*** EO 12866 Review Draft

– Deliberative

– Do Not Cite, Quote or Release During Review ***



# Economic Analysis for the TSCA Section 8(a) Proposed Reporting Requirements for Certain
Chemical Substances as Nanoscale Materials

RIN 2070

– AJ54

DRAFT

September 2 6 , 2014

EO12866_Nano Section 8(a) _ NPRM_EA_9

- 26

- 14.docx



## -- 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, DC 20460*** EO 12866 Review Draft

– Deliberative

– Do Not Cite, Quote or Release During Review ***



### This Page Intentionally Left Blank

## Contributors

The EPA analyst s responsible for this report are Kristen Loughery and Lynne Blake

- Hedges 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.

### i 

## Table of Contents

Table of Contents

................................ ................................ ................................ ................................ ......... i

Table of Figures

................................ ................................ ................................ ................................ .......... iii

Executive Summary

................................ ................................ ................................ ................................ ... iv

Chapter 1

– Introduction

................................ ................................ ................................ ......................... 1

- 1

1. 1 Statutory Authority

................................ ................................ ................................ ....................... 1

- 1

1.2 Regulatory and Programmatic Background

................................ ................................ .................. 1

- 1

1.3 Statement of Need

................................ ................................ ................................ ......................... 1

- 3

1.4 Su mmary of Methodology

................................ ................................ ................................ ............ 1

- 4

1.5 Organization of This Report

................................ ................................ ................................ ......... 1

- 5

Chapter 2

– Affected Entities

................................ ................................ ................................ .................. 2

- 1

2.1 Chemical Substances Subject to this Rule

................................ ................................ .................... 2

- 1

2.2 The Regulated Community

................................ ................................ ................................ ........... 2

- 1

2.3 Estimated Number of Large (non

- Small) and Small Business

................................ ..................... 2

- 4

2.4 Estimated Number of Nanomaterials per Company

................................ ................................ ..... 2

- 6

Chapter 3

– Industry Compliance Costs

................................ ................................ ................................ 3

- 1

3.1 Introduction

................................ ................................ ................................ ................................ ... 3

- 1

3.2 Wage Rates

................................ ................................ ................................ ................................ ... 3

- 1

3.3 Unit Industry Compliance Costs

................................ ................................ ................................ ... 3

- 1

3.4 Discounting Methods

................................ ................................ ................................ .................... 3

- 7

3.5 Total Industry Compliance Costs

................................ ................................ ................................ .. 3

- 8

Chapter 4

– Agency Costs

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

- 1

4.1 Introduction

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

- 1

4.2 EPA Co sts

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

- 1

Chapter 5

– Total Social Costs and Sensitivity Analyses

................................ ................................ ...... 5

- 1

Chapter 6

- Sensitivity Analyses

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

- 1

6.1 Annual Industry Growth Rate

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

- 1

6.2 Number of Nanomaterials per Firm

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

- 6

6.3 Annual Nanomaterials Growth Rate

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

- 12

6.4 Summary of all Analyses

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

- 17

Chapter 7

– Benefits

................................ ................................ ................................ ................................ . 7

- 1

7.1 Market Failure

................................ ................................ ................................ ............................... 7

- 1

7.2 Benefits of Information

- Based Policies

................................ ................................ ........................ 7

- 1

7.3 Potential Users of Information Generated by the Proposed Rule

................................ ................. 7

- 3

Chapter 8

– Small Entity Impact Analysis

................................ ................................ ............................ 8

- 1

8.1 Select a Relevant Small Business Definition

................................ ................................ ................ 8

- 1

8.2 Identify the Small Business Population

................................ ................................ ........................ 8

- 2

8.3 Estimate the Cost

- to

- Sales Ratio for Small Companies

................................ ................................ 8

- 4

Chapter 9

– Other Impact Analyses

................................ ................................ ................................ ....... 9

- 1

9.1 Paperwork Reduction Act (PRA)

................................ ................................ ................................ .. 9

- 1

9.2 Unfunded Mandates Reform Act (UMRA)

................................ ................................ .................. 9

- 1

9.3 Executive Order 13132

– Federalism

................................ ................................ ............................ 9

- 2

9.4 Executive Order 13175

– Consultation and Coordination with Indian Trib al Governments

........ 9

- 2

9.5 Executive Order 13045

– Children’s Health

................................ ................................ ................. 9

- 2

9.6 Executive Order 12898

– Environmental Justice

................................ ................................ .......... 9

- 2

9.7 Executive Order 13211

– Energy Supply, Distribution, or Use

................................ .................... 9

- 3

9.8 National Technology Transfer and Adv ancement Act

................................ ................................ .. 9

- 3

### ii

Appendix A

– Wage Rate Calculations

................................ ................................ ............................... A

- 1

A.1 Derivation of Industry Unit Wage Rates

................................ ................................ ...................... A

- 1

A.2 Derivation of Agency Unit Wage Rates

................................ ................................ ...................... A

- 2

Appendix B

– Small Business Sensitivity Analysis

................................ ................................ ............. B

- 1

B.1 Estimation of the number of nanomaterials per small Firm

................................ ......................... B

- 1

B.2 Conclusions

................................ ................................ ................................ ................................ .. B

- 2

Appendix C

- References

................................ ................................ ................................ ...................... C

- 1

### iii 

## Table of Figures

Table 1

- 1: TSCA

- authorized Reporting Requirements

................................ ................................ .............. 1

- 1

Table 2

- 1: Sample Small Business and Large Business Characteristics

................................ .................... 2

- 5

Table 2

- 2: Estimated Universe Small Business and Large Businesses

................................ ...................... 2

- 5

Table 2

- 3: Estimated Nanomaterials per Firm, with R&D Exclusion

................................ ....................... 2

- 7

Table 3

- 1: Loaded Industry Wage Rates, 2013$

................................ ................................ ........................ 3

- 1

Table 3

- 2: Industry One

- Time Cost Estimate to Familiarize with the Rule (2013$) (per Firm)

............... 3

- 2

Table 3

- 3: Industry Burden Estimate to Complete the Proposed Form (per Report)

................................ . 3

- 3

Table 3

- 4: Industry Cost Estimate to Complete the Proposed Form (2013$) (Per Report)

....................... 3

- 3

Table 3

- 5: Industry Bu rden and Cost of Electronic Reporting Requirements

................................ ........... 3

- 6

Table 3

- 6: Industry Burden and Cost of Electronic Reporting Requirements (Subsequent Years, per Firm) (2013$)

................................ ................................ ................................ ................................ ................ 3

- 6

Table 3

- 7: Industry Cost Estimate to Maintain Records (2013$) (per Report)

................................ .......... 3

- 7

Table 3

- 8: Total Annual Industry Burden Hours

................................ ................................ ....................... 3

- 8

Table 3

- 9: Total Annualized Industry Costs

................................ ................................ ............................ 3

- 10

Table 4

- 1: Estimate of Agency Hours for the Proposed Rule

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

- 1

Table 4

- 2: Agency Cost and Burden Hour Estimate for the Proposed Rule

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

- 2

Table 5

- 1: Total Social Burden and Cost of the Proposed Rule

................................ ................................ 5

- 1

Table 6

- 1: Estimated Number of Reports (Increased Annual Growth Rate Scenario)

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

- 1

Table 6

- 2: Total Annual Industry Labor Burden (Increased Annual Growth Rate Scenario)

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

- 3

Table 6

- 3: Annual Industry Labor Costs (Increased Annual Growth Rate Scenario)

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

- 4

Table 6

- 4: Agency Cost Estimate for the Proposed Rule (Increased Annual Growth Rate Scenario)

...... 6

- 5

Table 6

- 5: Total Social Costs for the Proposed Rule (Increased Annual Growth Rate Scenario)

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

- 5

Table 6

- 6: Estimated High

- and Low

- End Estimated Number of Commercially Relevant Nanomaterials per Firm

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

- 6

Table 6

- 7: Total Annual Industry Burden Hours (Low

- and High

- End Nanomaterials Estimates Scenario)

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

- 8

Table 6

- 8 : Annual Industry Labor Costs (Low

- and High

- End Nanomaterials Estimates Scenario)

........ 6

- 9

Table 6

- 9: Agency Cost Estimate for the Proposed Rule (Low

- and High

- End Nanomaterials Estimates Scenario)

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

- 10

Table 6

- 10: Total Social Costs for the Proposed Rule

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

- 11

Table 6

- 11: Total Industry Burden Hours (Increased Nanomater ials Growth Scenario)

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

- 13

Table 6

- 12: Annual Industry Labor Costs (Increased Nanomaterials Growth Scenario)

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

- 14

Table 6

- 13: Agency Cost Estimate for the Proposed Rule (Increased Nanomaterials Growth Scenario) 6

- 15

Table 6

- 14: Total Social Costs for the Proposed Rule

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

- 16

Table 6

- 15: Comparison of Annualized Costs of Sensitivity Analysis (Millions 2013$)

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

- 17

Table 8

- 1: Sam

ple Small Business and Large Business Characteristics

................................ .................... 8

- 3

Table 8

- 2: Universe Small Business and Large Business Estimates

................................ ......................... 8

- 4

Table 8

- 3: Characterization of Economic Impacts

................................ ................................ ..................... 8

- 4

Table 8

- 4: Estimate of Impacts on Small Business Sample

................................ ................................ ....... 8

- 5

Table 9

- 1: Industry Burden Estimates for the Propo sed Rule

................................ ................................ .... 9

- 1

Exhibit A

- 1: Detail of Labor Categories Used in the Analysis

................................ ................................ . A

- 1

Exhibit A

- 2: Derivation of Loaded Industry Wage Rates

................................ ................................ ......... A

- 2

Exhibit A

- 3: Derivation of Loaded Agency Wage Rates

................................ ................................ .......... A

- 3

Exhibit B

- 1: Number of Nanomaterials per Company after the R&D Exclusion

................................ ..... B

- 1

### iv 

## Executive Summary

This economic analysis estimates and evaluates the costs and benefits of c ollectin g information for

nanomaterials through a rule proposed by the U.S. Environmental Protection Agency (EPA), under the authority granted by Section 8(a) of the Toxic Substances Control Act (TSCA). The proposed rule would require that persons who currently manufacture (including import ) , or process certa in nanoscale materials (alternately described as “nanomaterials companies” and “nanomaterials firms” in this report ), and/or persons who begin to manufacture, (including import), or process nanomaterials (as defined by the proposed rule) after the effectiv e date of this rule, to electronically report to EPA certain information including specific chemical identity, production volume, methods of manufacture and processing, use, exposure and release information, and available health and safety data.

The propo sed rule builds on a history of Federal and international oversight of nanotechnology. EPA has developed a Nanomaterial Research Strategy (NRS) and previously conducted a Nanoscale Materials Stewardship Program (NMSP) to collect information on nanomaterial s in commerce (both discussed in Chapter 1 ). Other Federal agencies have also collaborated to better understand the opportunities and risks posed by nanotechnology, as have members of the Organisation for Economic Co

- operation and Development (OECD).

EPA conservatively estimates that there are approximately 800 U.S. nanomaterials manufacturers, and processors subject to TSCA (see Chapter 2 ). Around 500 firms (nearly 65 percent of firms) are estimated to be small businesses with less than $4 million in revenue, and these firms are exempt from the reporting requirements of the pr oposed rule. Each of the remaining 300 firms is expected to report on approximately five commercially

- relevant nanomaterials in the first year of the rule

. While this analysis

assumes that the universe of nanomaterials firms remains constant over the 10

- ye ar analysis period, the total number of regulated nanomaterials is assumed to double.

Under the proposed rule, industry is conservatively estimated to incur a burden of approximately 206,098 hours in the first year and 22,755 hours in subsequent years, w ith costs of approximately $ 13. 9 million

and $1.5 million, respectively (see Chapter 3 ), while the Agency is expected to use approximately 6,539

hou rs in the first year and 723 hours in subsequent years , with costs of approximately $0.51 million and $ 0.06 million respectively (see Chapter 4 )

. D iscounted over a 10

- year period at three and seven percent,

total annualized costs are estimated to be approximately $ 2. 80 million and $ 3. 08 million , respectively

.

As required by the Regulatory Flexibility Act of 1980 and the Small Business Regulatory Enforcement Fairness Act of 1996, a small entity impact analysis conducted in Chapter 8 is based on small business definitions provided by the U.S. Small Business Administration (SBA). EPA found that the costs of the proposed rule did not exceed 1 percent of the value of sales for any of the small businesses evaluated.

The rule i s expected to provide benefits to EPA and the public. Increased and improved data on the production, sale, and use of nanomaterials in the U.S. will allow EPA to more effectively determine whether additional risk assessment and management measures are need ed. This information will lead to

reduced cost of risk

- based decision making and improved decisions concerning nanomaterials. These benefits are discussed qualitatively in Chapter 7 of this report.

### 1

- 1 

## Chapter 1

– Introduction

This report estimates and evaluates the costs and benefits expected to result from an information

collection rule for nanoscale material manufacturers and processors proposed by the U.S. Environmental Protection Agency (EPA) under the authority granted by Section 8(a) of the Toxic Substances Control Act (TSCA). The proposed rule would require that persons who currently manufacture (including import )

, or process certain nanoscale materials (alternately described as “nanomaterials companies” and

“nanomaterial s firms” in this report ), and/ or persons who begin to manufacture (including import ) , or process nanomaterials (as defined by the proposed rule) after the effective date of this rule

, to electronically report to EPA certain information, described in detail below. Section 1.1 provides background information on EPA’s statutory authority for the proposed rule; Section 1.2 reviews the regulatory background; Section 1.3 discusses the need for the regulation; Section 1.4 presents a brief summary of the methodology used in the analysis; and Section 1.5 describes the organization of the remainder of this report.



### 1.1 Statutory Authority

Under Section 8(a) of TSCA, EPA has statutory authority to impose information reporting and recordkeeping requi rements on manufacturers and processors of chemical s ubstances used in commerce. Insofar as the information is known, or readily available, EPA may issue an information collection rule requiring the following items:

Table 1

- 1 : TSCA

- authorized Reporting Requirements

Reporting Elements

(A) The common or trade name, the chemical identity, and the molecular structure of each chemical substance or mixture for which such a report is required.

(B) The categories or proposed categories of use of each such substance or mixture.

(C) The total amount of each such substance and mixture manufactured or processed, or reasonable estimates of the total amount to be manufactured or processed.

(D) A description of the byproducts resulting from the manufacture, processing, use, or disposal of

each such substance or mixture.

(E) All existing data concerning the environmental and health effects of such substance or mixture.

(F) The number of individuals exposed, and reasonable estimates of the number who will be exposed, to such substance or mixture in their places of employment and the duration of such

exposure.

(G) In the initial report under paragraph (1) on such substance or mi xture, the manner or method of its disposal, and in any subsequent report on such substance or mixture, any change in such

manner or method.

Source: TSCA Section 8(a), Paragraph (2), Subparagraphs (A) through (G)



### 1.2 Regulatory and Programmatic Background

N anoscale materials, alternately referred to in this report as nanomaterials , constitute a unique class of chemicals. Nanomaterials are chemical substances organized in structures with dimensions measuring from 1 to 100 nanometers (nanoscale). Under the pro posed rule, reporting would be required of certain

solid chemical substances manufactured or processed in the range of 1 to 100 n anometers at ambient

conditions.

### 1

- 2

Several regulatory and programmatic activities precede or coincide with the proposed rule. These activities are briefly described in this section. The Nanoscale Materials Stewardship Program (NMSP), a voluntary information collection program for nanomateri als manufacturers, processors, and users established by EPA in January 2008, is described in Section 1.2.1 . The broader EPA Nanomaterial Research Strategy (NRS) is described in Section 1.2.2 . The government

- wide National Nanotechnology Initiative (NNI) is described in Section 1.2.3 . Sections 1.2.4 and 1.2.5 present two international programs to encourage global collaboration in nanotechnology regulation.

1.2.1 EPA Nanoscale Materials Stewardship Program (NMSP) 1



### On January 28, 2008, EPA formally instituted the Nanoscale Materials Stewardship Program (NMSP).

The NMS P was a voluntary information collection program to assemble data from manufacturers, importers, and processors, and users of industrial nanomaterials subject to TSCA. In addition to industry and commercial organizations, researchers were also invited to p articipate in the NMSP (EPA, 2007). By the end of the program

, 31 companies and associations had responded under the Basic program, submitting information on 132 nanomaterials ( EPA, 2009d ).

According to the NMSP Interim Report ( EPA, 2009b ), the program has “considerably increased [EPA’s] understanding of the types of nanoscale materials in commerce.” Submissions typically provided physical and chemical properties, commercial uses, manufacturing processes, and risk management practices; however, very few sub missions provided data on exposure and toxicity. Overall, EPA considers the NMSP a success for having informed EPA’s regulatory understanding of nanomaterials; however, a significant number of the environmental health and safety data gaps remain.

1.2.2 EPA Nano material Research Strategy (NRS)



### The Nanomaterial Research Strategy (NRS) is a document released by the EPA Office of Research and Development (ORD) on September 29, 2009 describing EPA’s strategy for conducting and supporting

research to understand the en vironmental health and safety implications of exposure to manufactured nanomaterials and the ways in which nanotechnology can be used in environmental protection applications ( EPA, 2009c ). The document has three main purposes: (1) to guide EPA researchers and managers as they conduct EPA’s research program; (2) to assist scientists in other organizations as they plan their own research programs; and (3) to inform the public of how EPA intends to generate scientific information to guide environmental decisio ns related to nanomaterials ( EPA, 2009c ).

The NRS focuses on developing scientific information for nanomaterial decision support. EPA has focused the NRS on four areas to take advantage of its scientific expertise as well as fill the gaps of

information no t addressed by other organizations. The four research themes are:

 Sources, Fate, Transport, and Exposure

 Human Health and Ecological Research to Inform Risk Assessment and Test Methods

 Risk Assessment Methods and Case Studies

 Preventing and Managing Risks

The NRS is the guiding document for the EPA Nanotechnology Research Program. EPA plans to collaborate across government, industry, and the international community to implement this strategy ( EPA, 2009c ).

1 The NMSP Information Collection Request (ICR) (EPA, 2007) and Interim Report (EPA, 2009b) are referenc ed throughout this report, where applicable.

### 1

- 3

1.2.3 U.S. National Nanotechnology Initiative (NNI)



### The 21 st Century Nanotechnology Research and Development Act of 2003 resulted in the implementation of the National Nanotechnology Initiative (NNI). The NNI created a framework for a comprehensive nanotechnology R&D program by establishing shared goals, prioriti es, and strategies. The NNI consists of individual and cooperative nanotechnology

- related activities of 25 federal agencies with a range of research and regulatory roles and responsibilities. EPA coordinates its nanotechnology research activities

with othe r federal agencies through the NNI ( EPA, 2009b ).

1.2.4 OECD Working Party on Manufactured Nanomaterials (WPMN)



### In 2006, the Organisation for Economic Co

- operation and Development (OECD) Chemicals Committee established its Working Party on Manufactured Nanomateri als (WPMN). The objective of the WPMN is to promote international cooperation in human health and environmental safety

- related aspects of manufactured nanomaterials. The WPMN is engaged in a variety of projects to further the understanding of the propertie s and potential risks of nanomaterials ( EPA, 2009b ).

