# 81 FR 49072: Hazardous Waste Management System; User Fees for the Electronic Hazardous Waste Manifest System and Amendments to Manifest Regulations

> Federal · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/FR_PRORULE_2016-15845

## Section

- **Citation:** 81 FR 49072
- **Heading:** Hazardous Waste Management System; User Fees for the Electronic Hazardous Waste Manifest System and Amendments to Manifest Regulations
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Federal Register / Vol. 81 / 81 FR 49072

## Text

ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 262, 263, 264, 265, and 271 [EPA-HQ-OLEM-2016-0177; FRL-9940-99-OLEM] RIN 2050-AG80 Hazardous Waste Management System; User Fees for the Electronic Hazardous Waste Manifest System and Amendments to Manifest Regulations AGENCY:
Environmental Protection Agency (EPA).

ACTION:
Proposed rule.

SUMMARY:
The Environmental Protection Agency (EPA or the Agency) proposes its user fee methodology applicable to electronic and paper manifests submitted to the national electronic manifest system (or e-Manifest system) that is being established by EPA under the Hazardous Waste Electronic Manifest Establishment Act. After the implementation date for the e-Manifest system, certain users of the hazardous waste manifest would be required to pay a prescribed fee for each electronic and paper manifest they use and submit to the system in order for EPA to recover its costs of developing and operating the national e-Manifest system. The final rule that EPA develops in response to public comments on this action's proposed fee methodology will include the final fee methodology. In addition, EPA will include the initial fee schedule and the implementation date for the e-Manifest system in the preamble to the final rule.
This action also proposes several amendments to the regulations governing the use of electronic hazardous waste manifests and the completion of manifests. These amendments propose: to change EPA's longstanding regulations regarding transporter changes to shipment routing information on the manifest during transportation, to specify a process by which receiving facilities may submit manifest data corrections to the e-Manifest system, and to modify a provision of the current electronic manifest use requirements that precludes the use of mixed electronic and paper manifests by those users desiring to make use of electronic manifests in settings where not all users are able to participate electronically
ransportation, to specify a process by which receiving facilities may submit manifest data corrections to the e-Manifest system, and to modify a provision of the current electronic manifest use requirements that precludes the use of mixed electronic and paper manifests by those users desiring to make use of electronic manifests in settings where not all users are able to participate electronically. This action is expected to result in net cost savings amounting to $34 million per year when discounted at 7% and annualized over 6 years. Further information on the economic effects of this action can be found in section VII of this preamble.

DATES:
Comments must be received on or before September 26, 2016. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before August 25, 2016.

ADDRESSES:
For this rule, EPA is requesting comments be submitted electronically on a comment platform being piloted at https://epa-notice.usa.gov. Alternatively, commenters may choose to submit comments by postal mail or electronically through Regulations.gov . For comments submitted via postal mail or Regulations.gov , EPA is further requesting comments be submitted using comment headings. Please see SUPPLEMENTARY INFORMATION , section I.E. (Submitting Comments) for more information on the pilot, use of comment headings, and other general instructions for submitting comments.
FOR FURTHER INFORMATION CONTACT:
For further information regarding specific aspects of this document, contact Richard LaShier, Office of Resource Conservation and Recovery, (703) 308-8796, lashier.rich@epa.gov, or Bryan Groce, Office of Resource Conservation and Recovery, (703) 308-8750, groce.bryan@epa.gov.

SUPPLEMENTARY INFORMATION:
I. General Information
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for submitting comments.
FOR FURTHER INFORMATION CONTACT:
For further information regarding specific aspects of this document, contact Richard LaShier, Office of Resource Conservation and Recovery, (703) 308-8796, lashier.rich@epa.gov, or Bryan Groce, Office of Resource Conservation and Recovery, (703) 308-8750, groce.bryan@epa.gov.

SUPPLEMENTARY INFORMATION:
I. General Information
A. Does this action apply to me?
The hazardous waste manifest affects approximately 80,000 federally regulated entities and an equal or greater number of entities handling state-only regulated wastes in at least 45 industries. These industries are involved in shipping off-site, transporting, and receiving several million tons 1 annually of wastes that are hazardous under the Resource Conservation and Recovery Act (RCRA) or state-only regulated wastes that are subject to the tracking of their movements with the RCRA hazardous waste manifest. EPA estimates that these entities currently use between 3 and 5 million hazardous waste manifests (EPA Form 8700-22) and continuation sheets (EPA Form 8700-22A) to track RCRA hazardous and state-only 2 regulated wastes from generation sites to receiving facilities for their management. The affected entities include hazardous waste generators, hazardous waste transporters, and owners and operators of treatment, storage, and disposal facilities (TSDFs), as well as the corresponding entities that handle state-only regulated wastes subject to tracking with the RCRA manifest.
1 The 2011 RCRA Biennial Report discloses that RCRA large quantity generators (LQGs) alone shipped about 6.2 million tons of waste in 2010. Small quantity generators and state regulated wastes subject to manifesting would likely produce several million more tons of wastes each year to be tracked with manifests
es that handle state-only regulated wastes subject to tracking with the RCRA manifest.
1 The 2011 RCRA Biennial Report discloses that RCRA large quantity generators (LQGs) alone shipped about 6.2 million tons of waste in 2010. Small quantity generators and state regulated wastes subject to manifesting would likely produce several million more tons of wastes each year to be tracked with manifests.
2 EPA uses the term “state-only regulated wastes” to refer to all types of wastes that are required under state law to be tracked with the RCRA hazardous waste manifest, though they exceed the coverage ( i.e., beyond the scope) of the listed and characteristic wastes that are regulated federally as RCRA hazardous wastes.
However, as explained in section III.B.3 of this preamble, this proposed rule would primarily affect the several hundred commercial TSDFs that receive hazardous and state-only regulated wastes from off-site for management at their permitted or interim status facilities. Under this proposed rule, these commercial TSDFs would be the focal point for the payment and collection of the user fees under the proposed rule. EPA has tentatively concluded that payment of this proposal's user fees by the several hundred commercial TSDFs is the most efficient and expedient means for implementing a user fee requirement for the national e-Manifest system. Potentially affected categories and entities include, but are not necessarily limited to:
NAICS Description NAICS Code Examples of potentially affected entities Transportation and Warehousing 48-49 Transportation of hazardous waste. Waste Management and Remediation Services 562 Facilities that manage hazardous waste. This table provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is aware could potentially be regulated by this action. Other types of entities not listed in the FOR FURTHER INFORMATION CONTACT section.
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ation of hazardous waste. Waste Management and Remediation Services 562 Facilities that manage hazardous waste. This table provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is aware could potentially be regulated by this action. Other types of entities not listed in the FOR FURTHER INFORMATION CONTACT section.
B. What action is the agency taking?
The EPA is requesting comment on its proposed fee formula and methodology for implementing a user fee to recover costs incurred in developing, operating, maintaining, and upgrading a national e-Manifest system, including any costs incurred in collecting and processing data from any paper manifest submitted to the e-Manifest system after the date on which the system begins to operate. The EPA is also requesting comment on its proposed changes to modify its current regulations regarding transporter changes to shipment routing information on the manifest during transportation.
C. What is the agency's authority for taking this action?
The authority to propose this rule is found in sections 1002, 2002(a), 3001-3004, and 3017 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (RCRA), and as amended by the Hazardous and Solid Waste Amendments, 42 U.S.C. 6901, 6906 et. seq., 6912, 6921-6925, 6937, and 6938, and further amended by the Hazardous Waste Electronic Manifest Establishment Act, Public Law 112-195, section 6939g.
