# Economic Analysis o f the Significant New Use Rule f or the **Trichoderma reesei** ( **T. reesei** ) organism Subject to MCAN J

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- 2 (EPA DOCKET EPA

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November 1, 2011

— Does not contain TSCA CBI

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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, N.W. Washington, DC 20460Economic Analysis for SNUR, Docket OPPT

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## Contributors

The EPA analyst responsible for this report was Stephanie Suazo . Analytical and draft preparation support was provided by Abt Associates Inc. under EPA Contract No. EP

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- 010.Economic Analysis for SNUR, Docket OPPT

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## Abstract

This Economic Analysis estimates the potential costs of a Significant New Use Rule (SNUR ) covering the microorganism identified generically as Trichoderma reesei (T. reesei) that has been the subject of Microbial Commercial Activities Notification (MCAN) J

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– 2. The proposed SNUR requires manufacturers, importers, or processors of T. ree s ei organism to notify EPA at least 90 days prior to the occurrence of any significant new use. A significant new use is defined

as any manufacturing, processing, or use of the microorganism without containment and inactivation controls described in the MCAN notice

. A firm intending to engage in these activities would be required to submit a Significant New Use Notice (SNUN), incurring an estimated submission cost of $8,302 per chemical, and potentially other minor costs. The required notification will prov ide EPA with the opportunity to evaluate the intended use and, if necessary, to prevent or limit potentially adverse effects from that activity before it occurs.

To submit a Significant New Use Notice or request a SNUR modification, a firm incurs a modest submission cost, plus costs of any additional data generated to support the submission. By avoiding a Significant New Use, a firm can avoid submission costs, but may incur other compliance costs. For example, it may incur costs of restricting microbe re leases o r preventing worker exposure.Economic Analysis for SNUR, Docket OPPT

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## Table of Contents

Contributors

................................ ................................ ................................ ................................ ...... i Abstract

................................ ................................ ................................ ................................ ........... ii 1 Introduction

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

### 1.1 Statutory Authority

................................ ................................ ............................. 1 1.2 Summary of Methodology

................................ ................................ .................. 1 1.3 Or ganization of this Report

................................ ................................ ................. 1 2 Affected Entities

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

### 2.1 Chemicals Subject to the Proposed Rule

................................ ............................ 3 2.2 Significant New Uses under the Proposed SNUR

................................ .............. 3 2.3 Potentially Affected Companies

................................ ................................ ......... 4 3 Industry Compliance Costs

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

### 3.1 Wage Rates

................................ ................................ ................................ ......... 5 3.2 Unit Industry Compliance Costs

................................ ................................ ......... 6 3.2.1 Rule Familiarization

................................ ................................ .................... 6 3.2.2 CDX Registration, CDX Electronic Signature, and Pay.gov Account Setup

................................ ................................ ................................ ..................... 7 3.2.3 Form Completion and Submission Fee

................................ ....................... 8 3.2.4 Recordkeeping for Companies Choosing to Submit a SNUN

.................... 9 3.2.5 Recordkeeping for Companies that do not Submit a SNUN

.................... 10 3.2.6 Customer Notification

................................ ................................ ............... 10 3.2.7 Import Certification

................................ ................................ .................. 11 3.2.8 Export Notification

................................ ................................ ................... 11 3.3 Summary of Per Submission Costs, by Option

................................ ................. 1 3 3.4 Likelihood of SNUN Submission

................................ ................................ ..... 14 3.5 Potential for Subsequent Regulatory Actions

................................ ................... 14 4 Agency Costs

................................ ................................ ................................ ........................ 16 

### 4.1 Labor Rates fo r EPA Staff

................................ ................................ ................ 16 4.2 SNUN Processing Costs

................................ ................................ ................... 17 4.3 Export Notification Cost

................................ ................................ ................... 20 5 Be nefits

................................ ................................ ................................ ................................ . 21 6 Additional Analyses

................................ ................................ ................................ .............. 22 

### 6.1 Regulatory Flexibility Act

................................ ................................ ................ 22 6. 2 Unfunded Mandates Reform Act (UMRA)

................................ ...................... 22 6.3 Paperwork Reduction Act (PRA)

................................ ................................ ...... 22 6.4 Executive Order 13132, Federalism

................................ ................................ . 23 6.5 Executive Order 12898, Environmental Justice

................................ ................ 23 6.6 Executive Order 13045, Protection of Children

................................ ............... 23 6.7 Executive Order 13175, Tribal Governments

................................ ................... 23 6.8 Executive Order 13211, Energy Supply, Distribution, or Use

......................... 24 7 References

................................ ................................ ................................ ............................. 25 Appendix A: Inflators and Wage Rates

................................ ................................ ......................... 28Economic Analysis for SNUR, Docket OPPT

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## List of Tables

Table 1: Loaded Industry Wage Rates, December 2010

................................ .................. 6 Table 2: Rule Familiarization Burden and Cost for SNUR Submitters

........................... 7 Table 3: CDX Registration, CDX Electronic Signature, and Pay.gov Account Setup Burden and Cost for First

- Time Submitters

................................ ....................... 8 Table 4: Industry Cost Estimate to Complete the SNUN Form

................................ ....... 9 Table 5: Industry Cost Estimate to Complet e and Submit the SNUN Form

.................... 9 Table 6: Annual Per

- Chemical Costs of Recordkeeping Requirement for Companies that Choose not to Subm it a SNUN

................................ ................................ .. 10 Table 7: Derivation of Total Mailing Cost for 12 Notices

................................ ............. 12 Table 8: TSCA 12(b) Export Notification Cost per Notification

................................ ... 13 Table 9: Compliance Options and Associated Costs Incurred by a Firm Due to the Proposed SNUR

................................ ................................ ............................... 14 Tabl e 10: Derivation of Loaded Agency Wage Rates

................................ ...................... 17 Table 11: Derivation of Inflation Factors for Agency Extramural Costs

......................... 18 Table 12: Agency Costs for SNUN and Other Submission Review and Processing

....... 19 Table 13: TSCA 1 2(b) Export Notification Cost: Agency Burden per Activity (2010$) 20 Table 14: Derivation of Loaded Wage Rates

................................ ................................ ... 30 Table 15: Derivation of Inflation Factors

................................ ................................ ......... 32Economic Analysis for SNUR, Docket OPPT

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## 1 Introduction

This report presents the U.S. Environmental Protection Agency (EPA), Office of Chemical Safety and Pollution Prevention (OCSPP’s) analysis of the potential costs incurred as a proposed Significant New Use Rule (SNUR) being promulgated for the microorganism identified generically as Trichoderma reesei ( T. reesei ) which has been the subject of Microbial Commercial Activities Notification (MCAN) J

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### 1.1 Statutory Authority Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule aft er considering all relevant factors, including those listed in TSCA section 5(a)(2). Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a SNUN to EPA at least 90 days before manufacturing, importing, or processing the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)). The general SNUR provisions are found at 40 CFR Part 721, Subpart A.

EPA has interpreted the TSCA section 3(2) definition of ‘‘chemical substance’’ as a uthorizing EPA to regulate microorganisms under TSCA. See the Federal Register of April 11, 1997 (62 FR 17910) (FRL

– 5577

– 2). Microorganisms that are not intergeneric are implicitly included on the TSCA Inventory, which would include naturally

- occurring m icroorganisms such as T. reesei (see § 725.8(b)). Thus, such microorganisms are only subject to TSCA section 5 notification requirements upon promulgation of a SNUR, pursuant to TSCA section 5(a)(2).



### 1.2 Summary of Methodology

This analysis quantifies, to the extent possible, the costs to society of the proposed rule by identifying the costs to industry associated with performing the required reporting and recordkeeping, and the costs to EPA of administering the rule. Industry costs consist of rule familiariz ation; registration with the Central Data Exchange (CDX) electronic reporting tool; collection, compilation, and submission of required information for significant new uses of the microorganism ; export notification; and recordkeeping. Agency costs include reviewing and processing the data received as a result of the rule. Data sources for this analysis include burden estimates derived from previous information collection requests and economic analyses for related rules, and compensation data acquired from government publications

.
In addition to costs, t his report qualitatively 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 Executive Order 12866.



### 1.3 Organization of this Report

The remainder of this report provides EPA’s economic analysis in support of the proposed rule. The chemical substances and entities affected ar e characterized in Chapter 

### 2

. Chapter 

### 3 contains estimates of the industry cost s to comply with the proposed rule, and Chapter 

### 4 shows estimates of the government costs associated with the administration of the proposed rule. Chapter 

### 5 addresses the benefits of the

pro posed rule. Several additional impact analyses are presented in Chapter 

### 6

, including: small entity impact analysis, as mandated by the Regulatory F lexibility Act (RFA) ; a burden hour analysis that responds to the requirements of the Paperwork Reduction Act (PRA); an analysis of unfunded mandates that pertains to the Unfunded Mandates Reform Act (UMRA); an analysis of environmental justiceEconomic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 2 implications that addresses the requirements of Executive Order 12898 ; and a n analysis of children’s health pertinent to Executive Order 13045

. Note that all dollar amounts in this analysis are reported in 20 10 dollars.Economic Analysis for SNUR, Docket OPPT

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## 2 Affected Entities

2.1 Chemicals Subject to the Proposed Rule

This SNUR will use notice and comment procedures. This proposed rule would require persons to notify EPA at least 90 days before commencing the manufacture, import, or processing the microorganism identified generically as Trichoderma reesei ( T. reesei ) that was the subject of the was the subject of the Microbial Commercial Activities Notification (MCAN) J

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– 2 prior to the occurrence of any significant

new use. A significant new use is defined as any manufacturing, processing, or use of the microorganism without containment and inactivation controls as described in the MCAN notice

. Based on information on analogous Trichoderma reesei species, EPA identified concerns for opportunistic infections to immune compromised persons from exposures to large quantit ies of the MCAN substance. For the uses described in the MCAN J

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- 2 , human and environmental exposures are minimal based on adequate containment and inactivation controls listed in the notice. Therefore, EPA has not determined that the proposed manufacturing, processing, or use of th e substance with the specific containment and inactivation controls described in the MCAN may present an unreasonable risk. However, b ased upon consideration of alternative uses for the substance, EPA has determined that use of the substance without adequ ate containment and inactivation controls, resulting in releases of active cells may cause serious health effects. Additional information relating to the assessment of this chemical substance, including sanitized reports and a list of references used, is available under docket ID number EPA