1.2.5 International Organization for Standardization (ISO) Technical Committee 229



### The International Organization for Standardization (ISO) has established a technical committee to develop international standards for nanotechnology. This technical committee, ISO/TC229, is working to develop standards for terminology and nomenclature, metrology and instrumentation, including specifications for reference materials, test methodologies, modeling and simulatio n, and science

- based health, safety and environmental practices ( EPA, 2009b ).



### 1.3 Statement of Need

Executive Order 12866 requires regulatory Agencies to identify the specific market failure that a significant rule addresses. The major causes of market failure identified in the Office of Management and Budget (OMB) guidance (OMB, 2003) on Executive Order 12866 are externality, natural monopoly, market power, and inadequate or asymmetric information. The proposed rule is designed to address the issue of inadequa te information about nanomaterial manufacture and use in commerce and, to the extent that new information indicates the presence of negative externalities, inform future rulemaking and/or legislation governing the manufacture, processing, and use of nanoma terials.

1.3.1 Inadequate Information



### Economic theory requires that buyers and sellers have complete information about the costs and benefits of their economic choices to produce an efficient allocation of resources. When buyers or sellers do not have perfect information, rational decision making cannot occur and a market failure exists. As an example, a producer may not consider substituting a less hazardous chemical for a hazardous chemical if knowledge about either chemical’s hazard is unknown or uncertain. More complete information on the hazards associated with the chemical will allow a producer to make more socially efficient decisions.

There are many reasons why information regarding the hazards associated with a chemical substance may not be widely known . Two of these reasons are:

 Producers may know this information but have no incentive to act on it or reveal it to their customers (because the costs are not borne by, and are therefore external to, the producer).

 This information may be unknown to both th e producers and their customers.

The first of these reasons is known as asymmetric information; that is, a case in which consumers and producers do not have the same level of information regarding the aggregate production, uses, and

### 1

- 4

hazards of a chemical s ubstance. Typically, the producers’ level of information regarding these items, particularly hazards, exceeds the consumers’ level of information.

In the second case, chemical production, use, and hazard information is inadequate and/or unavailable (i.e., unknown to both consumers and producers). Producers may have little incentive to acquire such information due to the potential costs associated with its acquisition. Information is by nature a public good; that is, non

- rival (one person’s use of informatio n does not diminish the amount remaining for other users) and non

- excludable (once made available, information cannot be easily withheld from others). Thus, where information is provided by one person, others are free to use and benefit from that

informati on without having made a contribution to its development. This situation reduces the incentive to provide the information, resulting in a failure of the market to efficiently provide the information. In addition, individual consumers are unlikely to be wil ling to pay the cost of collecting and reporting information if they can use information developed and paid for by others.

1.3.2 Externalities



### Externalities are another cause of market failure. An externality occurs when the actions of one economic agent impose costs (or benefits) on parties that are “external” to the market transaction; that is, these costs (or benefits) are not borne by the producers or consumers directly involved. Such is the case where manufacturing or other business activities harm human hea lth or the environment in excess of the costs borne by the parties to this activity, resulting in negative externalities. When information is missing about the human health and environmental costs to society, or when these costs are external to producers’ decision making, the costs are not incorporated into business decisions. The result can be the overuse and/or overproduction of certain harmful products.

EPA often intervenes when negative externalities pose risks to human health and the environment. For

e xample, risks may arise as a result of chemical exposure to the general population from the manufacture, processing, and use of chemicals. As a first step in mitigating externalities, the EPA Office of Pollution Prevention and Toxics (OPPT) routinely scree ns chemicals for the potential risks they may pose. This screening is used to determine if risks from the manufacture, processing, or use of chemicals are of sufficient concern to warrant risk management. Given that EPA’s TSCA Inventory recognizes more tha n 75,000 chemicals in commerce, chemical risk screening represents a significant effort. Risk is a function of hazard and exposure and when information on either is lacking, EPA’s ability to effectively identify significant risks arising from externalities is compromised.

1.3.3 Effect of the Proposed Rule



### The proposed rule will address market failure due to inadequate information by ensuring that basic information about the production, use, and environmental health and safety impacts of manufactured

nanomaterials is available to the public. This information can be used by consumers, producers, the public sector, and others to make more informed decisions regarding the production, sale, and use of nanomaterials. The information may also be used to resolve externali ties. To the extent that the provision of this information induces the producers to account for external social costs, either due to fear of litigation or due to the benefits of corporate stewardship, increased availability of information will

address the negative externalities generated by producing or using these chemicals.



### 1.4 Summary of Methodology

This analysis seeks to quantify, to the extent possible, the costs to society of the proposed rule by identifying the costs to industry (and to small entities, i n particular) associated with performing the required reporting and recordkeeping, and the costs to EPA of administering the rule. Industry costs consist of the collection, compilation, and submission of required information for the nanomaterials

### 1

- 5

handled b y each reporting firm. Agency costs include reviewing and processing the data received as a result of the rule. Small entity impact is defined as a small business’ estimated cost of compliance with the proposed rule as a percent of sales. Data sources for this analysis include burden estimates derived from information collection requests for similar regulations, compensation data acquired from government publications, and supplementary market research to produce an estimate of the universe of

affected entit ies. EPA believes the inputs for this analysis (e.g., estimated size of universe) are

conservative and that the final burden and cost estimates are therefore conservative (i.e., the total cost of the proposed rule may be overestimated)

.

This report qualita tively discusses the benefits of the proposed rule based on the value of the information it will provide. The benefits analysis was undertaken to address the implicit call for cost

- benefit balancing contained in TSCA, as well as the requirements of Executi ve Order 12866.



### 1.5 Organization of This Report

The remainder of this report provides EPA’s economic analysis in support of the proposed rule. The affected chemical substances and companies are characterized in Chapter 2

. Chapter 3 estimates industry cost of complying with the proposed rule, and Chapter 4 estimates government costs associated with the administration of the proposed rule. Chapter 5 p resents the total social costs. Chapter 7 addresses the benefits of the proposed rule using a “value of information” framework. Chapter 8 provides the small entity impact analysis for the proposed rule, as mandated by the Regulatory Flexibility Act (RFA), and amended by the Small Business Regulatory Enforcement Fairness Act ( SBREFA). Several additional impact analyses are presented in Chapter 9 , including: a burden hour analysis, which responds to the requirements of the Paperwork Reduc tion Act (PRA); an unfunded mandates statement, which is required by the Unfunded Mandates Reform Act (UMRA); an environmental justice statement, which addresses the requirements of Executive Order 12898; and a children’s health statement, which is mandate d by Executive Order 13045. Note that all dollar amounts in this analysis are reported in 2013 dollars.

### 2

- 1 

## Chapter 2

– Affected Entities

This chapter presents information about the manufacturers

, production, and uses of nanomaterials subject to the proposed rule. Section 2.1 provides a definition of nanoscale materials affected by the rule ; Section

2.2 describes and estimates the population of affected organizations; Section 2.3 divides the population estimate into large (non

- small) and small businesses subpopulations; and Section 2.4 estimates the number of nanomaterials handled by each reporting firm subject to TSCA.



### 2.1 Chemical Substances Subject to this Rule

The proposed rule requires the reporting and maintenance of records concerning chemical substances as nanoscale materials. For the purposes of th e rule

, reporting is required for nan oscale materials where at
least 10 percent of the primary particles, aggregates, or agglomerates are manufactured or processed in the size range of 1 to 100 nm

. Reporting is also required if the chemical substance has different morphology or is coated with different chemical substances

.

Nanomaterials of a single molecul ar ide ntity may vary both in the number of dimensions at nanoscale and the measurements in each dimension. For example, silver nanomaterials are available as nanoparticles (i.e., nanoscale in three dimensions) as well as nanorods (i.e., nanoscale in two dimensions). Silver nanoparticles and nanorods are also available in dozens of different particle sizes and diameters, respectively. Each of these configurations constitutes a distinct physical form

. In addition, nanomaterials with different shapes, morphology, or coat ings are also required to be reported.

The rule would not require manufacturers or processors to report information that has already been

submitted to EPA. The reporting requirements of this proposed rule would not apply to any person for a

nanoscale mate rial submitted a s a new chemical notice under section 5 of TSCA to EPA since Jan uary 1,

2005. In addition

, any person who has already reported part of or all of the required information under the Nanoscale Materials Stewardship Program would not need to re port that information again. I f , however, information required by this proposed rule had not been reported or new information is now available reporting of that information would be required

.



### 2.2 The Regulated Community

As previously noted, the proposed rule affects firms manufacturing and/ or processing chemical substances at the nanoscale. The rule applies to organizations operating in the U.S. and thus under EPA’s jurisdiction. Only those organizations handling nanomaterials with TSCA

- covered applications ar e subject to the rule. 2



### The NMSP ICR (EPA, 2007) estimated that at the time of its publication, the population of organizations involved in the manufacture or application of nanomaterials was approximately 600, based on an estimate of the size of the glob al nanotechnology industry from the National Science Foundation (NSF) (Roco, 2005). Due to the age of these data and their limitations, this report provides updated estimates of the

number of U.S.

- based nanomaterials manufacturers, processors, and distribu tors and the relative size of

these firms.

2 Not all of the nanoscale materials manufactured, imported, or used by these firms will constitute “chemical substances” according to the TSCA definition. TSCA applies to chemical substances exclusive of the fo llowing in the circumstances specified in TSCA section 3: pesticides, tobacco and tobacco products; nuclear materials, firearms and ammunition; food and food additives; drugs and medical devices; and cosmetics.

### 2

- 2

Three sources were used to estimate the number of U.S.

- based nanomaterials firms and to construct a sample of firms used to estimate both the number of large and small businesses and the number of

nanomaterials su pplied by each firm. The sources are:

 Lux Research: Nanotech ReportTM , 5th ed. (2007)

 BCC Research: Nanotechnology: A Realistic Market Assessment (2008)

 Nanowerk: Company & Labs Directory (2009)

These sources are described in more detail in the sections below.

2.2.1 Lux Research Nanotech ReportTM



### The Lux Research Nanotech ReportTM (Lux Research, 2007) is a market research report covering the field of nanotechnology. The Nanotech Report describes four categories of products: nanomaterials, nanointermediates, nano

- enabled products, and nanotools. For each product in these categories, the Nanotech Report provides properties, fabrication methods, key applications, environmental/health/safety concerns, and general market descriptors such as market size, market drivers, and market challenges. For select products, it also shares major market players and patents. The report suggests that there are over 1,500 nanotechnology companies worldwide but does not provide details regarding estimation methods.

The Nanotech Report al so profiles 121 nanotechnology companies worldwide. Eighty

- four of these companies (69.42 percent) are based in the U.S., and of these U.S. companies, 31 companies (36.90 percent) are involved in the manufacture of nanomaterials.

Lux describes its sample o f 121 nanotechnology companies as “a representative sample of companies across regions, sectors, and company types.” As such, multiplying the base estimate of nanotechnology companies worldwide (1,500) by the percent of the sample that are based in the U.S . (69.42 percent) and by the percent of sampled U.S. companies that are nanomaterials manufacturers (36.90 percent) produces

an estimate of 384 nanomaterials manufacturers in the U.S.

This universe estimate is limited for several reasons. Lux Research does not describe the methodology used to arrive at the estimate of 1,500 nanotechnology companies worldwide, nor does it describe sampling methods that would verify the representativeness of the sample

. Further, Lux acknowledges that the sample in its report includes the best known companies by design, but it does not specify any other selection criteria. EPA believes the slightly larger worldwide population estimate derived from the BCC

Research Nanotechnology Report (described in the following section) is a more reliable estimate for the purposes of this analysis. EPA also recognizes the inherent limitations of the Lux sample; however, given the report’s description of its sample, EPA assumes the sample to be representative of the universe of U.S.

nanomateria ls manufacturers.

2.2.2 BCC Research Nanotechnology Report



### The BCC Research report Nanotechnology: A Realistic Market Assessment (BCC Research, 2008) is also a market research report covering the field of nanotechnology. The report divides the nanotechnology

mar ket into three segments: nanomaterials, nanodevices, and nanotools. It then discusses the nanotechnology market’s size and structure, funding sources, and environmental, health, and safety concerns and regulation in general terms.

Due to the poorly defined and evolving nature of the nanotechnology market, the BCC report acknowledges that sizing the market is difficult, if not impossible. It suggests that estimates of the number of companies with “nanotechnology activities” worldwide can be as high as 1,600.

### 2

- 3

The report refers to a sample of 165 nanotechnology companies profiled by BCC Research and provides summary statistics of this sample; however, the report does not include the companies in the sample. Of the 165 companies in the sample, 112 companies (67. 88 percent) are based in the U.S. Additionally, of the full 165 company sample, 125 companies (75.76 percent) are nanomaterials manufacturers. However, the report does not specify how many or what percent of the U.S. companies are specifically involved in the manufacture of nanomaterials. Combining the reported percentages yields an estimate of 85 companies in the sample (51.42 percent of the sample) that are U.S. nanomaterials manufacturers.

Multiplying the estimated total number of nanotechnology companie s worldwide (1,600) by the percent of the sample that are based in the U.S. (67.88 percent) and by the percent of the sample that are nanomaterials manufacturers (75.76 percent) suggests an estimated 823 U.S. nanomaterials firms.

This estimate is potentia lly limited for two reasons. BCC Research does not describe the methodology used to arrive at the high

- end estimate of 1,600 companies with “nanotechnology activities” worldwide, nor does it explain its method for selecting a subset of these nanotechnology companies to profile in its report. Thus, the set of profiled companies may not be a representative sample. EPA recognizes the inherent limitations of this sample; however, based on EPA best professional judgment, the Agency considers 823 companies to be a reasonable and conservative estimate of the number of U.S. nanomaterials firms for the purposes of this analysis 3



### .

2.2.3 Nanowerk Company & Labs Directory



### Nanowerk (Nanowerk, 2009) is an online resource for information on nanotechnology and nanoscience.

The site provides an introduction to nanotechnology in layman’s terms, nanotechnology news coverage, general information about the nanotechnology market, and disclosure of the environmental, health, and safety concerns around nanotechnology. It also claims to maintain “the most extensive industry database” of nanomaterials suppliers in its Company & Labs Directory.

The Company & Labs Directory lists manufacturers and suppliers in five categories of nanomaterials: Carbon Nanotubes, Fullerenes, Fibers and Wires, Nanoparticles, and Quantum Dots. The database provides each company’s name, a brief description, and country of origin. According to aggregate statistics found on the website, the database contains 262 companies, 120 of which are identified in the listing as U.S. companies. Many of these companies manufacture several nanomaterials and are therefore listed in multiple nanomaterials categories.

The Nanowerk databases are compiled from publicly available information on nanotechnology

manufacturers’ websites. A ccording to Michael Berger of Nanowerk (Berger, 2009), the lists are regularly maintained and updated with new findings. Although it claims to be the most comprehensive source available, the Company & Labs Directory is a “best effort undertaking” rather th an a comprehensive listing of all suppliers. Notably, the databases exclude companies not known to Nanowerk and companies without publicly listed information.

2.2.4 Conclusion: Regulated Community Population Estimate and Representative Sample



### As noted above, EPA considers the 823 companies, estimated using BCC Research’s data, to be a

reasonable and conservative estimate of the current number of U.S. nanomaterials firms for the purposes of this analysis. This estimate reflects probable growth in the population si nce EPA’s judgment in the NMSP ICR (EPA, 2007) that the population at that time was approximately 600 companies. Due to

3 This estimate does not account for companie s that may manufacture or process nanomaterials for use in producing other products in

- house. As a result, this report may underestimate the number of nanomaterials firms subject to the

rule.

### 2

- 4

uncertainty in predicting the future nanomaterials market, EPA assumes that the universe of U.S.

nanomaterials firms remains constant ov er the analysis period; however, the number of nanomaterials handled by each reporting firm is assumed to double over the analysis period of 10 years (see section 2.4 for more details).

This analysis uses a sample of firms to estimate the percent of U.S. nanomaterials firms that are large or small businesses and to estimate the number of nanomaterials manufactured, processed, or sold by large

and small businesses. To construct this sample, EPA compiled a list of the U.S. nanomaterials manufacturers profiled by Lux Research and Nanowerk. 4 

### To avoid duplicates, the Agency considered companies found in both sources to be the same if they had identical or similar names and /or addresses. Based on this method, the sample includes 12 companies defined by Lux Research as nanomaterials firms, 101 companies defined by Nanowerk as nanomaterials firms, and an additional 19 companies defined by both Lux and Nanowerk as nanomaterials firms, for a total of 132 companies in the sample.



### 2.3 Estimated Number of Large (non

- Small) and Small Business

The general exemptions to TSCA 8(a) reporting (as described within the statute itself) apply to the proposed rule, including exemptions for small b usinesses that eliminate the reporting and recordkeeping requirements under the rule. Under TSCA regulations, according to 40 CFR 704.3, a manufacturer of a chemical substance is defined as small if it meets either of the following criteria: (1) total annu al sales of the company, combined with those of any parent company, are below $40 million and annual production

volume (including importation volume ) at each facility is less than or equal to 100,000 pounds; or (2) total annual sales of the company, combin ed with those of any parent company, are below $4 million. Based on EPA’s experience with NMSP and PMN submissions, a small business exemption that allows manufacturers not to report quantities of nanoscale materials up to 100,000 pounds would exclude a la rge proportion of potential reporting under the rule. For the purposes of this rule, EPA therefore proposes that

the definition of “small business” be any company whose annual sales, when combined with that of a parent, are less than $4 million.

To estimat e the number of small and large businesses in the population of U.S. nanomaterials firms, EPA matched the sample described above to the Dun & Bradstreet (D&B) corporate database to identify company and parent company sales, measured the percentage of compa nies defined as small and large within the sample, and applied these percentages to the population estimate. The specific procedures and results of the analysis are described in the following sections.

2.3.1 Search and Matching Procedure



### EPA attempted to obtain sales data from the Dun & Bradstreet corporate database for the 132 companies in the sample described above, following a rigorous search and matching procedure. The procedure began with a basic search by company name for each company in the sample. Compani es for which the initial search returned a single match were checked for a U.S. address and considered positively matched. Companies for which the initial search returned multiple matches were subsequently filtered by zip code. Companies not found in the D &B database were considered unmatched.

As noted above, the relevant small business definition for this rulemaking considers the sales of the parent company when classifying a subsidiary as a small business. Therefore, for the matched companies

identified i n the D&B database as subsidiaries of a parent company, the parent company’s sales were

4 While the BCC Research report refers to and summarizes a sampl e of 165 nanotechnology companies profiled in supporting research, the report does not provide the specific companies in this sample.

### 2

- 5

recorded. For all other matched companies, the company’s sales were recorded. The complete D&B search and matching procedure is described in further detail in Chapter 8

.

A total of 103 companies in the sample were found in the D&B database. Of these, 83 companies have no parent company, and 20 companies have a parent company; howe ver, one of the parent companies was already a member of the sample, thus reducing the matched subset to 83 + 20

– 1 = 102 companies. An additional two companies were identified as joint ventures, and one company was verified closed. Twenty

- six companies r emained unmatched against the D&B database.

