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February 9, 2018

Administrator Pruitt Signs TSCA User Fee Proposal

The ACTA Group

On February 8, 2018, the U.S. Environmental Protection Agency (EPA) announced that EPA Administrator Scott Pruitt signed a proposed rule regarding user fees for the administration of the Toxic Substances Control Act (TSCA). As amended by the Frank Lautenberg Chemical Safety for the 21st Century Act, TSCA provides EPA the authority to levy fees on certain chemical manufacturers, including importers and processors, to “provide a sustainable source of funding to defray resources that are available for implementation of new responsibilities under the amended law.” EPA states in its press release that the these fees “would go toward developing risk evaluations for existing chemicals; collecting and reviewing toxicity and exposure data and other information; reviewing Confidential Business Information (CBI); and, making determinations in a timely and transparent manner with respect to the safety of new chemicals before they enter the marketplace.” Publication of the proposed rule in the Federal Register will begin a 60-day comment period. EPA has posted a pre-publication version of the proposed rule.


Under the amendments to TSCA, EPA has authority to require payment from manufacturers and processors who:

  • Are required to submit information by test rule, test order, or enforceable consent agreement (ECA) (TSCA Section 4);
  • Submit notification of or information related to intent to manufacture a new chemical or significant new use of a chemical (TSCA Section 5); or
  • Manufacture or process a chemical substance that is subject to a risk evaluation, including a risk evaluation conducted at the request of a manufacturer (TSCA Section 6(b)).

Beginning in fiscal year (FY) 2019 (October 1, 2018, through September 30, 2019), EPA is required to adjust fees, as necessary, every three years to reflect inflation and ensure that fees are sufficient to collect 25 percent of the costs to EPA in administering TSCA Sections 4, 5, 6, and 14. Before establishing new fees or revising any existing fees, EPA is required to consult with manufacturers and processors, or their representatives.

The proposed rule provides a description of proposed TSCA fees and fee categories for FYs 20192020, and 2021, and explains the methodology by which the proposed TSCA user fees were determined and would be determined for subsequent FYs. In proposing the new TSCA user fees, EPA also proposes amending long-standing user fee regulations governing the review of Section 5 premanufacture notices (PMN), exemption applications and notices, and significant new use notices (SNUN). After implementation of final TSCA user fees regulations, certain manufacturers and processors would be required to pay a prescribed fee for each Section 5 notice or exemption application, Section 4 testing action, or Section 6 risk evaluation for EPA to recover certain costs associated with carrying out certain work under TSCA. EPA did not propose specific fees for submission of CBI.

The proposed rule would apply fees to manufacturers and importers of chemicals subject to Section 4 actions, Section 5 notices and exemptions, and Section 6 risk evaluations, including manufacturer-requested risk evaluations. EPA would apply fees to processors that submit Section 5 SNUNs or when a Section 4 activity is tied to a SNUN submission by a processor. EPA based this approach on what it saw as the difficulty in identifying processors for the other fee-triggering actions and discussed its expectation that manufacturers would pass some of the fee costs downstream. EPA requests comment on the proposed user fee approach and amounts, and on the methodology used for determining the amounts. EPA is also proposing and taking comment on standards for determining which persons qualify as small business concerns and thus would be subject to lower fee payments.


Who Will Be Charged Fees

EPA notes that although it has the authority to collect fees from both manufacturers and processors, it is proposing to focus fee collection on manufacturers. EPA proposes to collect fees from processors only when processors submit a SNUN under Section 5 or when a Section 4 activity is tied to a SNUN submission by a processor. According to the proposed rule, EPA “feels the effort of trying to identify a representative group of processors for the other three fee-triggering actions would be overly burdensome and expects many processors would be missed.” EPA believes its proposed approach “is the simplest and most straightforward way to assess fees for conducting risk evaluations under TSCA section 6 and other TSCA section 4 testing.” Furthermore, EPA states that it expects that manufacturers required to pay user fees will have a better sense of the universe of processors and will pass some of the costs on to them. EPA seeks public comment on this approach.

While fee payers will self-identify for certain actions, such as making a Section 5 new chemical submission to EPA, for other actions, such as TSCA Section 6 risk evaluations, EPA proposes to use Chemical Data Reporting (CDR) data to identify a preliminary list of companies. EPA seeks comment on whether to adopt a process that would allow time for public input for adding to that preliminary list before it is issued in final. EPA states that it is also interested in comments on using other sources to identify those subject to payment of fees. These sources include information reported to the Toxics Release Inventory (TRI), notice of commencement (NOC) submissions under EPA’s TSCA New Chemicals Review Program, and information reported under the TSCA Inventory active/inactive notification rule.