D. What is the scope of this proposed rule?
This proposed rule addresses several key policy issues related to the implementation of user fees to recover and fund the costs of developing and operating a national e-Manifest system, including:
1. Which users of manifests and manifest data will be charged user fees?
2. What will be the transactional basis for assessing user fee obligations?
3. How will users be expected to pay their owed fees?
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osed rule addresses several key policy issues related to the implementation of user fees to recover and fund the costs of developing and operating a national e-Manifest system, including:
1. Which users of manifests and manifest data will be charged user fees?
2. What will be the transactional basis for assessing user fee obligations?
3. How will users be expected to pay their owed fees?
4. What model or formula will EPA rely upon for the determination of users' fees?
5. How will the rule address fee trajectory and fee schedule revisions?
6. Which, if any, manifest transactions warrant a fee premium?
7. What sanctions are being proposed to induce prompt payment of user fees?
8. How will EPA conduct the financial tracking and reporting functions essential to the proper calculation and determination of fees and to the oversight of the e-Manifest fee program?
In addition, the proposed rule addresses several regulatory amendments related to the use of electronic manifests and the completion of manifests. These additional regulatory proposals are not user fee related, and address these issues: (1) A proposal that would allow certain changes to the routing of a hazardous waste shipment indicated on the manifest, while the shipment is in transportation; (2) a proposal that would allow hazardous waste receiving facilities to make corrections electronically to previously submitted manifest data; and (3) a proposal that would allow a manifest user, in certain instances, to execute and use a hazardous waste manifest that combines the use of a paper manifest with the use of an electronic manifest.
E. Submitting Comments
1. Notice and Comment Pilot
EPA partnered with the General Services Administration's 18F Team to pilot a platform for submitting comments on this rule. The new platform is designed to assist readers in understanding the rule and proposed regulatory changes, as well as to assist EPA in collecting structured comments
paper manifest with the use of an electronic manifest.
E. Submitting Comments
1. Notice and Comment Pilot
EPA partnered with the General Services Administration's 18F Team to pilot a platform for submitting comments on this rule. The new platform is designed to assist readers in understanding the rule and proposed regulatory changes, as well as to assist EPA in collecting structured comments. EPA is requesting commenters to use the new comment platform, which can be found at https://epa-notice.usa.gov. The pilot comment platform is a federal application supporting the EPA in its rulemaking process. Comments filed through the pilot comment platform are filed to the official docket for this rule. EPA will process comments submitted through the pilot using the same rules and restrictions ( https://www.epa.gov/dockets/commenting-epa-dockets#rules ) that apply to comments received from any other method. If a comment meets the aforementioned requirements, then the comment will be publically posted to Regulations.gov . Commenters, that use the pilot to submit comments, do not need to submit duplicative comments through another method ( e.g., Regulations.gov or postal mail).
The use of the pilot comment platform is optional; Commenters may still choose to submit comments by postal mail or electronically through Regulations.gov .
2. Comment Headings
For comments not submitted through the pilot comment platform, and instead submitted via postal mail or Regulations.gov , EPA is requesting commenters to identify their comments on specific issues by using the appropriate number and comment heading listed below. If your comment covers multiple issues, please use all the heading numbers and names that relate to that comment. As an example of this optional method, where one individual comment relates to issue #1 and a second individual comment pertains to issues #2 and #3, a set of comments would be submitted as follows, where the number and comment headings are underlined:
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comment heading listed below. If your comment covers multiple issues, please use all the heading numbers and names that relate to that comment. As an example of this optional method, where one individual comment relates to issue #1 and a second individual comment pertains to issues #2 and #3, a set of comments would be submitted as follows, where the number and comment headings are underlined:
1. Data Access Services Your comment here. . . 2. Billable Event; 3. Fee Methodology Your comment here. . . The list below also contains the proposed rule section numbers with which you can find more information on each issue. Similarly, throughout the proposed rule, parentheticals in italics have been added to identify the heading number and name to be used when commenting on the specific issues. The description following each comment heading summarizes the individual issues. More detailed descriptions of the issues and issue-specific questions can be found in the indicated sections of the rule.
Although submission of your comments using the aforementioned format is not required at this time, it is encouraged so as to not only assist the Agency in efficiently and effectively considering and responding to comments received, but also provide commenters more effective means of informing environmental decision making.
Comment Headings
1. Data Access Services —EPA requests comment on the proposal for TSDF user fees to cover cost of public data access services. (See Section III.A.2)
2. Billable Event —EPA requests comment on the proposal to use the final manifest submission by the TSDFs as the billable event for purposes of assessing user fees. (Section III.B.3)
3. Fee Methodology —EPA requests comment on the proposed fee formula, alternative fee formulas, transition period for application of different formulas, amortization period for costs, possible omitted costs, incentivizing material management behavior through the fee methodology, and other fee formula related issues. (Section III.C.6)
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ent for purposes of assessing user fees. (Section III.B.3)
3. Fee Methodology —EPA requests comment on the proposed fee formula, alternative fee formulas, transition period for application of different formulas, amortization period for costs, possible omitted costs, incentivizing material management behavior through the fee methodology, and other fee formula related issues. (Section III.C.6)
4. Disallow Postal Mailed Manifests —EPA requests comment on another approach under which TSDFs would be e.g., XML file) of manifest data accompanied by an image file. (Section III.C.6)
5. Inflation Adjuster —EPA requests comment on the proposal for an inflation adjustment factor predicated on the use of the CPI-U, for all items, not seasonally adjusted, as a sufficiently representative inflationary index and a means to adjust e-Manifest user fees for inflation between the first year and second year of the two-year fee schedules. (Section III.D.3.a and Section III.D.4)
6. Revenue Recovery Adjuster —EPA is requesting comment on the inclusion of a revenue recovery adjuster in the proposed fee trajectory methodology and on the emphasis on inflation, manifest usage estimates, and uncollectable manifests as the key sources of revenue instability that the adjusters should address in the trajectory methodology. (Section III.D.3.b and Section III.D.4)
7. Two-Year Fee Schedule Revision Cycle —EPA is requesting comment on the proposed two-year fee schedule revision cycle. (Section III.D.4)
8. 90-Day Lead Time for Fee Schedule Changes —EPA is requesting comment on the proposal to have EPA publish the fee schedule changes to the e-Manifest Web site 90 days prior to the effective date of fee schedule changes. (Section III.D.4)
9. Stray and Extraneous Documents —EPA is requesting comment on proposed fee premiums for processing stray and extraneous documents. (Section III.E.2.a.v)
10. Paper Manifest Corrections —EPA is requesting comment on proposed fee premiums for processing a correction to a paper manifest
nges to the e-Manifest Web site 90 days prior to the effective date of fee schedule changes. (Section III.D.4)
9. Stray and Extraneous Documents —EPA is requesting comment on proposed fee premiums for processing stray and extraneous documents. (Section III.E.2.a.v)
10. Paper Manifest Corrections —EPA is requesting comment on proposed fee premiums for processing a correction to a paper manifest. (Section III.E.2.a.vi)
11. Incentivize Electronic Manifest Use —EPA is requesting comment on a proposal to rely on the fee formula itself to incentivize electronic manifest use, and not to include a distinct monetary penalty to discourage paper manifest use. (Section III.E.2.a.vii)
