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On May 28, 2020, the US Environmental Protection Agency (US EPA) issued its final rule amending the definition of a “small manufacturer” under section 8(a) of the amended Toxic Substances Control Act (TSCA). As a result of the change, some manufacturers and importers who were previously subject to Chemical Data Reporting (CDR) requirements under the current definition will be exempt or subject to reduced reporting requirements under the new rule. The amended definition comes shortly before the reporting period for 2020 CDR submissions opens on June 1, 2020. We have previously covered a number of other key changes US EPA has made to the information that chemical manufacturers and importers must submit to the agency pursuant to the CDR rule.

TSCA section 8(a) generally excludes small manufacturers and importers of chemical substances from the reporting and recordkeeping requirements established under that section. The new rule amends the definition of a “small manufacturer” in 40 CFR §704.3 and applies to chemical manufacturers and importers subject to TSCA section 8(a) reporting and recordkeeping rules, unless a different standard is identified in a specific TSCA section 8(a) regulation.

The amended definition does not apply to chemical processors. US EPA stated it was “not necessary” to develop a definition of “small processor” for purposes of TSCA section 8(a) “at this time” because the amended definition mostly affects the CDR, which does not apply to processors. US EPA said that it will continue its practice of developing definitions for small processors on a rule-by-rule basis, as applicable.

Under the current definition in 40 CFR §704.3, a small manufacturer or importer is a manufacturer or importer that meets either of the following standards:

  • Its total annual sales, when combined with those of its parent company (if any), are less than $40 million. However, if the annual production or importation volume of a particular substance at any individual site owned or controlled by the manufacturer or importer is greater than 100,000 pounds, the manufacturer or importer shall not qualify as small for purposes of reporting on the production or importation of that substance at that site.
  • Its total annual sales, when combined with those of its parent company (if any), are less than $4 million, regardless of the quantity of substances produced or imported by that manufacturer or importer.

The amended definition is an update of the current two-standard definition and follows the same format. Under the revised definition, the thresholds for annual sales are increased from $40 million to $120 million for the first standard and from $4 million to $12 million for the second standard. The 100,000 pound threshold under the first standard remains the same under the revised definition. US EPA estimates that the new definition will eliminate CDR reporting entirely for 127 industry sites and reduce reporting by eliminating the need to report at least one chemical for an additional 173 industry sites.

The final rule is substantially similar to the amended definition proposed by US EPA in 2018, although the agency has now updated the dollar amount thresholds based on 2018 inflation data rather than using 2017 inflation data as proposed. During the comment period, some industry stakeholders requested that US EPA change the standards on which the definition was based rather than retaining the two-standard format based on annual sales and volume thresholds.

Some of the commenters’ suggested methods included a variable employment-based size standard using different industry specific standards (defined by NAICS codes) and the use of a Small Business Administration (SBA)-based definition similar to the standard that US EPA adopted in US EPA’s TSCA fee rule. US EPA rejected this approach, explaining that industry-specific standards using NAICS codes would be difficult to apply because it is up to a manufacturer to determine if it meets the “small manufacturer” exemption for purposes of CDR and multiple NAICS codes could apply to one site. As to an SBA-based standard, which would exempt significantly more sites than the revised definition, US EPA distinguished the data collection purpose and related considerations of the CDR program from the fee-apportionment purpose of the fees rule.

The rule will be effective June 29, 2020. As noted, the reporting period for 2020 CDR submissions opens June 1, 2020. US EPA has extended the usual deadline for submission of CDR reports from September 30 to November 30, 2020 to enable companies to become familiar with the revised CDR reporting requirements. Please get in touch with your Squire Patton Boggs contact if you have questions about US EPA’s CDR reporting requirements or need assistance with them.