The U.S. Environmental Protection Agency's (EPA) June 2021 proposal of a Toxic Substances Control Act (TSCA) reporting rule targeting manufacturers of per- and polyfluoroalkyl substances (PFAS) sparked a major outcry from chemical manufacturers and article importers. 86 Fed. Reg. 33926 (June 28, 2021). EPA acknowledged that its proposed rule would cost hundreds of millions of dollars more than EPA originally estimated. Last week, EPA issued an Initial Regulatory Flexibility Analysis (IFRA) that previews critical changes to the rule as proposed. 87 Fed. Reg. 72439 (Nov. 25, 2022). EPA requested comment on the IFRA by December 27, 2022. EPA faces a statutory deadline to finalize the PFAS reporting rule by December 31, 2022. Last week's announcement likely signals that EPA will not meet that deadline.
EPA Acknowledges High Compliance Costs With PFAS Reporting Rule as Proposed
When EPA proposed the PFAS reporting rule, it estimated the social costs of implementation of approximately $10.8 million. In the IFRA, EPA revised that estimate to over $875 million, an 80-fold increase. Of the revised cost estimate, nearly all is expected to be borne by article importers, with only about $10 million to be borne by chemical manufacturers.
Potential Changes to PFAS Reporting Rule
Due in part to the revised cost increases, EPA indicated that it is considering certain changes to the proposed PFAS reporting rule, which were recommended by a Small Business Advocacy Review (SBAR) Panel that EPA convened. EPA requested comments on each of the following potential changes. Some potential changes appear to be overlapping or mutually exclusive, so that EPA may pick and choose among them.
- Limiting the scope of PFAS covered by the rule to a finite list. The rule, as originally proposed, would cover a potentially limitless universe of per- and polyfluoroalkyl substances containing certain structural elements described in the rule. EPA is considering revising the rule to be limited to, for example, the 578 PFAS listed on the non-confidential portion of the TSCA Inventory or are subject to low volume exemptions in which the specific chemical identity was not claimed as confidential.
- Incorporating an annual reporting threshold. The proposed rule does not contain a volume threshold, meaning that, for example, the import of a single article containing a minute quantity of PFAS may trigger reporting obligations. EPA is considering imposing an annual reporting threshold of either 2,500 or 25,000 pounds per year.
- Simplified reporting forms. EPA is considering removing some required reporting elements for certain companies that are required to report. The simplified reporting would apply to research and development substances manufactured in volumes less than 10 kilograms per year or substances imported as part of an article.
- Incorporating common TSCA exemptions. EPA is also considering exemptions that apply to byproducts, impurities, recyclers, intermediates, and research and development substances.
- Eased burdens for small businesses. EPA is considering an exemption for businesses that do not exceed an annual sales threshold. EPA is currently considering annual sales thresholds of $2 million, $6 million, and $12 million. EPA is separately considering a longer reporting timeline for businesses that do not exceed an annual sales threshold (but are not covered by a blanket exemption).
EPA Comments on "Known or Reasonably Ascertainable" Standard
The rule, as proposed, would only require reporting activities "known to or reasonably ascertainable by" the submitter. Thus, in the IFRA, EPA acknowledged that "it is reasonable that some importers would not know or ascertain that there is reportable PFAS in their imported articles and would therefore not be subject to report." EPA does not appear to be second-guessing this standard. However, the question remains: how much due diligence is sufficient to satisfy the rule?
EPA offered the following comments in the IFRA:
Submitters need not conduct extensive supply chain surveys. That is, they need not conduct a new survey of their suppliers by sending out a comprehensive set of identical questions to multiple suppliers for a given article type to fulfill the rule's reporting standard. However, fulfilling the reporting standard may entail inquiries outside the organization (e.g., contacting first tier/immediate suppliers, major suppliers, examining a supplier's public website) to fill in the gaps in the submitter's knowledge, where the submitter's current knowledge is less than what a "reasonable person similarly situated might be expected to possess, control, or know."
EPA separately reiterated its previous comments that chemical testing on articles would not be part of the expected due diligence under the rule.
The PFAS reporting rule will bear enormous compliance costs if not amended prior to finalization. Manufacturers and article importers should consider submitting comments supporting the changes suggested by the SBAR Panel.
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