Annual sales data were obtained from the D&B database and internet

- based searches for 95 of these 102 companies. Using these data, the companies in this sample can be categorized as large or small businesses

unde r the TSCA 8 definition of small business.

2.3.2 Results and Analysis



### Of the 95 nanomaterials manufacturers and parent companies with observed annual sales

, 61 companies ( 64.2 percent of this sample) meet the small business definition with less than $4 million i n reported annual sales, and 34 companies ( 35.8 percent of this sample) do not meet the small business definition, having $4 million or more in reported annual sales. These results are provided in Table 2

- 1

.

Table 2

- 1 : Sample Small Business and Large Business

Characteristics

Population Category Sales

Threshold Actual

Number of

Firms in Sample Percent of

Sample

Small Businesses < $4

million 61 64.2%

Large Businesses ≥ $4

million 34 35.8%

Total

-- 95 100%

Source: D&B, 2009; Lux Research, 2007; Nanowerk, 2009.



### Multiplying the percent of U.S.

- based nanomaterials manufacturers that meet the small business definition ( 64.2 percent) by the previously estimated population of U.S.

- based nanomaterials manufacturers (823 companies) yields an estimate of 528 small business nanomaterials firms and a complementary estimate of 295 large (non

- small) bus iness nanomaterials firms.

Table 2

- 2 : Estimated Universe Small Business and Large

Businesses

Population Category Sales Threshold Est. Number of

Firms in

Universe Percent of

Sample

Small Businesses < $4 million 528 64.2% Large Businesses ≥ $4 million 295 35.8%

Total

-- 823 100%

Source: BCC Research, 2006; D&B, 2009.



### Based on these estimates, 295 firms are expected to submit chemical reports each year under the proposed

rule. EPA assumes that the number of nanomaterials firms will remain constant over the next ten years.

EPA has conducted an alternative analysis, presented in Section 6.1 that accounts for potential growth in

the number of firm s manufacturing nanomaterials

.

### 2

- 6

2.4 Estimated Number of Nanomaterials per Company

In the NMSP ICR (EPA, 2007), EPA estimated that large businesses participating in the NMSP wou ld submit information on two nanomaterial products. This section presents updated estimates of the number of nanomaterials per firm that will be subject to the proposed rule.

To estimate the number of nanomaterials per firm, EPA researched the 34 large bus inesses in the D&B

matched sample (of 95 companies), compiled a list of nanomaterials supplied by each large business, excluded specific nanomaterials without TSCA uses, and calculated the median number of nanomaterials per firm. The specific procedures an d results of the analysis are described below

.

2.4.1 Nanomaterial Identification Procedure



### The identification of the nanomaterials produced by each large business was performed by manual examination of online product offerings. This procedure captured both nano materials supplied for direct sale and nanomaterials supplied as a component in a larger product. The procedure only captured nanomaterials with verified TSCA uses, based on the industries and applications advertised on each

manufacturer’s website 5 

### . The fi nal count distinguishes nanomaterials by chemical and physical structure 6



### , as well as size at the nanoscale. The count also distinguishes nanomaterials identified as distinct products by their manufacturers. As defined in this chapter, to qualify as a nanomaterial, at least 10 percent of a

chemical substance has to exist in a form with two or more dimensions at the nanoscale.

Of the 34 large business nanomaterials firms identified, 26 had product information available on a company website. Of these, 23 firms manufactured nanomaterials for TSCA

- related uses. The number of

identified TSCA

- related nanomaterials manufactured per firm varied widely, from one nanomaterial up to

66 nanomaterials.

2.4.2 Results and Analysis



### The median number of TSCA

- related nanomateri als per large business in the reduced sample for this analysis ( n = 23) is 13 nanomaterials. EPA considers 13 nanomaterials per reporting business to be a reliable estimate for the purposes of this analysis, as small businesses are exempt from the requirem ents of this rule. The proposed rule also exempts chemicals with strictly research and development (R&D) applications. The estimates presented in this section include chemicals for R&D applications, and estimates presented in the following section exclude them.

2.4.3 R&D Exclusion



### The general exemptions to TSCA 8(a) reporting (as described within the statute itself) apply to the proposed rule including exemptions for chemicals with strictly research and development applications.

In the NMSP Interim Report ( EPA, 2 009b ), EPA identified a total of 234 unique existing nanomaterials from various sources including the NMSP. Of these, 91 nanomaterials (38.89 percent) were found to be “commercially relevant,” defined as being commercially available in five or more forms s uch as unique

5 Where product

- level detail was available, screening occurred at the product

- level; otherwise, screening occurred at

the company level. Several nanomaterials with strictly medical and cosmetic uses were eliminated.

6 Examples of unique nanomaterial physical structures include, but are not limited to, nanoparticles, nanopowders, nanofibers, nanotubes, nanorods, fullerenes, an d colloids.

### 2

- 7

sizes or chemical and physical structures. The remaining 143 nanomaterials (61.11 percent) were considered produced for research and development applications.

EPA therefore estimates a current average of 5.06 nanomaterials (38.89 percent of 1 3 nanomaterials) with commercial relevance per reporting business. 7 

### As previously mentioned, t he total number of

nanomaterials subject to the proposed rule is assumed to double over the analysis period of 10 years

. As a result, it is assumed that nanomater ials firms will report on approximately 0.5 6 additional nanomaterials

per year 8



### .

Table 2

- 3 : Estimated Nanomaterials per Firm, with R&D Exclusion

Population Category Nanomaterials

per Firm R&D

Exclusion (%) R& D

Exclusion (#) “Commercial” Nano

materials per Firm a

First Year Subsequent

Years Reporting

Businesses 13 61.11% 7.94 5.06 0.5 6

Notes:

a The total number of nanomaterials subject to the proposed rule is assumed to double over the analysis period of 10 years

. As a result, it is assumed that nanomaterials firms will report on approximately 0. 5 6 additional nanomaterials per year.
Source: D&B 2009; EPA, 2007; EPA, 2009b ; Company websites.

7 This estimate is an average; therefore, while no individual company may produce, process, or sell a fraction of a nanomaterial, the aggregated population of producers may produce, on average, a fraction of a nanomaterial.

8 The first year, reporting will be on 5.06 nanomaterials. This number is estimated to double in years 2 through 10 for a total of 10.12. Therefore, the annual increase in years 2 through 10 is calculated as 5.06/9= 0.56.

### 3

- 1 

## Chapter 3

– Industry Compliance Costs

3.1 Introduction

This chapter presents estimates of the total costs that nanomaterial manufacturers and other entities may incur due to the requirements included in the proposed rule and discusses the method used to measure

each.



### 3.2 Wage Rates

The proposed rule involves activities that may require efforts by employees in three labor classifications: managerial, technical, and clerical. Costs for each activity are calculated by estimating the labor hours required in each labor category and multiplying those burde ns by the wage rate for each labor category. This section presents the estimated wage rate in each labor category.

Loaded wage rates for managerial, technical, and clerical personnel are derived by combining data on wages and fringe benefits with estimates of overhead rates following the methodology described in “Wage Rates for Economic Analysis of the Toxics Release Inventory Program” (EPA, 2002b). Wage and fringe benefit data for each labor category are calculated using the December 2013 quarterly estimat es from the Employer Costs for Employee Compensation (ECEC) Supplemental Tables available on the BLS website ( BLS, 2014 ). The loaded wage rate for managerial labor is $ 77.82 ; for technical labor, $ 64.55 ; and for clerical labor, $ 30.35

. Table 3

- 1 presents the basic data used to calculate the loaded wage rates for all three categories of labor, and Appendix A provides more detailed information on the estimation of these wage rates.

Table 3

- 1 : Loaded Industry Wage Rates, 201 3 $

Labor Category Base

Wages a Fringe B enefits a +

O verhead F actor b Loaded Wages Managerial $ 46.25 1. 68 $ 77.82

Professional/

Technical $38. 16 1. 69 $64. 55

Clerical $ 18.05 1. 68 $ 30.35

Notes:

a W age rates and fringe benefits are calculated using the December 201 3 quarterly estimates from BLS (201 4 ).

b An overhead rate of 17% of base wages is used here, based on methodology and assumptions in EPA (2002a) and EPA (2002b).

Source: BLS, 201 4

.



### 3.3 Unit Industry Compliance Costs

3.3.1 Rule Familiarization



### The proposed rule requires reporting businesses and their staff to become familiar with the 8(a) rule and its various requirements. Rule familiarization is estimated to require 0.55 hours of technical labor and 0.27 hours of managerial labor . This burden is equivalent to the rule familiarization burden estimated i n the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule ( EPA,

2009a ) , because the reporting requirements for the proposed information collection rule are similar to those required by a PMN form

. Since this analysis assumes that no additional nanomaterials firms enter

the market over the 10

- year analysis period, rule familiarization costs are only incurred in the first year of

the rule. As shown in Table 3

- 2

, the labor cost associated with rule familiarization is $ 56.51

.

### 3

- 2

Table 3

- 2 : Industry One

- Time Cost Estimate to Familiarize with the Rule ( 201 3 $) (per Firm)

Reporting Activity Clerical Labor (at $ 30.35 /hour) Technical Labor (at

$64. 55 /hour) Managerial Labor

(at $ 77.82 /hour) Total Labor Cost

Burden Cost Burden Cost Burden Cost Burden Cost

Rule Familiarization 0 $0.00 0.55 $35. 50 0.27 $ 21.01 0.82 $ 56.51

Source: BLS, 201 4 ; EPA, 2009a

.

3.3.2 Form Completion



### The proposed rule requires reporters to gather and submit information consisting of all of the reporting elements found on the full NMSP reporting form. The reporting element burden estimates used here are taken from the NMSP ICR (EPA, 2007) with the exception of clerical burden. The burden estimates in the

NMSP ICR assume that data elem ents are reported on a form whereas the proposed rule requires electronic reporting though CDX. The total per

- report industry burden of the proposed rule is estimated to

be 1 36.60 labor hours. This burden estimate is presented in Table 3

- 3 below. 9

9 The burden estimates presented i n Table 3

- 3 are derived from the NMSP ICR (EPA, 2007). While some reporting elements are expected to require a fixed, one

- time burden (e.g., “Submitter information”), the estimates presented here are assumed to allocate the burden for these elements among multiple reports. For example, the cumulative burden incurred to gather “Submitter information” is assumed to be greater than 3.00 hours, but the burde n allocated to a single report is estimated to be 3.00 hours.

### 3

- 3 Table 3

- 3 : Industry Burden Estimate to Complete the Proposed Form (per Report)

Reporting Element Clerical

Hours Technical

Hours Managerial

Hours Total

Hours

1 Submitter information 0.00 2.00 1.00 3.00

2 Chemical identity information 0.00 7.50 1.00 8.50

3A Physical properties 0.00 2.00 0.50 2.50

3B Additional physical properties 0.00 4.00 1.00 5.00

4 Description of uses 0.00 3.00 1.50 4.50

5 Amount of substance to be manufactured/imported 0.00 1.00 1.50 2.50

6 Description of byproducts 0.00 0.50 0.00 0.50

7 Human exposure and environmental release 0.00 52.00 9.50 61.50

8 Physical properties related to understanding and assessing exposures and releases 0.00 4.00 1.00 5.00

9 Overview of lifecycles 0.00 10.00 2.00 12.00

10 Release point control technology 0.00 2.00 0.40 2.40

11 Worker exposure information 0.00 2.00 0.40 2.40

12 Protective equipment or engineering control 0.00 2.00 0.40 2.40

13 Information on cleaning/reuse/disposal of used protective equipment 0.00 1.00 0.20 1.20

14 Additional procedures or other equipment intended to mitigate exposures to nanoscale materials 0.00 1.00 0.20 1.20

15 Description of worker training and hazardous

communication 0.00 1.00 0.20 1.20

16 Number of individuals other than workers exposed to the chemical and duration of exposure 0.00 1.00 0.20 1.20

17 Manner or method of disposal for consumer use of products 0.00 2.00 0.40 2.40

18 Test data in the submitter's possession of information

on health/environmental effects 0.00 7.20 10.00 17.20

Total 0.00 105.20 31.40 136.60

Source: EPA, 2007



### Table 3

- 4 combines the estimated reporting burden and loaded wage rates for all three labor categories to estimate the per

- report cost of complying with the reporting requirements.

3.3.3 Electronic Reporting



### Th e proposed rule would require submitters to register with EPA’s C entral D ata Exchange (CD X ) and use the Chemical Information Submission System ( CISS ) to prepare and submit a data file

. CDX is EPA’s electronic system for environmental data exchange to the Agency. CDX also p rovides the capability for

submitters to access their data t hrough the use of web services. EPA developed CISS for use in submitting data for TSCA sections 4, 8(a), and 8(d) electronically to the Agency. CISS, a web

- based Table 3

- 4 : Industry Cost Estimate to Complete the Proposed Form ( 201 3 $) (Per Report)

Reporting Activity Clerical Labor (at

$ 30.35 /hour) Technical Labor (at $64. 55 /hour) Managerial Labor (at $ 77.82 /hour) Total Labor Cost

Burden Cost Burden Cost Burden Cost Burden Cost

Form Completion 0 $0.00 105. 2 $6, 790.37 31. 4 $2, 443.63 136. 6 $9, 234.00

Source: BLS, 201 4 ; EPA, 2007.

### 3

- 4

reporting tool, provides user

- friendly navigation, works with CDX to secure online communicati on, creates a completed Portable Document Format (PDF) for review prior to submission, and enables data, reports, and other information to be submitted easily

.

EPA believes that electronic reporting reduces the reporting burden for submitters by reducing t he cost and time required to review, edit, and transmit data to the Agency. It also allows submitters to share a draft submission within their organization, and more easily save a copy for their records or future use. The resource and time requirements to review and process data by the Agency will also be reduced and document storage and retrieval will require fewer resources.

EPA estimated that affected facilities would incur additional burden and cost due to the electronic reporting requirements of the p roposed rule. This includes costs in the first year to complete a subscriber agreement and register with CDX. Some respondents will incur CDX costs in subsequent years due to employee turnover or compromised electronic signatures. These costs are offset by reductions in reporting and recordkeeping costs due to electronic reporting. Understanding the electronic reporting requirements

is expected to be part of rule familiarization discussed in Section 3.4.1 and are not included again in this

section.

Some company users who have already registered with CDX to meet other EPA electronic reporting requirements, for example to submit Premanufacture Notices (PMNs) or to report under the Chemical Data Reporting rule (CDR), will not need to register again as a resu lt of this rule. While EPA expects that some nanomaterial manufacturers and processors will have employees who have registered with CDX, there was no way to determine how many new users would need to register as a result of this rule. Therefore, the Agency used the most conservative assumption that all affected submitters would register with CDX and, thus, incur an associated cost. This assumption would result in overestimating the costs

associated with the final rule.

When registering with CDX, users are a ssigned to one of two roles in the CDX system, an Authorizing Official or a Support Registrant.

Authorized Official (AO) : The AO is the person legally responsible for the submission. The AO is typically a senior official for the respondent. The AO is the only user who can start a new form, or reopen a completed form to begin the amendment process, and is the only user who can electronically sign and submit a form. AOs can also assign Support Registrants to edit and complete forms on his or her behalf. AOs must submit a subscriber agreement to EPA, and register with CDX.

Support Registrants : A Support Registrant is a person designated by an AO to submit supporting documents on his or her behalf. Support Registrants can edit a submission that is created by the AO. Support Registrants are only allowed to edit submissions that the AO has granted him or her access. Support Registrants do not have any access rights to create or submit a form. Once the AO creates a form, they will provide the Support Registrant with a passphrase to access the submission and complete all sections of the form. Once the Support Registrant has finished completing the form, the AO will access the submission, review it, and submit it. Support Registrants must register with CDX, but d o not need to submit a subscriber agreement to

EPA.

This analysis uses a simplifying assumption that an average of five employees at each respondent will register with CDX: one manager (who will serve as AO) four technical staff members (who will serve as Support Registrants).

### 3

- 5

First Year Costs
Respondents will incur electronic reporting costs in the first year to register with CDX, submit a subscriber agreement, contact EPA’s CDX Help Desk and perform ongoing problem resolution to resolve problems with th eir certifications or agreements.

Subscriber Agreement /Electronic Signature Agreement. An AO must complete a subscriber agreement in order to establish their identity and their relation to the entity for which they will submit electronic documents, as wel l as to document a unique correlation with the device that will

be used to create their electronic signature. While users can comply with the subscriber agreement provisions in CDX either by submitting a paper subscriber agreement with a wet

- ink signature, or by submitting an electronic signature agreement, this analysis assumes that all will submit electronic signature agreements

. Preparing, submitting, and filing a subscriber agreement

and an electronic signature agreement is estimated to require an average of 15 minutes of time per registrant (EPA

, 2011 )

. B ecause only an AO must complete the subscriber and electronic signature agreement, this is assumed to be managerial time. In addition, t he burden estimate is

assumed to include identity verification through a third party electronic verification process tha t
is an available service through CDX.

CDX Registration . CDX users will need to register with CDX, which involves selecting a user name and password, providing contact information, and identifying the facility and the registrant’s role (e.g., AO or Suppor t Registrant) at the facility. This is estimated to t ake an average of 10 minutes per user (EPA

, 2011 )

. Because there are assumed to be one manager and four technical staff registering, t his results in an estimate that each respondent (business) w ill spend 10 minutes of managerial time and 40 minutes of technical time to register with CDX.

Help Desk . CD X users are assumed to spend an average of 4 minutes contacting EPA’s CDX Help Desk for technical support (EPA

, 2011 ), w hich results in an estimate of 4 minutes of managerial time and 16 minutes of technical time per respondent.

Problem Resolution

. Three percent of respondents each year are assumed to spend an average of one hour of technical time working with EPA’s CDX Help Desk to resolve problems involving their registrations or agreements (EPA

, 2011 )

.

Subsequent Year Costs

In subsequent years, respondents may incur electronic reporting costs due to employee turnover and compromised electronic signatures as well ongoing problem resolution

.

Employee Turnover

. It is assumed that each year 10 percent of CDX users will be replaced by new employees, who will have to comply with the subscriber agreement and/or CDX registration requirements (EPA

, 2011 ). Thus, in subsequent years 10 percent of AOs will spend 15 minutes of managerial time to complete a subscriber agreement. In addition, 10 percent of all users (both managerial and technical) will spend10 minutes to register with CDX

.

Report Compromised Signature

. Each year 1 percent of respondents are assumed to report a compromised or surrendered electronic signature, which requires the submittal of a new subscriber agreement (EPA

, 2011 ). This will entail 15

- 20 minutes of managerial time to report the compromised signature and prepare, submit, and file a new agreement, plus an additional 4 minutes contacting the Help Desk for a total of approximately 24 minutes

.

### 3

- 6

Help Desk . CDX users are assumed to spend an average of 4 minutes contacting EPA’s CDX Help Desk for technical support (EPA

, 2011 ), which results in an estimate of 4 minutes of managerial time and 16 minutes of technical time per respondent.

Pro blem Resolution

. Three percent of respondents each year are assumed to spend an average

of one hour of technical time with EPA’s CDX Help Desk to resolve problems involving their registrations or agreements (EPA

, 2011 ).