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The MCAN states that the generic (non

- confidential) use of the microorganism will be to produce enzymes for ethanol production



### .

2.2 Significant New Uses under the Proposed SNUR

EPA may promulgate a SNU R for a substance when potential use could result in significant changes in human exposure or environmental release levels and/or that concern exists about the substance’s health or environmental effects (40 CFR §721.170)

. According to TSCA Section 5(a)(2 ), the determination that a chemical use qualifies as a significant new use must consider all relevant factors, including:

**•** The projected volume of manufacturing , importation, and processing of the chemical substance;

**•** The extent to which a use changes the t ype or form of exposure of human beings or the environment to a chemical substance;

**•** The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance; and

**•** The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

Additionally, EPA has determined that the results of the following tests would help characterize the human health ef fects of the MCAN substance: (1) a survival competition study to determine the ability of the MCAN microorganism to survive in the environment. Testing should evaluate the microorganism relative to the survival of the unmodified parent, or recipient strai n, and conduct counts of the MCAN microorganism versus total fungi. This test may require some supplementation with carbon source(s) and could involve more than one soil type. (2) A study to determine adequate inactivation in an anaerobic fermentation

en vironment under production conditions of ethanol content and ethanol distillation temperatures. (3) Investigate whether paracelsin will be produced, and at what levels i f T.reesi is grown on various plant biomass materials for different durations under va rious fermentation conditions in cellulosic biomassEconomic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 4 facilities. (4) If produced, whether paracelsin would be denatured/inactivated during biofuel production and processing. (5) If released from the facility, whether paracelsin would be degraded/inactivat ed during
wastewater treatment. (6) If released to the environment, the persistence, stability, dissemination, accumulation, and the potential resulting biological activity of paracelsin with exposure to organisms in the environment.

It should be noted t hat testing is not required under TSCA Section 5(a) and all testing of the MCAN substance as a result of the proposed SNUR is voluntary and therefore the costs of any testing are not attributable to the proposed r ule.



### 2.3 Potentially Affected Companies

T he proposed SNUR applies to processors as well as to manufacturers and importers (40 CFR §721.5) of the T. reesei species

. It would require manufacturers, importers, and processors to notify EPA at least 90 days before commencing the manufacture, import, or processing of T. reesei organism without the containment and inactivation controls as described in the MCAN notice

.Economic Analysis for SNUR, Docket OPPT

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## 3 Industry Compliance Costs

The proposed SNUR discussed in this report specifies that any manufacture, import, or processing of the microbe without the containment and inactivation controls as described in the MCAN notice will require reporting under secti on 5(a)(1)(A) of TSCA

. Therefore, a firm intending to manufacture, import, and/or
process the microorganism for these applications must submit a SNUN

. Alternatively, a firm can decide not to manufacture, import, and/or process the microbe or to manufacture, import, and/or process the microbe in such a way that it is not considered a significant new use

. The firm, therefore, has two options:

**•** Option 1 : Submit a SNUN

.

3.2.8 A SNUN indicates to EPA that the firm would like to manufacture, import, and/o r process the microbe for a significant new use

. The firm must submit the SNUN to EPA at least 90 days before it plans to commence the manufacture, import, and/or processing of the new use of the substance; the SNUN provides EPA with the opportunity to ev aluate the intended use and, if necessary, to prohibit or limit that activity before it occurs

. If EPA allows the manufacture, import, and/or processing of the microbe for a significant new use, then the costs associated with this opt ion are the costs of submitting the SNUN (including a user fee) plus, if there is any export of the microbe , the export notification costs that result from TSCA Section 12 (b) requirements that are automatically triggered for the microorganism regulated un der TSCA Section 5 (see Section for details).

**•** Option 2 : Comply with SNUR limits ( not manufacture, import, and/or process a new use of the chemical )

The remainder of this chapter estimates the quantified portion of costs associated with the proposed SNUR for the uses of the microorganism

. Section . A firm can avoid engaging in a Significant New Use and submitting a SNUN by not manufactur ing

, importing, and/or processing the microbe in a manner such that they would be considered new uses

. While this option avoids the costs of submitting a SNUN, it may entai l the “hidden” cost of the foregone profit as a result of not engaging in the commercial activity originally planned , and may involve substituting the microorganism for another, more costly microbe

. If the firm elects to produce the microbe for research a nd development (R&D) purposes only (an exemption for R&D purposes is provided in 40 CFR §721.47), it may have costs associated with R&D recordkeeping

. In addition, if the firm exports the microbe , it will incur the export notification costs. The firm may also pursue this option temporarily by complying with SNUR restrictions while also pursuing Option 1. Due to the unc ertainty related to this option and EPA’s expectation that affected entities will select Option 1 : the costs of Option 2 are not fully quantified in this report.

3.1 summarize s the wage rates used in this chapter

. Section 3.2 provides the unit industry compli ance costs , including the costs of rule familiarization, registration with the Central Data Exchange (CDX) electronic reporting tool

, complet ing the SNUN form

, submission fee

, import certification, and export notification

. Total costs under each option are presented in Sectio n 3.3

.


### 3.1 Wage Rates

The proposed rule involves activities that may require efforts by employees in three labor cl assifications: managerial, technical, and clerical. Costs for each activity are calculated by estimating the labor hours required in each labor category and multiplying those burdens by the wage rate for each labor category. This section presents the est imated 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 WageEconomic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 6 Rates for Economic Analysis of the Toxics Release Inventory Program (EPA, 2002b)

. Wage data for each labor category in December 2010 are provided by the Employer Costs for Employee Compensation (ECEC) Supplemental Tables available on the BLS website (BLS, 201 1 a ). The loaded wage rate is $ 69.74 for managerial labor; $ 61.71 for technical labor; and $ 28.98 for clerical labor. 

### Table 1 presents the basic data used to calculate the loaded wage rates for all three categories of labor. 

### Appendix A: provides more information on the wage rates and inflators used in this analysis.

Table 1 : Loaded Industry Wage Rates, December 20 10

Labor Category Data Sources Date Wage (2010$) Fringe Benefit (2010$) Fringes as %
wage Over

head

%
wage 2 Fringe + overhead

factor Loaded Wages (2010$) 1

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

Managerial BLS ECEC , Private Manufacturing industries

, “Mgt, Business, and Financial” Dec

10
3 $42.82 $19.64 45.87% 17% 1.63 $69.74

Professional/

Technical BLS ECEC , Private Manufacturing industries, “Professional and related“ Dec

10 3 $36.93 $18.50 50.09% 17% 1.67 $61.71

Clerical BLS ECEC , Private Manufacturing industries, “Office and Administrative Support” Dec

10
3 $17.36 $8.67 49.94% 17% 1.67 $28.98

1 Wage data are rounded to the closest pennies in this table; however, in calculations using these numbers for this report, unrounded values were used.
2 An overhead rate of 17% was used based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b ), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2002a). 3 Employer Costs for Employee Compensation Supplementary Tables December 2010, U.S. Bureau of Labor Statistics, March 9, 2011 (BLS, 2011a).



### 3.2 Unit Industry Compliance Costs

3.2.1 Rule Familiarization

The proposed rule requires submitters and their staff to become familiar with the SNUR and its various requirements. Rule familiarization is estimated to require 0.55 hours of technical labor and 0.27 hours of managerial labor, as described in the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009a ), which measures the costs o f mandatory electronic reporting of SNUNs and other TSCA Section 5 notices. As shown in Table 2

, the total labor cost associated with rule familiariz ation is $ 52.54

.Economic Analysis for SNUR, Docket OPPT

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Reporting Activity Clerical Labor ($29.98/hour) Technical Labor ($61.71/hour) Managerial Labor ($69.74/hour) Total Labor Cost ( 2010 dollars) Burden Cost Burden Cost Burden Cost Burden Cost Rule Familiarization 0.00 $0.00 0.55 $33.94 0.27 $18.60 0.82 $52.54
Note: Costs may not equal labor wage rate times burden hours as shown, due to rounding. Unrounded estimates were used during the actual cost calculations. Source: See Table 1 ; EPA, 2009a

.

3.2.2 CDX Registration, CDX Electronic Signature, and Pay.gov Account Setup

The proposed SNUR requires first

- time submitters of any TSCA section 5 notice (including Premanufacture Notices ( PMNs), Significant New Use Notices (SNUNs), Test Market Exemption (TME) applications, Low Volume Exemption (LVE) notices, Low Exposure/Low Release (LoREX) exemption notices, Biotechnology Notices for genetically modified microorganisms, Notices of Commencement of Manufacture or Import (NOCs), and support documents to S ection 5 notices ) to register their company and key users with the CDX reporting tool, deliver a CDX electronic signature to EPA, and establish and use a Pay.gov E

- payment account. 1 These activities are only required of first

- time submitters of any S ection 5 notice

**•** CDX registration: EPA estimates that companies will spend approximately 0.18 hours per employee to register with CDX, and that an average of four technical s taff members and one manager will need to register for each company, totaling approximately 0.92 hours of burden per
company. . These activities are estimated to require the following burdens, based on the estimates presented in the Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009a ):

**•** CDX electronic signature: EPA estimates that companies will spend 0.25 hours preparing, submitting, and filing an electronic signa ture agreement (Authentication of Identity) form to EPA per employee. This burden will apply to four technical staff members and one manager per company, totaling 1.25 hours of burden per company. In addition, EPA estimates that a manager will spend an a dditional 0.50 hours accessing, preparing, and submitting verification forms (Verification of Authorization) for all authorized submitters to EPA. The total burden incurred by companies submitting and then verifying electronic signature agreements is 1.75 hours. Note that this burden does not include any additional time required to contact EPA’s CDX help desk to notify a change of submitter status, should one occur.

Filing the electronic signature agreement requires an additional mailing cost of $2.30 per company (including five $0.44 stamps and five $0.02 business envelopes).

**•** Payment via Pay.gov account: EPA estimates that one manager per company will spend approximately 0.13 hours setting up a Pay.gov ID account, logging into the system, finding the
appr opriate form, and filling it out. This burden does not include the time required to click ‘submit’ on the form and wait for payment processing.