12. Payment Options —EPA requests comment on the proposed monthly invoicing approach and the alternative options. (Section III.F.6)
13. Fee Dispute Resolution —EPA requests comment on the proposed informal fee dispute resolution and appeals process. (Section III.G)
14. Financial Sanctions —EPA requests comment on the proposal to incorporate the financial interest and penalty charges set out in the Federal claims collection statutes as the first and second tier of e-Manifest fee payment sanctions. (Section III.H.2.a)
15. Delinquent Payors List —EPA requests comment on the inclusion of a Delinquent Payors List among the sanctions that would be available to the Agency in the event of serious, continued delinquency of e-Manifest user fee payments. (Section III.H.2.b)
16. Denial of Service Sanction —EPA requests comment on the appropriateness and means by which EPA could deny access to e-Manifest services to those users who are exceedingly delinquent in their manifest fee payments. (Section III.H.2.d)
17. Suspension of Facility Authorization —EPA requests comment on possible authorization sanctions on facilities that are delinquent on e-Manifest payments. (Section III.H.2.d)
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Sanction —EPA requests comment on the appropriateness and means by which EPA could deny access to e-Manifest services to those users who are exceedingly delinquent in their manifest fee payments. (Section III.H.2.d)
17. Suspension of Facility Authorization —EPA requests comment on possible authorization sanctions on facilities that are delinquent on e-Manifest payments. (Section III.H.2.d)
18. Changing Transporters en Route —EPA requests comment on the proposal to modify its current regulations regarding transporter changes to shipment routing on the manifest. (Section IV.B)
19. Submission of Manifest Data Corrections —EPA requests comments on the proposed approach for the submission of manifest data corrections to the system, and the fees to be assessed for such corrections. (Section V.C)
20. Hybrid Approach —EPA requests comment on the proposal for mixed paper and electronic manifest transactions. (Section VI.B)
21. RIA —In total, discounting at 7% over six years, the annualized baseline costs of the paper manifest system are estimated to be $183 million. EPA would appreciate any information to improve the accuracy of this estimate. (Section VII.C)
22. ICR —EPA requests comments on the Agency's need for information under ICR 0801.21, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to the EPA. NOTE: You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs via email to oira_submission@omb.eop.gov, Attention: Desk Officer for the EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after receipt, OMB must receive comments no later than 30 days after publication in the Federal Register . (Section IX.B)
23. OTHER —any comments not falling under one of the preceding categories should be identified using ‘OTHER’ as the comment header.
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mission@omb.eop.gov, Attention: Desk Officer for the EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after receipt, OMB must receive comments no later than 30 days after publication in the Federal Register . (Section IX.B)
23. OTHER —any comments not falling under one of the preceding categories should be identified using ‘OTHER’ as the comment header.
3. General Information for Submitting Comments
Comments submitted through Regulations.gov (at http://www.regulations.gov) or submitted by postal mail should be identified by Docket ID No. EPA-HQ-OLEM-2016-0177. For comments submitted through Regulations.gov , follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov . The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
Please note the Agency will not accept comments submitted via email or fax.
II. Background
A. Enactment of Electronic Manifest Legislation
In 2012, Congress enacted the Hazardous Waste Electronic Manifest Establishment Act, Public Law 112-195 (hereafter, the e-Manifest Act or Act)
eneral guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
Please note the Agency will not accept comments submitted via email or fax.
II. Background
A. Enactment of Electronic Manifest Legislation
In 2012, Congress enacted the Hazardous Waste Electronic Manifest Establishment Act, Public Law 112-195 (hereafter, the e-Manifest Act or Act). The goal of this legislation was to provide the users of the hazardous waste manifest with a much more efficient and modern option to the 6-copy paper manifest forms that have been used for more than 30 years to track hazardous waste shipments from “cradle-to-grave.” The e-Manifest Act directed EPA to establish a national electronic manifest system that would enable users, at their option, to obtain and submit electronic manifests to track waste shipments involving either RCRA hazardous wastes or certain state-only regulated wastes subject to manifesting requirements under federal or state law. It was the intent of the Act that a data repository would be established within the e-Manifest system, and that this national data repository would collect and retain waste shipment data from the electronic manifests obtained from the system, as well as from processing the data from any paper manifests that continued in use after the deployment of the e-Manifest system.
Of particular significance to this proposed rule are the funding provisions of the e-Manifest Act. While section 2(i) of the Act authorized Congress to appropriate funds to cover start-up activities and costs, Congress intended that the e-Manifest system would ultimately be self-sustaining once deployed. Under section 2(c) of the Act, EPA was authorized to impose and collect reasonable service fees (user fees) necessary to pay the costs of developing, operating, maintaining, and upgrading the e-Manifest system, including any costs incurred in collecting and processing paper manifests submitted to the system
ress intended that the e-Manifest system would ultimately be self-sustaining once deployed. Under section 2(c) of the Act, EPA was authorized to impose and collect reasonable service fees (user fees) necessary to pay the costs of developing, operating, maintaining, and upgrading the e-Manifest system, including any costs incurred in collecting and processing paper manifests submitted to the system. Section 2(d) of the Act further authorized the establishment of a special System Fund in the U.S. Treasury for the deposit of collected service fees. By the terms of sections 2(d)(2) and 2(c)(4) of the Act, funds deposited in the System Fund could be transferred from Treasury to EPA at the Administrator's request and spent for system related costs to the extent of and in the amount provided in advance in appropriations Acts. The fees collected and deposited in the System Fund would be used to fund the system's operating costs and other system related costs, as well as to offset any appropriated funds authorized under section 2(i) of the Act to seed the start-up activities and system development costs.
In particular, section 2(c) of the Act confers broad discretion to EPA to determine the user fees to be imposed on users of the system. This provision states that EPA “may impose on users such reasonable service fees as the Administrator determines to be necessary to pay costs in developing, operating, maintaining, and upgrading the system, including any costs incurred in collecting and processing data from any paper manifest submitted to the system after the date on which the system enters operation” (emphasis supplied).
On the issue of timing of fee collections, section 2(c)(2)(A) of the Act provides EPA discretion to collect fees from users either in advance of services being provided, or, as reimbursement for the provision of system-related services by EPA.
The user fee provisions of the Act further speak to the matter of fee adjustments
er the date on which the system enters operation” (emphasis supplied).
On the issue of timing of fee collections, section 2(c)(2)(A) of the Act provides EPA discretion to collect fees from users either in advance of services being provided, or, as reimbursement for the provision of system-related services by EPA.
The user fee provisions of the Act further speak to the matter of fee adjustments. Under section 2(c)(3)(B) of the Act, EPA shall, in consultation with the Board, 3 increase or decrease the amounts of the fees so that the amounts collected and aggregated in the System Fund are sufficient (and not more than reasonably necessary) to cover current and projected system costs, including necessary upgrades. Moreover, the fees should be maintained at levels that minimize, to the maximum extent practicable, the accumulation of unused amounts 4 in the Fund. Where the timing of fee adjustments is concerned, section 2(c)(3)(B)(iii) of the Act specifies that the fee schedule shall be adjusted initially when start-up costs have been recovered, and periodically thereafter, whenever an annual audit report on the system's finances discloses a significant disparity between fees collected in a fiscal year, and expenditures made for system related services during that fiscal year.
