage rates. In the Base Case, industry staff 

considering MCAN submissions for T. reesei or B. amyloliquefaciens must familiarize 

themselves with the requirements of the 1997 biotechnology rule in general, but do not 

necessarily need detailed understanding of Tier I and Tier II exemptions requirements, since 

their microorganisms do not qualify for the exemptions. In the Rule Case, companies must 

also become familiar with the Tier I and Tier II requirements of the 1997 rule, as well as with 

the two new microbial listings. Companies new to reporting must become familiar with all 

requirements. This activity entails reading the rule, understanding the various reporting and 

administrative requirements, and determining the manner in which the reporting requirements 

will be met. This estimates the change in costs of becoming familiar with the 1997 

biotechnology rule as supplemented by the listing of T. reesei and B. amyloliquefaciens as 

candidates for exemptions, since implications of the new listings cannot be understood 

 

19 “Contained” refers to use inside a structure designed to contain the microorganism. The 1997 Rule defines structure as “a 

building or vessel that effectively surrounds and encloses the microorganism and includes features designed to restrict the 

microorganism from leaving” (EPA, 1997b, Sections 725.3 and 725.422). Typically the microbe would be used in a fermentation 

vessel. There could be situations where the intended use is contained, but release of live microbes may not be sufficiently well 

controlled to qualify for exemptions conditioned on contained use. 
 17

without some understanding of the overall rule. 

 

 Submission costs. Estimate cost per firm to submit an MCAN, Tier I notice, or Tier II notice, 

based on labor requirements for managerial, technical, and clerical staff, current wage rates, 

and the MCAN submission fee. Once a company has determined what type of report it must 

submit, the required information must be collected and an MCAN, Tier I or Tier II 

submission must be completed, reviewed, and submitted to EPA. This task involves any 

research necessary to identify the correct information to report, the act of completing the 

MCAN, Tier I or Tier II submission (technical burden), managerial review, clerical 

preparation and any submission fee. Companies proceeding to commercial production or 

import after filing an MCAN must also submit a Notice of Commencement (NOC). Tier I and 

Tier II submissions are not followed by NOCs. 

 Recordkeeping costs. Companies must keep records supporting their submissions or 

contained R&D activities. 

 Delay Costs. Qualitatively describe costs that may result from the postponement of large 

scale testing (pilot or demonstration scale) or commercialization of a product due to the 

submission preparation and regulatory review period. Under the Base Case, the 90-day 

review period for an MCAN submission could create additional costs for submitters or affect 

research and development strategies. Under the Rule Case, the shorter review periods (45 

days for the Tier II exemption and 10 days for the Tier I exemption) reduce delay costs. 

 Numbers of submissions. Estimate the expected number of MCAN submissions under the 

current microbial reporting requirements and the number of Tier I and Tier II submissions 

under the proposed requirements. 

 Aggregate costs. Multiply the burden and cost per submission and per company by the 

number of submissions and companies, respectively, to determine the estimated total burden 

and cost of compliance for the current requirements and under the proposed requirements. 

 Incremental costs compared to Base Case. Subtract the compliance burden and cost under 

the proposed rule from the burden and cost under the current requirements to calculate the 

incremental additional burden and cost or savings attributable to the proposed requirements. 

Table 4-1 and Table 4-2 below summarize the industry costs and cost savings for the first year and 

the first ten years, respectively, of the proposed requirements. The remaining sections show how these 

cost savings were derived, and provide estimates for the ten-year period following rule promulgation. 
 18

Table 4-1: Base Case and Change in Industry Cost (Year 1 Summary) 

Item Base Case Rule Case Change 

(a) (b) (c)=(b)-(a) 

Number of firms and submissions (T. reesei and B. amyloliquefaciens only)

MCANs 4 0 (4) 

Tier I notices 0 4 4 

Tier II notices 0 0 0 

Firms with rule familiarization costs 0 4 4 

Cost type

Rule familiarization cost $0 $5,459 $5,459 

Submissions (reporting and recordkeeping) $134,305 $5,089 ($129,216) 

Total industry cost $134,305 $10,548 ($123,757)

Notes: Delay costs were not quantified but are discussed in Section 4.2. All costs are in 2009 dollars. 

Source: Table 4-16 

Table 4-2: Base Case and Change in Industry Cost (10 Year Summary) 

Item Base Case Rule Case Change 

(a) (b) (c)=(b)-(a) 

Number of firms and submissions (T. reesei and B. amyloliquefaciens only)

MCANs 63 0 (63) 

Tier I notices 0 60 60 

Tier II notices 0 3 3 

Firms with rule familiarization costs 0 6 6 

Cost type

Rule familiarization cost $0 $8,190 $8,190 

Submissions (reporting and recordkeeping) $2,115,300 $125,850 ($1,989,450) 

Total industry cost $2,115,300 $134,040 ($1,981,270)

Notes: Delay costs were not quantified (see 4.2.1 for qualitative discussion). All costs are in 2009 dollars and are before 

discounting. 

Source: New submitters, Table 4-12; submissions, Table 4-13; costs, Table 4-18 

 The next sections describe the remaining steps used to estimate the change in industry burden and 

cost. Sections 4.1.2, 4.1.3, and 4.1.4, present the industry unit burden and cost as described in Step 2. The 

number of expected submissions, Step 3, is presented in Section 4.1.5. Steps 4 and 5 are presented in 

Section 4.1.6. 

4.1.2 Labor Costs per Hour 

Standard wage rates for managerial, technical, and clerical levels are developed from information 

published by the Bureau of Labor Statistics (BLS) and a method outlined in the document Wage Rates for 

Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b). Average wage data for the 

three major occupational groups are published quarterly by the BLS in the Employer Costs for Employer 

Compensation (ECEC) reports. Managerial, technical, and clerical wage rates are taken from the 
 19

“Management, Business, and Financial”, “Professional and Related”, and “Office and Administrative 

Support” occupational groups respectively20. Wage data for the three occupational categories was 

gathered for manufacturing industries is obtained from Employer Costs for Employee Compensation 

Supplementary Tables December 2009 (BLS, 2010a).

The cost of fringe benefits, such as health insurance and vacation, are taken for each labor category 

from the same ECEC series and shown as a percent of wages for each category. An additional 17 percent 

of wages in each category accounts for overhead, based on assumptions in Wage Rates for Economic 

Analyses of the Toxics Release Inventory Program (EPA, 2002b) and the Revised Economic Analysis for 

the Amended Inventory Update Rule: Final Report (EPA, 2002a).21 The wages for each of the three 

categories are then multiplied by benefits and overhead factors to estimate loaded hourly rates in year 

2009 dollars. Table 4-3 contains the loaded wage rates for the managerial, technical, and clerical 

occupation categories. 

Table 4-3: Derivation of Loaded Wage Rates for the Private Manufacturing Sector in 2009$ 

Wage

1

Fringe 

Benefit

s1

Fringes 

as % 

Wage 

Overhead 

% Wage2

Fringe + 

Overhead 

Factor 

Loaded 

Wages 

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

Managerial $42.36 $18.68 44.10% 17% 1.61 $68.24 

Technical $35.96 $17.42 48.44% 17% 1.65 $59.49 

Clerical $17.2

1 $8.17 47.47% 17% 1.64 $28.31 

Notes: 

1 Employer Costs for Employee Compensation Supplementary Tables: December 2009, U.S. Bureau of Labor Statistics, March 

10, 2010 (BLS, 2010a).

2

 An overhead rate of 17% is used based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory 

Program (EPA, 2002b), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 

2002a). 

4.1.3 Rule Familiarization Cost per Firm 

Rule familiarization costs for firms making submissions are incurred at the company level, when 

either the company is a first-time submitter under the biotechnology rule or a new staff member must 

become familiar with the rule requirement. 

 

20 In Regulatory Impact Analysis of Regulations on Microbial Products of Biotechnology (EPA, 1997a), five 

different labor categories were used; clerical, research technician, junior professional, senior professional, and 

managerial. For the purposes of this analysis all burdens attributed to research technician, junior professional, and 

senior professional labor are considered to be performed by technical labor. This approach is consistent with the 

burden estimates presented in the New Chemicals ICR (EPA, 2007). 

21 The hourly wages presented in Table 4-3 are significantly lower than the wage presented in Regulatory Impact 

Analysis of Regulations on Microbial Products of Biotechnology (EPA, 1997a), after adjusting for inflation. The 

reason for this is because EPA apparently used a significantly higher overhead factor when calculating loaded wage 

rates in the 1997 Regulatory Impact Analysis (EPA, 1997a, page D-9), compared with the 17 percent overhead used 

in this analysis. An overhead rate of 17 percent was used in this analysis to be consistent with current OPPT 

methodology. The overhead rate was not stated in the 1997 report, but comparing loaded wage rates implies that it 

was much higher than 17 pecent. For example, loaded clerical costs were $25/hour in the 1997 report, in 1995 

dollars (EPA, 1997a, pp. D-9 and IV-4) compared with $28.31/hour in this report, in 2009 dollars. Inflation should 

have made the 14-year increase much larger. The wage rate increase is so small due to using a smaller overhead rate 

in this report. 
 20

In the Base Case for this analysis, companies submitting an MCAN for T. reesei or B. 

amyloliquefaciens would have to familiarize themselves with the 1997 biotechnology rule if they had not 

previously submitted an MCAN. 

In the Rule Case, companies making a Tier I or Tier II submission for T. reesei or B. 

amyloliquefaciens would have to be generally familiar with the 1997 biotechnology rule, and understand 

in detail the Tier I/Tier II requirements. They would also need to become familiar with the implications of 

listing T. reesei and B. amyloliquefaciens as candidates for exemption under the proposed rule. 

Most submitters are likely to have had experience with the 1997 rule. However, there may be some 

companies new to TSCA biotechnology regulation who would not make submissions under the Base 

Case, because of the burden associated with an MCAN, but who would enter the TSCA regulated market 

under the Rule Case. These companies may have to review the entire biotechnology rule as well as 

requirements specific to the Tier I or Tier II submissions under the proposed rule, increasing their rule 

familiarization costs attributable to the Proposed Rule. 

Conversely, some companies new to TSCA biotechnology regulation might have reduced 

familiarization costs under the Rule Case, as compared with the Base Case. This could happen if they file 

a Tier I or Tier II notice instead of an MCAN. Under the Base Case they would have to learn about the 

1997 rule in general as well as details of the MCAN process. Under the Rule Case, they would have to 

learn about the 1997 rule in general, but would not have to delve into details of the MCAN process. 

Instead, they need only to understand the simpler Tier I/Tier II processes, which is likely to take less time. 

Even companies with some MCAN or Tier I experience may still need to review Tier II exemption 

requirements. This is because historically (as of September 30, 2010), only one submitter has had direct 

Tier II experience. The 1997 biotechnology rule listed ten microorganisms at 40 CFR 725.420 as eligible 

for Tier I and Tier II exemptions. For these microorganisms as a group, EPA has received numerous Tier 

I certifications but only one Tier II request, indicating that most companies have never filed a Tier II 

exemption request (See Table 4-9). 

For simplicity, this analysis uses the same Proposed Rule familiarization costs for all submitters. The 

rule familiarization costs are those that are attributable to the proposed rule; they do not include any rule 

familiarization costs that might be born under both the Base Case and Rule Case. This would reflect the 

likely situation in which all submitters over the next ten years had previous experience with the 1997 

biotechnology rule. 

In the 1997 Regulatory Impact Analysis (RIA) of the biotechnology rule (EPA, 1997a, p.IV-26) the 

burden for rule familiarization was estimated to be between 20 and 40 hours of senior professional time 

per company. For the purposes of this analysis, the lower bound estimate of 20 hours of managerial time 

is used because EPA assumes that for the Rule Case, companies filing a Tier I or Tier II notice would 

need to review the Tier I and Tier II exemption requirements as they apply to T. reesei and B. 

amyloliquefaciens, but not the entire biotechnology rule. 

Table 4-4 below shows the estimated additional burden and cost per company of rule familiarization 

in the Rule Case, as compared to the Base Case. EPA estimates an added per-company burden of 20 hours 

of managerial time and a cost of approximately $1,365. 

Table 4-4: Additional Cost per Company of Rule Familiarization ($2009) 

Hours Burden 

Loaded Hourly 

Managerial Wage 

Rate 

Cost per Company 

20 $68.24 $1,365

Source: Hours are from EPA, 1997a, p IV-26. Wage rates are from Table 4-3 in this report. 
 21

4.1.4 Report Preparation, Submission and Recordkeeping Unit Cost 

Report Preparation and Submission 

As shown in Table 4-7, filing a Tier I notice instead of an MCAN would dramatically reduce 

submission costs, from $33,576 for an MCAN to $1,272 for the Tier I notice. This includes only 

quantified submission costs and does not reflect additional benefits from the reduced delay costs 

associated with a Tier I notice (see Section 4.2.1). 

Report preparation and submission burdens for MCANs, Tier I, and Tier II submissions are based on 

costs in the 1997 RIA for the final biotechnology rule (EPA, 1997a). Costs were updated for inflation and 

adjusted to reflect electronic submission savings, but were not otherwise revised.22 The hours per 

submission in also come from the 1997 RIA with the exception of clerical hours, which were reduced to 

reflect electronic reporting. 

The 1997 RIA estimated relatively low submission costs for MCAN microorganisms intended for 

release into the environment, since they would have been preceded by a TSCA Experimental Release 

Application (TERA), and higher costs for MCANs for microorganisms used in a containment structure, 

since they would not been preceded by any type of submission (EPA, 1997a. p. IV-20).23 

For the present rulemaking economic analysis, under the Base Case, MCAN submissions are for 

contained24 T. reesei and B. amyloliquefaciens microorganisms, since only contained microorganisms are 

eligible for Tier I and Tier II exemptions. Therefore, the high burden estimates from the 1997 RIA for 

closed system MCANs are used in this analysis (EPA, 2010a). High estimates of Tier I and Tier II 

burdens are also used to be consistent with the MCAN burden estimates. 

Cost Reduction due to Electronic Reporting 

The contained microorganism burden hours estimates from the 1997 RIA have been adjusted to 

reflect burden hours reductions resulting from the 2009 final PMN Electronic Reporting (ePMN) Rule 

that requires the electronic submission of MCANs, Tier I, and Tier II reports, as well as traditionalchemical PMNs. Only clerical hours were affected. Electronic submission of MCAN and Tier II 

submissions is expected to reduce the clerical burden associated with preparing these submissions by 14 

hours, and create an additional 0.18 hours of burden associated with completing the email address and 

user fee payment identification number data element,25 reducing the total clerical burden from 20 hours to 

6.18 hours (EPA, 2009b). The reduction in clerical burden does not affect Tier I submissions, because no 

clerical burden is assigned to Tier I preparation and submission in the 1997 report (EPA, 1997a, p. IV22). In reality, it is likely there is some clerical time associated with Tier I submissions, however because 

Tier I notices are so simple, the clerical burden is negligible. 

The ePMN economic report (EPA, 2009b) was primarily concerned with the many hundreds of 

annual submissions for traditional chemicals, e.g. PMNs, and did not separately estimate the cost savings 

 

22 Current costs for biotechnology notices may differ from those estimated over a decade ago, but resources were not 

available to re-estimate the costs. Even with a different set of costs, the rule would still be cost-saving. 23 Because TERAs require much of the same information as MCANs, the burden for submitting an MCAN is lower 

when it has been preceded by a TERA submission. MCANs for microorganisms in physical containment in a 

structure would not have been preceded by a TERA submission. 24 I.e. the intended use is inside a structure designed to contain the microorganism (EPA, 1997b, §725.422). 

25 The actual email/fee form cost may be less for Tier II submissions, since no fee is required for exemption notices 

(EPA, 1997b, § 700.45), but for simplicity this cost element is assumed to be the same for both MCAN and Tier II. 
 22

for biotechnology submissions, which affect only a handful of notices each year. Instead, the 

biotechnology notice savings were based on the PMN notice savings. An analysis specific to biotech 

submissions might show that ePMN savings are different from those estimated in the ePMN economic 

analysis. Unlike PMN submissions, biotech submissions make little use of EPA forms, and MCAN 

submissions are often far longer than PMN submissions. In the absence of data specific to biotechnology 

submissions, the ePMN estimates for MCANs, Tier I, and Tier II submissions are used in this report. 

Recordkeeping 

EPA assumes a recordkeeping burden of two hours per MCAN, Tier I, and Tier II submission before 

counting the savings from electronic submission (EPA, 2007). This burden is reduced by 50 percent, to 

reflect assumed savings due to electronic submission (EPA, 2009b). The resulting recordkeeping burden 

is 1 hour for each MCAN, Tier I, and Tier II notice. 

Historic Source of Recordkeeping Estimates 

The 1997 biotechnology rule economic analysis estimated recordkeeping for contained R&D, but did 

not present separate recordkeeping costs for MCANs, Tier II, and Tier I notices. Lacking more specific 

data, earlier EPA reports — both the ePMN rule analysis and the 2007 New Chemicals Information 

Collection Request (EPA 2007, Sect.6, Table 2) — assumed that biotech notices would have the same 

recordkeeping costs as PMNs: one technical hour and one clerical hour per submission. The PMN 

recordkeeping hours themselves were taken from recordkeeping burden estimates for polymer exemptions 

presented in the Regulatory Impact Analysis of Amendments to Regulation for TSCA Section 5 

Premanufacture Notification (EPA, 1994). The polymer exemption burden may have been used as an 

estimate of PMN recordkeeping costs because normal PMN recordkeeping costs were not broken out in 

the 1994 RIA, but rather were included in the PMN submission costs (EPA, 1994, Ch.III, Sect.2b, Ch.IV, 

Sect. 3c, and Table III-3). By contrast, polymer exemption recordkeeping hours were broken out, for both 

the pre-amendment Base Case (EPA, 1994, Table III-4, 1 to 4 hours) and the post-amendment case (EPA, 

1994, Table IV-2, 2 to 5 hours). The post-PMN-amendment low case of 2 hours for polymer exemptions 

matched the one used in the 2007 new chemicals ICR (EPA, 2007), and the ePMN analysis (EPA, 2009b) 

“before” case. The ePMN report estimated recordkeeping savings of 50 percent of burden hours for all 

types of submissions, resulting in 1 hour of recordkeeping after the ePMN rule. 