Table 3

- 5 and Table 3

- 6 present the first year burden and costs and subsequent year labor burden and costs for electronic reporting.

Table 3

- 5 : Industry Burden and Cost of Electronic Reporting Requirements

(First Year, per Firm) ( 2013 $)

Reporting Activity Clerical Labor

(at $ 30.35 /hour) Technical Labor

(at $64. 55 /hour) Managerial

Labor (at $ 77.82 /hour) Number

of Annual

Activities Total Labor

Cost

Burden Cost Burden Cost Burden Cost Burde

n Cost

CDX Registration 0.00 $0.00 0.67 $43. 25 0.17 $ 13.23 1 0.84 $ 56.48

Electronic

Subscriber Agreement/ Electronic Signature 0.00 $0.00 0 .00 $0.00 0.25 $ 19.46 1 0.25 $ 19.46

Help Desk 0.00 $0.00 0.24 $15. 49 0.06 $4. 67 1 0.30 $ 20.16

Problem Resolution 0 .00 $0.00 1 .00 $64. 55 0 $0.00 0.03 0.03 $1.94

Totals 1.42 $ 98.04



### Table 3

- 6 : Industry Burden and Cost of Electronic Reporting Requirements (Subsequent Years, per Firm) ( 2013 $)

Reporting Activity Clerical Labor

(at $ 30.35 /hour) Technical Labor

(at $64. 55 /hour) Managerial

Labor (at $ 77.82 /hour) Number

of Annual

Activities Total Labor Cost

Burden Cost Burden Cost Burden Cost Burden Cost
CDX Registration 0.00 $0.00 0.67 $43. 25 0.17 $ 13.23 0.1 0 0.08 $5. 65

Electronic

Subscriber Agreement/ Electronic Signature 0.00 $0.00 0.00 $0.00 0.25 $ 19.46 0.1 0 0.03 $1. 95

Help Desk 0.00 $0.00 0.24 $15. 49 0.06 $4. 67 0.1 0 0.03 $ 2.02
Report Compromised Signature 0.00 $0.00 0.00 $0.00 0.40 $ 31.13 0.01 0.00 $0. 31

Problem Resolution 0.00 $0.00 1.00 $64. 55 0.00 $0.00 0.03 0.03 $1.94

Totals 0.17 $11. 87

### 3

- 7

3.3.4 Recordkeeping



### Reporting businesses will be required to compile and maintain records of the collected information. Based

on estimates taken from the Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notification (EPA, 1994) which e stimates the burden associated with PMN form completion and submission , estimates of recordkeeping of paper records is expected to require one hour of technical labor, and one hour of clerical labor per report for all reporters. 10 

### Estimates from this RIA

we re used in the NMSP ICR (EPA, 2007) to estimate about half the burdens presented in Table 3

- 3

. However, the original PMN burden estimates from the 1994 RIA include recordkeeping costs ( EPA, 1994, pages III

- 13 and III

- 14). To account for the additional recordkeeping burden not captured by these estimates EPA used the additional two hour recordkeeping burden for polymer exception submissions, which have more stringent recordkeeping requirements than PMNs ( EPA, 1994, page IV

- 6 ). In addition

this two hour burden is consistent with the esti mate of 1 to 3 hours of recordkeeping burden per Section 8(a) notice presented in the Information Collection Request for Toxic Substance Control Act Section 8(a)

Chemical

- Specific Information Gathering Rules (EPA, 2006).

This proposed rule would require e lectronic reporting, however, which is expected to reduce the recordkeeping burden. EPA assumes that the final rule will reduce recordkeeping burden by half because of the efficiencies in creating and storing documents electronically. The full recordkeepin g burden and associated cost estimates are presented in Table 3

- 7

.

Table 3

- 7 : Industry Cost Estimate to Maintain Records ( 201 3 $) (per Report)

Reporting Activity Clerical Labor (at

$ 30.35 /hour) Technical Labor

(at $64. 55 /hour) Managerial Labor

(at $ 77.82 /hour) Total Labor Cost

Burden Cost Burden Cost Burden Cost Burden Cost Recordkeeping 0. 5 $ 15.17 0. 5 $32. 27 0 $0.00 1 $47. 44

Source: BLS, 201 4 ; EPA, 1994.



### 3.4 Discounting Methods

Discounting refers to the economic conversion of future costs (and benefits) to their present values, accounting for the fact that society tends to value future costs or benefits less than comparable near

- term costs or benefits. Discounting is important when the values of costs or benefits occur over a multiple year period and may vary from year to year. Discounting enables the accumulation of the cost and benefit values from multiple years at a single point in time, accounting for the difference in how society values

those costs an d benefits depending on the year in which the values are estimated to occur.

The proposed rule requires that firms incur a one

- time cost related to the reporting and maintenance of records pertaining to each nanomaterial manufactured or processed for redis tribution and use in the

United States.

Costs are discounted over a 10

- year period using rates of three and seven percent. 11 

### The 10

- year analysis period was selected because the number of nanomaterials is assumed to double over the next 10 years. The analy sis assumes that first year costs are incurred at the beginning of the period; as a result, costs incurred during the first year do not need to be discounted

. Costs accrued in subsequent years are discounted (for the discount rate r = 3 percent and r = 7 p ercent and t = time in years) back to the beginning of the 10

- year period (present value) , as follows:

11 These discount rate s values reflect guidance from the Office of Management and Budget regulatory analysis guidance document, Circular A

- 4 ( OMB 2003 ).

### 3

- 8 Present Value = ∑ ( Undiscounted Value ) t 

### ( 1 + r ) t 10

t = 1 

### This analysis also presents the 10

- year annualized costs of the rule. Conceptually, the annualized cost is equivalent to the level annual payment that one would have to make to pay off a debt equal to the net present value of the costs for a given interest rate (the discount rate). The costs ar e annualized such that the net present value of the costs is equivalent to a stream of 10 equal payments assuming that all costs

are incurred at the end of each year.



### Annualized Cost = ( PV ) ∗ r ∗ ( 1 + r ) 10



### ( 1 + r ) 11



### − 1 (



### 3.5 Total Industry Compliance Costs

As explained in Chapter 2

, EPA estimates that 295 reporters will submit chemical reports for an average of 5.06 nanomaterials per firm in the first year of t he rule

, resulting in approximately 1, 4 93 reports. The total number of nanomaterials subject to the rule is assume d to double over the 10

- year analysis period

, with an average of approximately 0.5 6 additional nanomaterials per firm in subsequent years

, resulting in

annual total of 16 5 additional reports annually

. As indicated in Table 3

- 9 , the total cost of the rule to nanomaterials firms drops from approximately $13

. 9 million in the first year of the rule to approximately $ 1. 5 3 million in subsequent years (without discounting) . The annualized cost of the rule over the 10

- year analysis period is $2. 71 million with a three percent discount rate and $2.9 7 million with a seven percent
discount rate.

Table 3

- 8 : Total Annual Industry Burden Hours

Year Number

of Firms a Reports

per Firm b Rule

Familiarization

c Burden (per Firm) Form

Completion

and Recordkeeping Burden (per Report) Electronic

Reporting Requirements (per Firm) d Total

Burden

Per

Firm Total Industry

Number

of Reports b Total

Industry

Burden

1 295 5.06 0.82 137.6 1.42 698 1,493 20 6,098

2 295 0.56 0.00 137.6 0.17 77 165 22,7 55

3 295 0.56 0.00 137.6 0.17 77 165 22,7 55

4 295 0.56 0.00 137.6 0.17 77 165 22,7 55

5 295 0.56 0.00 137.6 0.17 77 165 22,7 55

6 295 0.56 0.00 137.6 0.17 77 165 22,7 55

7 295 0.56 0.00 137.6 0.17 77 165 22,7 55

8 295 0.56 0.00 137.6 0.17 77 165 22,7 55

9 295 0.56 0.00 137.6 0.17 77 165 22,7 55

10 295 0.56 0.00 137.6 0.17 77 165 22,7 55

Total

- 10.10

- - - - 2,978 4 10,893

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional

reports per year.

c Derived in Table 3

- 2

d Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7 Values may not ca lculate exactly due to rounding

### 3

- 9

### 3

- 10 Table 3

- 9 : Total Annualized Industry Costs

Year Number

of

Firms a Report

s per Firm b Rule

Familiarization

c Cost (per Firm) Form

Completion

and Recordkeepin g Cost (per Report) d Electronic

Reporting Requirement s Cost (per Firm) e Total

Cost (per Firm) Discounted Cost

(Per Firm) Total

Industry

Number

of Reports b Total

Industry

Cost (Millions

201 3 $) Industry Discounted

Cost (Millions 201 3 $)

3 %

Discount

Rate 7 %

Discount

Rate 3 %

Discount

Rate 7 %

Discount

Rate

1 295 5.06 $56.51 $9,281 $98.04 $ 47,021 $ 47,021 $ 47,021 1,493 $13. 87 $13. 87 $13. 87

2 295 0.56 $0.00 $9,281 $11.87 $5, 198 $ 5,046 $4, 858 165 $1. 53 $1. 49 $1. 43

3 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 899 $4, 540 165 $1. 53 $1. 44 $1. 34

4 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 757 $4, 243 165 $1. 53 $1. 40 $1. 25

5 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 618 $3, 965 165 $1. 53 $1. 36 $1. 17

6 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 484 $3, 706 165 $1. 53 $1. 32 $1. 09

7 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 353 $3, 463 165 $1. 53 $1. 28 $1. 02

8 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 226 $3, 237 165 $1. 53 $1. 25 $0. 95

9 295 0.56 $0.00 $9,281 $11.87 $5, 198 $4, 103 $ 3,025 165 $1. 53 $1. 21 $0. 89

10 295 0.56 $0.00 $9,281 $11.87 $5, 198 $3, 984 $2, 827 165 $1. 53 $1. 17 $0. 83

Total

- 10.1

- - 2,978

- - -

Annualized Cost $ 9,180 $ 10,081 $2. 71 $2. 97

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.

c Derived in Table 3

- 2

d Derived f

rom Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7

e Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7 Values may not calculate exactly due to rounding.

### 4

- 1 

## Chapter 4

– A gency Costs

4.1 Introduction

EPA will also incur costs in administering the proposed rule. Specifically, EPA will be required to provide industry and public assistance to facilitate compliance and process submissions. These costs are

discussed in Section 4.2

.



### 4.2 EPA Costs

The proposed rule requires EPA to provide industry and public assistance (e.g., provide guidance and facilitate compliance), process submitted reports, an d maintain the information technology systems that support these activities. Based on previous estimates of Agency time used in economic analyses of Preliminary Assessment Information Reporting (PAIR) rules, which require Agency activity similar to

that re quired under the proposed rule, it is estimated to take 1. 2 5 labor hours per report to provide industry and public assistance and 3. 13 labor hours per report to provide data processing and systems support for a total of 4.38 labor hours per report (EPA, 20 03a) when the reporting is accomplished through non

- electronic reporting

. The electronic reporting required by the proposed rule is expected to result in cost savings to EPA.

This analysis used the same methodology as that in the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009a) to calculate EPA burden savings from electronic reporting . Potential Agency burden savings associated with the electronic reporting of the respective TSCA rep orts were characterized based on information in the CDX Business Case Analysis regarding the estimated monetary benefit from using CDX. Of the six Program Data Flows studied in the

CDX Business Case Analysis , monetary benefits from using CDX as compared to a paper submission baseline were quantified for two flows: TRI (Toxic Release Inventory) and e

- NOI (electronic Notice of Intent under the National Pollution Discharge Elimination System). Benefits ranged from eleven percent savings (e

- NOI) to 22 percent s avings (TRI) compared to the cost of the baseline process. For this analysis, EPA assumed an average annual savings of 16.5 percent

. Applying the 16.5 percent annual savings to burden estimates described above results in an estimated 1.25/report for provid ing indu stry and public assistance and 3.13/report for data processing and systems support.

Table 4

- 1 : Estimate of Agency Hours for the Proposed Rule

Administrative Activity for All Reporters H ours Industry/Public Assistance 1. 25 / report Data Processing and Systems Support Personnel 3. 13 / report

Total 4.38 / report

Source: EPA, 2003a.



### EPA assumes that, on average, a F ederal GS

- 13, Step 5 full

- time equivalent (FTE) will conduct its collection and administrative activities under the proposed rule. The annual 2013 fully loaded salary for a

GS

- 13, Step 5 FTE is $ 161,446 . This estimate includes a base salary of $ 100,904 plu s a 60 percent load increase to account for benefits and overhead (i.e., $ 60,542 ). 12 

### Dividing the fully loaded annual salary by

12 The base Federal GS

- 13 Step 5 salary ($100,904, effective January 2013) is from the Office of Personnel Management salary table for Washington

- Baltimore

- Northern Virginia (OPM, 2013). The 60 percent fringe

benefits

- and

- overhead rate is from an EPA/OPPE gui de (EPA, 1992).

### 4

- 2

2, 087 hours (i.e., the number of hours in a work year as defined by OPM ) yields an hourly FTE wage rate of $ 77. 36

. Appendix A provides a detailed description of these calculations.

Multiplying 4.38 hour s by the $ 77. 36 hourly FTE wage rate yields a total cost of approximately $ 339 to administer and process a chemical report. Further, as explained in Chapter 3 , approximately 1, 4 93 chemical reports will be filed in the first ye ar of the rule and 1 65 reports in subsequent years

. As shown in

Table 4

- 2

, t he total Agency hours and costs for the proposed rule are estimated to total 6,539 hours and $0. 5 1 million in the first year of the rule before decreasing to 723 hours and $ 0

. 0 6 million in subsequent

years . The annualized cost s of the rule over th e 1 0

- year analysis period are $0. 1 0 million with a three percent discount rate a nd $0. 1 1 million with a seven percent discount rate.

Table 4

- 2 : Agency Cost and Burden Hour Estimate for the Proposed Rule

Year Wage Rate

(FTE) Hours

per Report Agency

Cost per Report Total

Number of Reports a Total Discounted Cost (Millions 201 3 $)

( 201 3 $) Hours Cost (Millions

201 3 $) 3%

Discount

Rate 7%

Discount

Rate

1 $77.36 4.38 $339 1,493 6,539 $0.51 $0.51 $0.51

2 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.05

3 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.05

4 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.05

5 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.04

6 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.04

7 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.04

8 $77.36 4.38 $339 165 723 $0.06 $0.05 $0.03

9 $77.36 4.38 $339 165 723 $0.06 $0.04 $0.03

10 $77.36 4.38 $339 165 723 $0.06 $0.04 $0.03

Total

- 43.8

- 2,978 13,046

- - -

Annualized Cost $0.10 $0.11

Notes:

a The total number of nanomaterials subject to the rule is assumed to double in the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 16 5

reports per year. Source: EPA, 2003a; OPM, 201 3

### 5

- 1



## Chapter 5

– Total Social Costs and Sensitivity Analyses

Table 5

- 1 presents the total social burden and costs of the proposed rule in the first and subsequent years,

and the annual ized costs discounted over the 1 0

- year period using three and seven percent discount rates. As indicated, the total burden of the rule is expected to be approximately 423,939 hours over the 10

- year analysis period, while the annualized cost s are expected to be from approximately $ 2. 80 million with a

three percent discount rate and approximately $ 3.0 8 million with a seven percent discount rate.

Table 5

- 1 : Total Social Burden and Cost of the Proposed Rule

Year Burden (Hours) Discounted Costs ( 201 3 $)

3 % Discount Rate 7 % Discount Rate
Industry Agency Total Industry Agency Total Industry Agency Total

1 206,098 6,539 2 12,637 $13. 87 $0.51 $14. 38 $13. 87 $0.51 $14. 38

2 22,755 723 23,478 $1. 49 $0.05 $1. 54 $1. 43 $0.05 $1. 48

3 22,755 723 23,478 $1. 44 $0.05 $1. 49 $1. 34 $0.05 $1. 39

4 22,755 723 23,478 $1. 40 $0.05 $1. 45 $1. 25 $0.05 $1. 30

5 22,755 723 23,478 $1. 36 $0.05 $1. 41 $1. 17 $0.04 $1. 21

6 22,755 723 23,478 $1. 32 $0.05 $1. 37 $1. 09 $0.04 $1. 13

7 22,755 723 23,478 $1. 28 $0.05 $1. 33 $1. 02 $0.04 $1. 06

8 22,755 723 23,478 $1. 25 $0.05 $1. 30 $0. 95 $0.03 $0. 98

9 22,755 723 23,478 $1. 21 $0.04 $1. 25 $0. 89 $0.03 $0. 92

10 22,755 723 23,478 $1. 17 $0.04 $1. 21 $0. 83 $0.03 $0. 86

Total 410,893 13,044 423,939

- - - - - -

Annualized Costs $2. 71 $0.10 $2. 80 $2. 97 $0.11 $3. 08

Source: EPA, 2003a; OPM, 201 3

### 6

- 1 

## Chapter 6

- Sensitivity Analys e s

To show the possible range of costs and burden associated with the proposed rule, EPA conducted several alternative analyses that estimate how sensitive the cost and burden estimates presented in Chapter 3 and Chapter 4 are to changes in the estimated number of nanomaterials and firms subject to the proposed rule. EPA conducted three sensitivity analyses, estimating: 1) costs based on a potential growth in t he number of firms subject to the proposed rule over the 10 year period; 2) a low and high cost based on the range of number of reports submitted by a firm in year one; and 3) a low and high cost based the growth rate of the

number of nanomaterials over th e ten year period



### 6.1 Annual Industry Growth Rate

In Chapter 3 and 

### Chapter 4 , EPA assumes that the number of firms subject to the rule will remain static throughout the period of analysis. As an alternative analysis, EPA estimated the cost to industry and the Agency assuming an annual growth rate of 5.8 percent in the number of firms subject to the rule. The growth rate of 5.8 percent was calculated using the number nanomaterials firms identified in the 2005 NMSP ICR ( 611 ) and the number of firms estimated in this report ( 823 ) and calculated using the formula

below:



### Growt h Rate = ∆ Number of Firms

Firms year 1 ( Number of years ) = ( 823

− 611 ) ( 611 )
( 2011

− 2005 ) = 0

. 058

6.1.1 Estimated Number of Nanomaterials



### To be consistent with the main analysis presented i n Chapter 3 and Chapter 4 EPA assumes e ach firm will submit 5.06 reports in its first year and 0.56 reports in each subsequent year (see Section 2.4 ) . The total number of reports submitted each year is the sum of the first

- year reports submitted by new firms and subsequent

- year reports submitted by existing firms for a total of 4,354 reports over the 10

- year period

.

