Economic Analysis in Support of the TSCA S ection 12(b) Information Collection Request

Prepared by: Joseph M. Callahan Economic and Policy Analysis Branch Economics, Exposure, and Technology Division
Office of Pollution Prevention and Toxics

U.S. Environmental Protection Agency 401 M Street, S.W. Washington, D.C. 20460

October 30, 19986. Estimating the Burden and Cost of the Collection

The Purpose of this analysis is to determine the incremental cost to industry and to the EPA, associated with export reports that would be submitted to the Agency under the TSCA section 12(b) reporting requirements.

6 (a) Estimating the Respondent Burden

The burden to respondents of this information collection activity comprises the time required to perform the steps outlined in section 3 of this document.

Most companies comply by compiling a list of products exported by the company that are subject to section 12(b) reporting. Each outgoing order is checked to see if the chemical or product is on the list and, depending on the chemical, whether it is the first shipment to the importing country or the first shipment of the calendar year to that country. If so, a completed form letter is sent to EPA. In most cases the entire process is computerized.

Compile List . Since this information collection activity has been in place for eighteen years, most respondents will have already developed a list of their products subject to section 12(b) reporting. Respondents need only check fo r new regulations promulgated and any new products exported by the company. Updating the list is estimated to take an average of one hour of technical time (which may also include some proportion of legal time). This could vary depending on the number of products exported by the company and the number of their products subject to section 12(b). Based on past experience, approximately 350 companies report under section 12(b). Compiling the list for all respondents is estimated to take 350 hours (1 hour x 350 firms). On average, about 100 of those compan ies are filing notices under TSCA Section 12(b) for the first time and thus could be incurring higher costs for this task.

Write or Revise Letter . Companies that export chemicals subject to section 12(b) reporting must prepare an export notice to send to EPA. Time for initial preparation of the export notice probably varies depending on whether the company has prior experience with this program, but this step is estimated to take an average of one hour of technical time (which may also include some proportion of legal time) per year for each company subject to section 12(b) reporting. Many of the notifications received by EPA are for repeat submissions from a company. Most of the repeat submissions received by the Agency are computer generated form letters, and it is assumed that no additional time is required to prepare letters for repeat submissions. Thus we estimate a total of 350 hours (1 hour x 350 firms = 350 hours) per year in letter writing or revising.

Checking Orders and Send Notices . The 350 companies that export chemicals subject to section 12(b) reporting must check outgoing shipments against the list of their products described above. Where the shipment is for a section 12(b) chemical and, depending on the chemical, if it is the first shipment to the importing country or the first shipment of the calendar year to that country, a form letter notifying EPA is printed out. This whole process is estimated to take on average one half hour of clerical time per notice. Based on past experience, approximately 11,000 notices will be sent. Total time will be 5,500 hours (11,000 notices x 1⁄2hour each).

TABLE 1: ANNUAL AVERAGE BURDEN PER RESPONDENT FACILITY

BURDEN HOURS

ACTIVITY TECHNICAL CLERICAL TOTAL

Compile list 1
- 1

Write letter 1
- 1

Check order and send
notice - 16 16

Total 2 16 18

TABLE 2: ANNUAL AGGREGATE BURDEN

BURDEN HOURS

ACTIVITY TECHNICAL CLERICAL TOTAL

Compile list 350
- 350

Write letter 350
- 350

Check order and send
notice - 5,500 5,500

Total 700 5,500 6,200

Average burden hours per notice 0.064 0.5 0.564

It is estimated that the annual number of notices to be submitted for 1999 to 2001 will be 11,000. Estimating that the number of respondents will be 350 (a 75% increase over 1995), the average number of notices submitted per respondent will be 32.

6(b) Estimating the Respondent Cost

The costs to respondents is based on the time needed to complete the tasks listed in section 3, the hourly cost of labor at appropriate levels (labor rates), the number of facilities affected, and the number of reports generated. There are also costs for mailing. There are nospecific capital or overhead costs associated directly with this information collection activity.

Labor rates, including fringe costs, are $86.86 for management time, $64.30 for technical time, and $25.63 for clerical time, based on current labor market estimates produced in this
office.

Companies will also incur a cost of $6.27 per export notice to send the letter to EPA via registered mail ($4.85 for registered mail, $1.10 for a return receipt, and 32¢ postage). Aggregate annual costs for mailing will be $68,970 ($6.27 x 11,000).