As shown in Table 3

, the labor cost associated with CDX registration, CDX electronic signature, and Pay.gov account setup by a first

- time submitter is $ 181.34

. As noted above, an additional $2.30 in

1 Although the proposed rule does not require submitters to establish and use a Pay.gov account, the burden estimates in this analysis are conservative insofar as to include the use of Pay.gov as a required activity.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 8 mailing cost per company is attributable to these activities, for a total cost of approximately $1 84 per company.

Table 3 : CDX Registration, CDX Electronic Signature, and Pay.gov Account Setup Burden and Cost for First

- Time Submitters

Repor ting Activity Clerical Labor (at $29.98/hour) Technical Labor (at $61.71/hour) Managerial Labor (at $69.74/hour) Total Labor Cost (2010 dollars) Burden Cost Burden Cost Burden Cost Burden Cost CDX Registration 0.00 $0.00 0.73 $45.25 0.18 $12.78 0.92 $58.03 CDX Electronic Signature 0.00 $0.00 1 .00 $61.71 0.75 $52.30 1.75 $114.01
Mailing Cost $2.30
E

- Payment (Pay.gov ID) 0.00 $0.00 0.00 $0.00 0.13 $9.30 0.13 $9.30 Total 0.00 $0.00 1.73 $106.96 1.07 $74.38 2.80 $183.64
Note: Costs may not equal labor wage rate times burden hours as shown, due to rounding. U nrounded estimates were used during the actual cost calculations. Source: See Table 1 ; EPA, 2009a

.

3.2.3 Form Completion and Submission Fee

Respondents who choose to submit a SNUN are required to gather and submit information regarding the data elements identified in the applicable SNUN reporting form. The methodology and calculations used in this analysis assume that the employee responsible for collecting, filling out, and submi tting the requested information has a reasonable level of familiarity with the company and knowledge of operations at the site. It is assumed that for most entities these tasks are similar to other employee duties that require familiarity with EPA, State, and other Federal agency requests for chemical information and do not require additional familiarization or training beyond the basic rule familiarization described above. In addition, this analysis focuses on the marginal costs of submitting information for the proposed rule and not the total costs for the company to comply with a range of other Federal and State environmental, health, and safety regulations or accounting requirements that rely on this type of information.

Estimates of the costs of compl eting a Significant New Use Notice (SNUN) form are based on the costs of completing a PMN submission, since the data requirements are the same and the same form is used for both

. The PMN submission costs came from EPA's 1994 Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notifications, which relied on industry estimates of the effort needed to collect and compile all data required for a PMN submission, prepare the form, submit the form and data to EPA, and maintai n a file of the submission ( EPA , 1994, Table III

- 2 and pages III

- 11,

- 12, and

- 13)

. The 1994 estimates were based on a survey conducted by the Chemical Manufacturers Association, which became the American Chemistry Council

. These burdens include “the tim e spent reading and becoming familiar with the form, gathering the required information and preparing the report, producing sanitized responses for items claimed as confidential business information, and maintaining a file of the submission” (EPA, 1994. p. III 11

- 13)

. The burden associated with SNUN submission and preparation has been adjusted to reflect burden reductions resulting from the 2009 final PMN Electronic Reporting (ePMN) Rule that requires the electronic submission of all TSCA section 5 notices. Electronic submission of SNUN forms is expected to remove all clerical burden and reduce the recordkeepingEconomic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 9 burden associated with preparing a SNUN (EPA, 2009 a )

. 2

SNUN form completion and electronic submission is estimated to require 7 3

. 68 hours of technical labor and 18.00 hours of mana gerial labor (EPA, 2009a ). In addition, electronic submission is expected to generate and an additional 0.18 hours of technical bur den, for the completion of the User Fee Payment Identification Number and email address data elements on the electronic SNUN form.

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

- SNUN cost of form completion. The labor cost incurred by a SNUN submission for both large and small business submitters is $ 5,80 2

.

Table 4 : Industry Cost Estimate to Complete the SNUN Form

Reporting

Activity Clerical Labor ($29.98/hour) Technical Labor ($61.71/hour) Managerial Labor ($69.74/hour) Total Labor Cost (2010 dollars) Burden Cost Burden Cost Burden Cost Burden Cost Form Completion 0.00 $0.00 73.68 $4,546.65 18.00 $1,255.31 91.68 $5,80 2

Note: Costs may not equal labor wage rate times burden hours as shown, due to round i ng

. U nrounded estimates were used during the actual cost calculations. Source : Table 1 Loaded wages include fringe benefits and overhead

. See of this report for derivation

. Wage rates presented in this table are rounded values; however, unrounded values are used to calculate total labor costs

. For this reason, total labor costs
may not equal the product of rounded values. The estimate of no clerical burden is taken from the Economic Analysis of the Premanufacture Notice Electronic Reporting Final Rule (EPA, 2009a, page 7) Technical and managerial labor burden is from the PMN Amendments RIA (EPA, 1994, Table III

- 2)

. An additional eleven minutes (0.18 hours) of technical burden is estimated to complete the User Fee Payment Identification Number and Email Address data elements on the Electronic SNUN form (EPA, 2009a page 15).

In addition, each submitting large business must pay a $2,500 per

- SNUN submission fee, and each submitting small business must pay a $100 per

- SNUN submission fee. Table 5 adds the labor cost and submission fee to estimate the total cost of a SNUN submission. The total cost of a SNUN submission is $ 8,302 for large business submitters and $ 5,902 for small business submitters.

Table 5 : Industry Cost Estimate to Complete and Submit the SNUN Form
Reporting Population Labor Cost Submission Fee Total Cost (20 10 Dollars) Large Business Submitters $5,802 $2,500 $8,302 Small Business Submitters $5,802 $100 $5,902
Source : Table 4 ; EPA, 1994

3.2.4 Recordkeeping for Companies Choosing to Submit a SNUN

Companies submitting a SNUN must

, under 40 CFR §721.40

, keep records of the information contained in the SNUN . Some EPA reports have assumed that SNUN recordkeeping hours would be five percent of

2 The Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule (EPA, 2009 a ) estimates a 0.5 hour clerical and a 0.5 hour technical burden associated with recordkeeping in addition to the burden estimates from the 1994 RIA, which include the burden for recordkeeping ( EPA, 1994 , p. III

- 14)

. T hese burden estimates are based on the recordkeeping bu rden for polymer exceptions and not the recordkeeping burden associated with PMN submissions. Therefore

, for this analysis we assume that any reduction in recordkeeping burden is captured in the reduction of the clerical burden, and we do not consider the one hour recordkeeping burden from the ePMN EA in order to avoid double counting

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- 0994 November 2011 10 SNUN submission hours, or about five to six hours. 3
3.2.3 For this report, the SNUN recordkeeping hours were included in the SNUN submission hours (see Section ) and the SNUN recordkeeping cost s under 40 CFR §721.40 were not separately estimated. 4

3.2.5 Recordkeeping for Companies that do not Submit a SNUN

If a firm that manufactures, imports, or processes the microbe subject to the proposed SNUR chooses not to submit a SNUN, they must keep records that document compliance with SNUR conditions for avoiding a Significant New Use. Such recordkeeping requireme nts essentially involve copying and filing relevant records. Records must be maintained for five years from the date of their creation ( 40 CFR 721. 40)

. For firms that choose to not submit a SNUN, costs for compliance with the recordkeeping requirements a re estimated to be five percent of the reporting burden for reporting information for a specific section of the SNUN form and are performed by clerical staff (EPA, 2005b, pages 10 and 14). EPA used the per

activity burden for reporting, the d escription of manufacturing and processing and disposal presented in the Regulatory Impact Analysis for the Regulation of Microbial Products of Biotechnology (EPA, 1997). Any clerical burden associated with these activities was removed to reflect the burden reduction associated with electronic submissions (EPA, 2009a).

The total recordkeeping burden for a company that does not submit a SNUN is estimated to be 1.9 hours and $ 55 , and is derived in Table 6

. Table 6 : Annual Per

- Chemical Costs of Recordkeeping Requirement for Companies that Choose not to Submit a SNUN

Reporting Activity Total Burden Associated per Activity

(Hours) Percent of Reporting Burden Attributed to Recordkeeping Recordkeeping Burden

(hours) ( 2010 dollars )

Description of manufacturing/processing and disposal 38 5% 1.9 $ 55.06

Source: US EPA, 1997 Office of Pollution Prevention and Toxics Regulatory Impact Analysis for the Regulation of Microbial Products of Biotechnolo g y

. January 1997.

3.2.6 Customer Notification

Manufacturers, processors, and importers of substances subject to SNURs must notify recipients of such substances of the SNUR or verify that knowledge of the SNUR has been otherwise acquired by recipients, or that the recipients are unable to engage in significant new uses. Since it is not expected that all such entities will have complete knowledge of all uses of a ny products subject to a SNUR, and because filing a SNUN could require significantly more burden, it is assumed that manufacturers, processors, and importers will most often choose to notify their customers of SNUR regulatory activities. As this notificat ion may be accomplished by simply annotating an MSDS, EPA estimates the associated burden

3 For example, OPPT’s Information Collection Request (ICR) for TSCA Section 5(a)(2) Significant New Use Rules for Existing Chemicals (Renewal), October 11, 2005, estimates S NUN recordkeeping costs at 5.67 hours (ICR 118.08, page 1 5 ).
4 SNUN submission costs estimated in Section 3.2.3 of this report were based on PMN su bmission costs from a 1994 report, Regulatory Impact Analysis of Amendments to Regulations for TSC Section 5 Premanufacture Notifications (EPA, 1994). Page III

- 14 of the 1994 report refers to “the normal records kept with a PMN submission which are included in the estimates for submission costs.” Page III

- 12 identifies “maintaining a file of the submission” as part of the labor hours for the PMN reporting form. These stat ements imply that the 95 to 114 total hours for a PMN submission (page III

- 10 of EPA 1994) included recordkeeping hours.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 11 to be about one hour of a technical employee's time or $61.71 per manufacturer, proc essor, or importer per chemical substance

.

