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PFAS Rule to Cost Many Millions More, EPA Analysis Finds (1)

Nov. 23, 2022, 4:05 PM

Companies would pay hundreds of millions of dollars more to report their production of PFAS and importation of goods made with the chemicals than the EPA originally estimated, according to a revised economic analysis the agency will publish Friday.

Small businesses would be expected to pay $863.5 million rather than $1.8 million to report years of production and importation data that the Environmental Protection Agency would require under a rule (RIN 2070-AK67) it proposed in 2021.

The rule would impose $875 million instead of the $10.8 million the EPA previously estimated for social costs that consumers ultimately would pay, the updated analysis found. Public comment on the revised analyses is due Dec. 27.

The EPA recalculated the rule’s economic impacts generally and its impacts on small businesses in particular, because many organizations said its proposal lacked sufficient data to support its cost estimates, the EPA’s notice said.

Small businesses and groups representing them also criticized the EPA for failing to convene a type of small business advisory panel designed to help the agency understand—prior to proposing a rule—what the impacts of various regulatory options could be. The agency responded by convening a panel to obtain more insights into the proposal’s impacts.

Importers of thousands of manufactured goods, such as construction materials, medical devices, clothing, and cookware, that can be made with per- and polyfluoroalkyl substances (PFAS) also provided more data, the notice said.

The updated analysis also describes more potential benefits from the information the proposed rule would generate, but it will not numerically calculate those, the EPA said.

Initial Reactions

The significantly higher revised costs reveal that small businesses alone could pay “just short of $1 billion” to collect and submit the extensive information the EPA sought, said Kevin Bromberg, who worked in the Small Business Administration’s advocacy office for 41 years before retiring in 2020 and setting up the Bromberg Regulatory Strategy LLC consulting firm.

The new analyses also show the agency adjusts its conclusions, and possibly regulations, in light of new information, said Judah Prero, an Arnold & Porter Kaye Scholer LLP attorney who focuses on chemical chemical management laws.

Public comments and the small business advisory panel clearly showed the EPA that it didn’t understand how large the pool of regulated entities would be nor what they’d have to do to exercise sufficient diligence to know whether products they’ve imported over the years contained PFAS or not, he said.

“I would expect to see some type of changes in final rule” to reflect agency’s new insights into the costs of its proposal and awareness that many businesses are “not well positioned to get the information it sought,” Prero said.

The EPA should reduce the scope of information its rule sought and the breadth of companies targeted, Bromberg said. The agency also should consider collecting the information in two batches instead of within one year as its rule proposed, he said.

Chemical manufacturers and others that document what they make could report that information within a year, he said. Manufacturers of goods—airplane parts, wires, cookware, and other products that may be made with PFAS—could be given more time to figure out whether those materials had PFAS and the volumes of the chemicals, he said.

Congressional Mandate

The EPA’s proposed rule would enact a section of the 2020 National Defense Authorization Act requiring it to get a handle on PFAS that have been made and imported into the US since Jan. 1, 2011.

PFAS have been used for decades in thousands of medical, industrial, consumer, and other products, because they give those goods special data-transmission properties and qualities such as resistance to oil, water, germs, corrosion, and heat.

Yet, limits on the information chemical and other companies have long reported to the agency, mean the agency doesn’t know the range of PFAS made in or imported into the US over those years, the volume, the extent of ways the chemicals have been used, or how they’re disposed.

Data companies would have to report includes which PFAS they made and imported, byproducts generated during the production of the chemicals, disposal methods, imported goods that contained them, and any existing health and environmental effects information companies have. Industry would have to submit the information within one year of the rule being finalized. The law requires a final rule by Jan. 1.

The EPA isn’t likely to meet that deadline, because it will need to consider the comments the public provide on its new analyses, Prero said.

Broader Implications

The insights the small business advisory committee provided the EPA underscore the value of such panels, both Prero and Bromberg said.

Business groups have criticized the EPA for allegedly failing to recognize that multiple regulations it’s proposed warranted advice the advisory panels that the 1996 Small Business Regulatory Enforcement Fairness Act (SBREFA) says should be convened even before proposing a rule that could signficantly affect small businesses, municipalities, and other small entitites.

The revised cost analyses also offer insight into the potential implications of the agency’s increased emphasis on regulating chemicals in manufactured goods, or “articles,” as they’re called under the Toxic Substances Control Act (TSCA), Prero said.

Historically, the EPA exempted article manufacturers and importers from TSCA regulations. But amendments Congress made to that law in 2016 and the PFAS reporting mandates in the defense bill require the agency to look at chemicals in products, Michal Ilana Freedhoff, assistant administrator for chemical safety and pollution prevention, recently told Prero in a publicly available interview.

That means US manufacturers, similar to those in Europe, need to be able to track the chemicals in their goods, she said. And the EPA must communicate realistic compliance expectations, she said.

To contact the reporter on this story: Pat Rizzuto in Washington at prizzuto@bloombergindustry.com

To contact the editor responsible for this story: Renee Schoof at rschoof@bloombergindustry.com