3 “Board” refers to the e-Manifest System Advisory Board, a 9-person Federal Advisory Committee of stakeholders that EPA must establish pursuant to the Federal Advisory Committee Act to advise EPA on the effectiveness of the system, to consult with EPA on service fee adjustments, and to make recommendations relating to the system.
4 The Act provides an exception whereby a revenue surplus not exceeding $2 million may be accumulated in the Fund over the initial 3-year period of system operations.
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olders that EPA must establish pursuant to the Federal Advisory Committee Act to advise EPA on the effectiveness of the system, to consult with EPA on service fee adjustments, and to make recommendations relating to the system.
4 The Act provides an exception whereby a revenue surplus not exceeding $2 million may be accumulated in the Fund over the initial 3-year period of system operations.
B. Issuance of First e-Manifest Regulation in February 2014
In response to the e-Manifest Act's mandate 5 to issue regulations authorizing electronic manifests within one year of enactment of the statute, EPA issued its first final regulation pertaining to e-Manifest on February 7, 2014 (79 FR 7518-7563). Because of the mandate to issue this final regulation within one year of the statute, EPA refers to this regulation as the e-Manifest One Year Rule.
5 This mandate appears in section 2(g)(1)(A) of the Act, which directs EPA to promulgate final regulations to carry out the Act within one year of enactment of the Act, after consultation with the Secretary of Transportation. EPA consults regularly with the Department of Transportation (DOT) on its manifest requirements and other transportation related actions, since the manifest is a shipping paper that is grounded on the joint authority of RCRA § 3002(a)(5) and DOT's hazardous materials regulations or HMRs.
The purposes of the One Year Rule were to codify key provisions of the Act touching upon the scope of users and manifests eligible to participate in e-Manifest, to codify the provisions of the Act requiring consistent implementation of electronic manifests in all the states, to finalize EPA's decision to establish a national electronic hazardous waste manifest system, and to announce policy decisions related to using and implementing electronic manifests. Fundamentally, the One Year Rule provides clarity with respect to the validity of electronic manifests
o codify the provisions of the Act requiring consistent implementation of electronic manifests in all the states, to finalize EPA's decision to establish a national electronic hazardous waste manifest system, and to announce policy decisions related to using and implementing electronic manifests. Fundamentally, the One Year Rule provides clarity with respect to the validity of electronic manifests. The Rule explains that the electronic manifest format obtained from and supported by the national e-Manifest system shall be the one electronic manifest format authorized for national use, that electronic manifests obtained from and submitted to the e-Manifest system in accordance with the One Year Rule are the legal equivalent to paper manifests in all relevant respects, and that all authorized states must respect the validity of the national electronic manifest and revise their authorized programs to allow the use of electronic manifests. The One Year Rule also clarified that manifest data could not be subject to confidential business information claims or protections, and explained how e-Manifest and the recommended electronic signature methods discussed in the Rule's preamble would comply with EPA's electronic reporting policies as articulated in the Agency's Cross Media Electronic Reporting Rule or CROMERR (70 FR 59848, October 13, 2005). Thus, the One Year Rule announced the legal and policy framework governing the authorization and use of electronic hazardous waste manifests within EPA's national e-Manifest system.
While the One Year Rule addressed fundamental scope and policy issues related to the use of electronic manifests, it did not speak to user fees to any significant extent. When developing the One Year Rule, EPA realized it would not be in a position to determine in that rule's timeframe all the various components of the e-Manifest information technology system and their costs, and thus would not be able to determine the program's initial schedule of user fees as a part of the One Year Rule
lectronic manifests, it did not speak to user fees to any significant extent. When developing the One Year Rule, EPA realized it would not be in a position to determine in that rule's timeframe all the various components of the e-Manifest information technology system and their costs, and thus would not be able to determine the program's initial schedule of user fees as a part of the One Year Rule. Moreover, the issues raised and determined in the One Year Rule had been noticed for public comment in previous proposals and regulatory notices, while the content of the Fee Rule had not yet been scoped out and noticed for public comment. Therefore, EPA concluded that the development of an e-Manifest user fee methodology and fee schedules would be undertaken as a separate rulemaking. This proposed rule is thus the means by which EPA will solicit comment from the public on our proposed Fee Rule methodology, suggest the likely range of fees that will result, identify our economic models and assumptions, and propose for comment the related scope and other policy issues related to determining and collecting e-Manifest user fees.
C. Federal User Fee Design Guidance
The development of this action was influenced greatly by two federal guidance documents that apply to user fee design and implementation by executive department agencies. They Federal User Fees, A Design Guide, (May 2008).
1. OMB Circular A-25
The purpose of Circular A-25 is to establish federal policy regarding user charges or fees assessed for government services under the Independent Offices Appropriations Act or IOAA, 31 U.S.C. 9701, and 31 U.S.C. 1111. It explains for executive agencies the scope and type of activities subject to user charges and the basis on which user charges should be set. It also provides guidance for agencies on the implementation of user charges or fees and on the disposition of fee collections
ees assessed for government services under the Independent Offices Appropriations Act or IOAA, 31 U.S.C. 9701, and 31 U.S.C. 1111. It explains for executive agencies the scope and type of activities subject to user charges and the basis on which user charges should be set. It also provides guidance for agencies on the implementation of user charges or fees and on the disposition of fee collections. The guidance presented in Circular A-25 applies to user fees implemented generally under the IOAA, as well as to implementations of user fees that are governed specifically by a statute, such as the e-Manifest Act, to the extent that Circular A-25 is not inconsistent with the e-Manifest Act.
The Circular A-25 guidance that is most relevant to this action includes the following points:
• User charges should be assessed against identifiable recipients that receive special benefits derived from federal activities beyond those received by the general public.
• When the provision of special benefits to identifiable recipients also results in an incidental benefit to the general public, an agency need not allocate any costs to the public and should seek to recover the cost of providing the services from the identifiable recipients of special benefits.
• User charges should be set so as to recover the “full cost” to the Federal Government of providing the good or service, where “full cost” includes all direct and indirect costs to any part of the government of providing the good or service
eed not allocate any costs to the public and should seek to recover the cost of providing the services from the identifiable recipients of special benefits.
• User charges should be set so as to recover the “full cost” to the Federal Government of providing the good or service, where “full cost” includes all direct and indirect costs to any part of the government of providing the good or service.
• The relevant direct and indirect costs to be recovered by user charges include, but are not limited to, an appropriate share of:
○ Direct and indirect personnel costs, including salaries and fringe benefits such as medical insurance and retirement costs,
○ Physical overhead, consulting, and other indirect costs including material and supply costs, utilities, travel, and rents or imputed rents on land, buildings, and equipment,
○ Management and supervisory costs, and
○ Costs of enforcement, collection, research, establishment of standards and regulations, including environmental impact statements.
• It is general policy that user charges will be instituted through the promulgation of regulations.
• In their implementation of user charges, agencies should:
○ Review all sources of statutory authority, in addition to the IOAA, that may authorize the implementation of user charges; 6
6 The e-Manifest Act clearly authorizes user charges, and the Act's provisions on user fees must be accommodated with Circular A-25 policies
harges will be instituted through the promulgation of regulations.
• In their implementation of user charges, agencies should:
○ Review all sources of statutory authority, in addition to the IOAA, that may authorize the implementation of user charges; 6
6 The e-Manifest Act clearly authorizes user charges, and the Act's provisions on user fees must be accommodated with Circular A-25 policies.