Reporting and Recordkeeping Burden per Submission 

Table 4-5 and below present the burden hour estimates for recordkeeping and report preparation by 

submission type and activity. Table 4-5 contains the burden hour estimates by labor category while 

contains the total burden by activity and a description of the requirements under each submission type. 

The per-submission burden is estimated to be 19 hours for a Tier I submission, 276 hours for a Tier II 

submission, and approximately 520 hours for an MCAN submission. 

Table 4-7 contains the cost by submission type and activity. Costs are calculated by multiplying the 

burden estimates found in Table 4-5 with the corresponding wage rate found in Table 4-3 and summing 

the costs of all labor categories. Submissions costs are estimated to be approximately $1,272 for a Tier I 

submission, $16,504 for a Tier II submission and $33,576 for an MCAN submission. The MCAN cost 

includes the $2,500 EPA submission fee.
23

Table 4-5: Hours Burden per Respondent by Submission Type and Labor Category 

Activity 

Hours Burden by Submission Type 

MCAN Tier II Tier I 

Clerical Technical Managerial Total Clerical Technical Managerial Total Clerical Technical Managerial T

Recordkeeping1Recordkeeping 0.5 0.5 0.0 1.0 0.5 0.5 0.0 1.0 0.5 0.5 0.0 Submission Preparation and Submission to EPA2Description of microorganism, including verification of taxonomy, 

0.0 189.6 6.4 196.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Information about behavior in the environment of microorganism and parental strain 

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Manufacturing process information, including worker exposure and volume 

0.0 38.4 10.8 49.2 0.0 38.4 10.8 49.2 0.0 0.0 0.0 

Conditions of activity; human and environmental exposure 

0.0 48.0 0.0 48.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Clerical preparation3 6.18 0.0 0.0 6.2 6.18 0.0 0.0 6.2 0.0 0.0 0.0 Managerial review 0.0 0.0 20.0 20.0 0.0 0.0 20.0 20.0 0.0 0.0 18.0 1Submission write-up 0.0 200.0 0.0 200.0 0.0 200.0 0.0 200.0 0.0 0.0 0.0 Total 6.7 476.5 37.2 520.4 6.18 238.9 30.8 276.

4 

0.5 0.5 18.0 1

Sources: 1Recordkeeping hours come from EPA, 2009b, p.13. 2MCAN, Tier II, and Tier I estimates are based on EPA, 1997a. MCAN estimates are from EPA, 1997a, Tables D-5 and D-6, pages D-16-19. Tier II estimates are from EPA, 1997a pages 

IV-22-23. Tier I estimates are from EPA, 1997a, page IV-22. Estimates are adjusted for ePMN burden reductions using methods described in EPA, 2009b. 

3 MCAN and Tier II clerical preparation required 20 hours per EPA, 1997a, Table D-6. Following the method in EPA, 2009b, 14 clerical hours for preparing MCANs and Tier II forms are 

removed. An additional 0.18 clerical hours are added for MCAN and Tier II notices for completing the User Fee Payment Identification Number (MCAN only) and Email Address data elements on the electronic forms (EPA, 2009b page 15). 
24

Table 4-6: Total Hours Burden per Respondent by Submission Type and Cost Component 

Activity 

Submission Type 

MCAN Tier II Tier I 

Requirement Description Hours Burden Requirement Description Hours Burden Requirement Description Hou

Burd

Recordkeeping Recordkeeping Clerical and technical time to keep records of the submission 1.0 Clerical and technical time to keep records of the submission 1.0 Clerical and technical time to keep records of the submission 1.Submission Preparation and Submission to EPA Description of microorganism, including verification of taxonomy 

Description of morphological and 

physiological traits of microorganism; 

verification of taxonomy; phenotypic 

and ecological characteristics of 

parental strains and microorganisms 

196.0 

Microorganism identity information 

including type of modification and 

function of introduced DNA 

Negligible 

Certification of Compliance with 

requirements regarding recipient 

microorganism and introduced genetic 

material 

Negli

Information about behavior in the environment of microorganism and parental strain,

Description of traits selected for and 

developed; modification process 0.0 Type of modification; function of introduced DNA Negligible None - 

Manufacturing process information, including worker exposure and volume 

Information on equipment used to 

minimize dispersion; procedures for 

disposal/inactivation; production 

process; worker. human, and 

environmental exposure; intended 

manufacturing volume, transport 

49.2 

Information on equipment used to 

minimize dispersion; procedures for 

disposal/inactivation; production process; 

worker, human, and environmental 

exposure; intended manufacturing 

volume, transport. Certification of 

compliance; site of waste disposal* 

49.2 Certification of compliance; site of waste disposal Negli

- 

Conditions of activity; human and environmental effects 

Description of intended use of 

microorganism; summary of health and 

environmental effects data of parental 

strains and microorganism 

48 None - None - 

Clerical preparation Clerical time to prepare documents 6.18 Clerical time to prepare documents 6.18 Clerical time to prepare documents 0.Managerial review Managerial time to review documents- 20.0 Managerial time to review documents 20.0 Managerial time to review documents 18Submission write -up Technical time to write the submission 200.0 Technical time to write the submission 200.0 Technical time to write the submission 0.Total - 520.38 - 276.38 - 19Source: Hours are from Table 4-5. Requirement descriptions are mostly from EPA, 1997a, Table IV-4. Tier I/Tier II compliance certifications and waste disposal items were added to the Manufacturing Process element based on requirements at EPA, 1997b, § 725.424(b)2 and § 725.4255(e) and (f)
25

Table 4-7: Total Costs per Respondent by Submission Type and Cost Component 

Cost 

Component 

Submission Type 

MCAN Tier II Tier I 

Requirement Description Cost ($2009) Requirement Description Cost ($2009) Requirement Description Cost ($2009) 

Recordkeeping Recordkeeping - $44 - $44 - $44 Submission Preparation and Submission to EPA Description of microorganism including verification of taxonomy 

Description of morphological and 

physiological traits of 

microorganism; verification of 

taxonomy; phenotypic and 

ecological characteristics of 

parental strains and 

microorganisms 

$11,717 

Microorganism identity 

information including type of 

modification and function of 

introduced DNA 

Negligible 

Certification of Compliance with 

requirements regarding recipient 

microorganism and introduced 

genetic material 

Negligible 

Information about behavior in the environment of microorganism and parental strain 

Description of traits selected for 

and developed; modification 

process 

$0.00 Type of modification; function of introduced DNA Negligible None - 

Manufacturing process information, including worker exposure and volume 

Information on equipment used to 

minimize dispersion; procedures 

for disposal/inactivation; 

production process; worker 

human, and environmental 

exposure; intended manufacturing 

volume, transport 

$3,021 

Information on equipment used to 

minimize dispersion; procedures 

for disposal/inactivation; 

production process; worker, 

human, and environmental 

exposure; intended manufacturing 

volume, transport. Certification of 

compliance; site of waste disposal 

$3,021 Certification of compliance; site of waste disposal NegligibleConditions of activity; 

human and environmental exposure 

Description of intended use of 

microorganism; summary of 

health and environmental effects 

data of parental strains and 

microorganism 

$2,856 None - None - 

Clerical preparation Clerical time to prepare documents $175.02 Clerical time to prepare documents $175.02 Clerical time to prepare documents N/A Managerial review Managerial time to review documents $1,364.82 Managerial time to review documents $1,364.82 Managerial time to review documents $1,228.34 Submission write-up Technical time to write the submission $11,898.64 Technical time to write the submission $11,898.64 Technical time to write the submission N/A Total labor costs - $31,076 - $16,504 - $1,272 
26

Table 4-7: Total Costs per Respondent by Submission Type and Cost Component (continued) 

Cost 

Component 

Submission Type 

MCAN Tier II Tier I 

Requirement Description Cost ($2009) Requirement Description Cost ($2009) Requirement Description Cost ($2009) 

Submission FeeSubmission fee - $2,500 - $0.00 - $0.00 Total cost - $33,576 - $16,504 - $1,272 % of MCAN cost - 100% - 49% - 4% 

Sources: Calculated by multiplying hours for each labor type in Table 4-5 and wage rates for that labor type in Table 4-3, and summing for each cost component. Requirement descriptions are from . 
 27

4.1.5 Estimating the Number of Submissions and Submitting Companies 

This section estimates the annual number of MCAN, Tier I, and Tier II submissions relevant to the 

proposed rule, and the number of submitting companies. 

 The number of companies making submissions affects rule familiarization costs, which are assumed 

in this economic analysis to be one-time costs per company. Two companies, Genencor (Danisco) 

and Novozymes respectively, submitted the requests to list T. reesei and B. amyloliquefaciens as 

candidates for tiered exemptions. These companies, at least, are likely to submit exemption 

notifications. However, the T. reesei January, 2010, industry letter implied that “multiple companies” 

were interested. This economic analysis assumes that two more (unidentified) companies will make 

submissions in the first year after the Rule is promulgated, and that another two (unidentified) 

companies will make submissions in later years for a total of six firms making submissions over ten 

years. 

 The number of relevant submissions for T. reesei QM6a and B. amyloliquefaciens is assumed to be 

four in the first year, rising by roughly 10 percent per year to 9 submissions in Year 10. For the Base 

Case, the submissions would all be MCANs. For the Rule Case, the submissions are split between 

Tier I and Tier II submissions, with more companies submitting Tier I than Tier II submissions. 

The method for arriving at these assumptions is explained below. 

History of Past Submissions 

The assumed number of submissions for T. reesei and B. amyloliquefaciens in future years is based 

on the number of past MCAN submissions for T. reesei and B. amyloliquefaciens, past Tier I and Tier II 

submissions for all microorganisms, and the number of near term T. reesei submissions predicted by two 

trade associations in a presentation to EPA (BIO and ETA, 2009, slide 12). 

Table 4-8, below, shows the number of MCAN submissions and submitting companies for both T. 

reesei and B. amyloliquefaciens through September 30, 2010. Table 4-8 covers only submissions in which 

the species was not claimed as TSCA Confidential Business Information. MCANs for which the species 

was confidential are not considered in estimating future Base Case submissions. Table 4-9 shows the 

number of all MCANs received, including MCANs for other species or for which the species was 

confidential, along with the numbers of all Tier I and Tier II exemptions. 

During the period of over eleven years, EPA received a total of fifteen MCAN submissions for T. 

reesei and B. amyloliquefaciens for which the species was non-confidential. Only one submission was 

made for B. amyloliquefaciens, by Novo Nordisk, now Novozymes (EPA, 2010a). Fourteen MCANs have 

been submitted for T. reesei. Based on the non-confidential data, no MCANs were submitted for T. reesei 

prior to October, 2002. Since then, roughly half of all MCANs have been for T. reesei (EPA, 2010a). 

During that same period, EPA received 27 Tier I notices that might have otherwise been submitted as 

MCANs, had eligibility for exemptions not been in place. There were three Tier I notices in a typical 

year. EPA received only one Tier II notice in that entire period. (There were also unusual clusters of Tier 

I notices from November 2000 through April 2002, totaling 87 notices, that appeared on their face to have 

minimal or speculative TSCA uses and to not be relevant in estimating potential Tier I and Tier II 

submissions concerning T. reesei or B. amyloliquefaciens.)26

 

26 To protect confidentiality of submissions, details are not given here. 
 28

Number of Submitters 

As shown in Table 4-8, of the 14 MCANs for which the non-confidential species was T. reesei or B. 

amyloliquefaciens, from two to four companies have submitted MCANs. For two submissions, the 

company name was claimed as CBI. The remaining 12 were submitted by Danisco (which bought 

Genencor in 2005), and Novozymes (formally Novo Nordisk). Depending on the identity of the 

submitters whose identities were confidential, as many as 4 companies might have submitted MCANs for 

T. reesei. 

Two biotech industry trade associations projected that there might be four T. reesei MCAN 

submissions in 2010 and six per year in 2011 and 2012 (BIO and ETA, 2009, slide 12). 

For this analysis, EPA assumes that each of four companies will make a relevant biotech submission 

in the first year. To calculate the number of companies making submissions in future years, EPA uses an 

industry growth rate of four percent, as assumed in the 1997 RIA for closed system MCANs (EPA, 

1997a, Table IV-8, p. IV-40). This growth rate is conservative for a developing industry (EPA, 1997a, p. 

IV-7). 

Table 4-8: MCAN Submissions for B. amyloliquefaciens and T. reesei October 1, 1998 through 

September 30, 2010 

Coun

t 

MCAN 

Numbe

r

Submissi

on Date 

Full Microorganism 

Name1 Submitter2

Bacillus amyloliquefaciens

1) J98-0001 3/16/1998 Bacillus amyloliquefaciens strain 

MOL1350 Novo Nordisk 

Trichoderma reesei

1) J03-0001 6/25/2003 Trichoderma reesei strain CBI CBI 

2) J03-0002 6/25/2003 Trichoderma reesei strain CBI CBI 

3) J04-0001 1/2/2003 Trichoderma reesei strain 34-6 Genencor 

4) J04-0005 9/28/2004 Trichoderma reesei strain 23-1 Genencor 

5) J05-0001 1/24/2005 Trichoderma reesei strain 3236 Genencor 

6) J05-0002 9/12/2005 Trichoderma reesei strain 3243 Genencor 

7) J06-0001 3/24/2006 Trichoderma reesei strain 3260 Genencor 

8) J07-0001 12/1/2006 Trichoderma reesei strain CBI Novozymes 

9) J07-0002 5/28/2007 Trichoderma reesei strain 3277 Danisco/Genencor 

10) J09-0001 2/25/2009 Trichoderma reesei strain 3309 Danisco/Genencor 

11) J09-0002 2/27/2009 Trichoderma reesei strain CBI Novozymes 

12) J09-0004 9/3/2009 Trichoderma reesei strain CBI Novozymes 

13) J10-0002 11/2/2009 Trichoderma reesei strain CBI Danisco/Genencor 

14) J10-

0003 6/03/10 Trichoderma reesei strain 

3408 Danisco/Genencor 

Notes: 

1

 “Strain CBI” means the species was non-confidential but the strain was confidential. Only MCANs with non-confidential 

species were counted. 

2

 Danisco bought Genencor in 2005 (www.genencor.com). In 2000, Novo Nordisk was split into three companies, one of 

which was Novozymes (Novozymes, 2009). 

Source: EPA, 2010a, Office of Pollution Prevention and Toxics, "Notifications FY98 Through the Present." Available at 

http://www.epa.gov/oppt/biotech/pubs/submiss.htm. Last Updated June 23, 2010. Only MCANs for which the species is not 

confidential are included. 
 29

Table 4-9: All MCAN, Tier I, and Tier II Exemption Notices, FY1998 through Present 

Fiscal Year 

ending Sept. 

301

MCANs Tier II 

notices 

All Tier I 

Notices 

“Ordinary” Tier I 

Notices 

1998 3 - 1 1 

1999 1 - 0 0 

2000 0 1 5 5 

2001 1 - 422 32

2002 1 - 482 02

2003 1 - 1 1 

2004 5 - 3 3 

2005 2 - 3 3 

2006 1 - 3 3 

2007 8 - 0 0 

2008 3 - 3 3 

2009 4 - 2 2 

2010 3 - 3 3 

Totals 33 1 114 27 

Notes: 

1 EPA numbers submissions by Federal fiscal year, which begins October 1 of the prior calendar year. For example, the first 

MCAN of FY2010 was received in calendar year 2009, but was numbered J10-01. 

2

 Tier I notices include clusters of 39 in FY2001 and 48 in FY2002 that appear to cover minimal or speculative TSCA uses, and 

seem unlikely to be relevant in estimating Tier I submissions in lieu of MCANs for the current rule. 

Source: EPA internal list of MCANs submitted, and EPA’s collection of Tier I and Tier II submission documents. 

Table 4-10 shows species and submitter of Tier I notices in cases where the submission was not 

claimed as TSCA Confidential Business Information. The table excludes a cluster of 87 unusual 

submissions from November 2000 through April 2002 that seemed likely to cover TSCA uses that were 

minor or uncertain.27 Table 4-11 shows the number of non-confidential Tier I/II submissions for each of 

the ten microbial species currently listed at 40 CFR 725.420 as candidates for exemption. 

Most microorganisms listed as candidates for tiered exemptions in the 1997 biotechnology rule had 

either no Tier I or Tier II notices at all, or only a few notices each. This suggests that listing a microbe as 

a candidate for exemption does not necessarily mean there will be surge of exemption notices.28 

The confidential and non-confidential Tier I submissions history indicates that additional notices or 

notice amendments may be submitted if a firm decides to expand its manufacturing to more sites. 

Manufacturing may be by the submitter, a toll manufacturer, or a partner or customer firm. This may have 

implications for small business involvement, since a toll manufacturer or customer could be a small 

business even if the submitter is a large business. (See Regulatory Flexibility Act discussion in section 7.1 

of this report.) 

 

27 To protect confidentiality of submissions, details are not given here. 28 To protect confidentiality of submissions, details are not given here. 
 30

Table 4-10: All Tier I and Tier II Submissions from 1998 through 9/30/2010 

Fiscal 

Year 

Submission 

count 

Microorganism 

Name Submitter2

Tier I Notices 

1998 1 Bacillus licheniformis Novo Nordisk, Franklinton NC 

1999 0 

2000 5 

Confidential (3 submissions) 

E. coli strain K-12 

E. coli strain K-12

Confidential (3 submissions) 

 Prolume 

Aureozyme 

2001 33 Confidential (2 submissions) 

B. subtilis 

Confidential (2 submissions) 

Enzyme Biosystems 

2002 03 - - 

2003 1 E. coli strain K-12 Submitter: Dupont, Wilmington DE 

Manufacturer: A. E. Staley, Decatur IL 

2004 3 

(plus one amend.) 

E. coli strain K-12 Novozymes Biologicals, Salem VA 

(Amend. added 3 mfr sites in Salem VA) 

Bacillus licheniformis Genencor, Beloit WI 

Confidential Confidential 

2005 1 E. coli strain K-12 Genencor, Rochester NY 

2006 1 E. coli strain K-12 DuPont Tate & Lyle, Loudon TN 

2007 0 - - 

2008 3 

Bacillus subtilis Novozymes North America, 

Franklinton NC 

Saccharomyces cerevisiae Avoca Bioprocessing 

Saccharomyces cerevisiae Avoca Bioprocessing 

2009 2 Saccharomyces cerevisiae Avoca Bioprocessing 

Saccharomyces cerevisiae Avoca Bioprocessing 

2010 3 

Saccharomyces cerevisiae 

E. coli strain K-12 

E. coli strain K-12 

Avoca Bioprocessing 

Wacker Chemical Corporation 

Wacker Chemical Corporation 

Tier II Notices 

2005 

1 

(plus 2 

amends.) 

