Key Contacts
EPA Finalizes Small Manufacturer Definition for Reporting and Recordkeeping Requirements under TSCA Section 8(a)
Alert updated May 28, 2020, to include effective date of new rule and information about publication in the Federal Register.
On May 11, 2020, the Environmental Protection Agency (“EPA”) provided welcome relief to some small businesses confronting the possibility of cumbersome and expensive chemical data reporting in 2020 and released the signed pre-publication version of the final rule expanding the universe of “small manufacturers” exempt from Chemical Data Reporting (“CDR”) requirements under the Toxic Substances Control Act (“TSCA”) and certain reporting and recordkeeping requirements under TSCA Section 8(a) rules. This definitional change along with the revisions to the CDR that were finalized on March 17, 2020, set the stage for the CDR reporting period that commences June 1, 2020, and ends November 30, 2020.[1] The final rule was published in the Federal Register on May 28, 2020. A copy of the final rule can be found here.
Following the 2016 amendments to TSCA, EPA was required to consult with the Administrator of the Small Business Association to review the TSCA definition of “small manufacturer” that was first promulgated in 1988. The May 2020 final rule emerging from that process updates the size standards in the two-standard definition for “small manufacturer” and thereby meaningfully expands the types of manufacturers and importers potentially exempt from certain reporting and recordkeeping requirements under TSCA Section 8(a). The updated two-standard definition of “small manufacturer” now reads as follows:
Small manufacturer means a manufacturer (including importer) that meets either of the following standards:
(1) First standard. A manufacturer (including importer) of a substance is small if its total annual sales, when combined with those of its parent company (if any), are less than $120 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 45,400 kilograms (100,000 lbs), the manufacturer (including importer) will not qualify as small for purposes of reporting on the production or importation of that substance at that site, unless the manufacturer (including importer) qualifies as small under standard (2) of this definition.
(2) Second standard. A manufacturer (including importer) of a substance is small if its total annual sales, when combined with those of its parent company (if any), are less than $12 million, regardless of the quantity of substances produced or imported by that manufacturer (including importer).
Under this two standard approach, small businesses with total annual sales of less than $12 million (when combined with any parent company) will be exempt from CDR reporting. Small businesses with total annual sales of less than $120 million (again when combined with any parent company) will likewise be exempt from CDR reporting, except for those chemical substances manufactured or imported by an individual site in excess of 100,000 lbs. In both cases, however, if the chemical substance is subject to separate rules or orders under TSCA sections 4, 5 or 6, CDR reporting may still be required. The new rule also allows EPA to adjust the sales volumes in the definition if the five year average of the Producer Price Index for Chemicals and Allied Products changes more than 20 percent.
This modified “small manufacturer” definition is expected to significantly reduce the number of sites that must comply with CDR reporting requirements. EPA estimates that the modified 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 released on May 11 also includes a new definition of “small government” that is intended to exempt certain government entities from reporting requirements, thereby reducing the reporting burden for governments that may lack essential resources. Under the final rule, “small government” is defined as “the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000.” State and tribal governments do not fall under the definition.
The final rule also made some housekeeping changes, including:
- The addition of a cross-reference to the updated small manufacturer definition in 40 CFR 704.104 for hexafluoropropylene oxide.
- An update to the small manufacturer definition in the Preliminary Assessment Information Rule under 40 CFR 712.25 to use the updated small manufacturer definition.
Because the modified definition of small manufacturer has the potential to afford immediate relief to small businesses that would otherwise have been subject to CDR reporting period starting June 1, 2020, potentially qualifying business would be wise to understand whether they qualify as a “small manufacturer” under the updated definition and, if so, the extent to which they may be exempted from certain CDR reporting requirements.
If you have any questions or concerns regarding the final rule, please contact Todd Kantorczyk at (484) 430-2359, Maria Salvemini at (484) 430-2322, or MGKF technical consultant Michael Nines at (484) 430-2350.
[1] While the final rule amending the “small manufacturer” definition will become effective June 29, 2020, EPA has noted that the updated definition will apply to the current CDR reporting period commencing June 1, 2020.