How EPA Calculated the Proposed User Fees

EPA states that it believes that assigning fees across TSCA Sections 4, 5, and 6 is the most equitable and efficient approach for allocating costs. EPA intends its proposed fee methodology to recover fully the amount specified in the statute per TSCA Section 26(b)(4)(F). According to EPA, the estimated annual costs of carrying out TSCA Sections 4, 5, 6, and 14, without including the costs associated with manufacturer-requested chemical risk evaluations, are approximately $80.2 million. Based on these cost estimates, EPA anticipates collecting approximately $20.05 million in fees each year. In addition, EPA intends to collect fees from manufacturers to recover a portion of costs incurred by EPA in conducting chemical risk evaluations requested by manufacturers. EPA expects this fee amount will be $1.3 million per chemical for chemicals on the Work Plan and $2.6 million per chemical for chemicals not on the Work Plan.

EPA states that it determined the anticipated costs associated with TSCA Sections 4, 5, 6, and 14 activities, including both program costs and indirect costs. For FYs 2019 through 2021, EPA estimated these costs to be approximately $80.2 million per year, as detailed in the table below:

Estimated Annual Costs to EPA (FYs 2019 through 2021)

 Direct Program CostsIndirect CostsAnnual Costs
TSCA Section 4$2,765,000$778,000$3,543,000
TSCA Section 5$22,375,000$6,296,000$28,672,000
TSCA Section 6$34,073,000$9,545,000$43,618,000
TSCA Section 14$3,531,000$814,000$4,345,000

Note: Numbers may not add due to rounding. The indirect cost rate for Office of Chemical Safety and Pollution Prevention is estimated at 28.14 percent for the purposes of this analysis.

After EPA estimated the annual costs of administering TSCA Sections 4, 5, 6, and 14, EPA had to determine how the costs would be allocated over the narrower set of activities under TSCA Sections 4, 5, and 6 that trigger a fee. EPA states that it took an approach to determining user fees that parsed the fees based on the type of submission or fee triggering event, allowing costs to be more equitably allocated among the submissions and their related costs.

Under the proposed rule, EPA would require payment of fees for most types of fee triggering events under TSCA Sections 4, 5, and 6. This includes the requirement to submit information to comply with a test order, test rule, or ECA under TSCA Section 4. EPA would also require payment for the following TSCA Section 5 notices and exemptions: PMNs and consolidated PMNs, SNUNs, microbial commercial activity notices (MCAN) and consolidated MCANs, test marketing exemptions (TME), low releases and low exposures (LoREX), low volume exemptions (LVE), Tier II, film article exemptions, and TSCA experimental release applications (TERA). Payment would also be required for chemicals undergoing both EPA-initiated and manufacturer-requested risk evaluations under TSCA Section 6.

For TSCA Section 4 activities for existing chemicals, EPA is proposing three fee categories. The proposed fee associated with a test order is $10,000. The proposed fee associated with a test rule is $32,000, and the fee proposed for an ECA is $25,000. EPA states that it expects these fees will be paid by consortia, assuming that multiple companies manufacture the same chemical, and is requesting that consortia assign comparatively lower fees for small businesses than for large businesses in the consortia. Consistent with comments previously received, EPA is proposing to provide flexibility to manufacturers to form consortia to allocate these fees amongst those members involved in each submission activity. EPA estimated that, on average, it will annually undertake work on ten test orders, one test rule, and one ECA. Given the many TSCA chemicals that have limited test data available, these estimates, which correspond to the period 2019 through 2021, strike us as exceedingly low and unlikely to meet the needs and expectations for testing under the new law.

EPA proposes two categories of fees, with different fee amounts, for TSCA Section 5 submissions. According to the proposed rule, EPA “chose to lump activities with similar Agency costs together” to develop a simple fee structure. The fee proposed for each PMN, SNUN, and MCAN is $16,000. The fee proposed for each LoREX, LVE, TME, Tier II, film article, and TERA is $4,700. EPA proposes to continue the practice of allowing consolidation of PMNs, consolidation of MCANs and, in some cases, consolidation of a synthetic sequence, for up to six closely similar chemical substances with similar use, structure, and probable toxicology at the same time and for the same fee as a single chemical substance. According to EPA, consolidated PMNs (and MCANs) benefit submitters by reducing the administrative burden of developing multiple Section 5 submission forms for manufacture of two or more structurally related new chemical substances that have similar use, exposure, environmental release, and test data. EPA notes that its review process is also better facilitated by reviewing similar substances simultaneously.