Confidential Confidential 

Notes: 

1

 EPA receipt date. 

2

 Danisco bought Genencor in 2005 (www.genencor.com). Novozymes demerged from Novo Nordisk in 2000, and the two 

companies are both held by Novo Group (www.novozymes.com). Dupont Tate & Lyle Bio Products is a joint venture between 

Dupont and Tate & Lyle (www.duponttateandlyle.com). 3 The Tier I notices do not include 39 in FY2001 and 48 in FY2002 that appear on their face to have minimal or speculative 

TSCA uses, and are judged unlikely to be relevant in estimating Tier I submissions in lieu of MCANs for the current rule. 

Sources: EPA, Office of Pollution Prevention and Toxics, files of Tier I and Tier II notices. 
 31

Table 4-11: Nonconfidential Submissions for Microbes Listed at §725.420 through 9/30/2010 

Host Microorganism 

Name 

Non-confidential 

Tier I Notices* 

Non-confidential 

Tier II Notices ** 

Acetobacter aceti none none 

Aspergillus niger. none none 

Aspergillus oryzae. none none

Bacillus licheniformis 2 none 

Bacillus subtilis 1 none

Clostridium acetobutylicum. none none 

E. coli strain K-12 8 none

Penicillium roqueforti. none none 

Saccharomyces cerevisiae 5 none

Saccharomyces uvarum none none

Source: The list of potentially exempt strains is from 40 CFR §725.420. The host species are from Tier I non-confidential 

submissions in EPA files, listed in Table 4-10 

*There were 7 confidential Tier I submissions not shown in the table. The table also excludes an unusual cluster of 87 Tier I 

notices received from November 2000 through April 2002. 

**There was one confidential Tier II submission not shown in the table. 

Table 4-12 shows the number of companies assumed to submit either a Tier I or Tier II submission 

over a ten-year period. In Year 1, four submitters make their first submission under the Proposed Rule. In 

Years 5 and 10, two more companies make their first submission under the proposed rule. Each submitter 

must become familiar with the Proposed Rule the first year they make a submission. 

Table 4-12: Assumed Number of Companies Making First-Time Tier 1/Tier 2 Submissions for B. 

amyloliquefaciens and T. reesei over a 10-Year Period 

Year 

1 

Year 

2 

Year 

3 

Year 

4 

Year 

5 

Year 

6 

Year 

7 

Year 

8 

Year 

9 

Year 

10 

Companies submitting 

their first notice under the 

Proposed Rule 

4 0 0 0 1 0 0 0 0 1 

Source: EPA assumption, based on past MCAN submissions found in Table 4-8. Assumes roughly 4% annual growth in 

companies, as in 1997 RIA (EPA, 1997a, Table IV-8, p. IV-40). 

Future Submissions 

The number of future relevant submissions is very uncertain, but it is likely to be a small number. At 

a meeting with EPA on August 4, 2009, two biotech industry trade associations projected that there might 

be four T. reesei MCAN submissions in 2010 and six per year in 2011 and 2012 (BIO and ETA, 2009, 

slide 12). There were no similar estimates for B. amyloliqufaciens submissions. Due to the very small 

numbers involved, this analysis does not break down the submission count between T. reesei and B.

amyloliquefaciens. 

This analysis assumes a total of four MCAN submissions for T. reesei and B. amyloliquefaciens

during the first year, under the Base Case. In addition, this analysis assumes that under the proposed rule, 

all baseline MCAN submissions will qualify for a Tier I or Tier II exemption and that all submitters will 

choose to submit either a Tier I or Tier II notice instead of an MCAN. Based on MCAN history, it seems 

likely that most will be T. reesei submissions. 

These estimates are very uncertain, since it is uncertain to what extent future T. reesei and B. 

amyloliquefaciens submissions will meet the requirements for either a Tier I or Tier II exemption. For 

example, a company may submit an MCAN for a microorganism if they believe the use will not meet the 

containment requirements for either exemption. 
 32

In the absence of additional information, this analysis assumes that there will be many more Tier I 

submissions than Tier II submissions. The actual split between Tier I and Tier II is unknown, especially 

since some companies contemplating a Tier II submission may opt instead to submit the full MCAN. In 

the past, the sole Tier II submission over a 12-year period came in the third year after the 1997 rule 

promulgation. This analysis assumes, arbitrarily, that there will be a Tier II submission every three years 

after the current rule promulgation. The actual pattern of submissions depends heavily on decisions of a 

few firms, and could be quite different from the assumed pattern, but numbers are expected to be small in 

any case. To calculate an assumed number of submissions in the future years, this report uses an annual 

growth rate of roughly 10 percent for total submissions, as estimated in the 1997 RIA for new closed 

system MCANs (EPA, 1997a, Table IV-8, p. IV-40). Table 4-13 presents the assumed number of MCAN, 

Tier I and Tier II submissions for T. reesei and B. amyloliquefaciens combined, over a ten-year period. 

Table 4-13: Estimated Numbers of MCAN, Tier I, and Tier II Submissions for B. amyloliquefaciens and 

T. reesei over a 10-Year Period 

Submission 

Type 

Number of Submissions per Year 

Year 

1 

Year 

2 

Year 

 3 

Year 

4 

Year 

5 

Year 

6 

Year 

7 

Year 

8 

Year 

9 

Year 

10 

Base 

Case 

MCAN 4 4 5 5 6 6 7 8 9 9 

Tier I & II 0 0 0 0 0 0 0 0 0 0 

Rule 

Case 

MCAN 0 0 0 0 0 0 0 0 0 0 

Tier I 4 4 4 5 6 5 7 8 8 9 

Tier II 0 0 1 0 0 1 0 0 1 0 

Source: MCAN numbers are based on past MCAN submissions in Table 4-8, an August 4, 2009, industry presentation (BIO and 

ETA, 2009), and an assumed roughly 10% annual growth in submissions, as in the 1997 RIA (Table EPA, 1997a, IV-8, p. IV40). Counts only submissions that would qualify for Tier I or Tier II under the proposed rule. The Tier I:Tier II ratio was assumed 

based in part on Table 4-9 history. 

4.1.6 Base Case and Change in Industry Burden and Cost due to the Proposed Rule for 

T. reesei and B. amyloliquefaciens

This section estimates the total and change in burden and cost as a result of the proposed rule. 

Aggregate Rule Familiarization Burden and Cost 

In the first year after rule promulgation, the total industry rule familiarization cost is expected to be 

approximately $5,459, if four companies make submissions in the first year. 

As stated in Section 4.1.5, rule familiarization costs are incurred at the company level and it is 

assumed that four companies will make a relevant biotechnology submission in the first year under both 

the baseline and proposed rule (see Table 4-12). As discussed in Section 4.1.5, this analysis assumes all 

companies have made a previous biotechnology submission and therefore are familiar with the 1997 

biotechnology rule. It assumes that under the Rule Case, each company will need to become familiar with 

the Tier I and II exemption requirements as they apply to T. reesei and B. amyloliquefaciens, and will 

incur a rule familiarization burden of 20 hours per company and a cost of approximately $1,365 per 

company (see Section 4.1.3). Table 4-14 contains the total industry burden and cost estimates for rule 

familiarization in Year 1, after the final rule is promulgated. In the first year the total industry burden is 

expected to be approximately 80 hours in Year 1 and the cost is expected to be approximately $5,459. 

EPA assumes that one additional company will make a relevant submission in Year 5 and one in Year 

10, and that in the Rule Case, each company will spend 20 hours more for rule familiarization than in the 

Base Case (see Table 4-16). 
 33

Table 4-14: Total Industry Burden for Rule Familiarization (Year 1) 

Number of 

Companies 

with Rule 

Familiarizati

on Burden 

Rule 

Familiarizati

on Burden 

per 

Company 

(hours) 

Total 

Industry 

Burden 

(hours) 

Rule 

Familiarizati

on Cost per 

Company 

($2009) 

Total 

Industry 

Cost 

($2009) 

Base Case 0 0 0 $0 $0 

Rule Case 4 20 80 $1,365 $5,459 

Change in 

Burden 4 20 80 $1,365 $5,459 

Source: The number of submitting companies is taken from Table 4-12 and the per company rule familiarization burden is from 

Table 4-4. 

Aggregate Submission and Recordkeeping Burden Hours (Year 1) 

Submission preparation, submission, and recordkeeping burden hours are incurred at the persubmission level and not the per-company level. Under the Base Case (if no rule were promulgated) EPA 

assumes a total of four MCANs (see Table 4-13) will be submitted in the first year after the rule takes 

effect. Using the burden of 520.38 hours per MCAN submission (see Table 4-7), the total baseline burden 

is calculated to be approximately 2,082 hours. 

Under the Rule Case, EPA expects four Tier I submissions and no Tier II submissions for T. reesei 

and B. amyloliquefaciens in the first year and estimates a burden of 19 hours per Tier I submission. (The 

burden per Tier II submission would have been 276 hours.) As shown in Table 4-15 below, EPA expects 

a total industry burden of 156 hours in the first year of the proposed rule, resulting from rule 

familiarization, submission preparation and recordkeeping. Industry will experience a savings of 

approximately 1,926 hours in the first year due to a reduction in submission preparation burden resulting 

from the proposed rule. 
 34

Table 4-15: Base Case and Change in Industry Burden Hours (Year 1) 

Submissi

on Type 

Base 

Case 

Number 

of Annual 

Submissi

ons 

Per 

Submissi

on Burden 

(hours) 

Base Case 

Total 

Industry 

Burden 

(hours) 

Rule Case 

Number 

of Annual 

Submissi

ons 

Rule Case 

Total 

Industry 

Burden 

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 4 520 2,082 0 0 -2,082 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 4 76 76 

Total 4 - 2,082 4 76 -2,006 

Rule Familiarization Burden 

Total - - 0 - 80 80 

Total Industry Burden (Rule Familiarization Burden + Submission Burden) 

Total - - 2,082 - 156 -1,926

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-6 contains the burden per MCAN, 

Tier I, and Tier II submission. Calculations are with the unrounded numbers. Table 4-14 contains the total industry rule 

familiarization burden. Rule Case assumes 4 different submitters at 20 hours/organization. 

Aggregate Submission and Recordkeeping Cost (Year 1) 

Table 4-16 presents the total industry costs of the proposed rule in the first year. As shown in Table 

4-7, the cost of submitting one MCAN is approximately $33,576, therefore with four submissions, the 

first year industry cost is approximately $134,305 in the Base Case. The cost of submitting one Tier II 

submission is approximately $16,504 and the cost of submitting a Tier I submission is approximately 

$1,272 (see Table 4-7). Under the proposed rule, EPA expects zero Tier II and four Tier I submissions, 

resulting in a total industry cost of approximately $10,548 resulting from rule familiarization, 

recordkeeping, and submission preparation. The proposed rule will generate a cost savings of 

approximately $123,757 to the industry in the first year as a result of the reduced submission preparation 

burden associated with Tier I and Tier II submissions. 
 35

Table 4-16: Base Case and Change in Industry Cost (Year 1) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Cost 

($2009) 

Base Case 

Total 

Industry 

Cost 

($2009)

Rule Case 

Number of 

Annual 

Submissions 

Rule Case 

Total 

Industry 

Cost 

($2009)

Change in 

Industry Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 4 $33,576 $134,305 0 $0 -$134,305 

Tier II 0 $16,504 0 0 $0 $0

Tier I 0 $1,272 0 4 $5,089 $5,089 

Total 4 - $134,305 4 $5,089 -$129,216 

Rule Familiarization Cost 

Total - - $0 - $5,459 $5,459 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $134,305 - $10,548 -$123,757 

Source: Table 4-13 contains the number of MCAN, Tier I, and Tier II submissions. Table 4-7 contains the cost per MCAN, Tier I, and Tier

II submission. Table 4-14 contains the total industry rule familiarization cost. Rule Case assumes 4 different submitters at 20 

hours/organization.

Total Change in Industry Burden Hours (All Years) 

Table 4-17 presents the total industry burden hours under the Base Case and the Rule Case as well as 

the change in burden as the result of the proposed rule over a ten-year period. Industry burdens for Years 

2 through 10 are calculated using the same method as was used to calculate the burden for Year 1; the 

per-submission burden found in is multiplied by the number of submissions for a given year found in 

Table 4-13, and the rule familiarization burden is added to the total. 

As shown in Table 4-12, one additional company is expected to make a submission in Years 5 and 10 

under both the Base Case and the Rule Case. Like the Year One submitters, these companies will incur no 

additional rule familiarization burden in the Base Case and a 20 hour burden for rule familiarization in the 

Rule Case (see Table 4-4). 

EPA assumes that most companies will send Tier I submissions instead of Tier II submissions. This 

analysis assumes, arbitrarily, that there will be a Tier II submission every three years after the current rule 

promulgation. More detail on the derivation of the burden and cost estimates for Years 2 through 10 is 

presented in Appendix A. 

EPA estimates a total industry burden of 32,784 hours in the Base Case over the ten-year period, and 

a total burden of 2,089 hours under the proposed rule. Over the ten-year period the industry is expected to 

save a total of 30,695 hours and an average of 3,070 hours per year. 

 
36

Table 4-17: Base Case and Change in Industry Hours Burden (All Years) 

Year 

Base Case Rule Case To

Cha

Ind

y 

Bu

MCAN 

Submissions 

Tier I & II 

Submissions 

Rule 

Familiarization 

Burden 

Submission 

Preparation, 

Submission, 

and 

Recordkeeping 

Burden 

Total 

Industry 

Burden 

MCAN 

Submissions 

Tier I & II 

Submissions 

Rule 

Familiarization 

Burden 

Submission 

Preparation, 

Submission, 

and 

Recordkeeping 

Burden 

Total 

Industry 

Burden 

1 4 0 0 2,082 2,082 0 4 80 76 156 -12 4 0 0 2,082 2,082 0 4 0 76 76 -2

3* 5 0 0 2,602 2,602 0 5 0 352* 352 -2

4 5 0 0 2,602 2,602 0 5 0 95 95 -25 6 0 0 3,122 3,122 0 6 20 114 134 -2

6* 6 0 0 3,122 3,122 0 6 0 371* 371 -2

7 7 0 0 3,643 3,643 0 7 0 133 133 -38 8 0 0 4,163 4,163 0 8 0 152 152 -4

9* 9 0 0 4,683 4,683 0 9 0 428* 428 -410 9 0 0 4,683 4,683 0 9 20 171 191 -4

Total 63 0 0 32,784 32,784 0 63 120 1,969 2,089 -30

Avera

ge 

6.3 0 0 3,278 3,278 0 6.3 12 197 209 -3,

Notes: * Rule case hours are higher in years 3, 6 and 9, due to assumed Tier II submissions in those years but not in other years. Sources: The industry burden in Year 1 is derived in Table 4-15. Table A-8-1 through Table A-8-9 in Appendix A: derive the burdens for all other years.
 37

Total Change in Industry Cost (All Years) 

The total cost to the industry over the ten-year period is presented in Table 4-18. The calculations for 

the industry cost are derived in Appendix A: and Section 0 of this report. Total industry cost is estimated 

to be approximately $2.12 million over the ten-year period in the Base Case and approximately $134,040 

over the ten-year period in the Rule Case. Total cost savings to the industry are approximately $1.98 

million (before discounting) over the ten-year period with annualized savings ranging from $193,340 

under a three percent discount rate to $187,310 under a seven percent discount rate. 
38

Table 4-18: Base Case and Change in Industry Cost in Thousands of Dollars ($2009) (All Years) 

Year 

Base Case Rule Case 

T

Ch

Ind

in 

MCAN 

Submissions 

Tier I & II 

Submissions 

Rule 

Familiarization 

Cost 

Submission 

Preparation, 

Submission, 

and 

Recordkeeping 

Cost 

Total 

Industry 

Cost 

MCAN 

Submissions 

Tier I & II 

Submissions 

Rule 

Familiarization 

Cost 

Submission 

Preparation, 

Submission, 

and 

Recordkeeping 

Cost 

Total 

Industry 

Cost 

1 4 0 $0.00 $134.31 $134.31 0 4 $5.46 $5.09 $10.55 -$2 4 0 $0.00 $134.31 $134.31 0 4 $0.00 $5.09 $5.09 -$

3* 5 0 $0.00 $167.88 $167.88 0 5 $0.00 $21.59* $21.59 -$

4 5 0 $0.00 $167.88 $167.88 0 5 $0.00 $6.36 $6.36 -$5 6 0 $0.00 $201.46 $201.46 0 6 $1.36 $7.63 $9.00 -$

6* 6 0 $0.00 $201.46 $201.46 0 6 $0.00 $22.87* $22.87 -$

7 7 0 $0.00 $235.03 $235.03 0 7 $0.00 $8.91 $8.91 -$28 8 0 $0.00 $268.61 $268.61 0 8 $0.00 $10.18 $10.18 -$2

9* 9 0 $0.00 $302.19 $302.19 0 9 $0.00 $26.68* $26.68 -$210 9 0 $0.00 $302.19 $302.19 0 9 $1.36 $11.45 $12.81 -$2

Total 63 0 $0.00 $2,115.30 $2,115.30 0 63 $8.19 $125.85 $134.04 -$1

Average 6.3 0 $0.00 $211.53 $211.53 0 6.3 $0.82 $12.58 $13.40 -$1

Annualized 

3%* - - $0.00 $206.55 $206.55 - - $0.88 $12.32 $13.20 -$

Annualiz

ed 7%* - - $0.00 $200.25 $200.2 5 - - $0.96 $11.98 $12.95 -$1

Notes: * Rule case costs are higher in years 3, 6 and 9, due to assumed Tier II submissions in those years but not in other years. Sources: The industry burden in Year 1 is derived in Table 4-16. Table A-8-10 through Table A-8-18 in Appendix A: derive the burden for all other years. Note: Yearly, total, and average costs are calculated before discounting.
 39

4.2 Health, Environmental, Consumer and Other Benefits 

The proposed rule is a cost savings rule that will decrease the burden to industry of developing new 

intergeneric strains of T. reesei and B. amyloliquefaciens. However, the main benefits of the proposed 

rule could well be the reduced delay in developing and bringing to market products from the modified T. 

reesei and B. amyloliquefaciens organisms (which may be the organisms themselves), and the 

environmental and consumer benefits that are generated by the use of these products. Some of these 

benefits will be captured by industry through revenues, some will be enjoyed by consumers in the form of 

reduced prices or enhanced product performance, and some will accrue to the general public in the form 

of improved health or environmental quality, relative to situation in the absence of the proposed rule. 