3.2.7 Import Certification

In general, promul gation of a final SNUR triggers a TSCA Section 13 import certification requirement and the corresponding regulations at 19 CFR § 12.118 to 12.127 and 19 CFR § 127.28 for all imports of the microorganism

. Thus, any U.S. manufacturer, importer, or processor r eceiving an imported shipment of the microbe subject to the proposed SNUR would have to certify that the microbe in the shipment either complies with all applicable rules and orders under TSCA or that the microbe in the shipment is not subject to TSCA. 5

In practice, import certification is fulfilled by checking a box on an invoice or entry document and generally imposes no additional burden or cost on the importer (EPA, 2009 c ). Any potential burden associated with a submitter’s familiarization with this requirement is assumed to be included in the more general SNUR familiarization burden discussed above. T he statement must be on or attached to a commercial invoice or entry document belonging to the imported shipment.

3.2.8 Export Notification

Under Section 12(b) of TSCA, exporters must notify EPA if they export or intend to export a chemical substance subject to various TSCA sections (40 CFR §707.60 through 75)

. For TSCA 5(a)(2) (the section under which EPA promulgates significant new use rule s) and certain other TSCA sections, this is a one

time notification requirement 6

Most underlying data in this section come from t he 2009 TSCA Section 12(b) ICR, ICR No.: 0795.13 [Information Co llection Request for] Notification of Chemical Exports

- TSCA Section 12(b) Supporting Statement for Request for OMB Review under the Paperwork Reduction Act (EPA, 2009b), with updating for inflation

. per destination country for each exporter of a chemical substance

. After receiving a notification from a firm, EPA notifies the importing country and the United States State Department (40 CFR §707.70)

. To calculate the burden associated with making a single export notification, EPA first estimated the average annual number of export notifications made by an exporter

. EPA then derived the annual and per notification burden a ssociated with preparing and submitting an export notification

. EPA estimated the average burden associated with making a single notification

.

**Estimated Number of Annual Export Notifications per Exporter** 

EPA’s 2009 TSCA Section 12(b) ICR estimated that the average exporter making notifications will make 12 notifications per year

. 7

5 The exact statements are as follows: For imports of chemical substances subject to TSCA, “I certify that all chemical substances in t his shipment comply with all applicable rules or orders under TSCA and that I am not offering a chemical substance for entry in violation of TSCA or any applicable rule or order under TSCA.” For imports of chemical substances not subject to TSCA (e.g., pes ticides), “I certify that all chemicals in this shipment are not subject to TSCA.” ( 40 CFR 707.20 ) This includes notifications resulting from SNURs and notifications resulting from other TSCA activities

. Theref ore, it is likely that an exporter will make less than 12 notifications per

6 On November 14, 2006, EPA revised the export notification requirement for chemicals subject to TSCA §5(a)(2), 5(b), 5(e)(1) and 5(e)(2) from an annual to a one

- time requirement per destination country for each exporter (November 14, 2006, 71 FR 66234).

7 EPA calculated the average number of export notifications per exporter in the 2009 TSCA Section 12(b) ICR (EPA, 2009b) by dividing the estimated number of s ubmitted notifications (3,500) by the estimated number of exporters (300 ).Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 12 year as a result of this proposed SNUR. A notification is typically no more than one page per chemical/country combination, and one notification mailing often includes multiple chemicals and/or destination countries. 8

The percent of notifications resulting from S NUR s in general is unknown, and it is also unknown how many notifications may result from this rulemaking, as not all manufacturers may choose to export the microbe , or they may make several notifications for a single chemical substance

.
**Exporter Costs**

The 2009 TSCA Section 12(b) ICR (EPA, 2009b, page 11, Table 3), estimated the annual export notification cost for an exporter under the one

- time export notification require ment

. These costs include the cost to the exporter of compiling a list of their products that are subject to TSCA Section 12(b) requirements, writing or revising an export notification letter to EPA, checking the outgoing shipments, and sending the notifi cation letters with the associated shipping costs

.

The per

- notification cost was calculated based on the average burden per firm

. Exporters who mak e a larger number of n otifications per year may benefit from economies of scale and have lower costs per notification; conversely firms making fewer notifications may have a higher cost per notification.

Estimated Submission (Mailing) Costs

.

Table 7 Regulated companies will incur mailing costs for export

no tifications delivered to EPA

. Notifications are assumed shipped via the U.S. Postal Service (USPS) as first

- class registered mail with a return receipt (USPS, 2010 )

. The estimated per

- shipment and annual mailing costs incurred by individual submitters are detailed in

.

Table 7 : Derivation of Total Mailing Cost for 12 Notices
Postal S ervice Cost Registered mail, regular, with $0 declared value $10.60 Return receipt, requested at time of mailing (receive by mail) $2.30 Postage, regular First Class, up to 1 ounce $0.44 Cost per export notice

- Subtotal $13.34

× 12 Total Mailing Cost for 12 Notices $160
Source: Mailing rates are from the US Postal Service web site as of April 2010 (http://www.usps.com/prices/)

. The mailing method comes from th e Economic Analysis of the Proposed Change to TSCA Section 12(b) Export Notification Requirements, November 2005 (EPA, 2005a), as clarified in a later SNUR economic analysis (EPA, 2007c, Table 8). Note: Calculations may be rounded.

Compile and Maintain the List of Products

.

8 Based on review by an EPA economist of notifications received under TSCA Sections 4, 5 and 6 over approximately three weeks in early 2010. Since TSCA §12(b) information collection activity has been in place for twenty years, most respo ndents will have already developed a list of their products subject to TSCA §12(b) export notification

. Respondents need only check for 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 (EPA, 2009b)

. The total burden can vary from two hours per year up to two hou rs per month, depending on the number of pro ducts exported by the company and the number of their products subject to TSCA §12(b) (EPA, 2009b).Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 13 The number of submitters per year who report under TSCA §12(b) has varied over time, rising from around 160 in 1991 to over 460 in 2000, and declining since

. In the most recent TSCA §12(b) ICR, EPA estimated there would be approximately 300 submitters per year in near

- future years (EPA, 2009b )

. Of these 300 submitters, EPA estimated that 200 companies were near the lower burden estimate of two hours per yea r, and 100 companies were near the upper estimate of 24 hours per year

. Compiling the list for all respondents was therefore estimated to take 2,800 hours (2 hours x 200 firms plus 24 hours x 100 firms), or an average of about 9.3 hours of technical time per firm per year for 12 notifications per year (EPA, 2009b ).

Write or Revise Export Notification

. Companies that export chemicals subject to TSCA §12(b) reporting must prepare an export notification to send to EPA when export shipments are made

. Time for initial preparation of the export notice may vary depending on whether the company has prior experience with this requirement

. This step is estimated to take an average of one hour of technical time (which may also include some proportion of legal time) per firm per year for 12 notifications per year (EPA, 2009b ).

Check Orders and Send Notifications

.

The burdens and associated costs for each notification activity are provided in Companies that export chemicals subject to TSCA §12(b) reporting must check outgoing shipments against the list of their products described above

. A form le tter notifying EPA and providing the required data must be printed and mailed within the required time period

. This process is estimated to take an average one half hour of clerical time per export notification

or six hours for 12 notifications (EPA, 2009b)

.

Table 8

. EPA estimates that t he burden associated with making one notification is approximately 1.36 hours and $ 80.80

.

Table 8 : TSCA 12(b) Export Notification Cost per Notification Technical Clerical Total $/Hr Hours 2010 $ $/Hr Hours 2010 $ Hours 2010 $ Compile list $61.71 9.3 0 $574

-- -- -- 9.3 0 $574 Write letter $61.71 1 .00 $62

-- -- -- 1 .00 $62
Check order and send notice -- -- -- $28.98 6 .00 $174 6 .00 $174
Mailing cost

-- 1

-- -- -- -- -- -- $160 Total per average facility 2` 10.3 0 $635.59 6.0 0 $173.89 16.30 $969.56 Total per Notification $0.86 $52.97 0.50 $14.49 1.36 $80.80
Notes: Costs may not equal labor wage rate times burden hours as shown due to round ing. U nrounded estimates were used during the actual cost calculations.
1 Table 7

Mailing costs reflect April 2010 USPS rates and can be found in

. 2
Source: Appendix A of this report derives technical and clerical hourly labor costs

. Other costs are from ICR No.: 0795.13 [Information Collection Request for] Notification of Chemical Exports

- TSCA Section 12(b) Supporting Statement for Request for OMB Review under the Paperwork Reduction Act (EPA, 2009b, p.10), and are updated to 20 10 dollars

.

An average facility submitting notifications is assumed to submit 12 export notifications per year.



### 3.3 Summary of Per Submission Costs, by Option

The number of firms affected by not making submissions to EPA is not known; therefore, costs are not aggregated across the affected entities

. The following table summarizes the costs to comply with the proposed rule amendment, as described in more detail in section 3.2 above.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 14 Table 9 : Compliance Options and Associated Costs Incurred by a Firm Due to the Proposed SNUR Option 1 Costs Quantified Costs per Chemical (20 10 dollars ) 2

1. Electronic submission of a Significant New Use Notice (SNUN), indicating to EPA that the firm would like to manufacture, import, or process the chemical for a Significant New Use as defined in the SNUR

. Costs of submitting a SNUN, including rule familiariz ation, CDX registration (for companies that are first

- ti me submitters), form completion

, user fee, export notification, and any test costs, Rarely, a firm may choose to conduct toxicity or fate testing to support the SNUN, but such testing is
not $52.54 rule familiarization cost; $8,302 submission cost (including SNUN recordkeeping and fee $2,500 for large businesses). EPA usually receives well under ten SNUNs per year. Export notifications costs are estimated at $80.80 per notification; to tal cost per company will vary. First time submitters would incur $183.64 for CDX registration and associated activities. Companies manufacturing, importing, or processing a chemical

cur rently used in commerce in the United States will incur a cost $61.71 for notifying consumers of SNUR regulatory activities

. required by law

.

2. Manufacture, import, or process in a way that avoids a Significant New Use

. Cost of the profit foregone as a result of not engaging in the commercial activity originally planned (opportunity costs)

, recordkeeping, and export notification costs. Opportunity costs are not quantified. Other costs include rule familiarization ($52.54), recordkeeping ($ 55.06 ), export notification costs ($80.80 per notification) , and costumer notification ($61.71)
may ap ply. Recordkeeping costs include costs for use type and marketing and production volume.