○ Make every effort to keep the costs of collection to a minimum;
○ Initiate and adopt user charge schedules consistent with the policies of the Circular;
○ Review the user charges for agency programs biennially, to provide assurance that existing charges are adjusted to reflect unanticipated changes in costs or market values;
○ Ensure that internal control systems and appropriate audit standards are applied to collection; and
○ Maintain readily accessible records of the information used to establish charges, the specific methods used to determine them, and the collections from each user charge imposed. 7
7 Circular A-25, Section 8(g), provides that this information should be provided on request to OMB in accordance with OMB Circular No. A-11.
2. The GAO Federal User Fees Design Guide
The May 2008 GAO User Fees Design Guide presents a very useful analytical framework for addressing the equity, efficiency, and cost allocation issues posed by setting user fees. The User Fees Design Guide identifies and discusses at length four key design questions, and sub-questions for each, that agencies should address when establishing user fees for a good or service provided by the government:
• How are user fees set ? What total program costs are considered and allocated among beneficiaries? Does the beneficiary pay principle apply, or are there special considerations, such as particular beneficiaries' ability-to-pay, that affect the setting of fees? If exemptions are established for one class of beneficiaries, how are their costs recovered?
• How are user fees collected ? How is the proper balance struck between
total program costs are considered and allocated among beneficiaries? Does the beneficiary pay principle apply, or are there special considerations, such as particular beneficiaries' ability-to-pay, that affect the setting of fees? If exemptions are established for one class of beneficiaries, how are their costs recovered?
• How are user fees collected ? How is the proper balance struck between ensuring compliance with fees and minimizing administrative costs?
• How are user fees used by the government? What is the balance between Congressional oversight/appropriations controls and agency flexibility? Are fees dedicated only to the related agency program, or, are they deposited in the general fund of the Treasury?
• How are user fees reviewed and updated ? Are the fee rates aligned with actual program costs and activities, and how are they adjusted for changes in program costs? What opportunities are there for stakeholder input in fee reviews and how does this affect acceptance?
In addressing the key design questions, the GAO Guide explains that the design of user fees typically involves a balancing of several outcomes, including:
• The economic efficiency of user fees, including a consideration of the alignment of users' costs with the social costs of providing the services, and any incentives for reducing costs;
• The equity of the fee system, which may involve trade-offs between the principle that all beneficiaries of services should “pay their fair share,” and considerations of ability-to-pay;
• The adequacy of resulting revenues, insofar as revenues being sufficient to cover all known program related costs (direct and indirect) as well as to keep pace with inflation and other increases to program costs, and
• The administrative burden of the fees, which requires a consideration or balancing of the compliance burden imposed by fee administration and collection, as well as the costs of collection and enforcement of fees
s, insofar as revenues being sufficient to cover all known program related costs (direct and indirect) as well as to keep pace with inflation and other increases to program costs, and
• The administrative burden of the fees, which requires a consideration or balancing of the compliance burden imposed by fee administration and collection, as well as the costs of collection and enforcement of fees.
Circular A-25 and the GAO User Fees Design Guide contain a wealth of information that is relevant to the administrative processes of setting, revising, collecting, and reporting fees. As EPA discusses its rationale for setting e-Manifest fees in the remainder of this preamble, the Agency will rely heavily on the policies and principles identified in these two federal guidance documents.
III. Detailed Discussion of the Proposed Rule
A. Which users of manifests and manifest data will be charged user fees?
1. Background
Under Circular A-25 policy, user fees should be designed to recover all system related costs that arise from the development and operation of the e-Manifest system. EPA recognizes that there are two distinct classes of entities that might be considered as users with respect to the e-Manifest system: (1) The class of users who represent the waste handlers that must actually use the
Of relevance to this issue is the statutory definition of “user” included in the e-Manifest Act. In section 2(a)(5), the Act defines “user” to mean a hazardous waste generator, a hazardous waste transporter, an owner or operator of a hazardous waste treatment, storage, recycling, or disposal facility, or any other person that:
• Is required to use a manifest to comply with any Federal or State requirement to track the shipment, transportation, and receipt of hazardous waste or other material that is shipped from the site of generation to an off-site facility for treatment, storage, disposal, or recycling, and
• Elects to use the system to complete and transmit an electronic manifest format, or submits to the syste
:
• Is required to use a manifest to comply with any Federal or State requirement to track the shipment, transportation, and receipt of hazardous waste or other material that is shipped from the site of generation to an off-site facility for treatment, storage, disposal, or recycling, and
• Elects to use the system to complete and transmit an electronic manifest format, or submits to the system for data processing purposes a paper copy of the manifest (or data from such a paper copy) in accordance with such regulations as the Administrator may promulgate to require such a submission.
EPA incorporated this statutory definition of “user” within the terms of the February 2014 One Year Rule, which included in 40 CFR 260.10, a definition of “user of the electronic manifest system” that is consistent with the statutory definition. Both the statutory and regulatory definitions focus on the members of the regulated community that are required to use the manifest to comply with a federal or state requirement to track the generation, transportation, and receipt of waste shipments.
2. What is EPA proposing on this issue?
As a threshold issue, EPA is proposing to limit the imposition of user fees to only the members of the regulated community that must use the manifest as a matter of regulatory compliance for tracking the generation, transportation, or receipt of hazardous waste or other regulated waste shipments ( e.g., state-only regulated wastes or special wastes) that are subject to a manifest requirement under federal or state law. EPA is not proposing to charge members of the general public, nor officials from federal, state, or tribal agencies, any service fees for their accessing manifest data from the e-Manifest system. 8
8 EPA notes that public requests for information that are submitted to EPA pursuant to the Freedom of Information Act or FOIA may give rise to distinct FOIA imposed fees under FOIA requirements
e law. EPA is not proposing to charge members of the general public, nor officials from federal, state, or tribal agencies, any service fees for their accessing manifest data from the e-Manifest system. 8
8 EPA notes that public requests for information that are submitted to EPA pursuant to the Freedom of Information Act or FOIA may give rise to distinct FOIA imposed fees under FOIA requirements.
This proposal is based on the Agency's belief that by defining the term “user” with reference only to the members of the regulated community who must use the manifest for regulatory compliance with waste shipment tracking requirements, Congress similarly intended that the imposition of user fees would be limited to the class of “users” as defined under the Act.
EPA also believes that this proposal is supported by OMB Circular A-25 policy, as well as by principles of the GAO User Fees Design Guide. While the establishment of e-Manifest will provide significant benefits to waste handlers, the EPA believes the general public should also benefit from e-Manifest. These benefits, however, will likely be incidental to those afforded to the regulated waste handlers. Thus, under section 5.A.3 of Circular A-25, it would not be appropriate to allocate system costs to the public by charging members of the public a user fee to access e-Manifest data.
Therefore, EPA is proposing to limit the imposition of user fees to the class of hazardous or other regulated waste handlers who must use the manifest for tracking waste shipments. User fees will not be assessed against members of the general public for their access to manifest data. As a result, the costs of providing the public with access to manifest data will be recovered through user fees applicable to the members of the regulated community who are defined as “users” under the e-Manifest Act. There will be a small, incremental increase in the resulting user fees to cover the cost of the incidental provision of data access services
public for their access to manifest data. As a result, the costs of providing the public with access to manifest data will be recovered through user fees applicable to the members of the regulated community who are defined as “users” under the e-Manifest Act. There will be a small, incremental increase in the resulting user fees to cover the cost of the incidental provision of data access services. EPA requests comment on this proposal (If submitting comments on this issue, please use comment header: 1. Data Access Services).