It was not feasible to quantify these innovation and environmental benefits for this analysis, but they 

could very well be greater in magnitude than the quantified cost savings. Section 4.2.1 describes the 

potential benefits to industry and consumers of increases in innovation and reduced delays of bringing a 

product to market. The potential environmental, health, and consumer benefits of new intergeneric strains 

are described in Sections 4.2.2 and 4.2.3. 

4.2.1 Benefits of Reduced Delays in Bringing Products to Market and Increased Market 

Entry 

The Proposed Rule is expected to reduce delays and costs resulting from the MCAN submission lead 

time and cost. The most dramatic differences are between the MCAN and the Tier I notice, due to 

differences in advance notification (90 days for the MCAN versus 10 days for the Tier I) and submission 

content (often just two or three simple pages for a Tier I notice, compared with possibly hundreds of 

pages for the MCAN, many of them containing scientific and engineering information tailored to the 

microorganism and its specific use). 

Reduced Delays in Marketing a Product 

Under the Base Case, if a company identifies a promising strain of an organism, it must prepare an 

MCAN, file it, and wait for the 90-day review period (and possibly longer) before it can commercialize 

the new strain or, in some cases, before it begins full pilot-scale testing in a bio-refinery29. The actual 

review period for an MCAN can take more than 90 days, if the submitter voluntarily suspends the review 

clock and/or if EPA extends the review period. EPA may extend the review period for up to 90 days for 

an MCAN and 45 days for a Tier II notice (EPA, 1997b, § 725.54 and § 725.56). 

Because of the shorter regulatory review period for a Tier I or Tier II notice, compared with an 

MCAN, industry may avoid costs in the form of lost or delayed profits that would result from the 

postponement of product commercialization under the Base Case. If companies can plan well ahead, they 

may build the MCAN lead times into product development schedules, and their delay may be less than the 

review time (however, there may be costs to such planning, such as more internal coordination and more 

pre-notice consultations with EPA which may involve time and travel for submitter senior staff). Some 

markets for microbial products may be seasonal, so that a 90-day review period or an unexpected 

extension of the review period may delay production by several additional months if the submitter misses 

a seasonal market. Decreasing the delays in production and profit-making increases the company’s 

incentive to develop new intergeneric strains. 

 

29 A bio-refinery produces fuels, power or chemicals from biomass. 
 40

Industry trade associations called the current MCAN system “an obstacle to innovation and 

implementation” for bio-based products and biofuels (BIO and EPA, 2009, slide 8). The 2010 industry 

letter supporting the T. reesei application described the current process as cumbersome and emphasized 

that the proposed eligibility for exemption would allow companies to test multiple strains in parallel. It 

asserted that listing T. reesei as a candidate for exemption “will enhance the rate of innovation by 

allowing companies to create and test a number of strains in parallel rather than the current, cumbersome, 

step-by-step process in which a company assembles a promising candidate strain, prepares and then files 

an MCAN, waits for the 90 day notification period/’dropped from review’ status, and then goes for fullscale, in biorefinery testing. The ability to test multiple candidates will allow the industry to reach full 

potential in shorter time...” (BIO and ETA, 2010, p. 7). 

Use of Tiered exemptions could expedite the process of identifying the best strains. The industry 

letter stated that the tiered exemptions would reduce the time interval from innovation to implementation, 

and allow for smoother project planning and execution (BIO and ETA, 2010, p. 7). 

Reduced Delays in Large Scale Testing 

As indicated in the 2010 industry letter (BIO and ETA, 2010), the MCAN review period may delay 

not only bringing a product to market, but also large scale testing before commercialization. 

Microorganisms often must be tested in larger fermentation facilities, often called “pilot scale” or 

“demonstration scale” plants, to determine whether they will be cost-competitive at commercial scale. 

TSCA section 5(h)(3) provides an exemption from notification for R&D uses. However, such a use would 

have to meet the requirements in the 1997 biotechnology rule, section 725.234, to qualify for the R&D 

exemption. For example the use must be “solely for R&D” and must be contained within a structure. 

Microorganism modifications not meeting the requirements must go through the submission process for a 

commercial product even though, for the purpose of determining commercial viability, they are still in a 

testing stage.30

In the absence of the proposed rule, a company could opt to file multiple MCANs simultaneously, 

thereby incurring the costs of multiple MCANs but minimizing delays of production, since it will be clear 

within one review period whether one or more of the genetic modifications being submitted are 

commercially viable. Alternatively, the company could file only one MCAN at a time. This would reduce 

the potential costs of submission, since the company would be able to stop submitting MCANs as soon as 

a viable intergeneric product was found, but it could slow down innovation, since the company might not 

file the next MCAN until they know the results of large scale testing of the prior MCAN microorganism 

(BIO and ETA, 2010). 

Effects of Submission Costs on Market Entry 

Some potential TSCA markets may be too small or uncertain to justify the expense of an MCAN. In 

some cases, in the absence of Tier I/Tier II exemptions, biotechnology companies may choose to not 

develop an intergeneric product due to the burden associated with preparing an MCAN. For example, a 

company may choose to use a naturally-occurring microorganism or a company may modify how it 

develops and applies a microorganism (EPA, 1997a). 

In some cases, firms may focus intergeneric research on other host microbes that are already listed as 

candidates for tiered exemptions. For example, it is possible that companies have chosen to emphasize 

developing intergeneric strains of the B. amyloliquefaciens substitutes, B. licheniformis and B. subtilis, 

 

30 Submitters can consult with EPA if they are uncertain whether a use qualifies for an R&D exemption. 
 41

which are currently eligible for Tier I and Tier II exemptions, instead of B. amyloliquefaciens.

31 This may 

have slowed industry development of intergeneric B. amyloliquefaciens below what it otherwise might 

have been. Tier I certifications have been submitted for both B. licheniformis, and B. subtilis in recent 

years. However, no MCAN32 has been submitted for B. amyloliquefaciens since FY98.

Any benefits of new intergeneric T. reesei or B. amyloliquefaciens are likely to come sooner if the 

organism qualifies for an exemption, especially a Tier I exemption. In addition, it is possible that, due to 

the exemptions, some improved microorganisms would be developed that otherwise would not be 

developed at all. 

Rule Case Benefits 

Under the Rule Case, the shorter review periods (45 days for the Tier II exemption33 and 10 days for 

the Tier I exemption) could have reduced delay costs. This is especially true for Tier I notices which, 

unlike MCAN and Tier II notices, are not subject to suspensions or extensions of the review period. 

The proposed eligibility for Tier I/Tier II exemptions shortens the notice period for T. reesi QM6a 

and B. amyloliquefaciens. The Tier I notice requires only a 10-day advance notification and does not 

require EPA approval before commercial production. Using the Tier I exemption would potentially allow 

companies to test multiple strains at once, expediting the testing process and allowing for the product to 

enter the market more quickly. The Tier II notice also decreases the review period, to 45 days (extendable 

to 90 days), but requires EPA approval prior to commercial production. Thus, the Tier II exemption may 

be somewhat less important than the Tier I option in encouraging innovation. 

Although the Tier II exemption has seldom been used historically (see Table 4-9), this exemption still has 

a role in encouraging innovation, if the microorganisms are likely to be used in containment that does not 

meet the Tier I conditions. Overall, due to shorter notice or review periods, and simpler submissions, the 

proposed rule is expected to increase the rate of innovation in the industry. 

Innovation delay costs are not quantified for this report. The 1997 RIA stated that it was not feasible 

to quantify the impact of these costs as part of aggregate industry costs (EPA, 1997a). The 2007 New 

Chemical ICR (EPA, 2007) presents a cost for delayed receipt of profits, but this cost was based on 

calculations for conventional chemicals originally made in 1983 (ICF, 1983), and may be quite different 

for microorganisms.34 

Benefits to Consumers 

Reduced delays in the marketing of products, and increased innovation will positively impact both 

downstream users and end consumers of the genetically modified microbes and products produced using 

these microbes. Reduced delays in bringing products to market sooner brings value to potential 

consumers. Consumers would be able to start using the improved products sooner, and potentially start 

sooner to reap the direct and indirect environmental and health benefits of the rule discussed in Sections 

 

31 B. subtilis and B. amyloliquefaciens are closely related and were considered to be the same species until 1987 

(Novo Nordisk, 1997, p.2) 

32 Here, as elsewhere in this report, only nonconfidential submissions information was considered. 33 EPA may extend the review period for a Tier II notice up to 45 days (EPA, 1997b, §725.56). 

34 A delay cost of $23,378 in 2006 dollars is presented in the New Chemicals ICR (EPA, 2007, p.23-24; Table 3). The ICR cost 

was based on EPA’s 1994 Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture 

Notifications (EPA, 1994, pages II-6 and III-10) which in turn drew on a 1983 EPA report, Regulatory Impact Analysis for New 

Chemical Reporting Alternatives Under Section 5 of TSCA, May 10, 1983 (ICF, 1983). 
 42

4.2.2 and 4.2.3. The lower costs and reduced lead times for Tier I/Tier II exemptions are expected to 

encourage the development of new intergeneric microbe strains. Successful innovation would lead to 

reduced cost and/or improved performance of enzymes and other products made using the microbes, 

relative to the Base Case. Ultimately there would be relatively lower prices and/or improved performance 

for end products such as fuel ethanol, textiles, and detergents. 

4.2.2 Health, Environmental and Other Benefits of Improved Microbe Strains 

Benefits of Improved T. reesei Strains 

The proposed rule could lead to more cost-effective production of enzymes by T. reesei hosts, 

including production of enzymes native to other microbial genera. In cases where enzyme costs are 

reduced, the industry may realize some of the savings in the form of profits and some savings may be 

passed on to industrial customers, and to institutional, and household consumers. 

Reduced enzyme cost would tend to expand the use of enzymes and thus their environmental and 

other benefits. Depending on the application, enzymes may replace harsher chemicals, allow use of lower 

temperatures (less energy), allow recycling of waste biomass, and have other environmental benefits. For 

example, cellulases from T. reesei are used in the pretreatment and finishing of textiles. The use of 

enzymes in textile pretreatment may reduce the amount of wastewater generated, and the amount of 

energy and water used by textile plants that use traditional methods of treating garments (Blackburn, 

2009). Cellulases may be used instead of sludge-producing pumice stones in denim finishing to create a 

stonewashed affect. The enzymes may also be used as substitutes for hydrogen peroxide in bleach cleanup, reducing the amount of wastewater produced, and/or the amount of energy and water used in fabric 

pretreatment (Blackburn, 2009). 

The 2010 industry letter supplementing the original T. reesei petition highlights the conversion of 

biomass to sugars as an area of innovation. “One can ferment these saccharides/oligosaccharides to 

ethanol, acids and other metabolites or use them directly in organic synthesis” (BIO and ETA, 2010, p.7). 

Faster development of new T. reesei strains due to the tiered exemptions—especially Tier I—could 

reduce the costs of enzymes used to degrade biomass, and thus promote use of biomass as a feedstock for 

the production of ethanol and other chemicals. The cost reductions would result from increases in enzyme 

yields and development of more effective enzyme complexes using genetically modified T. reesei strains 

(BIO and ETA, 2010, p.8). 

An important use for T. reesei enzymes is in ethanol production. Other things being equal, more costeffective enzymes from T. reesei may reduce the cost of producing corn-based and cellulosic ethanol. The 

benefits of cellulosic ethanol are discussed in the next section. 

Benefits of Cellulosic Ethanol 

T. reesei enzymes are used in the production of cellulosic ethanol. For example, Genencor’s 

Accelerase® 1500 enzyme complex hydrolyzes biomass into fermentable sugars (Genencor, 2009). 

Cellulosic ethanol is a second-generation biofuel that is made from cellulosic biomass that comes 

from feedstocks like corncobs, switch grass, woodchips, and other inedible plant fibers. Tiered 

exemptions for T. reesei are expected to encourage the development of new T. reesei strains and thus 

indirectly reduce the costs of producing cellulosic ethanol and expand its production, compared with the 

current biotechnology regulations. Use of cellulosic ethanol in place of gasoline and corn-based ethanol is 

expected to lead to relatively lower greenhouse gas emissions. (As elsewhere in this analysis, the benefits 

of the Rule Case are relative to the Base Case in which T. reesei is not listed as a candidate for exemption. 

Other factors could swamp the effects of changed EPA biotechnology regulations on cellulosic ethanol 

production volume or price.) 
 43

A U.S. Department of Energy life cycle assessment found that greenhouse gas emissions from the use 

of cellulosic ethanol are 87 percent lower than emissions from gasoline (DOE, 2007). In comparison, 

corn-based ethanol has emissions reduction between 18 and 28 percent when compared with gasoline 

(DOE, 2007). A 2010 US EPA report expects a 21 percent reduction greenhouse gas emissions if cornbased ethanol is used as opposed to gasoline (EPA, 2010b). The same report estimates a 72 to 110 percent 

reduction if switchgrass-based ethanol is used instead of gasoline and a 92 to 129 percent reduction in 

greenhouse gas emissions if corn stover (stalks, leaves etc.) is used (EPA, 2010b). Increased use of 

cellulosic ethanol is expected to result in benefits, since greenhouse gas emissions are known to 

contribute to global climate change, which has many potential environmental and health risks. 

It was not feasible for this report to quantify the extent to which greenhouse gas emissions might be 

abated by the commercial use of cellulosic ethanol, and the associated risk reduction. However, some 

potential health and environmental benefits are discussed qualitatively in the next section. Other benefits 

of substituting cellulosic ethanol for other fuels are mentioned in Chapter 6 . 

Environmental and Health Impacts of Global Climate Change 

If innovations in T. reesei strains used in cellulosic ethanol production lead indirectly to a reduction in 

greenhouse gas emissions, relative to the Base Case, this would tend to mitigate global climate change 

and thus reduce the environmental and health impacts associated with global climate change. 

A significant benefit of the Tier I/Tier II exemptions to health and safety could occur if innovations in 

T. reesei strains used in ethanol production lead indirectly to a reduction in greenhouse gas emissions. 

The relative reduction in greenhouse gas emissions would be due to increased replacement of 

conventional gasoline and corn-based ethanol by cellulosic ethanol. Many factors other than 

biotechnology regulation affect energy markets, and it is not possible to forecast the extent to which 

making T. reesei QM6a eligible for the exemptions might lead to greater use of cellulosic ethanol, 

compared with the Base Case. However, the summary below indicates the potential importance of health 

and environmental benefits if cellulosic ethanol does become more competitive in part as a result of Tier 

I/Tier II exemptions. 

It is difficult to assess the human health and environmental risks associated with global warming 

because of the interdependency and complexity of the associated factors (EPA, 2009a).35 However, the 

following text briefly summarizes information found on EPA’s climate change website concerning the 

environmental impacts of climate change. Global warming may negatively impact freshwater and 

saltwater quality, freshwater abundance, sea level, air quality, biodiversity, and ecosystem services. 

Increased sea level from melted glaciers and icecaps may result in erosion, increased flooding, inundated 

wetlands, and increased salinity in freshwater rivers (EPA, 2009a). Certain animal and plant species are 

expected to change territorial regions, migration patterns, and growing seasons (EPA, 2009a). For 

example, North American forests are likely shift in both location and composition (EPA, 2009a). The 

EPA website states that it is unlikely that most aquatic and terrestrial ecosystems will be able to adapt to a 

large change in climate, resulting in greatly reduced global biodiversity and ecosystem services (EPA, 

2009a). 

Also, based on information on EPA’s climate change website, the Agency expects that an increased 

average temperature resulting from global climate change will negatively affect vulnerable populations 

such as the young, the elderly, and people with asthma and heart disease (EPA, 2009a). In addition, an 

increase in average temperature may increase the spread of vector borne diseases, such as malaria, yellow 

 

35 This is not intended to be a definitive summary of EPA information on this topic. See EPA’s climate change 

website for a more thorough and up-to-date discussion (www.epa.gov/climatechange/effects/). 
 44

fever, dengue fever, and encephalitis (EPA, 2009a). Increased rainfall is often associated with 

temperature increases, and this may lead to an increased number of ticks and increased incidence of 

Lyme’s disease (EPA, 2009a). Global warming is also expected to reduce air quality and increase the 

amount of particulate matter and ground level ozone in the air. Both particulate matter and ground level 

ozone are associated with significant health problems (EPA, 2009a). Finally, global climate change is 

expected to increase the number of extreme weather events that are likely to negatively impact human 

health and wellbeing (EPA, 2009a). 

Other Benefits of Cellulosic Ethanol 

Domestic cellulosic ethanol production may decrease U.S. dependency on foreign oil supplies. Unlike 

corn ethanol, the feedstocks used in cellulosic ethanol production (for example corncobs, or crops grown 

for specifically for ethanol production, such as grasses or wood) are not human food crops (DOE, 2009b), 

so increased demand for cellulosic ethanol feedstock may put less upward pressure on food prices. These 

crops may be grown on land that is unsuitable for growing other crops and it generally takes less energy 

to produce cellulosic ethanol biomass than sugar and starch based biomass (DOE, 2009b). In addition, the 

proposed rule may contribute to U.S. progress toward meeting the goals of the Energy Independence & 

Security Act (EISA) of 2007 which include US consumption of 6 million gallons of cellulosic ethanol in 

2011 and 500,000 million gallons of cellulosic ethanol in 2012 (EPA, 2010c and EPA, 2010d). 

4.2.3 Benefits of Improved B. Amyloliquefaciens Strains

As with T. reesei, the lower costs and reduced lead times for Tier I/Tier II exemptions are expected to 

encourage the development of new intergeneric B. amyloliquefaciens strains. The Rule could lead to more 

cost-effective production of enzymes by B. amyloliquefaciens hosts, including production of enzymes 

native to other microbial genera. Ultimately there could be relatively lower prices and/or improved 

performance for end products such as laundry detergents. There could also be indirect benefits to health 

and the environment. For example, B. amyloliquefaciens is used to produce amylases and proteases for 

commercial laundry detergents (LSBU, 2004; Aehle 2007 p.186). Novozymes asserts that the use of 

enzymes in laundry detergents as opposed to traditional chemicals (such as surfactants) has several 

environmental benefits including energy savings by enabling lower wash temperatures and the 

compaction of the product, reducing the amount of packaging used (Novozymes, 2010b). It also asserts 

that enzymes are biodegradable, have no negative environmental impact on sewage treatment processes, 

and do not present a risk to aquatic life (Novozymes, 2010b). 

