What Is in EPA’s Billion Dollar PFAS Reporting Rule?

Manufacturers and importers of products containing PFAS will face new and substantial costs for recordkeeping and reporting if an EPA rule designed to collect comprehensive data on PFAS is finalized as proposed. The proposed reporting rule requires U.S. manufacturers of any product containing PFAS and any U.S. importer of articles containing any PFAS to investigate and certify to EPA the amount of PFAS that they have manufactured or imported into the United States for the past 12 years (beginning January 1, 2011).[1] EPA estimates industry-wide compliance costs to be up to $876 million and up to $1.8 million for each manufacturer or $224,000 for each article importer.[2]

Despite a year-end Congressional deadline,[3] EPA is still working on the rule and has recently proposed several potential revisions, including revisions to exempt some small businesses and to narrow the set of PFAS covered by the rule. EPA is seeking comments on the potential revisions through December 27, 2022.[4]

EPA’s Proposed PFAS Reporting Rule

The proposed PFAS reporting rule, issued June 28, 2021, applies broadly to any businesses that currently or previously manufactured or imported PFAS “between January 1, 2011 and the effective date of the final rule.”[5] The rule covers manufacturers of PFAS chemicals as well as product manufacturers and product importers of articles containing PFAS. With the ubiquity of PFAS in consumer products—including apparel, food packaging, cookware, carpets, and even automobiles—this rule has the potential to cover large swaths of the economy. There is no exemption for businesses below a certain size. Manufacturers or importers that incidentally produce PFAS as a “byproduct” during the production or disposal of another substance or product are also required to report.[6] The only excluded entities in the proposed rule are manufacturers and importers of PFAS that are regulated under other statutes like the Food, Drug, and Cosmetic Act or the Federal Insecticide, Fungicide, and Rodenticide Act.[7]

EPA issued the proposed rule under section 8(a) of the Toxic Substances Control Act (“TSCA”), which authorizes EPA to promulgate rules that require businesses to maintain and submit records on the production, import, processing, or mixture of specified chemicals.[8] In December 2019, Congress amended section 8 of the TSCA to compel EPA to promulgate a rule requiring PFAS manufacturers and importers to report information on PFAS produced or imported for every year since January 1, 2011.[9] Although section 8(a)(1) of TSCA—the general grant of authority to EPA to promulgate these sorts of reporting rules—contains an exemption for “small manufacturer[s] or processor[s],”[10] Congress’s directive to EPA to study PFAS was not so limited.

EPA’s proposed reporting rule raises many questions about how a product manufacturer or importer should collect and report such detailed information. EPA provides only limited guidance on the topic. EPA requires a covered business to supply the requested information to the extent any such information is “known to or reasonably ascertainable[.]”[11] When actual data are not available, EPA will require a “reasonable estimate.”[12] This is the same standard used in Chemical Data Reporting (“CDR”), for which EPA has provided limited guidance: Information “[k]nown to or reasonably ascertainable by” the submitter means “all information in a person’s possession or control, plus all information that a reasonable person similarly situated might be expected to possess, control, or know.” [13] Most importantly for purposes of compliance, EPA expects a “case-by-case” and “complete” analysis in light of the submitter’s “particular circumstances.”[14] In the CDR guidance, EPA provided several examples of information known or reasonably ascertainable, including: marketing, sales, and customer-survey files maintained by the submitter; information from standard references like material safety data sheets and safety data sheets; and information known to employees or other agents, including those in research and development, manufacturing, and marketing.[15] But in general, the contours of the reporting standard remain opaque. After all, information that is reasonably ascertainable to one business may be quite difficult for others to gather, especially where the source of the PFAS is from foreign or bankrupt suppliers.

EPA’s Recent Updates and Proposed Rule Changes

Although EPA initially projected minimal costs of complying with the rule, [16] on November 25, 2022, it increased that estimate nearly 100 fold, releasing a report estimating industry-wide costs at $876 million. Small businesses subject to the rule are expected to bear the brunt of these reporting costs—over $863 million. Per-firm costs for manufacturers are estimated to range from $6,553 to $1.8 million, while per-firm costs for article importers are estimated to range from $4,046 to $224,734.

EPA’s new cost estimates were released as part of EPA’s obligations under the Regulatory Flexibility Act, a law designed to provide small businesses with more input on administrative action.[17] Any agency rule having a significant economic impact on a substantial number of small businesses must be accompanied by a report called an initial regulatory flexibility analysis (“IRFA”).[18] IRFAs must contain, among other things, a description of the number of small businesses that could be affected by the proposed rule and a description of any “significant alternatives to the proposed rule” that “accomplish the stated objectives” while minimizing economic impacts on small businesses.[19]

In the PFAS reporting rule IRFA, EPA proposed several compliance alternatives to the broadly applicable proposed rule. Those alternatives, which could be adopted in any combination EPA chooses, include:[20]

• Limiting the scope of chemicals subject to the rule to a finite list of PFAS. The proposed rule covered any PFAS that meet a structural formula. EPA is considering limiting reporting to a discrete list of PFAS instead.
• Exemptions for research and development substances, byproducts, impurities, recyclers, and intermediates. EPA is considering whether to implement these exemptions from the regular Chemical Data Reporting process.
• Exemption for small businesses. EPA is considering exemptions for businesses with less than $6 million or $12 million in sales.
• Exemption for article importers. EPA is considering exemptions for article importers with less than $2 million or $6 million in sales.
• Reporting threshold. EPA is considering a reporting threshold of either 2,500 lbs. per year or 25,000 lbs. per year.
• Longer reporting timeline for small businesses. EPA is considering extending the reporting deadline of 12 months post-final rule to 18 months for small businesses.
• Simplified reporting forms. EPA is considering limiting required reporting for two subsets of businesses: those dealing in R&D substances manufactured in volumes of less than 10 kg per year and article importers.

EPA also shed light on how it would implement the “known or reasonably ascertainable” reporting standard, though the exact bounds of the required inquiry remain quite vague. EPA clarified that “[s]ubmitters need not conduct extensive supply chain surveys,” but that some “inquiries outside the organization (e.g., contacting first tier/immediate suppliers, major suppliers, examining a supplier’s public website)” could be necessary if the submitter’s current knowledge is less than what a similarly situated reasonable submitter might be expected to have.[21] And submitters must conduct their inquiries “within the full scope of their organization,” not simply within the ambit of “managerial or supervisory employees.”[22] But submitters would not necessarily need to conduct an “exhaustive survey of all employees,” and they need not contact former employees. Nor will submitters need to perform chemical analyses on articles or products for PFAS or generate new data not presently known to or reasonably ascertainable by the submitter.

EPA is seeking comment on all aspects of the IRFA, including the alternatives considered, treatment of confidential business information under the rule, and the methodologies and assumptions underlying its revised cost estimates. This is possibly the last remaining opportunity for businesses and associations to comment on the scope of the PFAS reporting rule. The comment period closes December 27, 2022.[23]

Please contact Marten’s PFAS Products Team, including James Pollack, Victor Xu, and Jessica Ferrell if you are interested in submitting comments.