The Environmental Protection Agency’s (EPA’s) highly anticipated regulations governing per- and polyfluoroalkyl substances (PFAS) reporting, originally slated for final publication in January 2023, have been delayed to at least March. There have been concerns that the forthcoming rule may place an excessive burden on entities that are required to report, particularly from smaller businesses and others that may not have the infrastructure or resources to satisfy the reporting obligations.
The regulations are meant to implement a sweeping new data-gathering program codified in the Toxic Substances Control Act (TSCA), as amended by the National Defense Authorization Act for Fiscal Year 2020. A draft version of the rule, published in 2021, requires regulated entities to provide detailed reports containing information about the entity’s usage of PFAS dating back to January 1, 2011, including not only the identities of PFAS chemicals and amounts used, but also the byproducts resulting from their manufacturing, use, or disposal; the potential environmental and health effects of each substance; the manner of disposal; and the number of individuals potentially exposed, as well as the duration of such exposure.
The reach of the proposed rule is vast, both because it defines PFAS broadly and because it does not contain the same de minimis exceptions found in similar TSCA data reporting programs.
ECONOMIC ANALYSIS
The delay in finalizing the proposed rule is almost certainly due to the further economic analysis that EPA undertook in late November 2022—with a public comment period closing only at the end of December 2022—in response to widespread concerns with the draft rule’s significant reporting obligations and wide reach to businesses of any size.
EPA had initially certified that the proposed rule would not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act. However, public comments on the draft rule prompted EPA to convene a Small Business Advocacy Review (SBAR) panel in February 2022 to gather additional feedback from small businesses, trade associations, and others serving on the panel as small entity representatives (SERs).
According to an initial regulatory flexibility analysis (IRFA) that EPA released following the conclusion of the SBAR panel, EPA dramatically underestimated the social costs of the proposed rule on small businesses. In the November 25, 2022 IRFA, EPA revised its estimate of the proposed rule’s industry costs (i.e., total financial burden of compliance to all affected manufacturers and article importers) from $10.8 million to $876 million—an 81-fold increase—and also revised its estimate of associated agency costs from $948,078 to $1.6 million.
The staggering increase in social cost estimates, released just a month before the due date for the final rule, appears to have thrown a wrench in EPA’s plans to finalize the rule by the statutory deadline.
FORM OF LAW
The reporting law is an important component of EPA’s broader plans for restricting, controlling, or otherwise regulating PFAS. The reports are intended to provide an enormous amount of information on where, when, how, and what kinds of PFAS have been used across the country for the last 12 years, which can then inform future regulatory decision-making.
The final rule may not, therefore, dramatically narrow the proposed rule overall, but the delay in issuing the final rule does suggest that EPA is seriously considering measures to mitigate the considerable estimated impacts on small entities at a minimum, and possibly on manufacturers and article importers of any size.
POTENTIAL CHANGES
While the form such measures (if any) may take is difficult to predict, the SBAR’s final report offered several recommendations to reduce potential compliance costs, including, for example, (1) providing a broad small entity exemption; (2) providing guidance, training, and webinars for compliance; (3) providing additional time to small entities for compliance; (4) clarifying whether certain entities are within the scope of the final rule (such as recyclers, article importers, and processors); and (5) ensuring that processes for covered entities to submit their reports are functioning smoothly prior to the reporting period.
Public comments also suggested a number of other possible approaches, including the establishment of a definitive list of covered PFAS, a phased-in approach to reporting, and modification of the lookback period. In the absence of a categorical exemption, some commenters had also suggested including exemptions for impurities, certain byproducts (including those manufactured during disposal or waste treatment), low concentrations (i.e., a de minimis exemption), non-isolated intermediates, articles, and some or all fluoropolymers.
Whichever burden mitigation measures are ultimately adopted, businesses of any size would be well advised to begin collecting relevant information, and to also prepare for scrutiny of their past or current PFAS usage that may be prompted by the reporting.
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