Table 6

- 1 : Estima ted Number of Reports (Increased Annual Growth Rate Scenario)

Year Number of Firms Reports per Firm Total

New

Firms Existing

Firms Total First

Year Subsequent

Years New

Firms Existing

Firms Total

1 295 0 295 5.06 0.56 1,493 0 1,493

2 17 295 312 5.06 0.56 86 165 251

3 18 312 330 5.06 0.56 91 175 266

4 19 330 349 5.06 0.56 96 185 281

5 20 349 369 5.06 0.56 101 195 297

6 21 369 390 5.06 0.56 106 207 313

7 23 390 413 5.06 0.56 116 218 335

8 24 413 437 5.06 0.56 121 231 353

9 25 437 462 5.06 0.56 127 245 371

10 27 462 489 5.06 0.56 137 259 395

Total

- - - - 

### - 2,474 1,880 4,354

### 6

- 2

6.1.2 Industry , Agency and Total Costs



### Table 6

- 2 presents the annual industry labor burden for both new and existing firms

. There are 295 firms expected to submit reports in year 1, and a total 489 firms are estimated to submit reports by t he end of the 10 year period. Each new firm is estimated to incur 69 9 labor burden hours in their first year and 77 hours each subsequent year. The total industry labor burden is estimated to be 600,82 8 hours. The costs per firm and total industry costs ar e presented in Table 6

- 3

. Total a nnualized costs are $ 3. 85 million with a 3 percent discount rate and $ 4.07 million with a 7 percent discount rate.

Agency costs are derived following the method described in Section 4.2 . EPA expects that approximately 4,354 reports will be submitted over the next 10 years, resulting in a total Agency burden of 19,071 labor

hours. Table 6

- 4 presents Agency burden and cost estimates for each year over the 10

- year period. Annualized costs are expected to be $0.14 million with a three percent discount rate and $0.15 million with a 7 percent discount rate.

The 5.8 percent linear growth rate in the number of nanomaterials firms over a 10

- year period is expected to yield a total social burden of 619,89 8 hours and total annualized social costs of $ 3.9 9 million with a 3 percent discount rate ( $ 4. 22 million with a 7 percent discount rate )

.

### 6

- 3 Table 6

- 2 : Total Annual Industry Labor Burden (Increased Annual Growth Rate Scenario)

Year Number of Firms Total

Number of Reports a Rule Familiarization

Burden (Hours per
Firm) b Form

Completion and Recordkeeping
Burden (Hours per Report) c Electronic Reporting

Requirements Burden (Hours per
Firm) d Total Burden per

Firm (Hours per
Firm) Total

Industry

Burden

Hours Existing New Total Existing New Existing New Existing New

1 0 295 295 1,493 0 0.82 138 0 1.42 0 699 206,058

2 295 17 312 251 0 0.82 138 0.17 1.42 77 699 34,657

3 312 18 330 266 0 0.82 138 0.17 1.42 77 699 36,669

4 330 19 349 281 0 0.82 138 0.17 1.42 77 699 38,757

5 349 20 369 296 0 0.82 138 0.17 1.42 77 699 40,923

6 369 21 390 313 0 0.82 138 0.17 1.42 77 699 43,166

7 390 23 413 334 0 0.82 138 0.17 1.42 77 699 46,185

8 413 24 437 352 0 0.82 138 0.17 1.42 77 699 48,660

9 437 25 462 372 0 0.82 138 0.17 1.42 77 699 51,212

10 462 27 489 396 0 0.82 138 0.17 1.42 77 699 54,540

Total

- - - 4,354

- - - - - - - 600,82 8

Notes:

a The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years.

b Derived in Table 3

- 2

c Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7

d Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7 Values may not calculate exactly due to rounding.

### 6

- 4 Table 6

- 3 : Annual Industry Labor Costs ( Increased Annual Growth Rate Scenario)

Year Number of Firms Total

Number

of Reports a Rule Familiarization

Cost (per Firm) b
( 201 3 $) Form Completion

and Recordkeeping Cost (per Report) c ( 201 3 $) Electronic

Reporting Requirements (per Firm) d ( 201 3 $) Total Cost per

Firm ( 201 3 $) Total

Industry

Cost
(Millions

201 3 $) Discounted Cost

(Millions 201 3 $)

Existing New Total Existing New Existing New Existing New Existing New Existing New

1 0 295 295 1,493 $0.00 $56.51 0 $9,281 0 $98.04 0 $47,1

19 $13.90 $13.90 $13.90

2 295 17 312 251 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $2.34 $2.27 $2.18

3 312 18 330 266 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $2.47 $2.33 $2.16

4 330 19 349 281 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $2.61 $2.39 $2.13

5 349 20 369 296 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $2.76 $2.45 $2.11

6 369 21 390 313 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $2.91 $2.51 $2.08

7 390 23 413 334 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $3.12 $2.61 $2.08

8 413 24 437 352 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $3.28 $2.67 $2.04

9 437 25 462 372 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $3.45 $2.73 $2.01

10 462 27 489 396 $0.00 $56.51 $9,281 $9,281 $11.87 $98.04 $5,209 $47,1

19 $3.68 $2.82 $2.00

Total

- - - 4,354

- - - - - - - -

Annualized Cost $3.85 $4.07

Notes:

a The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period . As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years.

b Derived in Table 3

- 2

c Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7

d Derived from Table 3

- 3

, Table 3

- 5

, Table 3

- 6 , and Table 3

- 7 Values may not calculate exactly due to rounding.

### 6

- 5

Table 6

- 4 : Agency Cost Estimate for the Proposed Rule ( Increased Annual Growth Rate Scenario)

Year Wage

Rate Hours

per Report Agency

Cost per Report ( 201 3 $) Total

Number

of Reports a Total Discounted Cost (Millions 201 3 $)

Burden Cost

(Millions

201 3 $) 3%

Discount

Rate 7%

Discount

Rate

1 $77.36 4.38 $339 1,493 6,539 $0.51 $0.51 $0.51

2 $77.36 4.38 $339 251 1,099 $0.09 $0.08 $0.08

3 $77.36 4.38 $339 266 1,165 $0.09 $0.08 $0.08

4 $77.36 4.38 $339 281 1,231 $0.10 $0.09 $0.08

5 $77.36 4.38 $339 296 1,296 $0.10 $0.09 $0.08

6 $77.36 4.38 $339 313 1,371 $0.11 $0.09 $0.08

7 $77.36 4.38 $339 334 1,463 $0.11 $0.09 $0.08

8 $77.36 4.38 $339 352 1,542 $0.12 $0.10 $0.07

9 $77.36 4.38 $339 372 1,629 $0.13 $0.10 $0.07

10 $77.36 4.38 $339 396 1,734 $0.13 $0.10 $0.07

Total

- 43.80

- 4,354 19,071

- - -

Annualized Cost $0.14 $0.15

Notes:

a The total number of nanomaterials subject to the rule is assumed to double in the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 reports per year. Source: EPA, 2003a; OPM, 201 3

Table 6

- 5 : Total Social Costs for the Proposed Rule ( Increased Annual Growth Rate Scenario)

Year Burden (Hours) Discounted Costs ( 201 3 $)

3 % Discount Rate 7 % Discount Rate
Industry Agency Total Industry Agency Total Industry Agency Total

1 206,0 58 6,539 212, 597 $13. 90 $0.51 $14. 41 $13. 90 $0.51 $14. 41

2 34,657 1,099 35,757 $2. 27 $0.08 $2. 35 $2. 18 $0.08 $2. 26

3 36,669 1,165 37,834 $2. 33 $0.08 $2. 42 $2. 16 $0

. 08 $2. 24

4 38,757 1,231 39,988 $2. 39 $0.09 $2. 48 $2. 13 $0.08 $2. 21

5 40,923 1,296 42,220 $2. 45 $0.09 $2. 54 $2. 11 $0.08 $2. 18

6 43,166 1,371 44,537 $2. 51 $0.09 $2. 60 $2. 08 $0.08 $2. 15

7 46,185 1, 463 47,648 $2. 61 $0.09 $2. 70 $2. 08 $0.08 $2. 15

8 48,660 1, 542 50,202 $2. 67 $0.10 $2. 77 $2. 04 $0.07 $2. 12

9 51,212 1, 629 52,841 $2. 73 $0.10 $2. 83 $ 2.01 $0.07 $2. 08

10 54,540 1, 734 56,274 $2. 82 $0.10 $2. 92 $ 2.00 $0.07 $2. 07

Total 600,822 19,071 619,898

- - - - - -

Annualized Costs $3. 85 $0.14 $3. 99 $4.28 $0.15 $4. 22

Source: EPA, 2003a; OPM, 201 3

### 6

- 6

6.2 Number of Nanomaterials per Firm

6.2.1 Low and High

- End Estimates for the Number of Nanomaterials per Firm



### As described in Section 2.4 , the median number of TSCA

- related nanomaterials manufactured per firm is 13 (based on a sample of 34 firms), and after excluding those produced for R&D purposes (approximately 61 percent of all nanomaterials) , EPA estimated 5.06 to be “commercially relevant” and therefore subject to the proposed rule. The number of nanomaterials produced by the 34 businesses in the sample ranged from 1 to 66. As a sensitivity analysis, EPA has estimated industry and Agency burden associated with the proposed rule using the high and low values from this range. Assuming a low

- end estimate of 1

nanomaterial , on average each firm will report on 0.39 nanomaterials in the first year and 0.04 in the subsequent years. Using the high

- end estimate of 66 nanomaterials, a firm will submit 25.67 reports in the first year and 2.85 reports in all future years.

Table 6

- 6 : Estimated High

- and Low

- End Estimated Number of Commercially Relevant Nanomaterials per Firm

Population Category Nanomaterials

per Firm R&D

Exclusion (%) R&D

Exclusion (#) “Commercial”

Nano

- materials per

Firm a

First

Year Subsequent

Years

Reporting

Businesses 1 61.11% 0.61 0.39 0.04

66 61.11% 40.33 25.67 2.85

Notes:

a The total number of nanomaterials subject to proposed rule is assumed to double over the analysis period of 10 years. (see section 2.4 for more details)

6.2.2 Industry, Agency and Total Costs



### Low

- end estimates. Based on the number of firms and the burden estimates derived in Section 2.3 and

Section 3.3 , and using the low

- end estimate of 0.39 reports in the first year and 0.04 in the subsequent years, the total industry burden is 16,491 hours in the first year and 1,673 hours future years, with an annualized cost of $0.2 1 million with a 3 percent discoun t rate ($0.23 with a 7 percent discount rate)

Table 6

- 7 and Table 6

- 8 present the industry cost and burden estimates

.

Table 6

- 9 contains the Agency burden estimate of 504 hours in the first year and 52 hours each subsequent year, and the annualized cost of estimates of $0.0 1 million with a 3 percent discount rate ($0.0 1 million with a 7 percent discount rate).

Table 6

- 10 presents the total social costs of $0. 22 million with a 3 percent discount rate and $0. 24 million with a 7 percent discount rate.

High

- end estimates . Using the high end estimate of 25.67 rep orts in the first year, and 2.85 reports in each subsequent year, the industry burden is 1,042, 657 hours in the first year and 115,7 37 hours in each subsequent year, with an annualized cost of $ 13. 76 million with a 3 percent discount rate ($ 15.10 with a 7 percent discount rate). The industry burden and cost estimates are presented in Table 6

- 7 and Table 6

- 8 respectively

.

### 6

- 7

Table 6

- 9 presents the total Agency burden estimate of 33,1 68 hours in the first year and 3,682 in each subsequent year, and the annualized Agency cost estimate of $0.5 0 million with a 3 percent discou nt rate ($0.5 5 with a 7 percent discount rate).

Table 6

- 10 contains the total social cost s and burden of using the high end

- estimate. The total social burden is 2.12 million hours over the ten year period, and the annualized cost is $ 14.26 million with a 3 percent discount rate and $ 15. 66 with a 7 percent discount rate.

### 6

- 8 Table 6

- 7 : Total Annual Industry Burden Hours (Low

- and High

- End Nanomaterials Estimates Scenario)

Year Number

of

Firms a Reports per

Firm b Rule

Familiarization c Burden (per Firm) Form

Completion

and Recordkeeping

Burden (per Report) Electronic

Reporting Requirements (per Firm) d Total Burden

Per Firm Total Industry

Number of Reports b Total Industry

Burden

Low High Low High Low High Low High

1 295.0 0.39 25.67 0.82 137.6 1.42 55.90 3,534 115 7,573 16,491 1,042,657

2 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

3 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

4 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

5 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

6 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

7 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

8 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

9 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

10 295.0 0.04 2.85 0.00 137.6 0.17 5.67 392 12 841 1,673 115,737

Total

- 0.75 51.32

- - - - 221 15,139 31,544 2,084,293

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.

c Derived in Table 3

- 2

d Derived from Table 3

- 3, Table 3

- 5, Table 3

- 6, and Table 3

- 7

Values may not calculate exactly due to rounding

### 6

- 9 Table 6

- 8 : Annual Industry Labor Costs (Low

- and High

- End Nanomaterials Estimates Scenario)

Year Number

of

Firms a Reports per

Firm b Rule

Familiarization Cost (per Firm) b
( 201 3 $) Form

Completion

and Recordkeeping

Burden Cost (per Report) b
( 201 3 $) Electronic

Reporting Requirements (per Firm)b ( 201 3 $) Total Burden Per

Firm Total

Industry

Number of Reports b Total Industry Cost (Millions $ 201 3 )

Low High Low High Low High 3% Discount Rate 7% Discount Rate

Low High Low High

1 295 0.39 25.67 $56.51 $9,281 $98.04 $3,774 $238,409 115 7,573 $1.11 $70.33 $1.11 $70.33

2 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.11 $7.58 $0.11 $7.30

3 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.11 $7.36 $0.10 $6.82

4 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.10 $7.14 $0.09 $6.37

5 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.10 $6.94 $0.09 $5.96

6 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.10 $6.73 $0.08 $5.57

7 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.09 $6.54 $0.08 $5.20

8 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.09 $6.35 $0.07 $4.86

9 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.09 $6.16 $0.07 $4.54

10 295 0.04 2.85 $0.00 $9,281 $11.87 $383 $26,464 12 841 $0.09 $5.98 $0.06 $4.25

Tota

l - 0.75 51.32

- - - - 221 15,139

Annu alized Cost $0.21 $13.76 $0.23 $15.10

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.

c Derived in Table 3

- 2

d Derived from Table 3

- 3, Table 3

- 5, Table 3

- 6, and Table 3

- 7

Values may not calculate exactly due to rounding

### 6

- 10 Table 6

- 9 : Agency Cost Estimate for the Proposed Rule (Low

- and High

- End Nanomaterials Estimates Scenario)

Year Wage

Rate Hours

per Report Agency

Cost per Report Total Number of

Reports a Total Burden Discounted Cost (Millions 201 3 $)

3% Discount Rate 7% Discount Rate

Low High Low High Low High Low High

1 $77.36 4.38 $339 115 7,573 504 33,168 $0.039 $2.57 $0.039 $2.57

2 $77.36 4.38 $339 12 841 52 3,682 $0.004 $0.28 $0.004 $0.27

3 $77.36 4.38 $339 12 841 52 3,682 $0.004 $0.27 $0.003 $0.25

4 $77.36 4.38 $339 12 841 52 3,682 $0.004 $0.26 $0.003 $0.23

5 $77.36 4.38 $339 12 841 52 3,682 $0.004 $0.25 $0.003 $0.22

6 $77.36 4.38 $339 12 841 52 3,682 $0.003 $0.25 $0.003 $0.20

7 $77.36 4.38 $339 12 841 52 3,682 $0.003 $0.24 $0.003 $0.19

8 $77.36 4.38 $339 12 841 52 3,682 $0.003 $0.23 $0.002 $0.18

9 $77.36 4.38 $339 12 841 52 3,682 $0.003 $0.22 $0.002 $0.17

10 $77.36 4.38 $339 12 841 52 3,682 $0.003 $0.22 $0.002 $0.15

Total

- 43.80

- 221 15,139 969 66,311

- -

Annualized Cost $0.01 $0.50 $0.01 $0.55

Notes:

a The total number of nanomaterials subject to the rule is assumed to double in the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 reports per year.

Source: EPA, 2003a; OPM, 201 3

### 6

- 11 Table 6

- 10 : Total Social Costs for the Proposed Rule

Year Burden (Hours) Discounted Costs ( Millions 201 3 $)

3 % Discount Rate 7 % Discount Rate

Industry Agency Total Industry Agency Total Industry Agency Total

Low High Low High Low High Low High Low High Low High Low High Low High Low High

1 16,491 1,042,657 504 33,168 16,994 1,059,651 $1.11 $70.33 $0.04 $2.57 $1.15 $72.90 $1.11 $70.33 $0.04 $2.57 $1.15 $72.90

2 1,673 115,737 52 3,682 1,724 117,462 $0.11 $7.58 $0.00 $0.28 $0.11 $7.86 $0.11 $7.30 $0.00 $0.27 $0.11 $7.56

3 1,673 115,737 52 3,682 1,724 117,462 $0.11 $7.36 $0.00 $0.27 $0.11 $7.63 $0.10 $6.82 $0.00 $0.25 $0.10 $7.07

4 1,673 115,737 52 3,682 1,724 117,462 $0.10 $7.14 $0.00 $0.26 $0.11 $7.41 $0.09 $6.37 $0.00 $0.23 $0.10 $6.61

5 1,673 115,737 52 3,682 1,724 117,462 $0.10 $6.94 $0.00 $0.25 $0.10 $7.19 $0.09 $5.96 $0.00 $0.22 $0.09 $6.17

6 1,673 115,737 52 3,682 1,724 117,462 $0.10 $6.73 $0.00 $0.25 $0.10 $6.98 $0.08 $5.57 $0.00 $0.20 $0.08 $5.77

7 1,673 115,737 52 3,682 1,724 117,462 $0.09 $6.54 $0.00 $0.24 $0.10 $6.78 $0.08 $5.20 $0.00 $0.19 $0.08 $5.39

8 1,673 115,737 52 3,682 1,724 117,462 $0.09 $6.35 $0.00 $0.23 $0.10 $6.58 $0.07 $4.86 $0.00 $0.18 $0.07 $5.04

9 1,673 115,737 52 3,682 1,724 117,462 $0.09 $6.16 $0.00 $0.22 $0.09 $6.39 $0.07 $4.54 $0.00 $0.17 $0.07 $4.71

10 1,673 115,737 52 3,682 1,724 117,462 $0.09 $5.98 $0.00 $0.22 $0.09 $6.20 $0.06 $4.25 $0.00 $0.15 $0.06 $4.40

Total 31,544 2,084,293 969 66,311 32,513 2,116,806

- - - - - -

Annualized Costs $0.21 $13.76 $0.01 $0.50 $0.22 $14.26 $0.23 $15.10 $0.01 $0.55 $0.24 $15.66

Source: EPA, 2003a; OPM, 201 3

### 6

- 12

6.3 Annual Nanomaterials Growth Rate

6.3.1 Low and High

- End Estimates in the Growth Rate of the Number Nanomaterials per Firm



### The main analysis presented in this report assumes that the number of nanomaterials reported per firm will double over the next 10 years (or an annual growth rate of approximately 8 percent). EPA calculated

two alternative cost scena rios: 1) assuming the number of nanomaterials per firm will grow by 50 percent over the next 10 years, and 2) assuming the number of nanomaterials per firm quadruples over the next 10 years. For both analyses, EPA assumes that each firm will still manufact ure 13 nanomaterials in year 1 and report on the 5.06 commercially relevant nanomaterials subject to the proposed rule.