B. What will be the transactional basis for assessing user fee obligations?
1. Background
Section 2(c)(1) of the e-Manifest Act provides EPA authority to “impose on users such reasonable service fees as the Administrator determines to be necessary to pay the costs incurred in developing, operating, maintaining, and upgrading the system.” This authority to impose such fees extends to electronic manifest activities and to the processing of data from paper manifests that continue in use after e-Manifest is implemented. Moreover, under section 2(c)(2) of the Act, EPA may collect fees from users in advance of, or as reimbursement for, the provision of system-related manifest services. Apart from this direction, however, the Act provides EPA with broad discretion insofar as determining the amounts of applicable fees, and determining what system activities should give rise to a fee.
EPA believes that an important scoping consideration for e-Manifest user fees is determining what transactions should be the basis for manifest fees. This issue involves both the matter of what manifest-related event should be the trigger or “billable event” for assessing a user fee, and it also involves where in the manifest business process this event occurs, and which user entity should thus be responsible for paying the fee
scoping consideration for e-Manifest user fees is determining what transactions should be the basis for manifest fees. This issue involves both the matter of what manifest-related event should be the trigger or “billable event” for assessing a user fee, and it also involves where in the manifest business process this event occurs, and which user entity should thus be responsible for paying the fee. There is also the issue of whether the fee should be assessed on a per manifest basis, necessitating numerous fee payments of relatively small amounts, or, whether there should be a larger, aggregate payment paid perhaps in advance, based on recent manifest usage as perhaps the best indicator of likely current usage.
In determining this issue for this proposed rule, EPA will follow the principles of the 2008 GAO User Fee Design Guide. The Agency will attempt to balance: (1) The economic efficiency of the fees so that the fees align with the costs of providing services; (2) the equity of the resulting fee system by considering “beneficiaries pay their fair share” and “ability-to-pay” principles; and (3) assuring adequacy of resulting
2. What options did EPA consider?
EPA considered several options for determining the transactional basis for e-Manifest fees. Obviously, there appears to be a natural linkage between the system costs that accrue and the number of manifest transactions engaged in by the users. Thus, all options involve a consideration of manifest usage as a determining factor in assessing user fees. The options here differ in terms of what event in the manifest business process triggers the fee, and which entity is thus responsible for that fee.
While the consideration of the transactional basis for fee assessments might also consider the question of whether fees should be collected as a lump sum payment vs. collected from multiple manifest transactions, that issue is addressed later in this preamble in section III.F, dealing with how fee payments will be made and collected
ers the fee, and which entity is thus responsible for that fee.
While the consideration of the transactional basis for fee assessments might also consider the question of whether fees should be collected as a lump sum payment vs. collected from multiple manifest transactions, that issue is addressed later in this preamble in section III.F, dealing with how fee payments will be made and collected. The remainder of this section addresses the appropriate event in the manifest business process for assessing fees and which of the regulated community users of the manifest should therefore be responsible for e-Manifest fee payments.
As a first option, EPA considered imposing a per manifest fee on the hazardous waste generators at the time they initiate their manifests in the system. The system would track manifest usage by each generator, and payments could be collected either at the time of provision of manifests to the generators, or, these generators could be billed for their usage on a monthly basis. This option would ensure that all manifest users, including the many generators that initiate the manifest and that are responsible for much of the manifest content, pay their fair share for the services they would use. However, this option would also entail establishing 100,000 or more payment accounts for the many hazardous waste and state-only regulated waste generators and engaging in invoicing and collection activities with all those accounts. Thus, the “all pay their fair share” principle must be balanced against the administrative efficiency of assessing fees from the many generators in the system.
The alternative option considered would also impose a per-manifest fee, but the billable event under this option would be the submission of the final manifest by the TSDF to the system
ng and collection activities with all those accounts. Thus, the “all pay their fair share” principle must be balanced against the administrative efficiency of assessing fees from the many generators in the system.
The alternative option considered would also impose a per-manifest fee, but the billable event under this option would be the submission of the final manifest by the TSDF to the system. While this option necessarily entails providing manifest services to waste handlers prior to the final copy submission by the TSDF, it involves the significant advantage that there are only a few hundred commercial or captive TSDFs that receive waste from off-site and that would be submitting final manifests to the system. Thus, there would be far fewer parties responsible for paying fees under this approach. Many more manifests would be concentrated among these several hundred TSDFs, so the fee collections would be far more efficient than pursuing 100,000 or more generators for payments of smaller amounts. Also, with the TSDFs primarily responsible for payment of user fees to EPA, these facilities would be able to pass their fee costs through to their generator customers as part of their waste management service charges, if so desired. When this option was discussed with the waste industry members, they appeared to accept this option as the preferred approach for dealing with fees and their customer relations. Industry members were particularly supportive of this option if it were implemented with a monthly billing cycle, under which they would be billed each month for the prior month's actual usage, rather than being assessed fees for estimated levels of usage.
3. What is EPA proposing on this issue?
EPA is proposing the second option, under which the submission of the final manifest to the e-Manifest system by the TSDF would be the billable event for calculating per manifest fees
with a monthly billing cycle, under which they would be billed each month for the prior month's actual usage, rather than being assessed fees for estimated levels of usage.
3. What is EPA proposing on this issue?
EPA is proposing the second option, under which the submission of the final manifest to the e-Manifest system by the TSDF would be the billable event for calculating per manifest fees. This proposal is driven by the far greater administrative efficiency of dealing with a much more manageable base of several hundred TSDFs with payment accounts and collection activity in the system, rather than having to establish and deal with 100,000 or more generator accounts and the attendant administrative costs of billing and collecting from so many more entities. This option could pose some additional revenue stability risk, if the EPA elects to collect fees monthly as accounts receivable after providing facilities with manifest services. Under this approach, EPA might provide TSDFs with a month of manifest services at significant cost prior to billing the TSDFs on a monthly cycle for their actual manifest usage. Thus, credible sanctions to induce prompt fee payments would appear to be a necessary feature to support this option. Such fee sanctions are discussed in section III.G of this preamble.
EPA requests comments on the merits of treating the final manifest submission by TSDFs as the transactional basis or billable event for purposes of assessing user fees in e-Manifest (If submitting comments on this issue, please use comment header: 2. Billable Event)
would appear to be a necessary feature to support this option. Such fee sanctions are discussed in section III.G of this preamble.
EPA requests comments on the merits of treating the final manifest submission by TSDFs as the transactional basis or billable event for purposes of assessing user fees in e-Manifest (If submitting comments on this issue, please use comment header: 2. Billable Event). Do commenters agree with EPA's assessment that the more manageable number of commercial and captive TSDFs submitting manifests to the system, relative to the number of generators that might initiate manifests, is an appropriate analysis for the adoption of the policy that the final TSDF submission should be the billable transaction in e-Manifest? Is there another option available that is equally or more effective than this preferred option, insofar as providing a rational means for charging users for their manifest activity in the system, while minimizing the administrative costs of collection?