Notes:

1 Firms may be subject to both options at once since submission of a SNUN results in profits foregone as a result of not manufacturing, importing, or processing the chemical.
2
3.2

Quantified costs are attributable to the SNUR only if a firm would not otherwise follow the specified practices. Costs are detailed in Section

. 3 EPA does not require the development of test data for submission of a SNUN, al though a firm may submit test data already in its possession and/or describe any other available data. Because EPA does not require the development of test data, EPA assum es that no firms will incur testing costs as a result of the proposed SNUR.



### 3.4 Likelihood of SNUN Submission

This analysis assumes that very few entities are expected to submit a SNUN

. EPA has, over the years, promulgat ed SNURs that cover a total of more than 1,000 chemicals

. In response , the Agency receives only a handful of SNUNs per year

. For example, the number of SNUNs received was four in Federal fiscal year (FY) 2005, eight in FY2006, six in FY2007, and eight in FY2008, seven in FY2009 , two in FY2010, and ten in FY2011 9



### 3.5 Potential for Subsequent Regulatory Actions .

The Agency recognizes that if submission of a SNUN does result from a SNUR, the Agency may take additional regulatory actions under TSCA

. These additional regulatory actions might be necessary to further evaluate an intended new use and associated activities, or to prohibit or limit that activity before it occurs to prevent unreasonable risk of injury to human health or the environment

. It is not known what specific subsequent regulatory actions, if any, the Agency may determine are necessary after reviewing a SNUN

. Any such actions are highly dependent on the circumstances surrounding the individual SNUN

9 I n

- person count of SNUNs conducted by Kimberly Wilson of Abt Associates Inc , on April 8, 2010 at EPA’s Confidential Information Business Center (CBIC) and updated values for FY2010 and FY2011 provided by Lynn Blake

- Hedges of US EPA on September 1, 2011

.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 15 (e.g., available information and scientific understanding about the microbe and its risks at the time the SNUN is being reviewed)

. Should the Agency’s review of t he SNUN result in further regulatory actions, the Agency will initiate and follow the appropriate procedures for taking those actions

. Included in those procedures would be an assessment of the costs and benefits of those actions.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 16 

## 4 Agency Costs

As described in the following sections, EPA’s costs to review and process SNUN submissions are assumed to be the same as EPA costs to review PMNs

.


### 4.1 Labor Rates for EPA Staff

Agency labor costs are calculated based on annual Federal salaries for the Washington

- Baltimore area published by the Office of Personnel Management effective January 2010 (OPM, 2010 )

. EPA assumes that, on average, a federal GS

- 13, Step 5 full

- time equiva lent (FTE) will conduct its collection and administrative activities under the proposed rule. 10

Table 10 The average salary for a GS

- 13 Step 5 employee was $ 100,904 in 2010 without fringe benefits and 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 $ 161,446.40 (see )

. Dividing the fully loaded annual salary by 2,080 hours (i.e., the number of hours in a work year) yields an hourly FTE wage rate of $ 77.62

. The Agency loading factor of 1.6 is from an EPA guide entitled Instruc tions for Preparing Information Collection Requests (ICRs) (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 benefi ts and overhead for federal staff

. For example, it was used 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 multiplicatio n factor)

. The multiplication factor used is recommended in EPA’s Office of Policy, Planning, and Evaluation’s Instructions for Preparing Information Collection Requests (ICRs) (June 1, 1992)

. An EPA internal phone call between Carol Rawie (OPPT/EETD/RIB) and Carl Koch (OPPE/RMD/IMB) on May 3, 1994, indicated that the 1.6 factor included not only benefits but also overhead.

Fully loaded costs for Agency labor are shown in Table 10

.

10 The GS

- 13 Step 5 is consistent with IC R No. 0574.14 (12/18/2007) ( EPA, 2007a ), which covers PMN SNURs. Use of this grade level follows the approach introduced in EPA , 2007b . That report represented a change from an earlier PMN SNUR economic analysis ( EPA, 2003 ), which used an average of GS

- 12 Step 1 and GS

- 12 Step 10 salaries.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 17 Table 10 : Derivation of Loaded Agency Wage Rates

Labor Category Data Source for Wage Information Date Wage Fringe Benefit Fringes as %
wage Overhead as %
wage Fringe + overhead

factor Loaded Wages
(a) (b) (c)=(b)/(a) (d) (e)=(c)+(d)+1 (f)=(a)*(e)

EPA staff FTE Annual Federal staff cost: OPM Washington

Baltimore

- Northern Virginia, DC

- MD

- PA

- VA

WV, area, GS

- 13 Step 5

pay rates, with 60% overheads a Jan 6 2010

. $100,904.00 (annual)

-- [Included in 60% overhead] 60% 1.60 b $161,446.40 (annual)

$48.51 (hourly) $77.62 (hourly)

Notes :

a The Agency salary is the unloaded federal GS

- 13 Step 5 salary ($100,904 for 2010), from the OPM salary table for the Washington

- Baltimore

- Northern Virginia Locality Pay Area (OPM, 20 10 )

. Hourly rates are based on annual salary divided by 2,080 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).



### 4.2 SNUN Processing Costs

The list of review steps, estimates of extramural costs, and the percent of chemicals requiring a particular review step are derived from the costs for processing PMN submissions in Table VII

- 1 of a 1994 EPA report, Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notifications (EPA, 1994)

. The Agency burden associated with processing a PMN has been adjusted to reflect burden reductions resulting from the 2009 final PMN Electronic Reporting (e PMN) Rule that requires the electronic submission of all TSCA section 5 notices. Electronic submission of SNUN forms is expected reduce Agency burden by 16.5 percent (EPA, 2009b, p.28).

For each review step, the “EPA staff” cost is calculated by multiplyi ng the number of FTEs (in the first column) by the fully loaded hourly salary

. This shows EPA staff cost for chemicals requiring the selected review step.

The Extramural Cost column shows costs for contractor support and other outside purchases for chemicals requiring the selected review step , and is inflated from 1993 prices using the Bureau of Labor Statistics (BLS) Employment Cost Index (ECI) data (BLS, 2011b ). T he not seasonally adjusted E CI for total compensation of private industry professiona l and related workers (Series ID CIU2010000120000I ) is used because it is the only series with continuous data since 1985, and that includes professional and technical labor, which perform the majority of Agency extramural Table 11 activities. contains the derivation of inflation factors for Agency extramural costs



### .Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 18 Tab le 11 : Derivation of Inflation Factors for Agency Extramural Costs

Item Inflation Index S ource 1 Starting
year Index for starting

year

(a) Index for 20 10

(b) Inflation factor (b)/(a) 2

Agency Extramural costs White collar labor; equipment; supplies BLS ECI, Total comp, Private industry, Professional and related , 4 th Q [BLS , 201 l b] 1993
3 67.0 113.5 1.694

Notes:
1 In 2006, Bureau of Labor Statistics (BLS) Employment Cost Index (ECI) series “were rebased to December 2005 = 100 from June 1989 = 100.” The change is reflected in the indices in this table and explained on the BLS website, Employment Cost Ind ex News Rel ease Text: Employment Cost Index, March 2006 (BLS, 2006b ). The Consumer Price Index (CPI) was not rebased

. 2 Inflation factors are rounded to three decimal places in this table, but calculations in this report use the unrounded values

. 3

Source: Beginning with the report Economic Analysis of Expedited Significant New Use Rules for 25 Chemical Substances: EPA Docket OPPT

- 2009

- 0922 (EPA 2010d ), we began to use the not

- seasonally adjusted CIU2010000120000I for private industry Professional, and Related workers, ins tead of SA CIS2010000W00000I for private industry white collar workers because BL S retired the “white

- collar” series.

(BLS 2011b ) Bureau of Labor Statistics. Employment Cost Index

– Total Co mpensation: Professional and Related Private Industry, Not Seasonally Adjusted. (Series ID: CIU2010000120000I (B)), extracted June 16, 2011. (BLS, 201 1 b ).

The Percent of Cases column in Table 12 is a weighting factor applied to reflect the fact that not all chemicals require each review step

. For example, in the PMN process, all chemicals require Administrative Prescreening, but not all chemicals require the intensive scrutiny of “Standard Review.” The three types of submissions resulting from a SNUR may have weighting factors that differ from each other and from the weighting factors for PMNs

. Changes in weighting factors could ca use actual review costs to be higher or lower than calculated here

. For example, some SNUNs require little review because they are determined to be “invalid”

– i.e. not required in the first place

. However, often a SNUN may take more Agency time than a t ypical PMN because of factors such as the need to retrieve old PMN records from archives, and the likelihood that more data requiring EPA review is submitted with a SNUN than would be submitted on average with a PMN

. Resources were not available to update the review hours to reflect the current review process or to tailor the cost estimates to SNUNs

. Therefore, for this analysis, the review steps and weighting factors are assumed to be the same as those derived in 1994 for PMNs.