6.3.2 Industry, Agency and Total Costs



### Low

- end estimates. A 50 percent increase in the number of nanomaterials manufactured by each firm over the next 10 years will result in approximately 0.28 additional reports each year, for a total of 2,2 39 reports over the 10 year period. As indicated in Table 6

- 11 and Table 6

- 12 , i ndustry will incur a labor burden of 206,0 58 hours in the first year and 11,4 61 hours in each subsequent year and the annualized cost will be $2. 09 million with 3 percent discount rate ($2. 36 million with a 7 percent discount rate).

Table 6

- 13 contains the total Agen cy burden and cost under this scenario; 9,807 hours in the first year and

36 3 in each subsequent year and an annualized cost of $0.08 million with a 3 percent discount rate and $0.09 million with a 7 percent discount rate.

The combined industry and Agency burden of this scenario is 319, 011 hours over the 10

- year period with an annualized social cost of $2. 17 million with a 3 percent discount rate and $2. 45 with a 7 percent

discount rate. The total social costs are presented in Table 6

- 15

.

High

- end estimates. Assuming the number of nanomaterials per firm quadruples over the next 10 years, approximately 1.69 reports will be su bmitted every year after year 1, for a total of 5,971 reports over the

10

- year period. As shown in Table 6

- 11 and Table 6

- 12 , i ndustry is estimated to incur a labor burden of 206,098 hours in the first year and 68,517 hours in each subsequent year. The annualized costs of this

scenario are approximately $ 5. 23 million with a 3 percent discount rate and $ 5. 49 million with a 7 percent

discount rate.

Table 6

- 13 present the Agency burden and costs estimates of this scenario. The Agency burden is

estimate to be 6,53 8 hours in the first year and 2, 179 in each subsequent yea r. The annualized cost is $0. 19 million with a 3 percent discount rate and $0.2 0 million with a 7 percent discount rate

.

The total social burden of this scenario is presented in See Table 6

- 14 and is 1, 141,719 hours over the 10

- year period with an annualized social cost of $ 5. 43 million with a 3 percent discount rate and $ 5. 69 million with a 7 percent discount rate

.

### 6

- 13 Table 6

- 11 : Total Industry Burden Hours (Increased Nanomaterials Growth Scenario)

Year Number

of Firms a Reports per Firm b Rule

Familiarization c Burden (per Firm) Form

Completion

and Recordkeeping Burden (per Report) Electronic

Reporting Requirements (per Firm) d Total Burden Per

Firm Total Industry

Number of Reports b Total Industry

Burden

Low High Low High Low High Low High

1 295.0 5.06 5.06 0.82 137.6 1.42 698.50 699 1,493 1,493 206,058 206,058

2 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

3 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

4 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

5 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

6 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

7 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

8 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

9 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

10 295.0 0.28 1.69 0.00 137.6 0.17 38.85 232 83 498 11,461 68,517

Total

- 7.59 20.24

- - - - 2,239 5,971 309,204 822,708

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of

a pproximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.

c Derived in Table 3

- 2

d Derived from Table 3

- 3, Table 3

- 5, Table 3

- 6, and Table 3

- 7

Values may not calculate exactly due to rounding

### 6

- 14 Table 6

- 12 : Annual Industry Labor Costs (Increased Nanomaterials Growth Scenario)

Year Number of

Firms a Reports per

Firm b Rule

Familiarization Cost (per Firm) b ( 2013 $) Form

Completion

and Recordkeeping

Burden Cost (per Report) b
( 2013 $) Electronic

Reporting Requirements (per Firm) b
( 2013 $) Total Burden Per

Firm Total Industry

Number of Reports b Total Industry Cost (Millions $ 2013 )

Low High Low High Low High 3% Discount

Rate 7% Discount

Rate

Low High Low High

1 295 5.06 5.06 $56.51 $9,281 $98.04 $47,119 $47,119 1,493 1,493 $13.90 $13.90 $13.90 $13.90

2 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.75 $4.49 $0.72 $4.32

3 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.73 $4.36 $0.68 $4.04

4 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.71 $4.23 $0.63 $3.77

5 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.69 $4.11 $0.59 $3.53

6 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.67 $3.99 $0.55 $3.30

7 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.65 $3.87 $0.52 $3.08

8 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.63 $3.76 $0.48 $2.88

9 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.61 $3.65 $0.45 $2.69

10 295 0.28 1.69 $0.00 $9,281 $11.87 $2,621 $15,667 83 498 $0.59 $3.54 $0.42 $2.51

Total

- 7.59 20.24

- - - - 2,239 5,971

Annualized Costs $2.09 $5.23 $2.36 $5.49

Notes:

a EPA assumes that the number of firms remains constant over the analysis period.

b The total number of nanomaterials subject to the rule is assumed to double over the 10

- year analysis period. As a result, nanomaterials firms will report on an average of a pproximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 additional reports per year.

c Derived in Table 3

- 2

d Derived from Table 3

- 3, Table 3

- 5, Table 3

- 6, and Table 3

- 7

Values may not calculate exactly due to rounding

### 6

- 15 Table 6

- 13 : Agency Cost Estimate for the Proposed Rule (Increased Nanomaterials Growth Scenario)

Year Wage

Rate Hours per

Report Agency

Cost per Report Total Number of

Reports a Total Burden Discounted Cost (Millions 201 3 $)

3% Discount Rate 7% Discount Rate

Low High Low High Low High Low High

1 $77.36 4.38 $339 1,493 1,493 6,538.03 6,538.03 $0.51 $0.51 $0.51 $0.51

2 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.03 $0.16 $0.03 $0.16

3 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.03 $0.16 $0.02 $0.15

4 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.03 $0.15 $0.02 $0.14

5 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.15 $0.02 $0.13

6 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.15 $0.02 $0.12

7 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.14 $0.02 $0.11

8 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.14 $0.02 $0.10

9 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.13 $0.02 $0.10

10 $77.36 4.38 $339 83 498 363.22 2,179.34 $0.02 $0.13 $0.02 $0.09

Total

- 43.80

- 2,239.05 5,970.80 9,807.04 26,152.10

- -

Annualized Costs $0.08 $0.19 $0.09 $0.20

Notes:

a The total number of nanomaterials subject to the rule is assumed to double in the 10

- year analysis period. As a result, nanomaterials firms will report on an average of approximately 0.56 additional nanomaterials per firm in subsequent years for a total of 165 reports per year.

Source: EPA, 2003a; OPM, 2013

### 6

- 16 Table 6

- 14 : Total Social Costs for the Proposed Rule

Year Burden (Hours) Discounted Costs ( Millions 201 3 $)

3 % Discount Rate 7 % Discount Rate

Industry Agency Total Industry Agency Total Industry Agency Total

Low High Low High Low High Low High Low High Low High Low High Low High Low High

1 206,058 206,058 6,538 6,538 212,596 212,596 $13.90 $13.90 $0.51 $0.51 $14.41 $14.41 $13.90 $13.90 $0.51 $0.51 $14.41 $14.41

2 11,461 68,517 363 2,179 11,824 70,696 $0.75 $4.49 $0.03 $0.16 $0.78 $4.65 $0.72 $4.32 $0.03 $0.16 $0.75 $4.48

3 11,461 68,517 363 2,179 11,824 70,696 $0.73 $4.36 $0.03 $0.16 $0.76 $4.52 $0.68 $4.04 $0.02 $0.15 $0.70 $4.18

4 11,461 68,517 363 2,179 11,824 70,696 $0.71 $4.23 $0.03 $0.15 $0.73 $4.38 $0.63 $3.77 $0.02 $0.14 $0.65 $3.91

5 11,461 68,517 363 2,179 11,824 70,696 $0.69 $4.11 $0.02 $0.15 $0.71 $4.26 $0.59 $3.53 $0.02 $0.13 $0.61 $3.65

6 11,461 68,517 363 2,179 11,824 70,696 $0.67 $3.99 $0.02 $0.15 $0.69 $4.13 $0.55 $3.30 $0.02 $0.12 $0.57 $3.42

7 11,461 68,517 363 2,179 11,824 70,696 $0.65 $3.87 $0.02 $0.14 $0.67 $4.01 $0.52 $3.08 $0.02 $0.11 $0.53 $3.19

8 11,461 68,517 363 2,179 11,824 70,696 $0.63 $3.76 $0.02 $0.14 $0.65 $3.89 $0.48 $2.88 $0.02 $0.10 $0.50 $2.98

9 11,461 68,517 363 2,179 11,824 70,696 $0.61 $3.65 $0.02 $0.13 $0.63 $3.78 $0.45 $2.69 $0.02 $0.10 $0.47 $2.79

10 11,461 68,517 363 2,179 11,824 70,696 $0.59 $3.54 $0.02 $0.13 $0.61 $3.67 $0.42 $2.51 $0.02 $0.09 $0.44 $2.61

Total 309,204 822,708 9,807 26,152 319,011 848,860

- - - - - -

Annualized Costs $2.09 $5.23 $0.08 $0.19 $2.17 $5.43 $2.36 $5.49 $0.09 $0.20 $2.45 $5.69

Source: EPA, 2003a; OPM, 201 3

### 6

- 17

6.4 Summary of all Analyses

Table 6

- 15 presents a summary of the costs and assumptions of the sensitivity analyses. As show n in the table, the total annualized industry cost s range from $0. 21 million per year (with a three percent discount rate) with the assumption that a firm submits 0.39 reports in the first year to $ 13. 76 million per year (with a three percent discount rate) under the assumption a firm submits 25.67 reports in the first yea r. This would suggest that the cost estimates are more sensitive to the number of reports submitted in the first year, than increased costs in subsequent years (either through the growth in the number of nanomaterials or the number firms subject to the pro posed rule)

.



### Table 6

- 15 : Comparison of Annualized Costs of Sensitivity Analysis (Millions 201 3 $)

Scenario Annualized Costs at 3% discount rate Annualized Costs at 7% discount rate

Industry Agency Total Industry Agency Total

Main Analysis $2. 71 $0.10 $2. 80 $2. 97 $0.11 $3. 08

Annual Industry

Growth Rate of 5.8
percent (Section 6.1 ) $3. 85 $0.14 $3. 99 $4.28 $0.15 $4. 22

0.39 Nanomaterials
per Firm in Year 1
(Section 6.2 ) $0. 21 $0.01 $0. 22 $0.23 $0.01 $0. 24

25.67 Nanomaterials per Firm in Year 1
(Section 6.2 ) $13. 76 $0.50 $ 14.26 $ 15.10 $0.55 $15. 66

The number of

nanomaterials will
grow by 50% over 10 years(Section 6.3 ) $2. 09 $0.08 $2. 17 $2. 36 $0.09 $2. 45

The number of

nanomaterials will
quadruple over 10

years (Section 6.3 ) $5. 23 $0.19 $5. 43 $5. 49 $0.09 $5. 69

Note: Totals may not sum due to rounding

### 7

- 1 

## Chapter 7

– Benefits

As noted in the NMSP Interim Report ( EPA, 2009b ), EPA requires additional information to fulfill its mandate under TSCA to fully assess the risks posed by the production, sale, and use of nanomaterials in the United States. With this information, EPA will be able to screen these chemicals more effectively to identify whether add itional risk assessment and management steps are needed.

By enhancing the data supplied to Agency risk

- screening programs, EPA expects to more effectively and expeditiously reduce the potential risks posed by nanomaterials. The more EPA can base its decisi ons on actual data rather than on assumptions, the better EPA is able to tailor its risk management decisions to the level of actual risk whether higher or lower than it would be if based on assumptions alone. Ultimately, enhancing the risk screening proce ss will have positive consequences for human and ecosystem health and will enable a more efficient allocation of EPA’s and society’s resources. EPA would have an increased ability to anticipate industry trends, particularly for chemicals for which EPA

has concerns.

The benefits resulting from the proposed rule are discussed qualitatively in this section. Quantification of the benefits of the proposed rule would require more specific information about each user’s use patterns and preferences as well as the changes in these patterns and preferences that would result from the additional information made available under the proposed rule. These data are not readily available and collecting such data would be cost

- prohibitive. For example, one approach would be to conduct a national willingness

- to

- pay (WTP) survey of the general public to determine the value that the public places on the availability of the information resulting from the proposed rule. However, such a survey, or a survey to

collect similar inform ation, has not been conducted.



### 7.1 Market Failure

When buyers or sellers do not have perfect information, rational decision making cannot occur and a market failure exists. Information regarding the hazards associated with a chemical substance may not be

widel y known for several reasons. In one case, known as asymmetric information, consumers and producers do not have the same level of information regarding the aggregate production, uses, and

hazards of a chemical substance. Because information is a public goo d, producers are reluctant to provide

information (that is, businesses may perceive the high costs of collecting and disclosing information to be greater than the benefits from increased access to chemical information). I ndividual consumers are

simultaneou sly unlikely to be willing to pay the cost of collecting and reporting information if they can use information developed and paid for by others.

In addition to concerns about these direct costs, industry may have a disincentive to disclose data due to

the possibility of liability or regulation (Applegate, 1991). For example, some firms releasing Toxic Release Inventory (TRI) data saw a negative response in financial markets, indicating further reasons why businesses may be reluctant to disclose information (Konar and Cohen, 1997). As a result, data on the chemicals subject to the proposed rule may be produced below what is optimal for society.



### 7.2 Benefits of Information

- Based Policies

The proposed rule will supply information on nanomaterial production to whic h the Agency (or the public) does not currently have access. Increasing and improving the amount of available data serves to reduce inefficiencies, described above, arising from asymmetric information.

### 7

- 2

Increased and improved data on the production, sale, a nd use of nanomaterials in the U.S. would allow EPA and others to use the data more effectively as part of screening and prioritization programs. Screening chemicals for potential risks is an essential first step in developing and prioritizing risk

managem ent activities. Effective risk

- screening by EPA depends on the ability to characterize chemical uses accurately and to predict potential exposures. Current screening activities are greatly hampered by the incomplete and inconsistent nature of available dat a. In addition, EPA’s current screening activities are further hampered by the fact that EPA must rely on relatively limited public sources of information. This proposed rule will benefit society by filling these information gaps and contributing to better assessments of potential risks and risk management decisions.

The proposed rule will increase publicly available data about a chemical’s potential risks and consequently is likely to result in (a) a reduction in the cost of risk

- based decision making abou t the chemical, and (b) an improvement in the expected outcome of the decisions.

 Reduced cost of risk

- based decision making. By making new information about potentially toxic substances available to the public (including EPA and other government agencies), this proposed rule can replace other information

- gathering, management, and dissemination activities related to nanomaterials. Once the data are publicly available, information users and decision makers will avoid the time and resource costs required to i ndividually perform these activities. In effect, the proposed rule increases the efficiency (and strength) of the decision

- making process.

 Improved outcome of decisions. Information

- based policies contribute to better decisions by redirecting resources tow ard their most highly valued uses. With incomplete information regarding toxic chemicals, public and private decision makers are not able to assess adequately the benefits and costs of actions that involve these substances. For example, EPA decisions regar ding whether, when, and how to target chemicals for further risk assessment can be misdirected if basic risk

- screening information is unavailable or inadequate. With more information to supplement the data provided in the NMSP and fill gaps in the current understanding of the benefits and risks of nanoscale substances, EPA can better direct its limited resources toward high

- priority risks. Improved information can therefore help lead to more socially optimal reductions in risks to humans and the environment

.

The proposed rule will generate both types of benefits. First, it will provide data that are otherwise

unavailable or reduce EPA’s and other decision

- makers’ reliance on databases and information sources that are inadequate for accurately characterizing the risks associated with the nanomaterials in commerce that need to be evaluated and potentially regulated. As discussed in Chapter 4 , EPA will bear the cost of

co llecting and managing the data; however, by providing more reliable and complete data on nanomaterial uses and exposures, the rule will also allow EPA to save time and resources in screening chemicals and in developing risk management priorities.

Second, t he proposed rule will allow EPA to better prioritize its risk management activities

— to move more quickly in addressing nanomaterials that pose relatively high risks (and/or relatively low risk

management costs).

For example, potential problems from incompl ete information include the designation of an inappropriately high priority level to a chemical substance, resulting in unnecessary effort and resource expenditures for both regulated parties and EPA in cases where adequate data would have led the Agency

t o act differently. Similarly, if a business cannot provide adequate data for its product, that product may be subject to regulations which are unsuitable for its true hazard level (Applegate, 1991). In these cases, it

is in the best interest of the busines s to disclose information about its chemical production. Reporting through TSCA ensures the public that the chemical information provided by firms is credible, and thus is more likely to be utilized efficiently (Cohen and Santhakumar, 2007). As described b y Konar and Cohen

### 7

- 3

(1997), information provision can also serve as informal regulation, providing financial incentives for reducing behaviors which may lead to negative externalities.

Specific benefits that accrue from the use of the information generated by this proposed rule are discussed in the following sections.



### 7.3 Potential Users of Information Generated by the Proposed Rule

EPA is expected to be the primary user of the information generated by the proposed rule, although other public and private organi zations, in particular those interested in managing the health and environmental risks posed by nanomaterials, will also use the data. The information is expected to be applied and disseminated by these users in a number of ways; however, it will primarily serve to reduce the costs of screening and managing chemical risks and to improve risk management decisions. The American public will be the ultimate beneficiaries of the proposed rule. By lowering the cost of decision

- making in the public sector, the rul e will free up resources for other public or private uses. Similar gains will also result from cost savings in private

- sector decision

- making. By improving risk management decisions, the rule will also help to better target risk management activities to th e areas where the net benefits (i.e., risk reductions net of control costs) are expected to be the largest.

The users and beneficiaries of the reporting program and the benefits they derive from improved data on

nanomaterials are discussed in more detail i n the sections below.

7.3.1 EPA Risk

- Screening and Management Programs



### EPA’s Office of Pollution Prevention and Toxics (OPPT) has a multifaceted approach to managing chemical risks. Chemicals enter OPPT’s system primarily through a request by the Interagency Tes ting Committee or a request by the public or are otherwise identified by the Agency . The chemicals then enter one of several more detailed screening processes. Depending on the outcome of these screening processes, the next step may include entering one of EPA’s risk management programs. EPA’s current programs and tools to evaluate and manage chemical risks include:

 Risk Screening . OPPT screens chemicals on the TSCA Inventory to identify potential risks and

determine whether more detailed assessments should be undertaken. With the data currently available, EPA does not have the information needed to effectively and systematically screen most nanomaterials, some of which may not even be included in the inventory. The proposed rule would supply exposure

- related information that the Agency does not currently have, recognizing that industry has a greater knowledge than EPA about its own operations and the uses of chemicals it manufactures and/or sells. Without this information, EPA would likely: (1) not scr een these chemicals, (2) screen them using outdated or anecdotal exposure information, or (3) screen them but rely on exposure estimates using modeling data. Therefore, data collected as a result of the proposed rule will improve the Agency’s ability to sc reen nanomaterials in commerce, allowing the Agency to better focus its chemical screening programs and to identify potentially risky situations earlier than otherwise possible.