In the February 2014 final regulation on electronic manifests ( i.e., the One Year Rule), EPA codified language in parts 262, 263, and 264/265 that would authorize the Agency to impose reasonable user fees on hazardous waste generators, transporters, and receiving facilities or TSDFs. EPA included this broad authority to impose electronic manifest user fees on all classes of users, as this was consistent with the broad grant of authority to impose such fees in the e-Manifest Act. In this proposal, EPA is clarifying that its preferred option would be to limit electronic manifest user fee payments and collections to the receiving facilities, thereby excluding generators and transporters from fee payments and collections. If the final rule adopts this approach, and there are no other issues presented that suggest a need for a broader fee collection system, EPA intends to delete the current parts 262 and 263 provisions that now extend fee collection authority to generators and transporters.
C
d collections to the receiving facilities, thereby excluding generators and transporters from fee payments and collections. If the final rule adopts this approach, and there are no other issues presented that suggest a need for a broader fee collection system, EPA intends to delete the current parts 262 and 263 provisions that now extend fee collection authority to generators and transporters.
C. What model or formula will EPA use to calculate fees?
1. Background
In this section, EPA is presenting for comment its proposed methodology for determining the fees that TSDFs will be assessed based on their usage of manifests in the system. As discussed previously in this proposed rule, EPA believes that assigning fees to TSDFs based on a per-manifest charge is the most equitable and efficient means for allocating system costs to users. By relying on a per-manifest charge, users will bear the costs of developing and supporting the system in proportion to their usage of it. The TSDF users would be expected to bear the burden and realize the benefits of the system in proportion to their usage, and because TSDFs can pass their fee expenses
The proposed fee model or methodology must, of course, fully recover EPA's costs to design, build, operate, maintain, upgrade, and manage the e-Manifest system and program. This will ensure that the Agency can manage the e-Manifest system and program without funds from other appropriations, and avoid the possibility of Anti-Deficiency Act violations. Therefore, the development of a proposed methodology is all about determining first, what are all the activities related to developing and operating e-Manifest, and what are the costs of these activities? Second, once the total costs of developing and supporting e-Manifest have been documented, we then must determine how these costs will be allocated over all the manifests that will be submitted to the system
he development of a proposed methodology is all about determining first, what are all the activities related to developing and operating e-Manifest, and what are the costs of these activities? Second, once the total costs of developing and supporting e-Manifest have been documented, we then must determine how these costs will be allocated over all the manifests that will be submitted to the system. While at the most basic level, one might determine a per manifest fee by simply dividing total system costs by the total number of manifests in use. There are advantages to parsing the fees based on the type of manifest ( i.e., electronic or paper types), since some system costs are uniquely associated with paper manifests, while others tend to follow electronic manifest usage. Thus, it may be possible to allocate system costs more equitably to the manifest types that bear their related costs, and perhaps incentivize electronic manifest usage more than would be possible if costs were simply allocated to all manifests equally.
2. System Related Cost Categories
There are several categories of costs under which e-Manifest system-related costs may be grouped and explained. First among these groupings, it is important to distinguish between the System Setup Costs and costs that are described as Operations and Maintenance Costs.
a. System Setup Costs. EPA considers System Setup Costs to include all system-related costs, intramural and extramural, prior to the time the e-Manifest system is fully operational. Intramural costs are those costs related to the efforts exerted by EPA staff and management in developing, operating, and managing e-Manifest. Extramural costs are those costs related to the acquisition of contractors to develop and operate the e-Manifest system
Setup Costs to include all system-related costs, intramural and extramural, prior to the time the e-Manifest system is fully operational. Intramural costs are those costs related to the efforts exerted by EPA staff and management in developing, operating, and managing e-Manifest. Extramural costs are those costs related to the acquisition of contractors to develop and operate the e-Manifest system. EPA will track System Setup Costs distinctly from post-activation Operations and Maintenance (O&M) Costs, since the e-Manifest Act requires that the System Setup Costs, which are to be funded initially by seed appropriations, be offset eventually by user fee collections and repaid to the Treasury. Thus, System Setup Costs will be tracked distinctly for the period of system development, which EPA anticipates will require three to five years of effort.
EPA will amortize the System Setup Costs over an initial period of system operations. EPA is proposing an amortization period for System Setup Costs of five years, which EPA believes provides sufficient time to recover the System Setup Costs, while not significantly increasing the fees for the user community. 9 Once the system is operational, all system costs will be tracked as O&M Costs in EPA's fee calculations and in its accounting of system expenditures. Once the five-year amortization period has elapsed, EPA will drop the factor in the fee formula representing the amortization of System Setup Costs from the formula, and will thereafter track all costs as O&M Costs.
9 EPA analyzed the effects of a payback period of three, five, and ten years, and found that varying the amortization period had little effect on the total costs, resulting fee levels, or the efficiency of the proposed fee levels. EPA found that its total system costs are affected much less by the fixed costs of system development than by O&M costs, particularly, the marginal costs of processing manifests submitted to the system and the operations and maintenance costs for the system itself
rying the amortization period had little effect on the total costs, resulting fee levels, or the efficiency of the proposed fee levels. EPA found that its total system costs are affected much less by the fixed costs of system development than by O&M costs, particularly, the marginal costs of processing manifests submitted to the system and the operations and maintenance costs for the system itself. The Agency's analysis of amortization options showed only a nominal effect on total fixed costs and on how the system's fixed costs would be collected each year in user fees. The impacts of amortization period on total costs and their recovery with the proposed rule's fee levels are overshadowed by the impact of other fee design elements.
Within the broad category of System Setup Costs, EPA will track and calculate fees based on two distinct sub-categories of costs: (1) System Procurement Costs; and (2) EPA Program Costs dedicated to developing the system. The Procurement Cost sub-category is straightforward and includes all the IT-related contracting costs associated with the acquisition and development of the actual e-Manifest IT system and all e-Manifest related IT system services ( i.e., accounting, billing, collection, and reporting systems).
The EPA Program Cost sub-category can be described as the EPA Full Time Equivalent (FTE representing EPA's staffing/labor costs) and the non-IT contracting costs to the Agency for developing, running, and managing the system. EPA Program Costs are included in either Setup Costs or O&M Costs based on the year they are incurred. It is the EPA Program Costs that are incurred before the system activation date that we are including in this discussion of Setup Costs. These are EPA staff and non-IT 10 contract costs necessary to the design and development of the e-Manifest system itself and to the development of the overall e-Manifest program
are included in either Setup Costs or O&M Costs based on the year they are incurred. It is the EPA Program Costs that are incurred before the system activation date that we are including in this discussion of Setup Costs. These are EPA staff and non-IT 10 contract costs necessary to the design and development of the e-Manifest system itself and to the development of the overall e-Manifest program. Thus, these costs would include the costs of EPA staff and contracts used for the system planning and design effort, for development of the system architecture, for development of the program regulations, including this user fee regulation, for conducting program outreach and oversight prior to activation, for developing the Help Desk, for developing the FACA Advisory Committee required by the e-Manifest Act, for conducting Capital Planning and Investment Control (CPIC) and other budget related activities for the program, for conducting program management, and other costs related to establishing the e-Manifest system and program prior to the system's activation. All of these types of costs would be EPA Program Costs and included in the System Setup Cost category as they are incurred prior to the system activation date.