The Weighted Cost column is calculated by multiplying the un

- weighted Costs (EPA staff cost plus extramural costs) by the percentage of cases requiring this review step

. Weighted co sts are then multiplied by the burden reduction of 16.5 percent to account for burden savings generated electronic submission

. This calculation yields total Agency costs of $ 5,049 , per SNUN, for submission review and processing, as shown in Table 12

.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 19 Table 12 : Agency Costs for SNUN and Other Submission Review and Processing

Review Steps EPA staff (FTE) Cost Extramural Cost 2 Unweighted Cost Pct. of Cases Weighted Cost 3 ePMN Burden Reduction 4 Weighted Cost with ePMN

Burden Reduction FTE fraction Cost per FTE 1 FTE Total ($2009) 1993 dollars 2010 dollars (a) (b) (c)=(a)*(b) (d) (e) (f)=(c)+(e) (g) (h)=(f)*(g) (i) (j)=(h)*(1

- (i))
Pre

- notice consultation 0.0024 $161,446 $387.47 $4.00 $6.78 $394 41% $161.64 0.165 $135 Administrative prescreen/ notice receipt/user fee 0.0024 $161,446 $387.47 $92.00 $155.85 $543 100% $543.32 0.165 $454

CRSS (Chemical Review and Search Strategy) 0.0025 $161,446 $403.62 $268.00 $454.00 $858 100% $857.62 0.165 $716

SAT (Structure Activity Team) 0.0006 $161,446 $96.87 $14.00 $23.72 $121 100% $120.58 0.165 $101
Engineering/Exposure 0.0015 $161,446 $242.17 $56.00 $94.87 $337 100% $337.04 0.165 $281 Exposure/Fate 0.0008 $161,446 $129.16 $0.00 $0.00 $129 100% $129.16 0.165 $108
Focus 0.0009 $161,446 $145.30 $23.00 $38.96 $184 100% $184.26 0.165 $154
Standard Review Functions 0.0219 $161,446 $3,535.68 $511.00 $865.65 $4,401 29% $1,276.38 0.165 $1,066 Division Directors Meeting 0.0129 $161,446 $2,082.66 $113.00 $191.43 $2,274 15% $341.11 0.165 $285 Order Development/Negotiation Review 0.0171 $161,446 $2,760.73 $22.00 $37.27 $2,798 3% $83.94 0.165 $70

Post Order Data Review 0.0886 $161,446 $14,304. $0.00 $0.00 $14,304 3% $429.12 0.165 $358
Order Modification 0.2167 $161,446 $34,985.43 $0.00 $0.00 $34,985 3% $1,049.56 0.165 $876

New Chemical SNUR Development 0.0277 $161,446 $4,472.07 $85.00 $143.99 $4,616 7% $323.12 0.165 $270

Notices of Commencement 0.0012 $161,446 $193.74 $40.00 $67.76 $261 31% $81.06 0.165 $68 FOIA (Freedom of Information Act) Requests 0.0333 $161,446 $5,376.17 $287.00 $486.19 $5,862 1% $58.62 0.165 $49
CBI (Confidential Business Information) Substantiation 0.0004 $161,446 $64.58 $3.00 $5.08 $70 100% $69.66 0.165 $58

TOTAL $6,046 0.165 $5,049
Notes:
1 Table 10

GS

- 13 Step 5 salaries loaded with benefits and overhead

. See for derivation.
2 Table 11

Extramural costs consist of contracting support and other purchases directly attributable to the PMN review process inflated from 1993 prices u sing

. 3 Weighted costs were calculated using unrounded unit cost estimates, so results may differ from calculations using the rounded values shown in this table.
4
Sources: FTEs per review step, 1993 extramural costs, and percents of cases are from EPA, 1994 Table VII

- 1, GS

- 13 salaries are from OPM, 2010

.

Electr onic submission is expected to generate a cost savings of 16.5% to the Agency (EPA 2009a , p. 28).Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 20 

### 4.3 Export Notification Cost

Under TSCA Section 12(b), exporters must notify EPA if they intend to export chemicals subject to SNURs, as described in Section 3.2.8

. The Agency burden and cost due to TSCA §12(b) export notification result from three tasks

. In the first task, EPA receives export notifications from companies that intend to export one of the chemicals subject to T SCA §12(b) (EPA, 2009b )

. In the second task, EPA staff prepares separate notification letters that are subsequently reviewed and delivered to importing countries, their embassies, or representatives, and to the importing country’s US embassies (EPA, 2009b )

. (See Table 7 for the cost of mailing one notification). The third task is comprised of EPA staff responses to public inquiries and other TSCA 12(b) activities

. The work of responding to non

- routine requests for information and clarification from industry and importing countries, and of handling other tasks associated with the TSCA §12(b) program, was estimated to require roughly 400 hours per year ( EPA, 2009 b)

. Since the current rulemaking covers only a very small percent of the chemicals subject to TSCA 12(b) reporting, a very small percent of such activity will be attributable to the current rulemaking.

B ecause it is unknown how many, if any, noti fications EPA will receive or send as a result of the current rulemaking, the costs to the Agency are presented per activity

. The burden for the first two Agency activities is provided in Table 13

. To estimate the Agency cost, hourly burdens are multiplied by the loaded wage rate of a GS

- 13, Step 5, which is derive d in Table 13

.

Table 13 : TSCA 12(b) Export Notification Cost: Agency Burden per Activity ( 2010 $)

Agency Activity Hours
per Activity FTE per Activity 1 Loaded Mailing Cost Total Agency Cost per Activity GS

- 13, Step 5 FTE Wage Rate (a) (b) = (a)/2,080 (c) (d) (e) = ((b)*(c))+(d) Process an incoming notification from an exporting company 0.1 0.000048 $161,446 $0.00 $7.75

Prepare and mail a notification to an importing country 0.5 0.00024 $161,446 $13.34 $52.09

Notes:
1

Source: Appendix A of this report derives Agency labor costs

. Mailing costs are from

The burden associated with an Agency activity is the burden for the Agency to process one incoming notification, or to prepar e and mail an outgoing notification Table 7 of this report. Other burdens are from ICR No.: 0795.13 [Information Collection Request for] Notification of Chemical Exports

- TSCA Section 12(b) Supporting Statement for Request for OMB Review under the Paperwork Reduction Act (EPA 2009b ), updated for inflation.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 21 

## 5 Benefits

A SNUN submission provides EPA with the opportunity to evaluate the intended use and, if necessary, to prohibit or limit that activity before it occurs. It allows the Agency to take immediate action to mitigate an activity that the Agency deems harmful to the environment or human health. The proposed SNUR allows EPA to e valuate the use of, or exposure to the microbe and allow the Agency to take preventive action to limit or prohibit any Significant New Use. EPA believes this action is necessary because EPA has identified concerns for opportunistic infections to immune compromised persons from exposures to large quantities of the MCAN substance. For the uses described in the MCAN, human and environmental
expo sures are minimal based on adequate containment and inactivation controls listed in the notice. However, EPA has determined that use of the substance without adequate containment and inactivation controls may cause serious health effects. EPA expects tha t the proposed rule may restrict future uses or exposure to the microbe , as a company may choose modify planned uses, and genera l population or worker exposure to the microbe in such a way that does not trigger a SNUR, as opposed to submitting a SNUN. The refore, the proposed SNUR may limit future exposure to the microbe

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- 0994 November 2011 22 

## 6 Additional Analyses

6.1 Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et. seq.), as amended by the Small Business Regulatory Enforcement Fairness Act, requires regulators to consider the impact of regulations on small entities, in particular small businesses. EPA ’ s experience to date is that, in response to the promulgation of SNUR s covering over 1,000 chemicals, the Agency receives only a handful of notices per year. For example, the number of SNUNs was 4 in Federal fiscal yea r 2005, 8 in FY2006, 6 in FY2007, 8 in FY2008, and seven in FY2009. 11 During this five

- year period, three sm all entities submitted a SNUN, consider ing t he criteria for ‘ small business ’ to be that the company checked the box on the PMN form, page 2, stating that it was a small business for the purpose of paying the $100 fee instead of the normal fee

. 12

, 13

This leaves open the question of how many small businesses are affected but do not submit SNUNs. For example, businesses may change their behavior in order to use a chemical in a manner that avoids triggering Significant New Use notification requirements, and make no submission to EPA. Data and resources were not available to estimate the number of such small businesses affected by the current rule. Based on past considerations and on the limited data available, EPA expects that any compliance with a SNU R will not have a significant economic impact on a substantial number of small entities.

Small businesses may be affected by this proposed SNUR without EPA being aware; for example, if the firms have made no submissions or comments to EPA. However, even if a small business were interested in supplying a SNUR chemical, the SNUR’s impact on profits is generally expected to be minor. For example, the firm may have a small expense of keeping records (approximately $ 55.06 ) and/or of changing workplace practic es to comply with any new restrictions

. If modifying practices would be overly costly, the small business may instead forego production, thus sacrificing profits. The lost profits, if any, were not quantified for this report

.


### 6.2 Unfunded Mandates Reform Ac t (UMRA)

The proposed rule does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments because none of the current producers of the microbe are governments. Additionally, it is not expected that any governments will initiate production of the microbe

.


### 6.3 Paperwork Reduction Act (PRA)

According to the Paperwork Reduction Act (PRA), 44 U.S.C. 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 OMB approval under the PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 o f the CFR, after appearing in the Federal Register , are listed in 40 CFR, part 9, and included on the related collection instrument, or

11 February 5, 2009 email from Carol Rawie, EPA Office of Pollution Prevention and Toxics, to Tulika Narayan and Kimberly Wilson, Abt Associates. The counts include both “valid” and “invalid” SNUNs. SNUN numbering is accor ding to Federal fiscal year, ending September 30.
12 February 5, 2009 email from Carol Rawie, EPA Office of Pollution Prevention and Toxics to Tulika Narayan and Kimberly Wilson, Abt Associates.
13 In order to submit SNUN as a “small business” a company needs to be classified as small using the TSCA based definition of annual revenue of less than $4,000,000 per year. This definition is not consistent with the definition of a small business us ing Sma ll Business Administration (SBA) NAICs based definitions.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 23 form, if applicable. The information collection requirements related to this action have already been approved by OMB p ursuant to the PRA under OMB control number 2010

– 0994

.
This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average 9 7 .66 hours per response : 0.82 ho urs for rule familiarization (Section 3.2.1 ), 2.80 hours for CDX registration, CDX electronic signature, and pay.gov account setup (Section 3.2.2 ), 91.68 hours for form completion, submission and recordkeeping (Sections 3.2.3 ), 1 hour for consumer notifications (Section 3.2.6 ) and 1.36 hours for export notification (Section 3.2.8 ).



### 6.4 Executive Order 13132, Federalism

Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” Policies that have federalism implications are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government” (64 FR 43255, August 10, 1999).

The proposed rule establishes reporting and recordkeeping requirements that apply to manufacturers (including importers) and processors of a certain genetically engineered microbe

. EPA has no information to indicate that any s tate or local government manufactures or processes the microbe covered by this action.



### 6.5 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), establishes 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 i dentifying and addressing, as appropriate, 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.

The information collec ted under this proposed rule, if finalized, will assist EPA and others in determining the potential hazards and risks associated with a genetically engineered microorganism

. Although not directly impacting environmental justice

- related concerns, this info rmation will enable the Agency to better protect human health and the environment, including in low

- income and minority communities.