 Master Testing List. The data collected under the proposed rule for nanomateri als would also help to determine which chemicals substances belong on the Master Testing List (MTL). The MTL is a list of chemicals identified by the Agency as having inadequate data for health and/or environmental risk

assessments. OPPT uses the MTL to es tablish priorities for chemical testing, keep the public informed, solicit input from industry on specific chemical exposure and risk assessment needs, and to encourage industry to perform testing. Exposure

- related manufacturing, processing, and use data

w ould enable EPA to better target testing needs to situations in which potential exposures are known

### 7

- 4

to occur, thereby increasing the efficiency of efforts in these programs and facilitating earlier completion of critical testing needs.

 Design for the Envi ronment (DfE) program. EPA’s DfE program incorporates principles and strategies from both the Existing Chemicals review program, by focusing on specific chemical uses and establishing partnerships with industry to develop voluntary long

- range plans for ris k management. The data collected under the proposed rule would help to identify use cluster candidates for this program. The data could be used to assist in ranking activities, identifying high

- risk areas, and developing realistic approaches for reducing r isk.

7.3.2 Other Federal Risk Management Programs



### Other governmental agencies, such as the Occupational Safety and Health Administration (OSHA), the National Institute for Occupational Safety and Health (NIOSH), and the Consumer Product Safety Commission (CPSC), share regulatory authority over chemical substances or products containing them. In the case of NIOSH, the agency compiles summaries of available information and recommends exposure limits. Therefore, EPA serves as a conduit for chemical hazard informatio n between the chemical producers and these other agencies.

OSHA currently manages occupational exposure to chemicals by setting a variety of chemical and personal protection standards, by requiring preparation of emergency response and process safety

manag ement plans and by requiring provision of health and safety data to workers for chemicals used in the workplace. OSHA will be able to use the data collected under the proposed rule to identify chemicals with large numbers of potentially exposed workers or with uses that suggest greater exposure potential. The information provided by the proposed rule could increase OSHA’s ability to manage chemical hazards, exposures, and risks in occupational settings.

NIOSH will also benefit from the exposure

- related info rmation collected under the proposed rule. The exposure information that NIOSH uses to determine occupational safety and health in businesses nationwide may be based on outdated information collected under the National Occupational Exposure Survey (NOES). Completed in 1983, NOES collected information such as plant site location, plant site SIC, information on the plant site’s occupational safety and health programs, occupational titles of workers potentially exposed, the number of employees per occupational title, information on process steps, and trade names of products. Recognizing that some of the nanomaterials reported under the proposed rule may have been developed in the last decade, NIOSH could use the data in place of the NOES data to identify chemic als with large numbers of potentially exposed workers or with uses that suggest greater exposure potential.

CPSC also could use the new data directly in conducting its exposure and risk assessment activities (e.g., screening consumer products for chemical hazards). CPSC obtains risk information to screen chemical hazards from a network of hospital emergency rooms. This information is limited to injuries and illnesses resulting from acute exposures only.

Additional data required by the proposed rule would pr ovide a better source of reliable information on the chemicals used in consumer products. CPSC would improve its ability to identify the nanomaterials used in consumer products and, with consideration of hazard data, to identify chemical

– consumer use situa tions presenting greater potential risk. The information could improve CPSC’s ability to meet its program objective of protecting the public from chemical hazards in consumer products.

7.3.3 State and Local Programs



### The data collected under the proposed rule wil l also help state and local authorities with rulemaking, information collection, and voluntary program activities. Because state and local governments must

### 7

- 5

address chemicals, use patterns, and exposure scenarios that may be unique or isolated, state and lo cal agency access to improved data on nanomaterials will assist in identifying situations that pose potentially high risks for individual states or locations within those states.

7.3.4 Nongovernmental Organization (NGO) Initiatives and Private

- Sector Stewardship



### Many private

- sector organizations have a strong interest in reducing risks and providing leadership in preventing pollution while still maintaining productive economic enterprises. These organizations can better meet these objectives by developing a bette r understanding of how chemicals are used in general. This will allow them to more effectively manage risks and participate in community, regional, and national priority setting for chemicals.

The publicly available (non

- CBI) information collected under th e proposed rule can support activities typically undertaken by NGOs, such as tracking industry trends, organizing grassroots involvement in

risk

- based decision

- making, and conducting outreach and educational programs. These organizations

could use the new data to identify and establish priorities for risks; to evaluate chemicals and chemical use patterns to determine areas of concern; to identify and promote pollution prevention opportunities; and to focus pollution prevention, public outreach, and educatio n initiatives and activities.

Industry can use the collected data to improve corporate product stewardship programs through access to use information reported by multiple companies. The American Chemistry Council’s Responsible Care program is one example o f a corporate product stewardship program that could use this information. Use information supplied under the rule could be used to further strengthen this program. The Responsible Care program requires companies to take responsibility for their products f rom cradle to grave, which requires an understanding of how their product is being used not only by their customers, but also further down the value chain. Despite this private effort, some companies have told EPA that they do not know

how their chemicals are used. Non

- CBI information provided by multiple companies could give an individual company a better understanding of the downstream uses of its products, therefore enabling more effective implementation of the Responsible Care concepts.

### 8

- 1 

## Chapter 8

– Small Entity Impact Analysis

This chapter estimates the impact that the proposed rule may have on small entities by examining the relationship between the compliance costs and company sales for small companies.

The Regulatory Flexibilit y 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, including businesses, nonprofit organizations, and governments. In some instances, agencies also are required to examine regulatory alternatives that may reduce adverse economic effects on significantly impacted small entities. The RFA requires agencies to prepare an initial and final regulatory flexibility analysis for each r ule unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The RFA, however, does not specifically define “a significant economic impact on a substantial number” of small entities. S ections 603 and 604 of the RFA require that regulatory flexibility analyses identify the types, and estimate the numbers, of small entities to which the rule will apply; and describe the rule requirements to which small entities will be subject and any reg ulatory alternatives, including exemptions and deferral, that would lessen the rule’s

burden on small entities.

The major steps followed in the analysis are described below.



### 8.1 Select a Relevant Small Business Definition

The RFA relies on the definition of “s mall business” found in the Small Business Act, which authorizes the Small Business Administration (SBA) to develop definitions for “small business” for industries in each North American Industry Classification System (NAICS) code. These definitions can be based either on a company’s number of employees or its sales, depending on SBA’s criteria for that industry. As nascent fields, nanotechnology manufacturing, processing, and distribution have not been assigned NAICS codes

under the most recent classificat ion system 2007. This analysis therefore applies the SBA small business definitions to a sample of nanomaterials companies matched in the D&B database (further described in

Section 0 ) according to the NAICS listed for the global parent company of each company in that database.

Note that there are two definitions of small business used in this Economic A nalysis. The first definition

, which has been used in the prev ious chapters of this Economic A nalysis, is used to determine if a nanomaterials firm is exempt from the proposed rule requirements. A ccording to this definition, which was adapted from the standard TSCA definition provided in 40 CFR 704.3, a manufacturer of a TSCA Section 8(a) chemical substance is defined as small if total annual sales of the company, combined with those of any parent company, are below $4 million 13



### . The second definition, which is used only in this chapter, is

based on the small business definitions found in the SBA for the various industries. The small business thresholds for the industries identified in the D&B database range from 100 to 1,000 employees. T wenty companies in the sample meet the SBA small business definition . Thus, althou gh considered small

13 The original definition of a small business under 40 CFR 704.3 has been modified for this rule. The original

definition defined a manufacturer or importer of a substance a s small if (1) its total annual sales, when combined

with those of its parent company (if any), are less than $40 million and the annual production or importation volume of a particular substance at any individual site owned or controlled by the manufacturer or importer is less than 100,000 pounds , or (2) its total annua l sales, when combined with those of its parent company (if any), are less than $4 million, regardless of the quantity of substances produced or imported by that manufacturer or importer.

### 8

- 2

businesses for the purposes of this small entity impact analysis, they are expected to incur the full compliance cost s of the rule

. All t wenty of these nanomaterials firms are expected to experience an impact of less than one percent of sales.

Table 8

- 1 : Ultimate Parent NAICs Codes for the 20 Small Businesses in Sample

Ultimate

Parent NAICS

Code Description Number

of Firms Small Business Threshold

325131 Inorganic Dye and Pigment Manufacturing 3 Less than 1

, 000 employees

325188 All Other Basic Inorganic Chemical Manufacturing 4 Less than 1

, 000 employees

325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing 2 Less than 500 employees

331221 Rolled Steel Shape Manufacturing 1 Less than 1

, 000 employees

334413 Semiconductor and Related Device Manufacturing 1 Less than 500 employees

335991 Carbon and Graphite Product Manufacturing 1 Less than 750 employees

423220 Home Furnishing Merchant Wholesalers 1 Less than 100 employees

423330 Roofing, Siding, and Insulation Material Merchant

Wholesalers 1 Less than 100 employees

423510 Metal Service Centers and Other Metal Merchant

Wholesalers 2 Less than 100 employees

541712 Research and Development in the Physical,

Engineering, and Life Sciences (except Biotechnology) 4 Less than 500 employees

Note: NAICS c odes, d escriptions, and s mall b usiness d efinitions are all from the 2007 NAICS

Sou rce: D&B, 2009; SBA, 2010



### 8.2 Identify the Small Business Population

To estimate the number of small and large businesses in the population of U.S. nanomaterials firms, EPA matched the sample described in Chapter 2 to the Dun & Bradstreet (D&B) corporate database to identify company and parent company sales and employment, measured the percentage of companies defined as small and large within the sample (based on the SBA definitions) , and applied these percentages to the population estimate.

EPA attempted to obtain sales and employment data from the Dun & Bradstreet corporate database for the 132 companies in the sample described in Chapter 2 , following a rigorous search and matching procedure. The procedure began with a basic search by company name for each company in the sample. Companies

for which the initial se arch returned a single match were checked for a U.S. address and considered positively matched. Companies for which the initial search returned multiple matches were subsequently filtered by zip code. Companies not found in the D&B database were considered unmatched.

As noted above, the SBA small business definitions consider either the sales or employment of parent companies when classifying a subsidiary as a small business. Therefore, for the matched companies

identified in the D&B database as subsidiarie s of a parent company, the parent company’s data were recorded. For all other matched companies, the company’s data were recorded.

A more intensive matching procedure was subsequently applied to the set of companies not matched in the original procedure. A fter undertaking basic online research, each unmatched company was identified as either (a) owned or acquired by a parent company; (b) a joint venture between two or more companies; (c) out of business; or (d) none of these. This information was then used to perform a new round of

### 8

- 3

matching in the D&B database, yielding several more matches. For the matched companies identified by this procedure, the parent company’s data were recorded.

Several special cases occurred during the search and matching process. I n two cases, a company had multiple apparent registrations under a single name and at a single address; however, these entries were not linked in the D&B database, as generally are companies with shared ownership, thus causing difficulty in identifying the parent company. In one of these cases, the entries were few enough in number to identify the parent company; however, in the other case, the parent could not be identified.

A total of 103 companies in the sample were found in the D&B database. Of these, 8 3 companies have no parent company, and 20 companies have a parent company; however, one of the parent companies was already a member of the sample, thus reducing the matched subset to 83 + 20

– 1 = 102 companies. An additional two companies were identifie d as joint ventures, and one company was verified closed. Twenty

- six companies remained unmatched against the D&B database. 14



### Annual sales data were obtained from the D&B database and internet

- based searches for 95 of these 102 companies. Of the 95 nanomat erials manufacturers and parent companies found with sales data

, 34 have annual sales equal to or greater than $4 million and are therefore subject to the proposed rule. W ithin this subset, 20 companies ( 58.8 percent) meet the SBA small business definition s for their respective NAICS classifications, and 14 companies ( 41.2 percent) do not meet the SBA small business definitions. These results are provided Table 8

- 2 . Al l of these companies are considered large businesses under the rule

definition of small business.

Table 8

- 2 : Sample Small Business and Large Business

Characteristics

Population Category Number of

Firms in Sample Percent of

Sample

Small Businesses 20 58.8% Large Businesses 14 41.2%

Total 34 100.0%
Note: Entries may not sum to total due to rounding.
Source: D&B, 2009; Lux Research, 2007; Nanowerk, 2009.



### Multiplying the percent of U.S.

- based nanomaterials manufacturers that meet the SBA small business definitions ( 58.8 percent) by the previously estimated population of U.S.

- based nanomaterials manufacturers subject to the proposed rule ( 295 companies) yields an estimate of around 17 4 small

bus iness nanomaterials firms and a complementary estimate of around 121 large (non

- small) business nanomaterials firms that are subject to the rule. 15 

### A ll of these companies would be considered large

businesses under the rule definition of small business.

14 EPA believes the 102

- company sample to be representative. Howeve r, if a small business is less likely to register in the D&B database, it is possible that this report underestimates the number and percentage of small companies in

the universe of U.S. nanomaterials firms.

15 As previously stated, the analysis assumes tha t the universe of nanomaterials firms remains constant over the 10

- year analysis period, while t he total number of nanomaterials subject to the proposed rule is expected to double.

### 8

- 4 Tabl e 8

- 3 : Universe Small Business and Large Business

Estimates

Population Category Est. Number of

Firms in

Universe Percent of

Sample

Small Businesses 174 58.8% Large Businesses 121 41.2%

Total 295 100.0%
Note: Entries may not sum to total due to rounding.
Source: BCC Research, 2006; D&B, 2009.



### 8.3 Estimate the Cost

- to

- Sales Ratio for Small Companies

As previously stated, t he number of nanomaterials produced for commercial applications by the 174 small

U.S.

- based nanomaterials manufacturers

, processors, and distributors estimated above is assumed to double

over the analysis period . It is assumed that nanomaterials firms will produce 5.06 regulated nanomaterials in

the fi r st year of the rule, and an addit ional 0. 56 nanomaterials per year in subsequent years

. 16 

### ( 9.8Appendix

B presents a sensitivity analysis for the cost

- to

- sales ratio based on the number of nanomaterials produced.)

As indicated in Table 3

- 9 , the total cost of the rule over the 10

- year analysis period is $ 2. 71 million with a

three percent discount rate and $ 2. 97 million with a seven percent discount rate . On a per

- firm basis,

annualized costs are approximately $ 9,180 with a three percent discount rate and $ 10,081 with a seven percent discount rate

. 17



### P ast small business analyses developed by EPA have used a lower impact threshold of compliance costs of less than 1 percent of sales and a higher impact threshold a s compliance costs of greater than 3 percent of sales to evaluate whether or not the economic impacts faced by the small entities are significant. Therefore, to determine the magnitude of any potential adverse impact of the proposed rule on small entities, annualized per

- company compliance costs were compared to annual sales. D&B data for the 20 small businesses (by SBA definitions) identified among the 34 companies in the 95

- company sample of

U.S.

- based nanomaterials firms subject to the proposed rule were used to develop cost

- to

- sales ratios for these companies, which are believed to represent the broader universe of small businesses. 18



### Given expected annualized per

- company costs ranging between approximately $ 9,180 and $ 10,081 , a one percent

- of

- sales threshold for economic impact equates to sales thresholds of approximately $ 918 ,000 and $ 1,008 ,000 , respectively ; in other words, in order for the compliance cost to exceed one percent of sales,

sales must be less than these values . Simil arly, three percent

- of

- sales threshold s for economic impact range from approximately $ 306 ,000 to $ 336 ,000

. These equivalences are show in Ta ble 8

- 4

.

Ta ble 8

- 4 : Characterization of Economic Impacts

Economic Impact Type Cost

- to

- Sales

Percentage Equivalent Sales Dollar

Threshold ($1,000) ( $ 201 3 )

16 This estimate is an average; therefore, while no individual company may produce, process, or sell a fraction of a nanomaterial, the aggregated population of producers may produce, on average, a fraction of a nanomaterial. This average will under

- or over

- estimate the compliance cost incurred by each company and consequently un der

- or

over

- estimate the cost

- to

- sales compliance cost ratio for each company.

17 Note that annualized per

- firm costs are calculated using the per

- firm costs from Table 3

- 8 and not as the quotient

of the total annualized costs and the total number of firms.

18 EPA believes the 20

- company sample discussed here to represent the universe of small business nanomateri als manufacturers, importers, processors, and distributors. However, it is possible that the sample is not representative, in which case the small entity impacts might be positively or negatively biased.

### 8

- 5 Annualized (3%) Annualized

(7%)
Higher Impact > 3% < $ 306 < $ 336

Lower Impact 1% to 3% $ 306 to $ 918 $ 336 to 1 ,008

Less than 1% Impact < 1% > $ 918 > $ 1,008



### Table 8

- 5 summarizes the estimated cost impacts for the sample of small business , and applies these sample percentages to estimate the larger universe of impacted businesses. As indicated, all 20 small

businesses ( 100.0 percent) from the sample , and thus all small businesses in the universe, are expected to experience no adverse economic impact (that is, an impact of less than one percent of sales )

.

Table 8

- 5 : Estimate of Impacts on Small Business Sample

Economic Impact Type Cost

- to

- Sales

Percentage Sample Universe

3% Discount Rate 7% Discount Rate

Number Percent Number Percent Number Percent Higher Impact > 3% 0 0.0% 0 0.0% 0 0.0%
Lower Impact 1% to 3% 0 0 .0% 0 0.0 % 0 0.0% Less than 1% Impact < 1% 20 0 .0% 20 0.0% 174 00.0%

Total

-- 20 100.0% 20 100.0% 174 100.0%

Source: D&B, 2009; EPA, 2009a.



### In EPA’s judgment, these are conservative estimates

. There are several reasons why the rule may impact certain small businesses more than others. Recently chartered companies may have lower sales at the time of reporting and therefore experience a relatively higher impact under the rule as a percentage of current, annual sales; however, these firms a re expected to recover the initial compliance cost with future sales. Some firms may sell only a single nanomaterial that comprises (and limits) its entire revenue stream, raising the impact of the rule as a percent of sales; other firms may offer a broad portfolio of products other than nanomaterials. In the latter case, sales of non

- nanomaterial products might offset the costs of complying with the proposed rule and thus reduce the estimated impact as a percentage of sales. In EPA’s judgment, no companies are expected to experience a prohibitive cost or burden under the proposed rule.

### 9

- 1 

## Chapter 9

– Other Impact Analyses

Several statutes and executive orders (EOs) pertain to the proposed rule. This chapter presents statements discussing paperwork reduction, unfunded mandates, regulatory planning and review, tribal governments, children’s health, and environmental justice, among others.



### 9.1 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 (OMB) approval under the PRA, unless it has been approved by OMB and displays a currently vali d OMB control number. The information collection requirements related to this action have already been approved by OMB pursuant to the PRA under OMB control number 2070

- 0067 (EPA ICR No. 1198). The proposed rule will impose a burden requiring additional O MB approval. The ICR addendum is available for comment in the public docket for the proposed rule.

This section estimates the burden and costs for both the respondents and the Agency associated with the recordkeeping and reporting requirements of the prop osed 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 en tities 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 the industry respondents and the government are estimated.

Table 9

- 1 presents a summary of the total burden and costs to industry associated with the proposed rule over the first three years of its promulgation. The data used to populate this table are explained in greater

deta il in Chapter 3

.