TABLE 3: ANNUAL COST PER RESPONDENT FACILITY

ANNUAL COST

ACTIVITY TECHNICAL CLERICAL TOTAL

Compile list $64.30

- $64.30

Write letter $64.30

- $64.30

Check order and send
notice - $410.00 $410.00

Mailing cost $275.88

Total $128.60 $410.00 $814.48

TABLE 4: ANNUAL AGGREGATE RESPONDENT COST

ANNUAL COST

ACTIVITY TECHNICAL $64.30/hr CLERICAL $25.63/hr TOTAL PRESENT
VALUE*

Compile list $22,500

- $22,500 $63,180

Write letter $22,500

- $22,500 $63,180

Check order and
send notice - $143,500 $143,500 $402,950

Mailing cost
- - $68,970 $193,670

Total $45,000 $143,500 $257,470 $722,980

* Present value for 3 years at a 7% discount rate.6 (c) Federal Government Burden and Cost

Agency unit costs are based on past section 12(b) analyses, including the previous ICR, and on recent contacts with the Environmental Assistance Division (EAD) and with an EPA contractor’s office. EPA’s cost estimates are based on current experience with these activities. The Agency cost can be divided into three parts: receiving and processing incoming notices, preparing and mailing notifications to importing countries, and responding to requests for information and clarification from companies and importing countries. The allocation of burden hours and costs among these three parts is not exact, but the analysis below is reasonably accurate in terms of the overall burden estimate and the approximate allocation of that burden among these tasks.

In the first task, notices are received from firms that intend to export a product covered by this rule, the forms are checked for completeness, and the submissions are logged into a document control system. In 1997 EPA received and processed approximately 10,000 submissions. Based on conversations with the workers responsible for this task, about ten submissions can be processed per hour. We project that an average of 11,000 submissions will be received per year over the period covered by this ICR, requiring approximately 1,100 hours of contractor support. This work is currently done by contractor staff with a fully-loaded cost to EPA of approximately $20.00 per hour and thus is projected to cost $22,000 per year over the period of this ICR.

In the second task, workers prepare letters of notification which are subsequently reviewed and sent out to importing countries. Not all notices submitted require that a notification
be sent out. Based on conversations with EPA and contractor employees, this work varies considerably depending on the circumstances of any particular chemical, but averages approximately 35 minutes per notification. The previous ICR estimated 2,266 notifications to importing countries per year, but the recent experience has been approximately 1,700 per year. Assuming a 10% increase in these notifications, similar to the projected increase in submissions from companies, would project 1,870 notifications per year or a total of approximately 1090 hours. This work is currently done by contractor staff with a fully-loaded cost to EPA of approximately $20.00 per hour and thus is projected to cost $21,800 per year over the period of this ICR. The cost of mailing a notifications can vary from $2.00 to $12.00, depending on whether it is sent to an embassy in the US or to an overseas destination, and depending on whether the notice is registered. Based on current experience, mailing cost is estimate to average approximately $4.50 per notification, for a projected annual cost of $8,415

The burden described above covers the routine tasks of handing both incoming notices and outgoing notifications. The totals above also include a certain amount of time spent responding to routine requests for information, since data is not available to separate this outfrom the other tasks. Based on conversations with EAD staff, the work of responding to nonroutine requests for information and clarification from industry and importing countries, assisting the contractor staff in handling non-rou tine issues, and handling other tasks associated with the section 12(b) program can be expected to require about 20% of the time of a GS-13 EPA employee, or roughly 400 hours per year. Following the 1998 federal employee wage scale, and assuming an additional 60% to cover fringe benefits etc., that represents an annual cost ofapproximately $20,000.

TABLE 5: ESTIMATED COSTS FOR THE FEDERAL GOVERNMENT

ANNUAL COST PRESENT VALUE *

Processing of notices from companies $22,000 $64,096

Processing of notifications to importing countries $21,800 $63,513

EPA staff time, responding to information requests, etc. $20,000 $58,269

Mailing cost of notifications $8,415 $24,517

Total $72,215 $210,396

* Present value calculated for 3 years at a 3% discount rate.

6 (d) Reasons for Change in Burden

This analysis shows about a 50% increase in the number of notices sent to EPA, a 75% increase in the number of firms sending notices, and about a 30% increase in labor wage rates in comparison to the estimates for the previous ICR. These factors in combination result in about a 60% increase in projected burden hours and a 130% increase in burden cost to responding firms.