EPA Proposes Changes to TSCA Fee Rule

On January 11, 2021, the U.S. Environmental Protection Agency (EPA) published a proposed rule that would update and modify EPA’s 2018 Toxic Substances Control Act (TSCA) (15 U.S.C. § 2601 et seq.) “fee rule” (83 Fed. Reg. 52,694 (Oct. 17, 2018) (codified at 40 C.F.R. Part 700)), which was applicable to fiscal years 2019, 2020, and 2021.  

Section 26(b) of TSCA requires EPA, after consultation, to review and, if necessary, adjust applicable TSCA fees every three years. The proposed rule updates the Agency’s 2018 fee calculation methodologies and cost estimates for administering TSCA and proposes to modify fees and fee categories for fiscal years 2022, 2023, and 2024.   

The proposal seeks to create three new fee categories:  (1) bona fide inquiry (see 40 C.F.R. § 720.25) fees; (2) fees for Notices of Commencement of Manufacture or Import (NOC) (see 40 C.F.R. § 720.102); and (3) an additional fee when a company resubmits data for a section 4 test order. The proposed fees for bona fide inquiries and NOCs would effectively add $1,000 (for non-small businesses) to the cost of bringing a new chemical to market in the U.S. The fees associated with these additional fee categories are summarized in the table below:

EPA is proposing exemptions from section 6(b) risk evaluation fees for companies engaged in certain activities using a high priority substance:  

1. an exemption for research and development (R&D) activities;
2. an exemption for entities manufacturing less than 2,500 pounds of a chemical per year (unless all manufacturers and importers of substance produce the substance in quantities less than 2,500 lbs. annually); 
3. an exemption for substances produced as a “non-isolated intermediate”; and
4. exemptions for manufacturers of a substance subject to an EPA-initiated risk evaluation if the substance is imported in an “article,” produced as a “byproduct,” or produced or imported as an “impurity.”

The creation of these fee rule exemptions is likely to be welcomed by many manufacturers. However, those that remain subject to the fees will likely experience an increase in their share of the fees, as the number of subject manufacturers sharing the fees should be reduced. The proposal also departs from past EPA practice by proposing to make manufacturers of “export-only” substances subject to risk evaluation fees.  

Furthermore, for EPA-initiated risk evaluations, EPA is proposing a significant increase in the total risk evaluation fee shared by all covered persons, to $2,560,000 per chemical. In addition, EPA is proposing a volume-based fee allocation in instances in which a single consortium comprised of all manufacturers and importers is not formed. As proposed, this method would apply to both small and non-small business manufacturers and would be based on the average annual production volume from the four calendar years prior to the year certification was made. The Agency also proposes to modify various aspects of the timing of certain activities that occur during the fee payment process, and to explicitly reserve the right to modify the final list of manufacturers subject to risk evaluation fees (as EPA ultimately did for the first 20 high priority chemicals subject to the fee rule).

For manufacturer-requested risk evaluations, EPA currently uses a two-part payment approach — an initial payment of $1,250,000 (for a chemical on the TSCA Work Plan) or $2,500,000 (for a chemical not on the TSCA Work Plan), and a final invoice to total either 50% or 100% of the remaining actual costs in line with the percentage requirements in TSCA (or a refund to achieve these requirements, if warranted). EPA is proposing a modified payment plan that allows companies to pay approximately 1/3 of the fee each year, with the final invoice issued at the conclusion of the risk evaluation. 

EPA is soliciting public comment on the proposed rule and, in particular, seek comments addressing whether the proposal would improve fee collection and ensure fair fee distribution. In addition, EPA welcomes any additional information and/or data that may facilitate the Agency’s continued evaluation of the impact the modified rule will have on industries, companies, and small businesses.  Comments on the proposal must be received on or before February 25, 2021.