Table 9

- 1 : Industry Burden Estimates for the Proposed Rule

Year Reporting

Populatio

n Rule

Familiarizatio

n Burden (Hours) Form

Completion

and Record Keeping

Burden (Hours) Electronic

Reporting Requirements (Hours) Number

of Reports Total

Burden (Hours)

1 295 0.82 137.60 1.42 1,493 206,098

2 295 0.00 137.60 0.17 165 22, 75 4

3 295 0.00 137.60 0.17 165 22, 75 4 Average 295 0.27 137.60 0.59 608 83,869
Notes: Values may not calculate due to rounding.

See Chapter 3 for more details.



### 9.2 Unfunded Mandates Reform Act (UMRA)

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Public Law 104

- 4), 2 U.S.C. 1531

- 1538 for State, local, or tribal governments or the private sector. Based on EPA’s experience with similar information collection rules, State, local, and tribal governments have not been affected by this reporting requirement, and EPA does

### 9

- 2

not have any reason to believe that any State, local, or tribal government will be affected by this rulemaking.



### 9.3 Executive Order 13132

– Federalism

Under Executive Order 13132, “ Federalism” (64 FR 43255, August 10, 1999), EPA has determined that the proposed rule does not have “federalism implications” because it will not 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, as specified in the executive order. The proposed rule establishes reporting and recordkeepin g requirements that apply to manufacturers and processors of certain chemicals. Because EPA has no information to indicate that any state or local government manufactures or processes the chemical substances covered by this action, the proposed rule does n ot apply directly to states and localities and will not affect state and local governments. Thus, EO 13132 does not apply to the proposed rule.



### 9.4 Executive Order 13175

– Consultation and Coordination with Indian Tribal
Governments

As required by Executive Or der 13175, entitled Consultation and Coordination with Indian Tribal

Governments (65 FR 67249, November 9, 2000), EPA has determined that this proposed rule does not have tribal implications because it will not have any effect on tribal governments, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in the Order. Thus, EO 13175 does not apply to the proposed rule.



### 9.5 Execut ive 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 fo r any economically significant regulation (as defined by Executive Order 12866) that the Agency has reason to believe may disproportionately affect children.

EPA interprets EO 13045 as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5

- 501 of the EO has the potential to influence the regulation. The proposed rule does not establish an environmental standard intended to mitigate health or safety risks

and will not have an annual effe ct on the economy of $100 million or more, nor does it otherwise have a disproportionate effect on children. Nevertheless, the information obtained from the reporting required by this rule will be used to inform the Agency’s decision

- making process regardi ng chemicals to which children may be disproportionately exposed. This information will also assist the Agency and others in determining whether the chemicals in this proposed rule present potential risks, allowing the Agency and others to take appropriate action to investigate and mitigate those risks.



### 9.6 Executive Order 12898

– Environmental Justice

Executive Order 12898, “Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations” (59 FR 7629, February 16, 1994), est ablishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropri ate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low

- income populations in the United States.

### 9

- 3

The Agency believes that the information collected under thi s proposed rule, if finalized, will assist EPA and others in determining the potential hazards and risks associated with various chemicals manufactured and used at the nanoscale. Although not directly impacting environmental justice

- related concerns, this information will enable the Agency to better protect human health and the environment, including in low

income and minority communities.

The proposed rule is directed at all nanoscale substances for which basic production, use, and toxicity

information is currently unavailable. All consumers of these chemicals and the products made from them and all workers who come into contact with these chemicals could benefit if data regarding the chemicals’ health and environmental effects were developed. Therefore, it does not appear that the costs and the benefits of the proposed rule will be disproportionately distributed across different geographic regions or among different categories of individuals.



### 9.7 Executive Order 13211

– Energy Supply, Distribution, or Use

This proposed rule is not subject to Executive Order 13211, “ Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866

.



### 9.8 National Technology Transfer and 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 otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are develo ped 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.

The proposed rule does not involve technica l standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

### A

- 1 

## Appendix A

– Wage Rate Calculations

This appendix describes the derivation of the fully loaded wage rates and inflation factors used in calculating costs of labor, materials, and other inputs. All cost estimates are presented in 2011 dollars.

The fully loaded unit labor cost for managerial, professional/technical, and clerical labor in the regulated industry and for EPA staff is estimated by adding fringe benefits and overhead costs to the hourly wage or annual salary for each category following the method described in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (EPA, 2002b). This appendix describes the method employed to estimate the fully loaded unit labor costs for each labor category and presents the results of the analysis.

Labor categories used in the analysis correspond to the U.S. Bureau of Labor Statistics (BLS) Standard Occupational Classification (SOC ) system. In March 2004, BLS began using the North American Industry Classification System (NAICS) instead of the Standard Industrial Classification (SIC) System, and the Standard Occupational Classification (SOC) system instead of the Occupational Classif ication System (OCS). Exhibit A

- 1 summarizes the crosswalk between old and new occupational titles, and lists the SOC titles that correspond to the managerial, professional/technical, and clerical labor categories used in this analysis (Weinstein and Loewenstein, 2004).

Exhibit A

- 1 : Detail of Labor Categories Used in the Analysis
Labor Category Used in the Analysis BLS Old Title (OCS) BLS New Title (SOC)

Managerial Executive, administrative, and managerial Management, business, and

financial

Professional/Technical Professional specialty and technical Professional and related

Clerical Administrative support, including clerical Office and administrative support
Source: BLS (201 4 ); Weinstein and Loewenstein (2004).



### A.1 Derivation of Industry Unit Wage Rates

Wages and fringe benefit data for managerial, professional/technical, and clerical labor are from the BLS Employer Costs for Employee Compensation (ECEC) historical data for December 2013 ( BLS, 2014 ). 19



### The costs of fringe benefits such as paid leave and insurance, specific to each labor category, are taken from the same BLS report ( BLS, 2014 ). Fringe benefits as a percentage of wages are calculated separately for each labor category. For example, the wage rate for professional/ tech nical labor in 2013 was $ 3 8

. 16

, and the average fringe benefit was $ 1 9

. 90

. 20 

### Therefore, fringe benefits as a percentage of wages were $ 1 9. 90 /$ 3 8

. 16 , or approximately 52 percent (see Exhibit A

- 2 ).

19 Past economic analyses used ECEC data series speci fic to white

- collar workers in the manufacturing sector. However, those data sets were discontinued in March 2007, and these historical data were the best alternative. In a phone conversation (February 11, 2009), a BLS employee could not identify a better data set to use.

20 Past economic analyses have used the term “technical” labor. Here the category is called “professional/technical” labor, to make clear how it relates to BLS categories. In 2004, BLS changed from the Occupational Classification System, OC S, to the Standard Occupational Classification system, SOC. In the process, the “Professional specialty and technical” category became the “Professional and related” category. However, the coverage of the old and new occupational groups is approximately th e same. See the BLS article , “ Comparing Current and Former Industry and Occupation ECEC Series” (Weinstein and Loewenstein, 2004).

### A

- 2

An additional loading factor of 17 percent is applied to wages to account for overhead. 21 

### This approach is used for consistency with Office of Pollution Prevention and Toxics (OPPT) economic analyses for two major rulemakings: W

age Rates for Economic Analyses of the Toxics Release Inventory Program , June 2002 (EPA, 2002b), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report , August 2002 (EPA, 2002a). This overhead loading factor is added to the b enefits loading factor, and the total is then applied to the base wage to derive the fully loaded wage. For example, fully loaded wage for professional/technical labor in 2013 is $ 3 8

. 16 × (1+ 0. 5 2 + 0.17) = $64. 55

.

Fully loaded costs for managerial and clerical labor are calculated in a similar manner, as shown in

Exhibit A

- 2

.

Exhibit A

- 2 : Derivation of Loaded Industry Wage Rate s

Labor Category Data Source for

Wage Information Wage Fringe

Benefit Fringes as

% wage Overhea

d as %

wage 1 Fringe +

overhead

factor Loaded

Wages

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

Managerial BLS ECEC, Private

Manufacturing

industries

, “Management, business, and financial occupations” 2 $ 46.25 $ 23.71 51.26 % 17% 1. 68 $ 77.82

Professional/

Technical BLS ECEC, Private

Manufacturing industries,

“Professional and related occupations“ 2 $38. 16 $19. 90 52.15 % 17% 1. 69 $64. 55

Clerical BLS ECEC, Private

Manufacturing industries, “Office and administrative support occupations” 2 $ 18.05 $ 9.23 51.14 % 17% 1. 68 $ 30.35

Notes:

1 The wage and fringe benefit rates are calculated as the average of the quarterly rates in 201 3

. 2 An overhead rate of 17% was used based on assumptions in Rice (2002) and U.S. EPA (2002).



### A.2 Derivation of Agency Unit Wage Rates

Unit wage rates for EPA staff are calculated based on annual federal salaries for the Washington

Baltimore area published by t he Office of Personnel Management (OPM) and effective January 2013 ( OPM, 2013 ). The average salary for one full

- time equivalent (FTE) staff member is estimated as the salary for a GS

- 13 Step 5 employee, which is $ 100,904 annually without fringe benefits an d overhead

costs

. 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 $1 61,446 (see Exhibit A

- 3 : Derivation of Loaded Agency Wage Rates ).

21 The change was used in the 2003 PMN SNUR economic analysis (EPA, 2003b). In some earlier reports, the 17 percent had been a pplied to wages

- plus

- fringe benefits.

### A

- 3

The Agency loading factor of 1.6 is from an EPA guide entitled Instructions for Preparing Information Collection Requests (IC

Rs) (EPA, 1992, page 30, footnote 9). The 60 percent assumption was labeled “the benefits multiplication factor” in the EPA guide, but has been used in many EPA OPPT ICRs to reflect both fringe benefits and overhead for federal staff. For example, it was u sed in a document supporting EPA ICR No. 1139.06 (EPA, 2000), 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 t hat the 1.6 factor included not only benefits

but also overhead.



### Fully loaded costs for Agency labor are shown in Exhibit A

- 3 : Derivation of Loaded Agency Wage Rates

.

Exhibit A

- 3 : Derivation of Loaded Agency Wage Rates

Labor Category Data Source

for Wage

Information Date Wage Fringe

Benefit Fringes as

% wage Overhea

d as %

wage Fringe +

overhead

factor Loaded Wages

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

EPA staff

FTE Annual federal

staff cost: OPM Washington

Baltimore

Northern Virginia, DC

MD

- PA

- VA

WV, area, GS

13 Step 5 pay

rates a Jan

- 1 3 $ 100,904

(annual)

-- [Included in

60% overhead] 60% b 1.60 $ 161,446 (annual)

$ 48. 35 (hourly) $ 77. 36 (hourly)

Notes:

a The Agency salary is the unloaded federal GS

- 13 Step 5 salary ($ 100,904 for 201 3 ), from the OPM salary table for the Washington

- Baltimore

- Northern Virginia Locality Pay Area ( OPM, 201 3 ). Hourly rates are based on annual salary divided by 2, 08 7 hours.

b The 60% fringes

- and

- overhead rate is from an EPA guide , Instructions for Preparing Information Collection Requests (ICRs) (EPA, 1992, page 30, footnote 9).

### B

- 1 

## Appendix B

– Small Business Sensitivity Analysis

Th e following presents an alternative small business analysis to demonstrate the sensitivity of the small business analysis to changes in the assumed number of nanomaterials produced by each small firm. The current small business analysis in Chapter 8 assumes that both small and large firms produce on average 5.1 “commercial” nanomaterials per firm. In this alterna tive analysis we calculate the number of

nanomaterial s manufactured separately for large and small firms and how this change affects the number of small businesses significantly affected by the proposed rule.



### B.1 Estimation of the number of nanomaterials per small Firm

I n Section 2.4 of this report EPA calculates the number of nanomaterials produced by each firm, based on a sample of 34 large businesses, using the TSCA

- based definition of annual revenue greater than $4

million. Within this group of 34 companies

, EPA then calculated the median number of nanomaterial s and makes th e assumption that both small and large businesses produce the same number of

nanomaterials. H owever, this assumption is conservative and may overestimate the impact of the requirements on small businesses. In this appendix, we present the costs to small businesses using the sample of 34 businesses that are currently used in Chapter 2 to estimate the average number of nanomaterials produced by small and large companies as opposed to all companies.

Of the 34 nanomaterial

- producing firms identified in Chapter 2 , 26 had product information available on a company website. Twenty

- three of these firms manufactured nanomaterials for TSCA

- related uses. Of

these 23 fir ms
, 12 are small and 11 are large using SBA ’s NAICS

- specific sales or employee

- based

definitions. EPA calculated the median number of nanomaterials for these 12 small companies to be 11.5

nanomaterials. This is slightly lower than the median number for all companies

, 13, which is used to calculate the number of nanomaterials per firm in Section 2.4

. Based on results in Chapter 2, EPA

estimated that the number of nano materials that are produced for R&D purposes is 61.11 percent.
S ubtracting 61.11 percent R&D nanomaterials from the total number of nanomaterials produce s an esti mate of 4. 47 “commercial” nanomaterials produced by each small firm. This is slightly fewer th an the

5. 06 “commercial” nanomaterials estimated for all companies in Section 2.4.3 of t his report



### .

Exhibit B

- 1 : Number of Nanomaterials per Company after the R&D Exclusion

Company Size Nanomaterials

per Firm R&D

Exclusion (%) R&D

Exclusion (#) “Commercial

” Nano

materials per

Firm

All Large Businesses

under TSCA

definition 13.0 61.11% 7.9 5.1

Subset of Small Businesses (SBA definition) 11.5 61.11% 7.0 4. 47

Note: Small businesses included here are the set of companies considered large under the TSCA definition (and therefore subject to the proposed rule) but also considered small under the NAICS

specific SBA definition.

### B

- 2

B.2 Conclusions

EPA completed an analysis of impacts on small entities in Chapter 8 and found that no small businesses were impacted at greater than 1% of their sales. Costs to these entities were based upon the reporting costs per nanomaterial. In this section, EPA’s calcul ations suggest that the number of nanomaterials that a small entity will necessarily report on could be overestimated. In this case, it follows that costs would also be overestimated if there are fewer reports required. Therefore, it is reasonable to concl ude that no small entities would be impacted at greater than one percent of sales under the alternative estimate of the number of nanomaterials presented above.

### C

- 1 

## Appendix C

- References

Applegate, J.S. 1991. The Perils of Unreasonable Risk: Information, Regulatory Policy, and Toxic

Substances Control. Columbia Law Review

, 91 (2): 261

- 333.

BCC Research. 2008

. Nanotechnology: A Realistic Market Assessment.

Bureau of Labor Statistics (BLS). 2 014 . “Employer Costs for Employee Compensation (ECEC) Supplemental Tables: December 2006 to March 2014 .” Available at: http://www.bls.gov/ncs/ect/sp/ecsuphst.pdf . Accessed July 2014

. Berger, 2009. Personal Communication between Michael Berger, Nanowerk, and Daniel Gross, Abt Associates. August 11, 2009.

Cohen, M. and V. Santhakumar. 2007. Information Disclosure as Environmental Regulation: A Theoretical Analysis. Environmental and Resource Economics, 37 (3): 599

- 620.

Dun & Bradst reet (D&B). 2009. Duns Market Identifier Database.

Konar, S. and M. Cohen. 1997. Information As Regulation: The Effect of Community Right to Know

Laws on Toxic Emissions. Journal of Environmental Economics and Management, 32 : 109

- 124.

Lux Research. 2007. T

he Nanotech ReportTM. 5th Ed.

Nanowerk. 2009. “Company & Labs Directory.” Available at: http://www.nanowerk.com/nanotechnology/research/nanotechnology_links.php. Accessed October 08, 2009.

Roco, M.C. 2005. “Nanotechnology.” Presented at 2nd Annual Internati onal Symposium on Nanotechnology and Occupational Health . University of Minnesota, October 3, 2005.

U.S. Environmental Protection Agency (EPA), Office of Policy, Planning and Evaluation. 1992. Instructions for Preparing Information Collection Requests (ICR s)

. U.S. Environmental Protection Agency (EPA). Office of Pollution Prevention and Toxics; Economics, Exposure, and Technology Division; Regulatory Impacts Branch, 1994. Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notifications

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2000. Supporting Statement for EPA ICR No. 1139.06: TSCA Existing Chemical Test Rules, Consent Orders, Test Rule Exemptions, and Voluntary Test Data Submissions

.

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2002a. Economic Analysis for the Amended Inventory Update Rule: Final Report

. EPA

- HQ

- OPPT

- 2002

- 0054

- 0260.

U.S. Environmental Protection Agency (EP A). Office of Pollution, Prevention and Toxics. 2002b. Wage Rates for Economic Analyses of the Toxics Release Inventory Program

.

### C

- 2

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2003a. Economic Analysis for the Additio n of 47 Chemical Abstract Service (CAS)

- numbered Chemicals Requested to be added to EPA's Preliminary Assessment Information Reporting (PAIR) Rule in the 48th, 50th, and 51st Reports of the TSCA Interagency Testing Committee . EPA

- HQ

- OPPT

2002

- 0061

- 0005.

U. S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2003b. Economic Analysis of Expedited Significant New Use Rules for 65 Chemical Substances . EPA

HQ

- OPPTS

- 2002

- 0078.

U.S. Environmental Protection Agency (EPA), Office of P ollution Prevention and Toxics. 200 6

. Supporting Statement for EPA ICR No. 1198.05 : Information Collection Request for Toxic Substance Control Act Section 8(a) Chemical

- Specific Information Gathering Rules

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2007. Supporting Statement for EPA ICR No. 2250.01: Information Collection in Support of EPA’s Stewardship Program for Nanoscale Materials

.

U.S. Environmental Protection Agency (EPA), Off ice of Pollution Prevention and Toxics. 2009a. Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA

HQ

- OPPT

- 2008

- 0296).

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2009b

. Nanos cale Materials Stewardship Program Interim Report

.

U.S. Environmental Protection Agency (EPA), Office of Research and Development. 2009c

. Nanomaterial Research Strategy

.

U.S. Environmental Protection Agency (EPA), Office of Pollution Prevention and Toxics. 2009 d

. “Nanoscale Materials Stewardship Program.” Available at: http://www.epa.gov/oppt/nano/stewardship.htm. Accessed October 08, 2009.

U.S. Environmental Protection Agency (EPA). 2011. Supporting Statement for EPA Information Collection Request Number 2 002.05, “Cross

- Media Electronic Reporting Rule” Office of Environmental Information, U.S. Environmental Protection Agency. June 22, 2011.

U.S. Office of Personnel Management (OPM). 2013 . “Salary Table 2013

- DCB: for the Locality Pay Area of Washington

- Baltimore

- Northern Virginia, DC

- MD

- VA

- WV

- PA.” Effective January 2013

. Available at: http://www.opm.gov/policy

- data

- oversight/pay

- leave/salaries

- wages/2013/general

schedule/gs.pdf . Accessed July 2014

.

Weinstein, Harr iet G and Mark A. Loewenstein. U.S. Bureau of Labor Statistics (BLS). 2004. “Comparing Current and Former Industry and Occupation ECEC Series.” Available at: http://www.bls.gov/opub/cwc/cm20040823ar01p1.htm. Accessed October 08, 2009.

White House Office of Management and Budget (OMB). 2003. Circular A

- 4. Available at: http://www.whitehouse.gov/omb/circulars/a004/A

- 4.html. Accessed October 08, 2009.