### 6.6 Executive Order 13045, Protection of Children

Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), requires EPA to identify and assess environmental health and safety risks that may disproportionately affect children

. This type of analysis is required for rules that will have an impact of $100 million or more only

. The impact of this SNUR will be less than $100 million and therefore no analysis of such impacts on children is required.



### 6.7 Executive Order 13175, Tribal Governments

Executive Order 13175 is Consultation and Coordination with Indian Tribal Governments (59 FR 22951, November 6, 2000)

. This rule does not have Tribal implications because EPA has noEconomic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 24 information to indicate that any tribal government manufactures or processes the microbe covered b y this action

.


### 6.8 Executive Order 13211, Energy Supply, Distribution, or Use

Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355 [May 22, 2001]) requires Agencies to prepare a Statement of Energy Effects for any action that is likely to have a significant adverse effect on the supply, distribution, or use of energy.

The Agency expects that if there is any effect of thi s rule on the Nation’s energy supply, distribution, and use, it would be modest and not significant. F irms that wish to use the T. reesei organism for ethanol production may either follow the containment and inactivation procedures outlined in MCAN J

- 10

- 02 or incur the modest cost of submitting a SNUN. A firm may also choose to use another organism that is not subject to the proposed SNUR. Therefore, it is highly unlikely that the proposed SNUR will inhibit the production of ethanol in any significant way

.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 25 

## 7 References
40 CFR 721 Toxic Substances Control Act, Significant New Uses for Chemical Substances Code of Federal Regulations . Part 721 Title 40 , July 27, 1988, as amended, June 23, 1993

. BLS, 2006a. U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation: Changes to NAICS and SOC, Table 2. ECEC Occupational Comparability between SOC and OCS. Downloaded February 2006 from http://www.bls.gov/ncs/ect/sp/ecsm0003.htm.
BLS, 2006b. U.S. Bureau of Labor Statistics, Employment Cost Index News Release Text: Employment Cost Index, March 2006 (April 28, 2006), at http://www.bls.gov.
BLS, 2006c. U.S. Bureau of Labor Statistics. C hange has Come to the ECI (June 14, 2006) at http://www.bls.gov/ncs/ect/sp/ecsm0001.htm

. BLS, 2011a. U.S. Bureau of Labor Statistics. “Employer Costs for Employee Compensation Supplementary Tables December 2010.” Accessed March 9, 2011. http://www.bls.gov/ncs/ect/sp/ecsuptc17.pdf . (Note: The BLS report title and content is updated periodically to include more recent data, on the same website.)
BLS, 201 1 b

. Bureau of Labor Statistics. Employment Cost Index

– Total Compensation: Professiona l and Related Private Industry, Not Seasonally Adjusted. (Series ID: CIU2010000120000I (B)), extracted June 16, 2011. http:/data.bls.gov/cgi

- bin/srgate.
BLS, 2011c. U.S. Bureau of Labor Statistics. Consumer Price Index

- All Urban Consumers, U.S. City Aver age (Series ID: CUUR0000SA0), extracted June 16, 2011. Available through http:/data.bls.gov/cgi

- bin/srgate

. Branch, 2006. Raphael E. Branch and Lowell Mason. U .S. Bureau of Labor Statistics, “Seasonal adjustment in the ECI and the conversion to NAICS and S OC.” Monthly Labor Review . Vol. 129, No. 4, April 2006

. Available at www.bls.gov
Caroll, 2006

. Richard E. Caroll. U.S. Bureau of Labor Statistics, “Changes affecting the Employment Cost Index: an overview.” Monthly Labor Review . Vol. 129, No. 4, April 2 006

. Available at www.bls.gov. .

EPA, 1992. U.S. EPA, Office of Policy, Planning, and Evaluation. Instructions for Preparing Information Collection Requests (ICRs). Washington, DC, June 1, 1992. EPA, 1994. U. S. EPA, Office of Toxic Substances, Regulatory Im pacts Branch. Regulatory Impact Analysis of Amendments to Regulations for TSCA Section 5 Premanufacture Notifications. Washington, DC, September 9, 1994. (OTS/RIB later became OPPT/EPAB.) EPA, 1997. Office of Toxic Substances Regulatory Impact Analysis for the Regulation of Microbial Products of Biotechnology . January 21, 1997.
EPA, 2000. U.S. EPA, Office of Pollution Prevention and Tox ics, ICR No. 1139.06. OMB Control No.: 2070

- 00 33 [Information Collection Request for] TSCA Existing Chemical Test Rules, Con sent Orders, Test Rule Exemptions, and Voluntary Test Data Submissions: Supporting Statement for Request for OMB Review under the Paperwork Reduction Act . Attachment 5, Wage Rates Estimation, August 29, 2000.
EPA, 2002a. U.S. EPA, Office of Pollution Preve ntion and Toxics, Economic and Policy Analysis Branch. Revised Economic Analysis for the Amended Inventory Update Rule: Final Report. Washington, DC. August 2002.Economic Analysis for SNUR, Docket OPPT

- 2010

- 0994 November 2011 26 EPA, 2002b. U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch, Wage Rates for Economic Analysis of the Toxics Release Inventory Program. Washington, DC: June 10, 2002.
EPA, 2003 . U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch. Economic Analysis of Expedited Significan t New Use Rules for 65 Chemical Substances. Washington, DC, 2003. Available from the Federal Docket Management System as EPA

- HQ

- OPPTS

- 2002

- 0078
at http://www.regulations.gov

. EPA, 2005a. Office of Pollution Preventi on and Toxics, Economic and Policy Analysis Branch. Economic Analysis of the Proposed Change to TSCA Section 12(b) Export Notification Requirements, November 2005, available from the Federal Docket Management System as EPA

- HQ

- OPPT

- 2005

- 005 8

- 0017 at http://www.regulations.gov

. EPA, 2005b. U.S. EPA, Office of Pollution Prevention and Toxics ICR No. 118.08. [Information Collection Request for] TSCA Section 5(a)(2) Significant New Use Rules for Existing Chemicals (Renewal). Supporting Statement for a Request for OMB Review under the Paperwork Reduction Act

, October 11, 2005.
EPA, 2007a. U.S. EPA, Office of Pollution Prevention and Toxics

, EPA ICR No. 0574.14. OMB Control No.: 2070

- 0014 [Information Collection Reque st for] Pre

- Manufacture Review Reporting and Exemption Requirements for New Chemical Substances and Significant New Use Reporting Requirements for Chemical Substances: Supporting Statement for a Request for OMB Review under t he Paperwork Reduction Act , Dec ember 6, 2007. EPA, 2007b. U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch. Economic Analysis of Expedited Significant New Use Rules for 65 Chemical Substances (EPA Docket OPPT

- 2003

- 0063), December 4, 2006 (Revised March 12, 2007). EPA, 2007c. U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch. Economic Analysis of Expedited Significant New Use Rules for 38 Chemical Substances (EPA Docket OPPT

- 2006

- 0898 ), August 17, 2007

. EPA, 20 09a. U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch . Economic Analysis of the Premanufacture Notification Electronic Reporting Final Rule

. (EPA

- HQ

- OPPT

- 2008

- 0296) . July 13, 2009

. EPA, 2009b. U.S. EPA, Office of Pollution Prevention and Toxics. EPA ICR No.: 0795.13 OMB Control Number 2070

- 0030 [Information Collection Request for] Notification of Chemical Exports

- TSCA Section 12(b) Supporting Statement for Request for OMB Review un der the Paperwork Reduction Act . March 6, 2009 at http://www.regulations.gov

. EPA, 2009c, U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. 2009. Section 13 Import Certification

. Available at: http://www.epa.gov/opptintr/import

export/pubs/sec13.html. Accessed March 30, 2010.
EPA, 2010 . U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. Economic Analysis of Expedited Significant New Use Rules for 25 Ch emical Substances , (EPA Docket OPPT

2009

- 0922).
OPM, 2010. Office of Personnel Management, Salary Table 2010

- DCB, Washington BaltimoreNorthern Virginia, DC

- MD

- PA

- VA

- WV. Accessed from http://www.opm.gov/oca/10tables/pdf/DCB.pdf.
Sleemi, 2006. Fehimida Sleem i. U.S. Bureau of Labor Statistics, “Employment Cost Index Publication Plans”. Monthly Labor Review. Vol. 129, No. 4, April 2006. available at www.bls.gov/opub/mlr/2006/04/art2full.pdf

.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 27 U.S. Postal Service (U.S. PS). 2010. “Prices” < http://www.usps.com/prices/ 

### >. Accessed 2010.
Weinstein, 2004. Harriet G. Weinstein and Mark A. Loewenstein, U.S. Bureau of Labor Statistics. C omparing Current and Former Industry and Occupation ECEC Series. Originally posted August 25, 2004 at h ttp://www.bls.gov/opub/cwc/cm20040823ar01p1.htm

.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 28 

## Appendix A: I nflators and Wage Rates

This appendix describes the derivation of the fully loaded labor rates and inflation factors used in calculating costs of labor , materials, and other inputs

. Costs for this report are for year

- end 2010

. 

### A.1 Derivation of Loaded Wage Rates

Unit labor costs are calculated by adding fringe benefits and overhead to the wage or salary to derive a fully loaded labor cost

. The basic m ethod is described in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (EPA, 2002b)

. The resulting loaded labor rates are given in Table 14

. Costs are calculated for several labor categories: Managerial, Professional/Technical, Clerical, and EPA staff.

In March 2004, BLS began using the North American Industry Classification Syst em (NAICS) codes instead of the Standard Industrial Classification (SIC) System, and the Standard Occupational Classification (SOC) system instead of the Occupational Classification System (OCS)

. The following table shows the crosswalk between old and new occupational titles.

EPAB Reports Labor Category 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: Employer Costs for Employee Compensation: Changes to NAICS and SOC, Table 2 . ECEC Occupational Comparability between SOC and OCS (BLS, 2006a and We instein, 2004).