4.3 Limitations of the Analysis 

Estimates of the number of potentially affected companies, the numbers of submissions, the cost 

savings per submission, rule familiarization costs, and the innovation impacts are very uncertain. In some 

cases, a more extensive analysis would not be able to remove much uncertainty. For example, impacts on 

the pace and type of innovation, and the health and environmental benefits of enhanced innovation, are 

extremely difficult to predict. In other cases, such as per-submission costs or numbers of submissions, a 

larger study might reduce uncertainty, but it is unlikely that the added information would change the rule 

decision. For example, an industry survey might show that per submission costs are higher or that there 

might be more submissions than estimated here. However, Tier I/Tier II per-submission costs would 

almost certainly continue to be lower than per submission costs for MCANs, and there would still be a 

cost-savings from the proposed rule. Any change in submission numbers might be large percentage-wise 

but would be small absolutely, as would the change in quantified rule cost savings. 
 45

4.3.1 Uncertainties in the Number of Tier I and Tier II Submissions 

Growth in submissions 

The analysis assumes that the number of submissions will be relatively small for the foreseeable 

future: several submissions per year for the two microorganisms combined, rather than dozens or 

hundreds. However, it is difficult to forecast future submissions for intergeneric T. reesei and B. 

amyloliquefaciens, especially beyond the first year or two. The year-to-year innovative activity leading to 

submissions depends on business decisions of a handful of firms, and can be affected by both internal 

technical success and external economic factors. Errors in assumed submission numbers would tend to 

affect benefits and costs in the same direction, so that even with significant errors in assumed submission 

numbers, benefits would still very likely outweigh costs. This is because the rule is cost-saving, and the 

only costs identified in this report are minor costs for rule familiarization. 

Rule Case versus Base Case total submissions 

This analysis assumes that total T. reesei and B. amyloliqufaciens submissions would not be affected 

by the rule, and that the rule would merely result in some MCANs being replaced by Tier I/Tier II 

submissions, for a savings in submission costs. However, this might not be true. Instead, the lower Tier 

I/II submission costs could increase the total number of submissions for T. reesei and B. 

amyloliquefaciens. 

The number of Tier I submissions could be higher than estimated if companies are encouraged to 

submit a large number of low-cost Tier I notices, including companies who might not have submitted an 

MCAN in the Base Case. A review of past submitters of Tier I/Tier II notices reveals that while many 

Tier I/Tier II submissions are by past MCAN submitters, some have been submitted by companies that 

have never submitted an MCAN. It is not known whether any companies have been deterred from 

developing or using intergeneric T. reesei or B. amyloliquefaciens for TSCA applications because of the 

MCAN cost, but if so, they could enter some TSCA markets because of the proposed rule. 

For large markets, such as T. reesei enzymes for ethanol production, it is unlikely that the MCAN 

cost would deter entry. However, it is possible that the proposed rule would create a surge of Tier I 

submissions for small markets where it might not be profitable to submit MCANs. For example, a firm 

may develop a microorganism for non-TSCA uses, but there might also be potential TSCA uses. The firm 

might consider the profits from minor TSCA uses to be too low to justify an MCAN, but high enough to 

justify the simpler Tier I notice. Industry and agency costs for the extra submissions would be low on a 

per-submission basis. A surge of Tier I notices could increase submission costs, but would tend to 

increase the innovation benefits even more. 

The total number of notices could also be higher for the Rule Case than for the Base Case because 

companies must submit a new Tier I or Tier II notice (or amendment) for each new site using the same 

microorganism, while they submit only one MCAN per microorganism. These supplementary notices 

would be relatively inexpensive but would slightly increase Rule Case submission costs. 

For example, there may be potential T. reesei applications which are so different from historic uses of 

other microorganisms eligible for Tier I/Tier II exemptions that EPA’s history of receiving only one Tier 

II submission is irrelevant. For example, a company might wish to provide the eligible microorganisms to 

toll manufacturers (for example, firms that produce the enzymes under contract with the submitter) or to 

customer sites that may not meet the Tier I containment requirements, and use a Tier II exemption for 

each site. This could increase both the Tier II exemptions and total exemption notices beyond the number 

assumed in the analysis. 
 46

Rule Case MCAN mix 

The analysis assumes that if the intergeneric microorganism qualifies for an exemption, producers 

will submit a Tier I or a Tier II notice, not an MCAN. However, it is possible that firms would make an 

MCAN submission even though the microorganism itself would qualify for an exemption. This could 

happen, for example, if the submitter believes that manufacturing conditions may not always meet the 

containment requirements for either exemption. 

For example, in one case, an MCAN submitter believed that the microorganism itself would qualify 

for a Tier I exemption, but did not know whether customer sites receiving the live microbe would meet 

Tier I containment criteria. The submitter stated that it would be burdensome to make this determination 

on a site-by-site basis. They also thought that Tier I regulatory requirements might make the commercial 

use less attractive to customers. They did not want to impose containment requirements beyond the 

normal for customer facilities (MCAN, 2010, p.7). 

In addition, microorganisms associated with Tier I or Tier II exemptions are not added to the TSCA 

inventory, so they remain “new.” A company might decide to submit an MCAN once rather than 

repeatedly submit a Tier I or Tier II notification for each site where the organism is used. By contrast with 

exemption notices, if EPA does not take action on the MCAN within 90 days, once the company begins 

commercial production and submits a Notice of Commencement (NOC), the specific microbial strain 

would be added to the TSCA inventory. At that point, the microorganism would be no longer “new” and 

would not require a submission if more sites produce the microorganism or the method of containment 

changes (unless the organism is subject to a Consent Order under TSCA Section 5(e) or to a Significant 

New Use Rule). 

Tier II submissions 

The analysis assumes that firms not meeting Tier I containment requirements would prefer a Tier II 

submission to an MCAN. However, some firms may perceive the cost of a Tier II submission to be only 

slightly lower than the cost of an MCAN. Because there is more flexibility post-EPA review with MCAN 

submissions, a company may believe the cost savings from submitting a Tier II rather than an MCAN do 

not justify the future costs of repeated Tier II submissions. This would tend to reduce quantified cost 

savings from the Rule. 

The analysis assumes that there will be only three Tier II notices over a ten-year period. To avoid 

having to assume fractional notices each year, it assumes one notice every three years. However, the 

actual number and timing of Tier II notices could be quite different. As with the Tier I assumptions, the 

assumed number of Tier II submissions may be too high or too low. 

EPA has received only one Tier II submission (with amendments) since 1998. It is possible there 

could be no Tier II submissions for either microorganism for a period of several years. Alternatively, the 

Tier II submissions forecast could be an underestimate. 

If the total number of exemption notices stays the same, but more Tier I notices and fewer Tier II 

notices are submitted, the cost savings generated by the rule may be higher than estimated here, because 

Tier I submissions have much lower costs than Tier II submissions. Conversely, if more Tier II notices 

are submitted, the relatively small burden difference between MCANs and Tier II submissions would 

yield a smaller but still positive cost savings. 

Firms incurring rule familiarization costs 

The analysis assumes that a few firms would incur rule familiarization costs over ten years, and that 

the numbers of submitting firms would be the same in the Base and Rule Cases. However, the advantages 

of Tier I and Tier II exemptions could induce firms to make T. reesei or B. amyloliquefaciens submissions 
 47

under the Rule Case that would not have done so under the Base Case. For firms who would not have 

submitted MCANs under the Base Case, there will be rule familiarization costs associated with the Tier I 

or Tier II submission under the Rule Case. However, the expected profits should outweigh the costs 

associated with the additional Tier I and Tier II submissions—otherwise firms would not make the 

additional submissions. 

4.3.2 Uncertainties in Cost Estimates 

The analysis assumes that the costs estimated for the 1997 biotechnology rule are a good basis for 

estimating costs of current submissions, after updating for inflation and the advent of electronic 

submissions. Resources were not available to update the 1997 MCAN submission costs, except to reflect 

inflation and electronic reporting. There is therefore uncertainty surrounding the cost estimates associated 

with MCAN, Tier I, and Tier II submissions. However, it is highly likely that at least some firms would 

find the cost savings sufficient to take advantage of the Tier I and possibly also the Tier II exemptions, 

resulting in a cost savings associated with the proposed rule. 

Submission costs 

MCAN burden estimates may be underestimates if preparing a submission requires the development 

of more new information than was assumed in the original 1997 RIA, or if existing information was more 

difficult to compile than was originally estimated. 

In addition, these cost estimates may be understated if they do not adequately reflect pre-notice 

consultations with EPA, as well as phone calls with EPA and responding to EPA inquiries during 

submission review. EPA encourages, but does not require, pre-notice consultations. An industry 

consultant has recommended such consultations well in advance of the expected commercial start date 

(Glass, 2010), and firms have often availed themselves of this opportunity. Some consultations involve 

travel by senior staff to EPA’s headquarters in Washington DC. In addition, industry staff may spend time 

compiling additional information to respond to inquiries by EPA staff during the review period. 

If costs of planning and preparing MCANs are higher than those estimated, it is unclear how this 

would affect cost savings due to the Tier II exemption, since the Tier II costs might also be higher than 

estimated. Compared with the Tier I exemption, however, higher MCAN costs would likely increase the 

cost savings from the proposed rule. 

On the other hand, MCAN submission costs may be lower than those estimated, if firms make more 

than one submission for the same species. If the firm and EPA are familiar with the species, the firm may 

save time preparing the submission, have less need to consult with EPA, and spend less time answering 

EPA questions. This could reduce the advantages of a Tier II or Tier I exemption compared with an 

MCAN. 

In addition to the cost savings from electronic submissions to EPA, advances in information 

technology may have reduced the costs of some steps in preparing a submission. 

The analysis assumes that the cost of determining whether containment qualifies for the Tier I 

exemption is negligible. This may not be true for some firms, such as those supplying live 

microorganisms to customers. Higher Tier I costs would tend to somewhat reduce the net benefits of the 

rule. 

The analysis assumes that cost savings to industry and the Agency from electronic reporting are 

similar to savings estimated by EPA for conventional chemicals. However, biotechnology submissions 

are quite different from submissions for conventional chemicals, with less reliance on EPA forms and 

more pages in a typical submission. It is not clear whether the savings associated with electronic 

biotechnology submissions would be higher or lower than for conventional chemical submissions. 
 48

Recordkeeping and rule familiarization 

The analysis assumes that MCAN recordkeeping costs are the same as Tier I and Tier II 

recordkeeping costs (1 hour). However, because MCANs are far larger and more complex than Tier I 

notices, and somewhat more complex than Tier II submissions, it is unlikely that the recordkeeping 

burden is truly the same for all types of notices. A more tailored estimate of MCAN, Tier I and Tier II 

recordkeeping costs may slightly increase the cost-savings from the proposed rule. 

The rule familiarization cost of 20 hours per firm may be an over- or underestimate. Such costs will 

be company-specific. For example, instead of a cost, there might be a cost savings (negative rule 

familiarization cost) for Tier I/II submitters who otherwise would have had to learn about the more 

complex MCANs. The rule familiarization cost may be an overestimate for Danisco/Genencor and 

Novozymes since they are likely to be familiar with the proposed rule concepts as a result of their roles as 

submitters of the applications that triggered the current rulemaking. By contrast, if firms enter the TSCA 

biotechnology market with Tier I notices solely due to the potential T. reesei or B. amyloliquefaciens

exemptions, their rule familiarization costs attributable to the proposed rule could be higher, since they 

might have to learn about TSCA biotechnology regulation in general as well as about the proposed rule. 

In any case, even if rule familiarization costs are somewhat different than estimated, they are low, onetime costs and unlikely to be major costs for any submitter. 

The analysis assumes that only firms making submissions have rule familiarization costs. It is 

possible that some firms working with T. reesei or B. amyloliquefaciens for non-TSCA uses would 

consider making a submission as a result of the rule, learn about the rule, and then decide not to make a 

submission of any kind. If such firms exist, it would increase rule familiarization costs without the 

subsequent benefits of a submission. 

Industry overhead rates 

The industry cost estimates rely on loaded wage rates. The wages and fringe benefits are based on 

Bureau of Labor Statistics data and should be reasonably accurate. However, the authors of this analysis 

are not aware of any similarly reliable data for industry overhead rates. This analysis assumes that the 

overhead for General and Administrative costs is 17 percent of wages, which is consistent with the 

overhead rate used in other economic reports supporting TSCA rules. The actual overhead rate may vary 

by industry, by company, by the process within the company, and by accounting methods; no single rate 

would be correct for all submitters. Other things being equal, submitters with a rate higher than 17 percent 

would see increased cost savings from the rule, and those with a lower rate would have less cost savings. 

Either way, there would still be a net cost savings. 

4.3.3 Uncertainties regarding Innovation Benefits 

The analysis does not quantify innovation benefits, but does suggest that they would be significant. 

However, technological change is also advancing in competing biotechnology and non-biotechnology 

areas. It is possible that other technical progress would make genetically modified T. reesei and B. 

amyloliquefaciens commercially less important than is implied in this analysis. For example, advances in 

non-biological ways of converting biomass to fuel or in the use of algae to produce biofuels might make 

T. reesei use in ethanol production less important. On the other hand, the two microorganisms might find 

uses in areas not explored for this analysis. In an uncertain world, the proposed rule opens the door to 

faster development of new technologies but does not guarantee technical or commercial success. 
 49

5 :Agency Burden and Cost Savings 

5.1 Methodology for Estimating Agency Costs 

This chapter analyzes the changes in Agency processing burden and cost associated with listing 

Trichoderma reesei QM6a derivatives and Bacillus amyloliquefaciens at 40 CFR 725.420 as eligible for 

Tier I and Tier II exemptions. EPA calculates the incremental burden and cost, or savings, of the proposed 

eligibility for exemptions by comparing the burden and cost of processing a Tier I or Tier II submission 

with the burden and cost of processing an MCAN. The methodology for estimating the change in Agency 

cost is similar to estimating the change in cost to industry. Costs per submission were updated for 

inflation and to reflect electronic reporting, but otherwise are the same as those estimated in the 

Regulatory Impact Analysis of Regulations on Microbial Products of Biotechnology (EPA, 1997a). The 

following steps were used to estimate Agency costs: 

 Identify the tasks performed by the Agency under both the current biotechnology requirements and 

the proposed rule requirements. The tasks are the same in the Base Case and the Rule Case, since the 

proposed rule does not change the nature of Agency review for the various types of submissions; it 

only changes the likely numbers of submissions of each type. 

 Determine the unit cost and hours burden for all activities identified in Step 1. Wage rates and other 

unit costs are updated for inflation in Section 5.2 below. Costs per submission are calculated in 

Sections 5.2.2 and 5.2.3. 

 Determine the estimated total cost and burden by multiplying the unit cost and burden by the 

frequency of the activity. Section 5.3 shows the costs for the first year and the first ten years after rule 

promulgation. 

 Subtract the total Agency cost or burden after the proposed rule from the cost or burden under the 

current rule to calculate the incremental Agency cost or savings. Section 5.3 shows Agency cost 

savings for the first year and the first ten years. 

For MCAN, Tier I, and Tier II submissions, EPA is expected to perform the activities shown in Table 5-1 

and hire contractors for extramural assistance. 

Table 5-1: Agency MCAN and Tier I/Tier II Regulatory Activities 

Activity Description

1. Review MCAN and Tier I/Tier II exemption submissions 

2. Notify respondents of any submission deficiencies 

3. Provide appropriate protection for confidential data 

4. Provide industry and public assistance (e.g., guidance, technical support) 

5. Conduct site and records inspections and perform related 

compliance monitoring functions 

5.2 Agency Costs per Submission 

5.2.1 Agency Wage Rates 

Unit wage rates for EPA staff are calculated based on annual federal salaries for the WashingtonBaltimore-Northern Virginia, DC-MD-VA-WV-PA locality pay area published by the Office of Personnel 
 50

Management (OPM). The average salary for one full-time equivalent (FTE) staff member is estimated as 

the annual salary for a GS-14, Step 5 employee, which is $116,419 in 2009 without fringe benefits and 

overhead costs.36 In order to derive the fully loaded salary, EPA multiplied the annual salary by an 

assumed loading factor of 1.6 to reflect federal fringe benefits and overhead, which results in a fully 

loaded annual salary of $186,270. The hourly FTE wage rate is $89.25. 

The Agency loading factor of 60 percent was labeled as “the benefits multiplication factor” in an EPA 

guide (EPA, 1992, p.29), but has been used in many EPA OPPT ICRs to reflect both fringe benefits and 

overhead for federal staff. For example, it was used in a document supporting EPA ICR No. 1139.06 

(EPA, 2000b), with the following explanation: 

“The annual costs per FTE are derived by multiplying the annual pay rate by 1.6 (the benefits 

multiplication factor). The multiplication factor used is recommended in EPA’s Office of Policy, 

Planning, and Evaluation’s Instructions for Preparing Information Collection Requests (ICRs)

(June 1, 1992). An EPA internal phone call between Carol Rawie (OPPT/EETD/RIB) and Carl 

Koch (OPPE/RMD/IMB) on May 3, 1994, indicated that the 1.6 factor included not only benefits 

but also overhead.” 

Fully loaded costs for Agency labor are presented in Table 5-2. 

Table 5-2: Derivation of Loaded Agency Wage Rates ($2009) 

Labor 

Category 

Data 

Source for 

Wage 

Information 

Date 

Wage Fringe 

Benefit

Fringes 

as % 

wage 

Overhead 

as % 

wage

Fringe + 

overhead 

factor 

Loaded 

Wages 

(a) (b) (c) = (b) / 

(a) (d) (e) = (c) + (d) + 1 

(f) = (a) 

*(e) 

EPA staff 

FTE 

Annual federal 

staff cost: OPM 

WashingtonBaltimoreNorthern 

Virginia, DCMD-PA-VAWV area, GS14 Step 5 pay 

rates1 

Dec09 

$116,419 

(annual) 

-- 

[Included 

in 60% 

overhead] 

60%2

 1.60 

$186,270 

(annual) 

$55.78 

(hourly) 

$89.25 

(hourly) 

Notes: 

1

 The Agency salary is the unloaded federal GS-14, Step 5 salary ($116,419 for 2009), from the OPM salary table for the

Washington-Baltimore-Northern Virginia Locality Pay Area (OPM, 2009). Hourly rates also come from the OPM Salary table. 

