Kristin Watt contributed to this post.
USEPA is proposing two new rules with the potential for major impacts to industry members that interact with PFAS. Read together, these rules also indicate a discrepancy in EPA’s position on how to manage the compliance burden PFAS reporting requirements create for small businesses.
- The TSCA Rule
In 2021, EPA proposed a rule under its Toxic Substances Control Act (“TSCA”) authority (the “TSCA Rule”) that would create retroactive PFAS reporting requirements for manufacturers and importers of products containing PFAS. New estimates about compliance costs for the proposed TSCA Rule, however, caused EPA to later issue a report with alternatives to the original proposed rule to ease the regulatory burden for small businesses.
- The Original Proposed TSCA Rule
EPA’s original proposed TSCA Rule, if enacted, would create a 12-year lookback period, requiring entities that manufactured or imported PFAS in any year since January 1, 2011 to report their PFAS uses, production volumes, disposal, exposure, and hazards. Entities would be required to report their PFAS information to the extent it is “known to or reasonably ascertainable by them,” a due diligence standard for which EPA has offered little guidance.
The original proposed TSCA Rule would provide no exemptions for small businesses, or manufacturers and importers that coincidentally produce PFAS as a byproduct. Further, the original proposed Rule would apply to any PFAS that meets the Rule’s structural definition for PFAS, meaning that at least 1,364 chemical substances and mixtures could be subject to reporting. EPA initially estimated industry-wide compliance costs for this Rule to be $10.8 million.
- The Proposed TSCA Rule Alternatives
EPA issued an Initial Regulatory Flexibility Analysis (IRFA) for the proposed TSCA Rule on November 25, 2022 with updated cost estimates and regulatory alternatives for the original proposed Rule. Agencies must produce IRFAs when an agency rule will have a significant economic impact on small businesses.
First, the IRFA updated EPA’s industry-wide compliance costs estimate to $876 million, with small businesses expected to incur $863 million of those costs. (The IRFA relies on the “small business” definition in the Small Business Act, which can be based on a company’s number of employees or sales depending on the company’s NAICS code. The small business threshold varies according to NAICS Code, but, in terms of employee thresholds, can range up to 1500 employees.)
Second, the IRFA proposes regulatory alternatives to the original proposed TSCA Rule that EPA could adopt to ease the regulatory burden for small businesses. These proposed alternatives reflect, in part, EPA’s recognition of factors that create difficulty for small businesses to determine whether PFAS is present in products they manufacture, such as long supply chains, proprietary information, and lack of leverage.
The regulatory alternatives to the original proposed TSCA Rule include:
- Exemptions for small businesses with less than $12 million, or $6 million in sales;
- Exemptions for articles importers with less than $6 million in sales, or $2 million in revenue;
- Limiting the scope of PFAS covered by the TSCA Rule;
- Exemptions for reporting thresholds of either 2,500 lbs. per year, or 25,000 lbs. per year;
- Longer reporting timeline for small businesses;
- Simplified reporting forms for article importers, and R&D substances manufactured in volumes < 10 kg per year; or
- Exemptions for research and development substances, byproducts, impurities, recyclers, and intermediates.
Comments are due for the proposed TSCA Rule IRFA on December 27, 2022.
- The TRI Rule
On December 5, 2022, EPA proposed a rule that would eliminate currently existing, burden-reducing reporting options for facilities that use PFAS subject to Toxic Release Inventory (“TRI”) reporting requirements (the “TRI” Rule). A facility is subject to TRI if it has: (1) a TRI-covered NAICS code; (2) 10 or more full-time employees; and (3) a reportable quantity of a TRI-listed chemical.
First, the proposed TRI Rule would add all TRI-listed PFAS (180 are currently listed) to the Chemicals of Special Concern ("COCS") list, removing the option for facilities subject to TRI reporting requirements for PFAS to rely on the de minimis exemption. The de minimis exemption allows facilities to disregard TRI-listed chemicals if the chemicals are present at concentrations below 1% of a mixture (0.1% for carcinogens) when determining their reporting requirements. (Presently, only TRI-covered facilities that manufacture, process, or otherwise use TRI-listed PFAS in excess of 100 pounds per year are required to report for PFAS.)
Second, the proposed TRI Rule would remove the de minimis exemption from the Supplier Notification Requirements for all COSC. Currently, this exemption allows suppliers to not provide notifications for mixtures or trade name products if a TRI-listed chemical is present at de minimis levels. The proposed TRI Rule, however, would require suppliers of mixtures or products to notify purchasers if the mixture or product contains any COSC, no matter the quantity or concentration.
Comments are due for the proposed TRI Rule on February 3, 2023.
- A Tale of Two Reporting Regimes
In terms of their recognition of the difficulty of determining the presence of PFAS for certain entities, these two rules seem to be at cross-purposes. The TSCA Rule IRFA considers adding burden-reducing options to decrease the PFAS reporting burden for small businesses while the TRI Rule considers eliminating burden-reducing options to increase the PFAS reporting burden for TRI-covered facilities using small concentrations of TRI-listed PFAS. The TRI-covered facilities that currently rely on burden-reducing tools for their TRI reporting of PFAS could face some of the same challenges in determining whether the chemical substances they use contain PFAS as the small businesses for which EPA is considering exemptions from PFAS reporting under the proposed TSCA Rule.
This discrepancy in EPA’s stance on the severity of reporting requirements under two different reporting regimes suggests EPA may be of two minds about how to manage the compliance burden of PFAS reporting for entities that interact with small quantities and concentrations of PFAS.
If you have questions about USEPA’s newly proposed PFAS reporting rules, please contact your Vorys attorney.