### A.1.1 Derivation of Labor Rates for Managerial, Professional/Technical, Clerical, and Production Labor

Wages and fringe benefits for managerial, professional/technical, clerical and production labor were taken from the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation (ECEC) data, 14 for December, for manufacturing industries. 15

The cos t of fringe benefits such as paid leave and insurance, specific to each labor category, are taken from the same ECEC series

. Fringe benefits as a percent of wages are calculated separately for each labor category

. For example, for December 2010 , the aver age wage rate for professional/technical 16

An additional loading factor of 17 percent is applied to wages to a ccount for overhead

. This approach is used for consistency with Office of Pollution Prevention and Toxics economic analyses for two major labor was $ 36.93 ; the average fringe benefit was $ 18.50

. Fringe benefits as a percent of wages were $ 18.50 /$ 36.93

, or approximately 50.1 percent.

14 This follows the approach introduced in Economic Analysis of Expedited Significant New Use Rules for 65 Chemical Substances: EPA Docket OPPT

- 2003

- 0063 (EPAB, 2007a)

. 15 Employer Costs for Employee Compensation Supplementary Tables December 20 10

. (BLS, 2011 a)

. This follows the approach introduced in EPAB, 2007a. Earlier PMN SNUR economic analyses, such as EPA, 2003 , used ECEC data for “All Goods Producing” sectors (manufacturing, mining, and construction)

. However, the manufacturing sector data seem more relevant since the SNURs mainly affect the chemicals industry. 16 This follows terminology introduced in EPAB, 2007a. Earlier SNUR economic analyses 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, OCS, to the Standard Occupational Classification system, SOC

. In the process, the “Professi onal specialty and technical” category became the “Professional and related” category

. However, the coverage of the old and new occupational groups is approximately the same

. See the BLS article, C omparing Current and Former Industry and Occupation ECEC Se ries (Weinstein, 2004).Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 29 rulemakings: Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b), and the Revised E conomic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2002a)

. This overhead loading factor is added to the benefits loading factor, and the total is then applied to the base wage to derive the fully loaded wage

. For example, the Dece mber 2010 fully loaded wage for professional/technical labor is $ 36.93 × (1+0. 5009 + 0.17) = $ 61.71

. Fully loaded costs for managerial, clerical, and production labor are calculated in a similar manner, as shown in 

### Table 14

.


### A.1.3 Derivation of Labor Rates for EPA Staff

Agency labor costs are calculated based on annual Federal salaries for the Washington

- Baltimore area published by the Office of Personne l Management effective January 2010 (OPM, 2010 )

. The average salary for one FTE staff member is estimated as the salary for a GS

- 13 Step 5 employee. 17

Multiplying the annual pay by an assumed loading factor of 1.6 to reflect Federal fringe benefits and

ove rhead, the loaded annual salary of EPA staff was calculated to be $ 161,446

. The Agency loading factor is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (EPA, 1992, page 30, footnote 9)

. The 60 percent assumption was l abeled “the benefits multiplication factor” in the EPA Guide, but has been used in many EPA Office of Pollution Prevention and Toxics ICRs to reflect both fringe benefits and overhead for Federal staff

. For example, it was used in an August 2000 document supporting 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 that the 1.6 factor included not only benefits but also overhead.” (ICR No.1139.06)

17 The GS

- 13 Step 5 is consistent with ICR No. 0574.14 (12/18/2007), which covers PMN SNURs. Use of this grade level follows the approach introduced in EPAB, 2007a. That report represented a change from the earlier PMN SNUR economic analysis (EPA, 2003), which used an average of GS

- 12 Step 1 and GS

- 12 Step 10 salaries.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 30 

### Table 14 : Derivation of Loaded Wage Rates

EPAB Labor

Category Data Sources Date Wage Fringe Benefit Fringes as % Wage Over

head % Wage 2 Fringe + Overhe ad

Factor Loaded Wages 1

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

Managerial BLS ECEC , Private Manufacturing industries

, “Mgt, Business, and Financial” Dec

- 10

3 $42.82 $19.64 45.87% 17% 1.63 $69.74

Professional/

Technical BLS ECEC , Private Manufacturing industries , “Professional and related“ Dec

- 10

3 $36.93 $18.50 50.09% 17% 1.67 $61.71

Clerical BLS ECEC , Private Manufacturing industries, “Office and Administrative Support” Dec

- 10

3 $17.36 $8.67 49.94% 17% 1.67 $28.98

EPA staff FTE Annual Federal staff cost: OPM Washington

- Baltimore

- Northern Virginia, DC

- MD

- PA

- VA

- WV, area, GS

- 13 Step 5 pay rates, with 60% overhead. Jan

- 10

4 $ 100,904 (annual) -- [Included in 60% overhead] 60% 1.6 $161,446.40 (annual)

Notes:

1 Wage data are rounded to the closest penny in this table; however, in calculations using these numbers for this report, unrounded values were used.
2 An overhead rate of 17% was used based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (EPA, 2002b), and the Revis ed Economic Analysis for the Amended Inventory Update Rule: Final Report (EPA, 2002a).
3 Employer Costs for Employee Compensation Supplementary Tables December 2010, US Bureau of Labor Statistics, March 9, 2011 (BL S, 2011a).

4 3 The Federal salary is the unloaded Federal GS

- 13 Step 5 salary ($100,904) for 2010, from the Office of Personnel Management salary table for Washington

- Baltimore

- Northern Virginia (OPM, 2010). The 60% fringes

- and

- overhead rate is from an EPA guide, Instructions for Preparing Inform ation Collection Requests (ICRs) (EPA, 1992, page 30, footnote 9).Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 31 

### A.2 Derivation of Inflation Factors Complete information on the derivation of the inflation factors used is given in Table 15

. In 2006, the Bureau of Labor Statistics (BLS) made several changes to the Employment Cost Index

. The changes are described on a BLS web page, “Change has come to the ECI,” (BLS, 2006c ) and in several April 2006 Monthly Labor Review articles posted on the BLS web site: “Changes affecting the Employment Cost Index: an overview” (Caroll

, 2006 ); “Employment Cost Index Publication Plans” ( Sleemi, 2006 ); and “Seasonal adjustment in the ECI and t he conversion to NAICS and SOC” ( Branch, 2006 ).
Under a mandate from OMB, BLS changed its classifica tion of industries and occupations from the Standard Industrial Classification (SIC) and Occupational Classification System (OCS) to the North American Indu stry Classification System (NAICS) and Standard Occupational Classification (SOC) system

. In 2006, BLS adjusted all ECI series to reflect this change.

In addition to changing the industry and occupational classification systems, in 2006, BLS rebased the E CI from June 1989 = 100 to December 2005 = 100 for all current and historical non

- seasonally adjusted series, including the NAICS and SIC based series

. (Seasonally adjusted indices, including those in Table 15 of this report, may not exactly equal 100 for December 2005 as a result of the seasonal adjustment

. Seasonal adjustments are explained in Branch, 2006.)

According to BLS, the official ECI for the years 1975

- 2005 is the SIC

- OCS based series, and for subsequent years, the official ECI is the NAICS

- SOC based series (Sleemi, 2006, p.8). 18

“Starting year” indices in Table 15 continue to be SIC

- OCS based

. Current year indices are NAICS

- SOC based

. We use indices from both the NAICS

- SOC and the SIC

- OCS based ECI series because neither series spans the entire period over which testing and o ther costs ne ed to be inflated.

18 BLS has been publishing the NIACS

- SOC based ECI series since March 2001 and it became official in March 2006. The SIC

OCS based series and NAICS

- SOC series have dif ferent series ID numbers, even when they describe essentially the same population. For example the series ID for seasonally adjusted total compensation for all private industry workers is ECS10002I for the SIC

- OCS series and CIS2010000000000I for the NAICS

- SOC series

.Economic Analysis for SNUR, Docket OPPT

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- 0994 November 2011 32 Table 15 : Derivation of Inflation Factors

Item Inflation Index Source 1 Starting Year Index for Starting Year (a) Index for 200 9

(b) Inflation Factor (b)/(a) 2

Export notification BLS ECI, ,Total comp, Private industry, Professional and related , 4 th Q [BLS, 2011b ] 1992
3 64.9 113.5 1.749

Agency Extramural costs White collar labor; equipment; supplies BLS ECI, Total comp, Private industry, Professional and
related , 4 th Q [BLS, 2011b ] 1993 3 67 113.5 1.694

Labels, placards etc. BLS CPI, All urban consumers, not SA. CUUR0000SA0, Annual [BLS, 2011 c ] 1997 160.5 218.056 1.359 File cabinet

Photocopies BLS CPI, All urban consumers, not SA

. CUUR0000SA0, Annual [BLS, 201l c ] 1988 118.3 218.056 1.843 Record keeping materials

Key: BLS = Bureau of Labor Statistics. CPI = Consumer Price Index

. ECI = Employment Cost Index

. SA = Seasonally Adjusted. Total Comp = Total Compensation (wages/salaries and benefits)

. 4th Q = Fourth Quarter. Notes:

1

“Starting year” ECI indices are SIC

- OCS based: Seasonally Adjusted (SA) ECS10002I for private industry All Workers, and not SA ECU11122I for private industry Professional and Related Workers.

In 2006, Bureau of Labor Statistics (BLS) Employment Cost Index (ECI) series “were rebased to December 2005 = 100 from June 1989 = 100.” The change is reflected in the indices in this table and explained on the BLS website, Employment Cost Index News Relea se Text: Employment Cost Index, March 2006 (BLS, 2006b )

. The Consumer Price Index (CPI) was not rebased

.

After 2006, ECI indices are NAICS

- SOC based: Seasonally Adjusted (SA) CIS2010000000000I for private industry All Workers, and not SA CIU2010000120000I (B ) for private industry P rofessional, and Relate d workers

. 2 Inflation factors are rounded to three decimal places in this table, but calculations in this report use the unrounded values

. BLS CPI values were published with one decimal place through 2006 and with three decimal places after that.

3 Beginning with the report Economic Analysis of Expedited Significant New Use Rules for 25 Chemical Substances: EPA Docket OPPT

- 2009

- 0922 ( EPA, 2010 ) we began to use the not

- seasonally adjusted CIU2010000120000I for private industry Professional, and Relate d workers, instead of S A CIS2010000W00000I for private industry white collar workers because BLS retired the “white

- collar” series

.