The GS-14 average grade level is estimated based on the current composition of the EPA workgroup that reviews biotechnology 

submissions. 

2

 The 60% fringes-and-overhead rate is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs)

(EPA, 1992, p.29). 

5.2.2 Federal Cost per MCAN Submission 

 The estimated net cost to EPA of reviewing an MCAN submission is $64,327, as shown in Table 

5-3. The cost to the Federal government is $61,827 after deducting the $2500 user fee from Federal costs. 

This estimate is based on the hour estimates from the 1997 Regulatory Impact Analysis (EPA, 1997a), 

 

36 GS-14, Step 5 is based on the approximate average grade levels of current reviewers, as estimated by an EPA 

economist based on the staff mix of the EPA biotechnology workgroup. This is higher than the level used for PMN 

reviews in the 2007 new chemicals ICR, GS-13, Step 5 (EPA, 2007, page 25). 
 51

reduced for assumed savings from electronic reporting and increased to reflect inflation and higher staff 

grade levels. The calculations are described below. 

The previous RIA on Microbial Products of Biotechnology (EPA, 1997a) and the recent New 

Chemicals ICR (EPA, 2007) give a low-end estimate of 848 hours and a high-end estimate of 1,285 hours 

for Agency review of an MCAN submission. The high-end estimate applied to microorganisms which 

EPA reviewers had not seen before, because they were for contained37 microorganisms which had not 

been preceeded by a TERA. The low-end estimate applied to MCANs for microorganisms that were more 

familiar to EPA because the MCAN was for a released use, and therefore would have been preceded by a 

TERA submission (EPA, 1997b, page V-8,V-9). 

Tier I and Tier II exemptions apply only to contained microorganisms, so that the MCAN alternative 

would also be for a contained microorganism. Nevertheless, this analysis uses the 848 hour low-end 

estimate from the RIA for an MCAN,38 not the high-end estimate. This is because EPA has reviewed 

numerous T.reesei submissions, and in the Base Case, further T. reesei reviews are likely to be easier than 

for less familiar microorganisms.39 Agency review costs for B. amyloliquefaciens may be closer to a mid 

or high-end estimate, because of the fewness of B. amyloliquefaciens submissions. Only one MCAN with 

a non-confidential species has been for B. amyloliquefaciens. However, since most submissions are 

expected to be for T. reesei, the lower hours are used. 

The 2009 final ePMN rule is expected to reduce the Agency processing burden by 16.5 percent for all 

biotechnology submissions (EPA, 2009b). Accounting for this burden reduction, the Agency’s burden is 

approximately 708.1 hours for an MCAN. Multiplying the approximate 708.1 hour burden for MCAN 

review and industry and public assistance by the hourly FTE wage rate of $89.25 yields a total labor cost 

of $63,195 for EPA to process a single MCAN submission.40 

Using the estimates from the 1997 RIA (EPA, 1997a, Table V-3) and inflating these to 2009 dollars 

and reducing the values by 16.5 percent to reflect the savings from the e-PMN rule, EPA estimates that 

the extramural (contracting) costs are approximately $1,642 for MCANs. 

Adding the EPA labor cost and the extramural costs and subtracting the $2,500 user fee paid to the 

U.S. Treasury, the net cost to the Government of an MCAN submission is $62,337, as shown in Table 

5-3.41

5.2.3 Agency Cost per Tier I and Tier II Submissions 

The Government cost for a Tier I submission is approximately $3,212, and the cost of a Tier II 

exemption submission is approximately $19,421, as shown in Table 5-3. This calculation uses the hours 

 

37 I.e. the intended use is inside a structure designed to contain the microorganism (EPA, 1997b, §725.422). 38 The RIA (EPA, 1997a, Table V-3) estimates that one MCAN submission review requires between 848 and 1,285 

hours, one Tier I exemption submission review requires between 42 hours and 64 hours, and one Tier II exemption 

submission review requires between 254 hours and 386 hours. As explained in the text, this analysis uses the lowcost estimates for Agency burden associated with submission review. 

39 The high end per-submission cost was used for industry submissions in Section 4 . Industry submissions may 

come from different companies, whereas the same group of Agency staff tends to review all biotech submissions. 

40 In estimating savings, the ePMN economic analysis did not distinguish between biotechnology submissions and 

conventional chemical submissions. Savings from electronic submissions of biotechnology notices could be 

different from those estimated for conventional chemicals, but were not re-assessed for this report. 

41 As was explained in the 1997 biotechnology rule RIA, p. V-3, the user fee is a cost to industry and a transfer 

payment from industry to the U.S. Treasury, but not a net social cost. Following the 1997 RIA method, in this 

report, the user fee is counted as a cost to MCAN submitters and deducted from the Federal government cost. 
 52

estimates from the 1997 Regulatory Impact Analysis (EPA, 1997a), reduced for assumed savings from 

electronic reporting. The calculations are described below. The 1997 RIA estimates assume that Tier I 

and II costs are 5% and 30% of MCAN costs, respectively (EPA, 1997a, Table V-3). 

The low-end burdens to the Agency to process a Tier I and Tier II submission are 42 hours and 254 

hours, respectively. The 2009 final ePMN rule is expected to reduce the Agency processing burden by 

16.5 percent for all biotechnology submissions (EPA, 2009b). Accounting for this burden reduction, the 

Agency’s burden is approximately 35.1 hours for a Tier I submission, and 212.1 hours for a Tier II 

submission. 

Using the estimates from the 1997 RIA (EPA, 1997a) and inflating these to 2009 dollars and reducing 

the values by 16.5 percent to reflect the savings from the e-PMN rule EPA estimates that the extramural 

costs are approximately $82.11 for Tier I submissions exemptions, and $493 for Tier II exemptions 

submissions (in 2009 dollars). 

Similarly, with approximate burdens of 35.1 and 212.1 hours for Tier I and Tier II submission review, 

respectively, the total labor costs for EPA to process these submissions are $3,220 and $18,929. Adding 

an additional $82.11 in Tier I extramural contractor costs, calculated above, the total cost to Government 

of a Tier I exemption submission is approximately $3,212. Similarly, adding $493 in Tier II extramural 

costs, the total cost to Government of a Tier II exemption submission is approximately $19,421, as shown 

in Table 5-3. 

Table 5-3: Agency Burden Hours and Cost per MCAN, Tier I, and Tier II Submission ($2009) 

Type of 

Submissi

on 

Low 

Case 

Hours 

Electron

ic 

Reportin

g 

savings 

Agency 

Burden 

GS-14, 

Step 5 

FTE 

Wage 

Rate 

Labor 

Costs 

per 

Submissio

n 

Extramura

l Costs 

per 

Submissio

n 

User 

Fee 

Incom

e 

Total Cost 

per 

Submission 

(a) (b) (c) = (a)*(b) (d) (e) = (c) *(d) (f) (g) (h) = (e)+(f)+(g) 

MCAN 848 16.5% 708.1 $89.25 $63,195 $1,642 -$2,500 $62,337 

Tier II 254 16.5% 212.1 $89.25 $18,929 $493 - $19,421 

Tier I 42 16.5% 35.1 $89.25 $3,130 $82 - $3,212 

Source: Wage rates are from Table 5-2 and include fringes and overhead. Low-case hours are from the 1997 biotechnology RIA 

(EPA, 1997a, Table V-3). Electronic reporting savings are from EPA, 2009b. Tier I and II costs are 5% and 30% of MCAN costs, 

as assumed in EPA, 1997a, Table V-3. 

5.3 Change in Agency Cost due to Exemptions for T. reesei and B. 

amyloliquefaciens 

 The Agency expects to save $236,500 in the first year after rule promulgation, and $3.676 million 

during the first ten years, before discounting, as shown in Table 5-5 and Table 5-7. 

5.3.1 Agency First-Year Cost Savings 

As mentioned in Section 4.1.5, this analysis assumes that four MCANs will be submitted under the 

Base Case (no rule) for T. reesei and B. amyloliquefaciens in Year 1. Under the proposed rule this 

analysis assumes it will receive four Tier I submissions and zero Tier II submissions. Multiplying these 

estimates by the Agency burden associated with each type of submission yields a total Agency burden of 

140 hours in the first year, generating a savings to the Agency of 2,692 hours as shown in Table 5-4. 
 53

Table 5-4: Base Case and Change in Agency Burden Hours (Year 1) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case Per 

Submission 

Burden 

(hours) 

Base Case 

Total Agency 

Burden 

(hours) 

Rule Case 

Number of 

Annual 

Submissions 

Rule Case 

Total Agency 

Burden 

(hours) 

Change in 

Agency 

Burden 

(hours) 

Submission Review for T. reesei and B. amyloliquefaciens 

MCAN 4 708.1 2,832 0 0 -2,832 

Tier II 0 212.1 0 0 0 0 

Tier I 0 35.1 0 4 140 140 

Total 4 - 2,832 4 140 -2,692 

Source: The number of submissions is from Table 4-13. Hours per submission are from Table 5-3. 

Table 5-5 presents the Base Case and change in Agency cost in Year 1, as a result of the proposed 

rule. The per submission costs estimated in Table 5-3 are multiplied by the number of MCAN, Tier I, and 

Tier II submissions expected under the baseline and the proposed rule. The cost to the Agency is 

approximately $12,848 in the first year under the proposed rule; this generates a cost saving to the 

Agency of approximately $236,500 in the first year. 

Table 5-5: Change in Agency Cost (Year 1) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case Per 

Submission 

Cost 

($2009) 

Base Case 

Total Agency 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions 

Rule Case 

Total Agency Cost

($2009) 

Change in 

Agency Cost 

($2009) 

T. reesei and B. amyloliquefaciens 

MCAN 4 $62,337 $249,348 0 $0 -$249,348 

Tier II 0 $19,421 $0 0 $0 $0 

Tier I 0 $3,212 $0 4 $12,848 $12.848 

Total 4 - $249,348 4 $12,848 -$236.500 

Source: The number of submissions is from Table 4-13. Cost per submission is from Table 5-3. 

5.3.2 Agency Ten-Year Cost Savings 

Table 5-6 and Table 5-7 give the expected number of submissions, Agency burden, and Agency cost 

associated with both the baseline (no rule) and rule scenarios, projected over ten years. The total number 

of submissions in a given year is taken from Table 4-13 and reflects a 10 percent assumed annual increase 

in the combined total of MCAN, Tier I, and Tier II submissions (see Section 4.1.5). Over a the ten-year 

period the Agency is expected to save approximately 41,869 hours, with an annual savings of 4,187 

hours. 

The total ten-year cost savings in Agency costs attributable to the rule are estimated to be $3.676 

million, before discounting. Annualized savings range from $358,924 (with a three percent discount rate) 

to $347,955 (with a seven percent discount rate). 

5.3.3 Uncertainties in Agency Cost Estimates 

Uncertainties about the number and mix of future submissions were discussed in Section 4.3.1. 

Changes in estimated submissions could cause Agency cost-savings to be higher or lower than estimated 

here, but there would still be a cost-savings. 

Agency costs to review MCANs were not re-estimated after the 1997 rule, except to update them for 

inflation and electronic reporting. Agency practices may have changed and become more streamlined as 
 54

EPA gained experience and with improved information technologies. Furthermore, the MCANs most 

likely to be replaced by exemption notices are for low-risk, relatively familiar organisms; these MCANs 

are likely to have below-average review costs. The Agency cost-savings could be lower than estimated, 

especially for MCANs as compared with Tier I notices. 

Agency costs could be incorrect if the 60 percent rate normally assumed for Agency overhead and 

benefits is too high or too low. This would affect the level of cost savings, but there would still be cost 

savings to the Agency due to the proposed rule. 
55

Table 5-6: Agency Burden Hours Reduction due to Rule (All Years) 

Year 

Base Case Rule Case Total 

Change i

Agency 

Burden 

MCAN 

Submissions 

Tier I 

Submissions 

Tier II 

Submissions MCAN Burden Tier I Burden Tier II Burden 

Total 

Agency 

Burden 

MCAN 

Submissions 

Tier I 

Submissions 

Tier II 

Submissions MCAN Burden Tier I Burden Tier II Burden 

Total 

Agency 

Burden 

1 4 0 0 2,832 0 0 2,832 0 4 0 0 140 0 140 -2,692 2 4 0 0 2,832 0 0 2,832 0 4 0 0 140 0 140 -2,692 3 5 0 0 3,540 0 0 3,540 0 4 1 0 140 212 352 -3,188 4 5 0 0 3,540 0 0 3,540 0 5 0 0 175 0 175 -3,365 5 6 0 0 4,248 0 0 4,248 0 6 0 0 210 0 210 -4,038 6 6 0 0 4,248 0 0 4,248 0 5 1 0 175 212 387 -3,861 7 7 0 0 4,957 0 0 4,957 0 7 0 0 245 0 245 -4,711 8 8 0 0 5,665 0 0 5,665 0 8 0 0 281 0 281 -5,384 9 9 0 0 6,373 0 0 6,373 0 8 1 0 281 212 493 -5,880 

10 9 0 0 6,373 0 0 6,373 0 9 0 0 316 0 316 -6,057 

Total 63 0 0 44,609 0.0 0 44,609 0 60 3 0 2104.2 636 2,740 -41,869 

Average 6 0 0 4,461 0.0 0 4,461 0 6 0 0 210.4 64 274 -4,187 

Source: Number of submissions, Table 4-13. Hours per submission, Table 5-4. 

Table 5-7: Agency Cost Reduction due to Rule - Thousands of Dollars ($2009) (All Years) 

Year

Base Case Rule Case Tot

Chan

Agen

Co

MCAN 

Submissions 

Tier I 

Submissions 

Tier II 

Submissions MCAN Cost Tier I Cost Tier II Cost Total Agency Cost MCAN Sub- missions Tier I Sub- missions Tier II Sub- missions MCAN Cost Tier I Cost Tier II Cost Total Agency Cost 

1 4 0 0 $249.35 $0 $0 $249.35 0 4 0 $0 $12.85 $0.00 $12.85 -$2362 4 0 0 $249.35 $0 $0 $249.35 0 4 0 $0 $12.85 $0.00 $12.85 -$2363 5 0 0 $311.69 $0 $0 $311.69 0 4 1 $0 $12.85 $19.42 $32.27 -$2794 5 0 0 $311.69 $0 $0 $311.69 0 5 0 $0 $16.06 $0.00 $16.06 -$2955 6 0 0 $374.02 $0 $0 $374.02 0 6 0 $0 $19.27 $0.00 $19.27 -$3546 6 0 0 $374.02 $0 $0 $374.02 0 5 1 $0 $16.06 $19.42 $35.48 -$3387 7 0 0 $436.36 $0 $0 $436.36 0 7 0 $0 $22.48 $0.00 $22.48 -$4138 8 0 0 $498.70 $0 $0 $498.70 0 8 0 $0 $25.70 $0.00 $25.70 -$4739 9 0 0 $561.03 $0 $0 $561.03 0 8 1 $0 $25.70 $19.42 $45.12 -$515

10 9 0 0 $561.03 $0 $0 $561.03 0 9 0 $0 $28.91 $0.00 $28.91 -$532

Total 63 0 0 $3,927.23 $0 $0 $3,927.23 0 60 3 $0 $192.72 $58.26 $250.99 -$3,67

Average 6 0 0 $392.72 $0 $0 $392.72 0 6 0 $0 $19.27 $5.83 $25.10 -$367

Annualized 

3% - - - $383.47 $0 $0 $383.47 - - - $0 $18.81 $5.74 $24.55 -$358

Annualized 

7% - - - $371.79 $0 $0 $371.79 - - - $0 $18.23 $5.60 $23.83 -$347

Source: Number of submissions, Table 4-13. Dollars per submission, Table 5-3. Yearly, total and average costs are before discounting. Note: Yearly, total, and average costs are calculated before discounting 
 56

6 :Summary of Social Costs and Benefits 

6.1 Social Cost Savings and Other Benefits 

This chapter summarizes the social costs and benefits generated by the proposed rule that would list 

Trichoderma reesei QM6a derivatives and Bacillus amyloliquefaciens at 40 CFR 725.420 as eligible for 

Tier I and Tier II exemptions. The proposed rule is expected to generate a cost savings for organizations 

that in the absence of the proposed rule would submit Microbial Commercial Activity Notices for new 

intergeneric T. reesei or B. amyloliquefaciens strains. As shown in Table 4-17 and Table 4-18 in Chapter 

4: , EPA expects the proposed rule to result in an industry burden reduction of 30,700 hours and $1.98 

million (before discounting) over a ten-year period. In addition to the immediate cost savings from 

submitting a Tier I or Tier II notice as opposed to an MCAN, the reduced cost and review times may 

increase innovation in the biotechnology industry. Ways in which reporting costs and lead times may 

affect the industry R&D process and the potential benefits of enhanced innovation are discussed in 

Chapter 4: of this report. There may be environmental and health benefits resulting from improved 

innovation affecting areas such as cellulosic ethanol production. As discussed in Section 2.4 of this report, 

costs savings generated by the proposed rule may be passed on to customers, reducing the cost of end 

products. The proposed rule is also expected to generate an Agency burden reduction of 41,900 hours and 

$3.646 million (before discounting) for the ten-year period, as calculated in Chapter 4.2. 

6.1.1 Quantified Social Cost Savings 

This section summarizes the quantified costs savings to society. To estimate the burden reduction, the 

report adds the total industry burden hours to the total Agency burden and calculates burden savings from 

the rule. Table 6-1 below contains the annual burden hour estimates for the ten-year period. 

The baseline total burden for the ten-year period is calculated by adding the baseline burden to 

industry, 29,760 hours (see Table 4-17), and the baseline burden to the Agency, 44,609 hours (see Table 

5-6), for a total of 74,409 hours. EPA estimates that the total industry burden reduction under the 

proposed rule will be approximately 27,859 hours over the ten-year period (see Table 4-17) and the total 

Agency burden reduction will be 41,869 hours (see Table 5-6). Therefore, as shown in Table 6-1, EPA 

estimates that the total decrease in burden as a result of the proposed rule over a ten-year period will be 

72,500 hours, with an annual average savings of 7,250 hours. 
 57

Table 6-1: Change in Total Burden Hours to Society Due to Rule 

Year 

Base Case 

Burden 

(hours) 

Rule Case 

Burden 

(hours)

Change from Base 

Case 

(hours)

Year 1 4,914 296 -4,618 

Year 2 4,914 216 -4,698 

Year 3* 6,142 705* -5,438 

Year 4 6,142 270 -5,872 

Year 5 7,371 344 -7,026 

Year 6* 7,371 759* -6,612 

Year 7 8,599 378 -8,221 

Year 8 9,828 433 -9,395 

Year 9* 11,056 921* -10,135 

Year 10 11,056 507 -10,550 

Total 77,393 4,830 -72,564

Average 7,739 483 -7,256

Notes: 

*Rule case hours are higher in years 3, 6 and 9, due to assumed Tier II submissions in those years but not in other years. 