EPA also proposes to eliminate the currently available “intermediate PMN” fee class, arguing that each intermediate in a sequence takes about as much time to review as does the final product that is sold or used commercially. We will need to think about this aspect of the proposal insofar as the fact of intermediate use would limit the scope of the exposure review for the intended use. Perhaps the complexity comes from reviewing “reasonably foreseen” uses, however, this can only be surmised as it is not discussed in the proposal. We are also aware of the need for numerous synthetic intermediates that in some cases achieve a single final chemical, and wonder at the implications of an “intermediates fee” multiplier of $16,000x where “x” can be five, ten, or more chemicals.

EPA is not proposing to assess greater fees for submissions with CBI claims, an important consideration for Section 5 notices, given the frequency of CBI claims for new chemicals. Also, in an important nod that recognizes the continued importance of the Sustainable Futures program, EPA is proposing to waive the TME fee for submission from companies that have graduated from this program.

For risk evaluations (RE), EPA is proposing a slightly different fee amount ($1.35 versus 1.3 million) for EPA initiated risk evaluations and for manufacturer-requested Res for Work Plan chemicals, while the fees would approximately double for manufacturer-requested REs on non-Work Plan chemicals. While we expected that REs would have significantly higher fees than the other TSCA elements, we were surprised to see a “one size fits all” approach to REs on existing chemicals. While $1 million plus may be appropriate for high volume or high value chemicals, many if not most existing chemicals share neither of these attributes. There is also the issue of REs conducted on categories of existing chemicals. Seemingly the idea behind lower fees for PMN consolidated cases would also be relevant to existing chemical categories of related substances? If selected for RE, would the fee amounts alone affect commercial viability in the case of low value, low volume, or categories of existing chemicals and, if so, was this intended by new TSCA?

The fee amounts being proposed are summarized in the following table:

Proposed TSCA User Fees

TSCA Section 4
Test order$9,800
Test rule$29,500
Enforceable consent agreement$22,800
TSCA Section 5
PMN and consolidated PMN$16,000
MCAN and consolidated MCAN
Tier II exemption
Film Articles
TSCA Section 6
EPA-initiated risk evaluation$1,350,000
Manufacturer-requested risk evaluation on a chemical included in the Work Plan$1,300,000
Manufacturer-requested risk evaluation on a chemical not included in the Work Plan$2,600,000

*EPA is proposing to waive the TME fee for submissions from companies that have graduated from EPA’s Sustainable Futures program.

Small Business Concerns

EPA proposes reduced fees for small businesses, as summarized in the following table:

Proposed TSCA User Fees for Small Businesses

TSCA Section 4
Test order$1,950
Test rule$5,900
Enforceable consent agreement$4,600
TSCA Section 5
PMN and consolidated PMN$2,800
MCAN and consolidated MCAN
Tier II exemption
TSCA Section 6
EPA-initiated risk evaluation$270,000
Manufacturer-requested risk evaluation on a chemical included in the Work Plan$1,300,000
Manufacturer-requested risk evaluation on a chemical not included in the Work Plan$2,600,000

EPA set the proposed small business fees at an 80 percent reduction compared to the proposed base fee for each category. EPA notes that in one case, for PMN and related actions, the proposed small business fee reduction is 82.5 percent. According to EPA, this slightly higher percentage reduction is due to the concern for the potential impact on small businesses of higher fee levels. The proposed small business fees for each category fee is triggered only when there is one entity subject to the fee, and that entity is a small business, or if there is a consortium paying the fee and all members of that consortium are small businesses.

EPA proposes to revise the size standard used to identify businesses that can qualify as a “small business concern” under TSCA for the purposes of fee collection. In 1988, EPA promulgated a regulatory definition for a small business that makes a submission under TSCA Section 5, based on the annual sales value of the business’ parent company. EPA states that the definition provided in 40 C.F.R. Section 700.43 currently states: “Small business concern means any person whose total annual sales in the person’s fiscal year preceding the date of the submission of the applicable section 5 notice, when combined with those of the parent company (if any), are less than $40 million.” EPA proposes several changes to this definition. Consistent with the definition of small manufacturer or importer at 40 C.F.R. Section 704.3, EPA proposes to increase the current revenue threshold of $40 million using the Producer Price Index (PPI) for Chemicals and Allied Products, as compiled by the U.S. Bureau of Labor Statistics. Using a base year of 1988 and inflating to 2015 dollars results in a value of approximately $91 million.