Source: Table 4-17 and Table 5-6 

The reduction of 72,500 burden hours over ten years is associated with a reduction in cost of $5.66 

million to society over the ten-year period. The cost to industry is expected to decrease by $1.98 million 

over this period (see Table 4-18), and the Agency cost is expected to decrease by $3.68 million (see Table 

5-7). The annualized cost savings to society, presented in Table 6-2, are estimated to be approximately 

$552,300 and $535,300 per year at three percent and seven percent discount rates, respectively. 

Table 6-2: Change in Total Costs to Society Due to Rule 

Year 

Base Case 

Burden 

(Thousands of 

2009$) 

Rule Case 

Burden 

(Thousands of 

2009$)

Change from Base 

Case 

(Thousands of 

2009$)

Year 1 $383.65 $23.40 -$360.26 

Year 2 $383.65 $17.94 -$365.72 

Year 3* $479.57 $53.86 -$425.70 

Year 4 $479.57 $22.42 -$457.14 

Year 5 $575.48 $28.27 -$547.21 

Year 6* $575.48 $58.35 -$517.13 

Year 7 $671.39 $31.39 -$640.00 

Year 8 $767.31 $35.87 -$731.43 

Year 9* $863.22 $71.80 -$791.42 

Year 10 $863.22 $41.72 -$821.50 

Total $6,042.54 $385.02 -$5,657.51 

Average $604.25 $38.50 -$565.75 

Annualized at 3% $590.02 $37.75 -$552.27 

Annualized at 

7% $572.04 $36.78 -$535.26 

Notes: 

*Rule case costs are higher in years 3, 6 and 9, due to assumed Tier II submissions in those years but not in other years. 
 58

Source: Table 4-18 and Table 5-7 

Note: Annual, total and average costs are taken before discounting 
 59

6.2 Health, Safety, and Environmental Costs and Benefits 

6.2.1 Benefits of New Intergeneric T. reesei and B. amyloliquefaciens 

Increased market entry and reduced delays in bringing products to market are expected to reduce the 

costs and/or improve the performance of enzymes made using intergeneric T. reesei and B. 

amyloliquefaciens, in areas such as ethanol production, the pretreatment and finishing of textiles, and in 

detergents. As stated in Sections 4.2.2, there are several environmental benefits to using enzymes in these 

applications as opposed to traditional chemicals. The use of cellulase T. reesei enzymes in textile 

pretreatment may reduce the amount of waste water generated, and the amount of energy and water used 

by textile plants that use traditional methods of treating garments (Blackburn, 2009). The use of enzymes 

from B. amyloliquefacien in laundry detergents as opposed to traditional chemicals (such as surfactants) 

has several environmental benefits including energy savings by enabling lower wash temperatures and the 

compaction of the product reducing the amount of packaging used (Novozymes, 2010b). In addition, 

enzymes are biodegradable, and are said by their suppliers to have no negative environmental impact on 

sewage treatment processes and to present no risk to aquatic life (Novozymes, 2010b). To the extent that 

intergeneric T. reesei and B. amyloliquefaciens are more efficient at producing certain enzymes than other 

microorganisms, the cost of some enzymes will decrease. Decreased cost and/or enhanced enzyme 

performance make it more likely that companies will use enzymes as opposed to more environmentally 

harmful substitutes. T. reesei has particular promise in the area of cellulosic ethanol production, discussed 

below. 

6.2.2 Benefits of Reducing the Cost of Cellulosic Ethanol 

Innovation resulting from the proposed rule is likely to decrease the cost of enzymes produced with T. 

reesei, and therefore reduce the cost of cellulosic ethanol,42 compared with the Base Case. Because 

cellulosic ethanol has lower greenhouse gas emissions than gasoline and corn-based ethanol, more use of 

cellulosic ethanol may lead to a reduction in greenhouse gas emissions relative to the Base Case.43 The 

potential negative environmental and health impacts of global warming are discussed in detail in Section 

4.2.2. While it is well beyond the scope of this report to quantify the potential benefits of greenhouse gas 

reductions as a result of the proposed rule, production and use of cellulosic ethanol appears to generate 

significantly less greenhouse gas emissions than production and use of gasoline and corn-based ethanol. 

Cellulosic ethanol is also thought to have additional benefits to society compared with both gasoline and 

corn-based ethanol, such as possibly decreased dependence on foreign oil, and less pressure on food 

prices versus corn ethanol. 

6.2.3 Rule Costs and Risks 

There is not expected to be any increase in health and safety risk associated with the proposed rule, as 

discussed in Chapter 3: . EPA’s risk assessments show that both T. reesei strain QM6a and its derivatives 

and B. Amyloliquefaciens microorganisms are not pathogenic or toxigenic and that they pose little risk to 

human health or the environment. On the contrary, as discussed earlier in this chapter, there may be 

health and environmental benefits from faster development of these microorganisms to better produce 

enzymes and other chemicals. 

 

42 Absolute cellulosic ethanol costs may rise or fall, depending on many other factors. 

43 Cellulosic ethanol is the same chemical as corn ethanol, but feedstocks and production processes differ. 

Comment [ccr4]: PLACEHOLDER 

PENDING RISK ASSESSMENT 
 60

There are no net quantified rule costs because the rule is expected to be cost-savings for both industry 

and the Environmental Protection Agency, as described earlier in this chapter.
 61

7 :Additional Analyses 

7.1 Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) of 1980, as amended by the Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on 

small entities. The RFA requires agencies to prepare an initial and final regulatory flexibility analysis for 

each rule unless the Agency certifies that the rule will not have a significant economic impact on a 

substantial number of small entities. Small entities include small businesses, small organizations, and 

small governmental jurisdictions. 

For the purposes of evaluating the rule’s impact on small businesses, manufacturers of non-medical 

microorganisms and enzymes are considered classified in NAICS 325199 (All Other Basic Organic 

Chemical Manufacturing). Ethanol production is classified in NAICS 325193 (Ethyl Alcohol 

Manufacturing) (U.S. Census, 2010). The Small Business Administration (SBA) defines small businesses 

in this category as companies with less than 1,000 employees. This analysis therefore considers as small 

those businesses whose employment totals, when combined with employment of a parent company, are 

less than 1,000 employees. With approximately 5,200 and 7,000 employees, respectively, neither 

Novozymes nor Danisco (the dominant suppliers of industrial enzymes and the companies submitting the 

applications to list T. reesei and B. amyloliquefaciens as candidates for exemptions) qualify as small 

businesses (Danisco, 2009; Novozymes, 2009). However, at least some other manufacturers of live 

microorganisms and their fermentation products are likely to meet the requirements of the small business 

definition. 44 For example, enzyme manufacturer Verenium had 270 full time employees in 2009 

(Verenium, 2010b). 

In determining whether a rule has a significant economic impact on a substantial number of small 

entities, the impact of concern is any significant adverse economic impact on small entities, since the 

primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives 

“which minimize any significant economic impact of the rule on small entities” (5 U.S.C. 603 and 604). 

Thus, an agency may certify that a rule would not have a significant economic impact on a substantial 

number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect 

on all of the small entities subject to the rule. 

A review of firms submitting past Tier I and Tier II notices suggests that both large and small 

businesses submit such notices. In addition, some toll manufacturers producing under contract with a 

large business submitter may be small businesses. 

Overall, this action is likely to reduce the burden to small businesses by reducing submission costs, 

compared to an MCAN and by removing the barrier to entry into TSCA applications markets for T. reesei

and B. amyloliquefaciens that may have been represented by the somewhat complex and costly MCAN 

process. Small firms may have fewer microorganisms over which to spread shared costs such as rule 

familiarization or maintaining specialized regulatory liaison staff. Being able to file a simple Tier I notice 

may help them even more than it would help a large business. 

 

44 Since enzymes are produced from live microorganisms, which multiply during fermentation, enzyme 

manufacturers are also “manufacturers” of live microorganisms. The same would be true of other firms that use live 

T. reesei or B. amyloliquefaciens to manufacture chemicals such as ethanol or biopolymers[OK LEGALLY?] 
 62

7.2 Unfunded Mandates Reform Act (UMRA) 

Federal agencies are required to assess the effects of federal regulations on state, local, or tribal 

governments, and on the private sector under Title II of the Unfunded Mandates Reform Act of 1995 

(UMRA). In particular, UMRA requires that agencies prepare a written statement to accompany any 

rulemaking that “includes any Federal mandate that may result in the expenditure by State, local, and 

tribal governments, in the aggregate, or to the private sector, of $100 million or more (annually adjusted 

for inflation) in any one year” (Section 202(a)). 

This report estimates that the proposed rule will not cost the private or public sectors $100 million or 

more in any one year. As shown in Table 4-18, this report estimates that a total cost saving of $1.98 

million (before discounting) will be generated by the proposed rule over a ten year period. Assuming a 

seven percent discount rate, the annualized cost savings for industry over the ten years is approximately 

$0.187 million per year.45 

Furthermore, a search of submissions received by EPA through September 30, 2010, demonstrated that 

state, local, or tribal governments have never submitted an MCAN, Tier I or Tier II notification. However, 

in the future such governments might make submissions or use live microorganisms covered by the 

proposed rule. An example could be use in cellulosic ethanol production. In such case, the rule would 

benefit the governments by improving the cost/effectiveness of the microorganisms. 

7.3 Paperwork Reduction Act (PRA) 

According to the Paperwork Reduction Act (PRA), 44 USC 3501 et seq., an agency may not conduct 

or sponsor, and a person is not required to respond to, a collection of information that requires Office of 

Management and Budget approval under the PRA, unless it has been approved by OMB and displays a 

valid OMB control number. The information collection requirements related to the submission of Tier I 

and Tier II notices are already approved by OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et 

seq. Those Information Collection Request documents have been assigned OMB control numbers 2070-

0012 and 2070-0038, according to information on the EPA Biotech Form used for electronic submissions 

(EPA, 2009c). This rule would not impose any new requirements. Rather, it reduces the amount of 

required reporting by allowing firms to submit less information for qualifying microorganisms. 

The Paperwork Reduction Act mandates that federal agencies estimate the recordkeeping and 

submitting burden of a proposed rule. In this context, the term “burden” is interpreted as the total time, 

effort, or financial resources expended by people to generate, maintain, retain, disclose, or provide 

information to or for a federal agency. This includes the time needed by regulated entities to review 

instructions and to develop, acquire, install, and use technology and systems to collect, validate, verify, 

and disclose information. Time taken to adjust existing ways to comply with any previously applicable 

instructions and requirements and to train personnel to respond to the information collection task is also 

included. In this section, burden hours for both industry respondents and the government are estimated. 

7.3.1 Industry Burden 

In this report, total industry burden hours represent the sum of time spent on preparing submissions 

and on other administrative activities. Industry respondents will spend time on the following activities 

associated with the biotechnology rule: rule familiarization, preparation and submission of certifications, 

and recordkeeping. 

 

45 Compliance costs are annualized using a 7 percent discount rate to reflect the opportunity cost of capital. 
 63

As derived in Section 0 of this report, the proposed rule would result in a reduction of industry burden 

by 30,695 hours over ten years. 

7.3.2 Government Burden 

The government will also spend time processing, reviewing, and analyzing the information that will 

be collected. As explained in Section 5.2.1, this work is assumed to be performed by a GS-14, Step 5, 

FTE employee, and by contractors. 

As derived in Section 4.2 of this report, the proposed rule would cause a total incremental Agency 

savings of 41,869 hours over ten years 

7.4 Executive Order 13132 - Federalism 

Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), requires EPA to 

develop an accountable process to ensure “meaningful and timely input by State and local officials in the 

development of regulatory policies that have federalism implications.” “Policies that have federalism 

implications” are defined in the Executive Order to include regulations that have “substantial direct 

effects on the States, on the relationship between the national government and the States, or on the 

distribution of power and responsibilities among the various levels of government.” 

EPA has no information to indicate that any state or local government commercially manufactures or 

processes the microorganisms covered by this action. No MCANs, Tier I, or Tier II notifications have 

been submitted by state or local governments.46 If a state or local government were to use live 

microorganisms covered by this rule, they would likely benefit from reduced submission cost and/or 

improved cost-effectiveness of the microorganisms. 

7.5 Executive Order 13045 – Children’s Health 

Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” 

(62 FR 19885, April 23, 1997), requires that federal agencies examine the impacts of each regulatory 

action on children for any economically significant regulation that the Agency has reason to believe may 

disproportionately affect children. 

The proposed rule is not “economically significant;” it does not establish an environmental standard 

intended to mitigate health or safety risks and will not have an annual effect on the economy of $100 

million or more. It is not expected to have any direct environmental or health impacts, and any indirect 

effects are expected to be beneficial. 

7.6 Executive Order 13175 – Consultation and Coordination with 

Indian Tribal Governments 

In the development of Federal policies that may have tribal implications, Agencies must establish 

regular and meaningful consultation and collaboration with tribal officials to strengthen the United States 

government-to-government relationships with Indian tribes, and to reduce the imposition of unfunded 

mandates upon Indian tribes. 

 

46 Data is for submissions through September 30, 2010. 
 64

A search of past submissions to EPA demonstrated that tribal governments have never submitted an 

MCAN, Tier I or Tier II notification.47 Thus, EPA has no information to indicate that any tribal 

government commercially manufactures the microorganisms covered by this action. If in the future tribal 

organizations use intergeneric microorganisms covered by the proposed rule, or their enzyme products, to 

produce ethanol, the proposed rule is likely to provide benefits in the form of more cost-effective 

microorganisms or enzymes. 

7.7 Executive Order 13211 – Energy Supply, Distribution, or Use 

Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy 

Supply, Distribution, or Use (66 FR 28355 [May 22, 2001]) requires Agencies to prepare a Statement of 

Energy Effects for any action that is likely to have a significant adverse effect on the supply, distribution, 

or use of energy. 

The Agency expects that if there is any effect of this rule on the Nation’s energy supply, distribution, 

and use, it would be modest and positive; the rule may encourage development of more cost-effective 

technologies for fuel ethanol production. 

7.8 National Technology Transfer Advancement Act 

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public 

Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its 

regulatory activities unless to do so would be inconsistent with applicable law or impractical. Voluntary 

consensus standards are technical standards (e.g., materials specifications, test methods, sampling 

procedures, and business practices) that are developed or adopted by voluntary consensus standards 

bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides 

not to use available and applicable voluntary consensus standards. 

This proposed action does not involve any technical standards that would require Agency 

consideration of voluntary consensus standards pursuant to the NTTAA. It does not add any new 

regulatory requirements. Rather, it lists additional microorganisms eligible for exemptions under an 

existing biotechnology rule promulgated in 1997.

 

47 Data is for submissions through September 30, 2010. 
 65

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MCAN, 2010. Microbial Commercial Activity Notice submitted to EPA. (The submitter name is 

confidential business information.) 

Moller, 2006. Ralf Moller. “Cell Wall Saccharification”. Available at 

http://epobio.net/pdfs/0611CellWallSaccharificationReport_c.pdf. 

NCEP, 2003. National Center for Energy Policy, “Cellulosic Ethanol Fact Sheet.” July 13. 

Novo Nordisk, 1997. Novo Nordisk, “Letter of Application with information on B. amyloliquefaciens 

requesting this organism be included in § 725.40 as a candidate recipient microorganism for tiered 

exemption.” November 7. 

Novozymes, 2009. Novozymes A/S. The Novozymes Report 2009. Available at 

http://report2009.novozymes.com. Accessed March 1, 2010. 

Novozymes, 2010a. Novozymes A/S. Company website. Available at http://www.novozymes.com/en. 

Accessed March 1, 2010. 

Novozymes, 2010b. Novozymes A/S. “Detergent enzymes”. Available at 

http://www.novozymes.com/en/MainStructure/AboutUs/Positions/Detergent+enzymes.htm. Accessed 

September 27, 2010. 

OPM, 2009. Office of Personnel Management, Salary Table 2009-DCB, Washington Baltimore-Northern 

Virginia, DC-MD-PA-VA-WV. Accessed from http://www.opm.gov/oca/09tables/pdf/DCB.pdf. 

Peckous, 1999. Termamyl SC: A Novel alpha-amylase for liquefaction of whole grain, by Larry W. 

Peckous, Novozymes Biochem, Presented at the 10999 Starch Convention in Detmold, Germany. 

Comment [ccr5]: Can add MCAN # from 

sanitized version once it is added to docket. 
 69

Polaina and McCabe, 2007. Polaina, Julio and Andrew P. McCabe. Industrial Enzymes: Structure, 

Function, and Applications. Springer Netherlands, 2007. 

Purdue, 2004. “Purdue Yeast make Ethanol from Agricultural Waste more Effective”. Purdue News, June 

28, 2004. Available at www.purdue.edu. 

Rao et al., 1998. Rao, Mala B., Aparnam M. Tanksale, Mohini S. Ghatage, Vasanti V. Deshpande. 

“Molecular and Biotechnological Aspects of Microbial Proteases.” Microbiology and Molecular 

Biology Reviews, 62(3): 597-635, 1998. 

Slade, 2010. Slade, Raphael. Cleantech Magazine. “Low cost enzymes could catalyze a revolution in 

ethanol production.” March/April 2010. Available at 

http://www.cleantechinvestor.com/portal/biofuels/5164-enzymes.html. Accessed August 27, 2010. 

Smith and Suh, 2008. Smith, Timoth M., Sangwon Sun. “Environmental and Economic Assessment of 

Ethanol Production Systems in Minnesota: Final Report to the Minnesota Pollution Control Agency.” 

March 19, 2007. University of Minnesota. 

Solvay, 1996. Solvay Group Sells Its Industrial Enzymes Business to Genencor, July 1, 1996. Available 

at http:www.solvaypress.com. Accessed November 11, 2010. 