Pursuant to 13 C.F.R. Section 121.903(a)(1)(ii), EPA also proposes to change the time frame over which annual sales values are used when accounting for a business’s revenue. Instead of using just one year preceding the date of submission, EPA proposes to average annual sales values over the three years preceding the submission. EPA proposes to apply this updated definition — adjusted for inflation and averaging sales revenue over three years — to not only TSCA Section 5 submissions, but also to TSCA Section 4 and 6 submissions, as well.

Timing of Fee Payment

EPA proposes to collect lump sum payment of the entire user fee for Section 5 notices prior to reviewing each submission or undertaking the activity associated with the fee. EPA proposes to require fee payment at the time a TSCA Section 5 notice (including an exemption) is submitted.

EPA proposes to allow fee submitters for test orders, test rules, ECAs, and EPA-initiated chemical risk evaluations time to associate with a consortium and work out fee payments within that consortium. Payment for fee categories under TSCA Section 4 (i.e., test orders, test rules, and ECAs) is due within 60 days of the effective date of the order or rule, or 60 days upon signing of an ECA. For EPA-initiated risk evaluations, full payment is due within 60 days of EPA publishing the final scope of a chemical risk evaluation. EPA states that it believes this provides sufficient time for manufacturers to associate as a consortium, if they so choose, and to decide on the partial fee payments each member of the consortium will be responsible for. EPA notes that manufacturers will have ample warning that a risk evaluation is underway, well before the final scope is published in the Federal Register.

For manufacturer-requested risk evaluations, EPA proposes to collect a fee when it grants the request to conduct the evaluation. Payment will be required within 30 days of EPA providing such notice.

EPA proposes that user fees will begin to be incurred starting on October 1, 2018. EPA states that it will not, however, collect any fees until the final user fee rule is effective. Instead, EPA intends to record actions that would be expected to trigger payment of fees and once the rule is final send invoices to the affected parties. The invoices would reflect timing for payments and amounts based on the final rule.

Circumstances under Which EPA Will Refund Payments

EPA states that it will continue to refund any fee paid for a Section 5 notice whenever it determines that the notice or fee was not required. TSCA Section 26(b)(4)(G) permits EPA to refund fees, or a portion of fees, for notices submitted under TSCA Section 5 that are later withdrawn and for which EPA conducts no substantive work unless it determines that the submitter unduly delayed the process. EPA proposes to refund a consistent 75 percent of the user fee to the submitter if the notice is withdrawn within ten business days. Beyond ten business days, EPA states that it is likely to have already conducted substantial review work that qualifies as substantive work for which no refund is authorized under TSCA Section 26(b)(4)(G). According to EPA, up to three significant milestones of the PMN review process can take place within ten business days: the Chemical Review/Search Strategy Meeting occurs between Days eight and 12; the Structure Activity Team Meeting occurs between Days nine and 13; and Development of Exposure/Release Assessments occurs between Days ten and 19. EPA states that it “feels that tying the refund time period to a certain number of days is a simpler and more efficient approach than tying it to a specific milestone of the review process.” EPA does not have authority to, and therefore will not, provide refunds under any other circumstances.

Consequences of Failing to Pay a Fee

The proposed rule states that failure to comply with any requirement of a rule promulgated under TSCA is a prohibited act under TSCA Section 15 and is subject to penalties under TSCA Section 16. When the final rule is promulgated, failure to pay the appropriate fee at the required time would subject each manufacturer and processor who is subject to the fee payment to penalties of as much as the maximum statutory amount per day ($38,114 as of January 2017) until the required fee is paid. Each person subject to fees would be subject to such penalties regardless of whether they intend to pay independently, as a joint submitter, or through consortia. Specifically, each member of a consortium, and each joint submitter, is individually responsible for payment of the fee, and subject to penalties for non-payment, until the fee is actually paid.

Compliance Date

EPA proposes to start collecting fees the day after the final TSCA user fees rule is published in the Federal Register.