Uhlig, 1998. Helmut Uhlig Industrial Enzymes and their Applications. John Wiley & Sons. New York, 

NY. 1998. 

Uniprot, 2010. UniprotKB protein knowledgebase, on line at http://www.uniprot.org/. Accessed 

November 7, 2010. (The Uniprot consortium is supported by the U.S. National Institutes of Health, 

the European Commission, and other European and U.S. organizations.) 

Verenium, 2010a. Verenium Corporation. Company website. Available at http://www.verenium.com. 

Accessed March 1, 2010. 

Verenium, 2010b. Verenium Corp Form 10-K (Annual Report): Filed 03/16/10 for the Period Ending 

12/31/09. Available at http://www.verenium.com. Accessed November 11, 2010.
 A-1

Appendix A : Industry Burden and Cost in Years Two 

through Ten 

Industry Burden Hours 

This appendix contains tables that derive the industry burden for Years 2 through 10 of the rule. (The 

Year 1 burden was presented in Chapter 4 , Table 4-15.) Burden estimates are calculated following the 

method outlined for Year 1 in Section 4.1.6 of this report. EPA assumed that companies would send more 

Tier I submissions than Tier II submissions. This analysis assumed that there would be a Tier II 

submission every three years and that an additional firm will make a submission in Years 5 and 10. Table 

4-17 presented the change in burden hours for all ten years. Table A-1 through Table A-9 present the 

change in burden hours for Years 2 through 10. 

Table A-1: Base Case and Change in Industry Burden Hours (Year 2) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 4 520 2,082 0 0 -2,082 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 4 76 76 

Total 4 - 2,082 4 76 -2,006 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Burden (Rule Familiarization Burden + Submission Burden) 

Total - - 2,089 - 76 -2,006 

Source: Number of submissions, Table 4-13. Hours per submission, . 
 A-2

Table A-2: Base Case and Change in Industry Burden Hours (Year 3) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 5 520 2,602 0 0 -2,602 

Tier II 0 276 0 1 276 276 

Tier I 0 19 0 4 76 76 

Total 5 - 2,602 5 352 -2,250 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 2,602 - 352 -2,250 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 

Table A-3: Base Case and Change in Industry Burden Hours (Year 4) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 5 520 2,602 0 0 -2,602 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 5 95 95 

Total 5 - 2,602 5 95 -2,507 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 2,602 - 95 -2,507 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 
 A-3

Table A-4: Base Case and Change in Industry Burden Hours (Year 5) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 6 520 3,122 0 0 -3,122 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 6 114 114 

Total 6 - 3,122 6 114 -3,008 

Rule Familiarization Burden 

Total - - 0 - 20 20 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 3,122 - 134 -2,988 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 

Table A-5: Base Case and Change in Industry Burden Hours (Year 6) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 6 520 3,122 0 0 -3,122 

Tier II 0 276 0 1 276 276 

Tier I 0 19 0 5 95 95 

Total 6 - 3,122 6 371 -2,751 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 3,122 - 371 -2,751 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 
 A-4

Table A-6: Base Case and Change in Industry Burden Hours (Year 7) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 7 520 3,643 0 0 -3,643 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 7 133 133 

Total 7 - 3,643 7 133 -3,510 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 3,643 - 133 -3,510 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 

Table A-7: Base Case and Change in Industry Burden Hours (Year 8) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 8 520 4,163 0 0 -4,163 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 8 152 152 

Total 8 - 4,163 8 152 -4,011 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 4,163 - 152 -4,011 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 
 A-5

Table A-8: Base Case and Change in Industry Burden Hours (Year 9) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 9 520 4,683 0 0 -4,683 

Tier II 0 276 0 1 276 276 

Tier I 0 19 0 8 152 152 

Total 9 - 4,683 9 428 -4,255 

Rule Familiarization Burden 

Total - - 0 - 0 0 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 4,683 - 428 -4,255 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 

Table A-9: Base Case and Change in Industry Burden Hours (Year 10) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Burden 

(hours) 

Base 

Case 

Total 

Industry 

Burden

(hours) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Burden

(hours) 

Change 

in 

Industry 

Burden 

(hours) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 9 520 4,683 0 0 -4,683 

Tier II 0 276 0 0 0 0 

Tier I 0 19 0 9 171 171 

Total 9 - 4,683 9 171 -4,512 

Rule Familiarization Burden 

Total - - 0 - 20 20 

Total Industry Cost (Rule Familiarization Burden + Submission Burden) 

Total - - 4,683 - 191 -4,492 

Source: Number of submissions, Table 4-13. Hours per submission, Table 4-15. 
 A-6

Industry Cost 

This section contains tables that derive the industry cost for Years 2 through 10 of the rule. . (The 

Year 1 cost was presented in Chapter 4: , Table 4-16.) Cost estimates are calculated following the method 

outlined for Year 1 in Section 4.1.6 of this report. This analysis assumed that there would be a Tier II 

submission every three years and that an additional firm will make a submission in Years 5 and 10. Table 

4-18 presents the change in burden hours for all ten years. The tables located below, Table A-10 through 

Table A-18, present the change in burden hours for Years 2 through 10. 

Table A-10: Base Case and Change in Industry Cost (Year 2) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Cost 

($2009) 

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 4 $33,576 $134,305 0 $0 -$134,305 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 4 $5,089 $5,089 

Total 4 - $134,305 4 $5,089 -$129,216 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $134,305 - $5,089 -

$129,216 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

Table A-11: Base Case and Change in Industry Cost (Year 3) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Cost 

 ($2009) 

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 5 $33,576 $167,881 0 $0 -$167,881 

Tier II 0 $16,504 $0 1 $16,504 $16,504 

Tier I 0 $1,272 $0 4 $5,089 $5,089 

Total 5 - $167,881 5 $21,593 -$146,288 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 
 A-7

Total - - $167,881 - $21,593 -

$146,288 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

Table A-12: Base Case and Change in Industry Cost (Year 4) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Cost 

 ($2009) 

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 5 $33,576 $167,881 0 $0 -$167,881 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 5 $6,361 $6,361 

Total 5 - $167,881 5 $6,361 -$161,520 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $167,881 - $6,361 -

$161,520 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

Table A-13: Base Case and Change in Industry Cost (Year 5)

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Cost 

 ($2009) 

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 6 $33,576 $201,458 0 $0 -$201,458 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 6 $7,633 $7,633 

Total 6 - $201,458 6 $7,633 -$193,824 

Rule Familiarization Cost 

Total - - $0 - $1,365 $1,365 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $201,458 - $8,998 -

$192,459 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16 
 A-8

Table A-14: Base Case and Change in Industry Cost (Year 6) 

Submission 

Type

Base Case 

Number of 

Annual 

Submissions

Base Case 

Per 

Submission 

Cost 

 ($2009) 

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 6 $33,576 $201,458 0 $0 -$201,458 

Tier II 0 $16,504 $0 1 $16,504 $16,504 

Tier I 0 $1,272 $0 5 $6,361 $6,361 

Total 6 - $201,458 6 $22,865 -$178,592 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $201,458 - $22,865 -

$178,592 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

Table A-15: Base Case and Change in Industry Cost (Year 7) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Cost 

 ($2009)

Base 

Case 

Total 

Industry 

Cost 

($2009)

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009)

Change 

in 

Industry 

Cost 

($2009)

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 7 $33,576 $235,034 0 $0 -$235,034 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 7 $8,906 $8,906 

Total 7 - $235,034 7 $8,906 -$226,128 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $235,034 - $8,906 -

$226,128 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 
 A-9

Table A-16: Base Case and Change in Industry Cost (Year 8) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Cost 

 ($2009)

Base 

Case 

Total 

Industry 

Cost 

($2009)

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009)

Change 

in 

Industry 

Cost 

($2009)

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 8 $33,576 $268,610 0 $0 -$268,610 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 8 $10,178 $10,178 

Total 8 - $268,610 8 $10,178 -$258,432 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $268,610 - $10,178 -

$258,432 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

Table A-17: Base Case and Change in Industry Cost (Year 9) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Cost 

 ($2009)

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 9 $33,576 $302,186 0 $0 -$302,186 

Tier II 0 $16,504 $0 1 $16,504 $16,504 

Tier I 0 $1,272 $0 8 $10,178 $10,178 

Total 9 - $302,186 9 $26,682 -$275,504 

Rule Familiarization Cost 

Total - - $0 - $0 $0 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $302,186 - $26,682 -

$275,504 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 
 A-10

Table A-18: Base Case and Change in Industry Cost (Year 10) 

Submission 

Type 

Base Case 

Number of 

Annual 

Submissions 

Base Case 

Per 

Submission 

Cost 

 ($2009)

Base 

Case 

Total 

Industry 

Cost 

($2009) 

Rule Case 

Number of 

Annual 

Submissions

Rule 

Case 

Total 

Industry 

Cost 

($2009) 

Change 

in 

Industry 

Cost 

($2009) 

Notice Preparation, Submission and Recordkeeping for T. reesei and B. amyloliquefaciens 

MCAN 9 $33,576 $302,186 0 $0 -$302,186 

Tier II 0 $16,504 $0 0 $0 $0 

Tier I 0 $1,272 $0 9 $11,450 $11,450 

Total 9 - $302,186 9 $11,450 -$290,736 

Rule Familiarization Cost 

Total - - $0 - $1,365 $1,365 

Total Industry Cost (Rule Familiarization Cost + Submission Cost) 

Total - - $302,186 - $12,815 -

$289,371 

Source: Number of submissions, Table 4-13. Cost per submission, Table 4-16. 

 
 B-1

Appendix B : Production and Substitute Information 

for Cellulosic and Corn-Based Ethanol 

This appendix briefly discusses the production and use of T. Reesei in cellulosic and corn-based 

ethanol, as well as the commercial substitutes for ethanol from both corn and cellulosic biomass. 

Corn-Based Ethanol Production 

Corn-based ethanol is produced from the corn kernels, the starchy part of the corn plant. T. reesei is 

used in the commercial manufacturing of corn-based fuel ethanol. Fuel ethanol is mostly produced using a 

dry mill process. In the dry mill process the corn ethanol is first ground into “meal.” The meal is moved 

into a slurry tank where it is mixed with water and other ingredients including the hydrolyzing enzyme, a 

thermostable alpha-amylase (Kwiatkowski et al., 2005). This enzyme has been commercially produced 

using Bacillus licheniformis (Peckous, 1999) and T. reesei (Genencor, 2008). The slurry is then liquefied 

using heat and the alpha-amylase enzyme, which breaks the corn starch into olosaccharides known as 

dextrins. 

The dextrins are then moved into the saccharification tank where the glucoamylase enzymes are 

added to further hydrolyze the dextrins into fermentable sugars (Kwiatkowski et al., 205). Glucoamylase 

enzymes used in corn-based ethanol production have been produced commercially using A. niger

(Genencor, 2008). However, patents have been issued for the use of T. reesei in the production of the 

glucoamylase enzymes (Danisco Patent, 2009). 

As described by Kwiatkowski et al, the slurry with glucose is then moved into the fermentation tanks 

where it is fermented using yeast, and creates “beer.” This beer is moved into the beer column where the 

ethanol is recovered. In the final step, the recovered ethanol moved into a new tank where it is mixed with 

about 5 percent gasoline (denaturant) to create fuel ethanol (Kwiatkowski et al., 2005). 

Figure 2: Simplified corn-based ethanol dry mill production process 

Glucoamylase 

enzymes from A. niger

or other microbes 

Alpha-amylase 

enzymes from B. 

licheniformis T. reesei, 

or other microbes

Yeast 

1. 

Corn 

Grind 

2. 

Liquefaction 

with Enzymes 

and Heat

3. 

Saccharification 

4. 

Fermentation 

5. 

 Ethanol 

recovery 

from “beer” 
 B-2

Cellulosic Ethanol Production Steps 

Cellulosic ethanol is produced from the non-starchy portions of corn plants, such as cornstalks, and 

from other inedible biomass such as wood chips, sugarcane waste, and grass. 

In cellulosic ethanol production, the hard cell wall of the feedstock is fermented into ethanol. The cell 

wall consists of chain polymers known as microfibrils. These microfibrils are composed of three main 

parts: (1) the hard cellulose, (2) the soft hemicellulose, and (3) irregular lignin. 

Both the five-carbon sugars (pentoses) from the hemicellulose and the six-carbon sugars from the 

cellulose are fermented into ethanol. The lignin is discarded or used to generate steam for the ethanol 

process. The main steps in converting the cellulosic biomass into ethanol via biochemical production are 

discussed below. 

The process described below is a generic process that may not apply to every situation, and some 

practices may be replaced by newer technologies: 

Step 1: Biomass Handling - The biomass feedstock (wood, switchgrass, cornstalks, etc.) is reduced 

in size for more efficient processing (DOE, 2009c). 

Step 2: Biomass Pretreatment - The biomass is then pretreated to open up the lignocellulose, 

making hemicellulose and cellulose more accessible to being broken down later by enzymes (Knauf 

and Moniruzzaman, 2004). A common process known as the dilute acid process hydrolyzes much of 

the hemicellulose —but not the cellulose—into sugars (Knauf and Moniruzzaman, 2004). 

Step 3: Enzymatic hydrolysis - Cellulase enzymes, typically from T. reesei, catalyze the degradation 

of cellulose into glucose, a 6-carbon sugar. This enzymatic hydrolysis reaction is also known as 

cellulose saccharification (DOE, 2009c). Cellulose is made up of units of the simple sugar, glucose. A 

number of enzymes are needed to degrade cellulose to glucose, including endogluconases, 

exogluconases, cellobiohydrolases which release cellobiose (disaccharides of two glucoses) from 

crystalline cellulose, and beta-glucosidases (which cleave cellobiose to glucose) (Knauf and 

Moniruzzaman, 2004, p.148). 

Enzymes also break down the complex sugars of the hemicellulose into simple sugars. Hemicellulose 

from agricultural wastes such as corn stover is predominately made up of the five-carbon sugar, 

xylose, but also includes arabinose [five-carbon], galactose [six carbon], and mannose [six carbon]. 

Xylanases and other hemicellulases break down hemicellulose to xylose and other sugars. (Moller, 

2006 p.11). 

Cellulase enzymes are grown in-house or purchased from a commercial enzyme company (DOE, 

2009c) 

Step 4: Fermentation - After enzymatic hydrolysis, the six-carbon glucose is converted to ethanol 

and CO2 through fermentation. Commonly this uses a yeast, Saccharomyces cerevisiae. 

The five-carbon (pentose) sugars such as xylase that were released from hemicellulose can also be 

fermented to ethanol. The conventional fermentation organism, S. cerevisiae, can use only the sixcarbon sugar, glucose. However, genetically modified bacteria such as Z. mobilis or E. coli or a 

genetically modified Saccharomyces (yeast) can ferment both five-carbon and six-carbon sugars 

(Knauf and Moniruzzaman, 2004; DOE, 2009a; Purdue, 2004). 

The hydrolysis of amorphous cellulose into glucose (saccharification) and fermentation to ethanol can 

be combined in one process (Knauf and Moniruzzaman, 2004 p.149). 

Step 5: Ethanol Recovery - The ethanol-CO2 mixture from fermentation is sent to a distiller. 

Impurities such as lignin and residual ligninocellulosic biomass are removed from the ethanol broth 
 B-3

and may be used to produce energy for the ethanol plant. Any bacterial organisms in the ethanol are 

heated and killed during this process. All water is also removed from the mixture, recovering only the 

ethanol (DOE, 2009c). 

Non-biological Alternatives for Producing Cellulosic Ethanol 

In addition to enzymatic hydrolysis, other methods for producing cellulosic ethanol from biomass 

include acid hydrolysis and gasification. Acid hydrolysis uses an acid bath to break the hemicellulose and 

cellulose in biomass into simple xylose and glucose sugars, which are subsequently fermented into 

ethanol. Gasification uses wood chips as feedstock and uses pressure “to create a synthesis gas ... that is 

passed over a catalyst to make ethanol” (CEN, 2009). None of these technologies are currently considered 

cost-competitive with corn ethanol or gasoline (CEN, 2009). 

Those supporting the T. reesei application asserted the following: 

 [T]here simply is no viable chemical alternative to enzymes for a commercially feasible process to obtain 

quality saccharides in sufficient yields. Mineral acids such as hydrochloric and sulfuric acids have been tried for 

years, but the quality and the yields of products is simply far too low using this route to be commercially 

feasible. In addition, a “chemical” approach adds an environmental burden through the generation of chemical 

waste and the significant costs associated with disposal” (BIO and ETA, 2010, p.9). 

However, as with cellulosic ethanol, it is possible that non-biological technologies could become 

competitive in the future. In 2007, the U.S. Department of Energy (DOE) awarded grants to six cellulosic 

ethanol producers to develop and test these ethanol production methods (CEN, 2009). Range Fuels, one 

of the grant recipients, is constructing a large-scale gasification plant for operation in 2010, and BlueFire 

Ethanol, another recipient, is negotiating for a permit to build an acid hydrolysis plant in the near future 

(CEN, 2009). 

Substitutes for Fuel Ethanol 

Gasoline is the fuel alternative to ethanol. Gasoline has more energy per unit than ethanol, can be 

transported in current pipelines, and can be used in current engines. At present gasoline is less expensive 

per mile, although this can change with fluctuations in gas prices. Due to its chemical makeup, ethanol 

cannot be transported in current pipelines nor used in conventional auto engines beyond a certain 

percentage of the gasoline/ethanol mix. On the other hand, ethanol provides an octane boost to gasoline. 

In this function, it replaces Methyl tert-Butyl Ether (MTBE), which has raised concerns when found in 

drinking water supplies. 

From a societal viewpoint, cellulosic ethanol is thought to have environmental advantages over corn 

ethanol and gasoline, especially lower greenhouse gas emissions. Compared with corn ethanol, depending 

on the feedstock, it is also likely to use less fertilizer (see Section 4.2.2). 

Domestic cellulosic ethanol production may decrease U.S. dependency on foreign oil supplies. Unlike 

corn ethanol, the feedstocks used in cellulosic ethanol production (corncobs, or crops grown for 

specifically for ethanol production, such as grasses or wood) are not human food crops (DOE, 2009b), so 

increased demand for cellulosic ethanol feedstock may put less upward pressure on food prices. These 

crops may be grown on land that is unsuitable for growing other crops and it generally takes less energy 

to produce cellulosic ethanol biomass than sugar and starch based biomass (DOE, 2009b).