Other Proposed Amendments

EPA proposes minor changes to several of its regulations that cross-reference the Part 700 fees regulations, specifically Parts 720, 723, 725, 790, and 791. Amending the regulatory text in these Parts will ensure that existing regulations appropriately reference the regulatory text being proposed. EPA proposes minor updates for implementing the fee requirements for TMEs at Section 720.38; PMN regulations at Section 720.45(a)(5); instant photographic and peel-apart film articles exemptions at Section 723.175; amendments to regulations covering MCANs and exemption requests at Sections 725.25 and 725.33; minor amendments at Sections 790.45 and 790.59; and a modification to the general provisions for data reimbursement found at Section 791.39.

Request for Comments

Affected Industry

EPA states that it specifically seeks additional information and data that it could consider in developing the final economic analysis. In particular, EPA is seeking data that could facilitate further evaluation of the potentially affected industry and firms, including data related to potential impacts on those small businesses that would be subject to user fees.

User Fees Categories

EPA seeks comments on all aspects of the fee categories being proposed for manufacturers and processors and “welcomes comments on how the various fees and fee categories discussed could be combined in different ways” to achieve an overall fee structure amounting to 25 percent of EPA’s costs to administer TSCA Sections 4, 5, 6, and 14. EPA states that it would appreciate specific comments on the decision not to include a fee category for risk management under TSCA Section 6(a) and the decision to eliminate the existing intermediate PMN fee category, which currently provides a discount to manufacturers who submit intermediate PMNs at the same time as a final PMN. While EPA will still accept intermediate PMN submissions, it will charge a full PMN fee for each chemical.

EPA is interested in comments on the fee amounts being proposed today, as well as the alternative fees considered. EPA states that it is also interested in comments on the proposal to waive exemption fees on TMEs submitted at the same time as a PMN, SNUN, or MCAN from a company that has graduated from its Sustainable Futures program.

Small Business Concerns

EPA proposes several changes to the size standard used to identify businesses that can qualify as a “small business concern” for purposes of fees and seeks comment on the proposed approach. EPA is also interested in comments on the reduced fee amounts being proposed for those businesses that can qualify as a “small business concern.”

EPA is specifically interested in comments on whether an employee-based size standard would be more appropriate than a receipts-based size standard and what that employee level should be; whether the size standard, be it receipts-based or employee-based, should vary from industry to industry to reflect differences among the impacted industries; and what other factors and data sources EPA should consider, besides inflation, when developing the size standard to qualify for reduced fee amounts.

Further, with respect to small business size standards, EPA notes that it recently committed to revisiting the definition of small businesses as it relates to the TSCA Section 8(a) data reporting regulations. Due to the “urgent need” for EPA to promulgate this regulation and expeditiously collect fees, EPA states that it believes that the upcoming rulemaking will provide a venue for a more expansive consideration of appropriate size standards for industries subject to TSCA and offer the public further opportunities to comment on the size standard. In addition to considering comments submitted in response to this proposal, EPA is committed to evaluating the results of the 8(a) rulemaking process and, in the event that the reporting and fee standards differ, to determine if the size standards set through that process should be harmonized with the small business definition for fees. EPA suggests that this harmonization could be implemented in a subsequent rulemaking for the next three-year fee cycle (FYs 2022-25).

Electronic Payment of Fees

EPA is interested in comments pertaining to the electronic payment of fees. If, for some reason, neither nor Fedwire meets the needs of those required to pay user fees, EPA “would appreciate the identification of other appropriate electronic payment methods to consider.”


EPA reached an important milestone in issuing the proposed fee rule and we applaud the Agency’s success. The proposal is generally well constructed and thoughtful, particularly with regard to its approach to processors, the limited fees on Section 4 actions, and continued flexibility in fees for certain Section 5 notices, for example, consolidated cases and Sustainable Futures-related submissions. At the same time, additional careful thought needs to be given by stakeholders to the implications and wisdom of EPA’s proposal to not include the “intermediate PMN” approach and the “one size fits all” fees for Section 6 risk evaluations in the case of low value, low volume, or categories of existing chemicals.

We also are a bit concerned by EPA’s relatively modest expectations regarding initiating Section 4 actions over the first five years of TSCA. At a minimum, EPA may wish to explore and discuss this issue in the final rule or separately in a policy paper outlining its longer-term thinking and strategy for Section 4 testing that meets the needs of new TSCA. Other stakeholders are, of course, also urged to move the needle on this important issue. While much is ongoing pertinent to TSCA implementation, Section 4 testing is a central component of new TSCA and we do not want it relegated to a back seat.