10 EPA is tracking closely its e-Manifest program costs by the date the costs are incurred, which is relevant to their classification as System Setup or as O&M costs. Likewise, EPA will establish distinct codes for tracking its contract tasks and their costs so that EPA can accurately distinguish its IT contracting costs (tracked either as System Procurement Costs and Electronic System O&M Costs depending on date incurred) from its non-IT contracting costs, which will be tracked in the formula as EPA Program Costs.
b. Operations and Maintenance Costs. The Operations and Maintenance (O&M) Costs include all system-related costs incurred after the e-Manifest system is activated
distinguish its IT contracting costs (tracked either as System Procurement Costs and Electronic System O&M Costs depending on date incurred) from its non-IT contracting costs, which will be tracked in the formula as EPA Program Costs.
b. Operations and Maintenance Costs. The Operations and Maintenance (O&M) Costs include all system-related costs incurred after the e-Manifest system is activated. Important components of O&M costs are the costs of operating the electronic IT system to which electronic manifests will be submitted and all manifest data collected, and the costs of operating the paper manifest processing center that EPA will establish to meet the e-Manifest Act's and One Year Rule's requirements that EPA collect and process the data from any paper manifests that continue in use after the implementation of e-Manifest. In addition to the costs of running the electronic system and the paper processing center, O&M costs also include the same types of costs described previously as EPA Program Costs (EPA FTE and non-IT contract costs), when these costs are incurred after the e-Manifest system activation date. Other components of O&M Costs include Help Desk Costs necessary to run the e-Manifest Help Desk that will be established to provide technical support to system users; life-cycle enhancements to all e-Manifest system related services, such as the services
c. Indirect costs. Indirect costs are the intramural and extramural costs that are not captured in any of the previously defined cost categories, but that are necessary to capture because of their necessary enabling and supporting nature, and so that our proposed user fees will accomplish full cost recovery. Indirect costs typically include such cost items as physical overhead, maintenance, utilities, and rents on land, buildings, or equipment
mural and extramural costs that are not captured in any of the previously defined cost categories, but that are necessary to capture because of their necessary enabling and supporting nature, and so that our proposed user fees will accomplish full cost recovery. Indirect costs typically include such cost items as physical overhead, maintenance, utilities, and rents on land, buildings, or equipment. As discussed in section 2(c)(3)(A) of the statute, the indirect costs include the EPA costs incurred from the participation of EPA offices and upper management personnel outside of the immediate program office (the Office of Resource Conservation and Recovery or ORCR) that is primarily responsible for implementing the e-Manifest program. These other EPA offices and upper management personnel provide support to all aspects of the e-Manifest program, including promulgating the e-Manifest implementing and fee regulations, supporting the IT system planning and system acquisition, and participating in the e-Manifest Advisory Board and the related Federal Advisory Committee Act (FACA) processes. Indirect costs are disparate and more difficult to track than the other cost categories, because they are typically incurred as part of the normal flow of work ( e.g., briefings and decision meetings involving upper management) at many offices across the Agency and cannot be attributed directly to the activity they support. Also, the level of indirect costs incurred by a particular office is also likely to change as the e-Manifest program develops and its needs change. For these reasons, it is not practical to account for indirect costs in the same manner as the other categories of e-Manifest costs.
EPA will account for indirect costs in the proposed e-Manifest user fee formulas by the inclusion of an indirect cost factor. This rate is multiplied by the base fee that accounts for the program's direct costs
the e-Manifest program develops and its needs change. For these reasons, it is not practical to account for indirect costs in the same manner as the other categories of e-Manifest costs.
EPA will account for indirect costs in the proposed e-Manifest user fee formulas by the inclusion of an indirect cost factor. This rate is multiplied by the base fee that accounts for the program's direct costs. The product of the indirect cost rate and the base fee is then added to the base fee to determine the final, comprehensive user fee.
The Agency-wide indirect cost rate is determined for all EPA user fee programs by the Agency's Office of Financial Management, according to that Office's indirect cost methodology, and as required by Federal Accounting Standards Advisory Board's Statement of Federal Financial Accounting Standards No. 4: Managerial Cost Accounting Standards and Concepts. The Office of Financial Management publishes annually an indirect cost rate for each of the Agency's Regional Offices and for each of the Assistant Administrator-level program offices within EPA Headquarters. An indirect cost rate customized for the e-Manifest program will be developed, based on consideration of the EPA's existing indirect cost methodology and other indirect costs required to support the e-Manifest program.
Therefore, once the appropriate indirect cost rate for e-Manifest is developed, then the indirect costs for e-Manifest would be captured by our proposed fee formulas as the product of the base fee times that indirect cost factor. 11 The result is that the total or comprehensive user fee is simply the base fee formula times the expression (1 + indirect cost rate).
11 The EPA is developing an indirect cost rate for the e-Manifest Program. The FY 2015 Interagency Agreement (IA) indirect cost rate for OLEM is 19.74%. This rate is recalculated each year and is therefore subject to change and consideration regarding its applicability to e-Manifest
the total or comprehensive user fee is simply the base fee formula times the expression (1 + indirect cost rate).
11 The EPA is developing an indirect cost rate for the e-Manifest Program. The FY 2015 Interagency Agreement (IA) indirect cost rate for OLEM is 19.74%. This rate is recalculated each year and is therefore subject to change and consideration regarding its applicability to e-Manifest. EPA will calculate the fees with the Final Rule using the then applicable-Manifest Program indirect cost rate, which will be based on a consideration of the OLEM IA indirect cost rate and other appropriate indirect costs attributable to e-Manifest.
3. Types of Manifests and Fee Categories
Another piece of information relevant to determining applicable e-Manifest user fees is the type of manifest that is being submitted to the system. In this regard, there are electronic manifests that will be completed by users electronically and submitted electronically to the system, and there are several types of paper manifests that will be received and processed by the e-Manifest system's paper processing center. 12
12 Unlike electronic manifests, paper manifest copies (or the scanned images and data from paper manifests) are to be submitted to the national e-Manifest system for data processing purposes only, and are not submitted as copies of record intended to replace paper manifests as valid and enforceable documents. The ink-signed paper manifest copies that are retained at waste handler sites remain the enforceable copies of record where paper manifests continue in use to track waste shipments. The paper copies (or scanned images and data from them) submitted for data processing purposes require no CROMERR related processes or electronic signatures to accompany their submission.
Under the One Year Rule, EPA indicated that it would accept paper manifest data from final manifest copies submitted by TSDFs by several modes of delivery
per manifests continue in use to track waste shipments. The paper copies (or scanned images and data from them) submitted for data processing purposes require no CROMERR related processes or electronic signatures to accompany their submission.
Under the One Year Rule, EPA indicated that it would accept paper manifest data from final manifest copies submitted by TSDFs by several modes of delivery. First, paper manifests could be mailed by TSDFs directly to EPA's processing center, where personnel staffing that center would open the mail, scan the paper forms to create image files, and manually key in the data to the national data repository. These paper manifests would likely undergo a significant level of Quality Assurance (QA) activity as well, as the experience of EPA's state partners with manifest tracking systems suggests that a significant number of paper manifests will present legibility issues, typographical errors, missing data, or other errors requiring follow-up with submitters to clarify or correct. Also, state partners advise EPA that they frequently find extraneous documents or mis-directed mail included with manifests mailed to their systems, and these require clerical attention to sort and return to their senders.
Second, the One Year Rule allows TSDFs to submit scanned images of paper manifests to the processing center in lieu of mailing paper forms to EPA. These scanned image submissions involve less clerical effort insofar as opening mail and returning extraneous mailings, but still require clerical effort to conduct QA activities and to key the data into the data repository.
Third, the One Year Rule provided TSDFs with the alternative of submitting the data from paper manifests to EPA as an image file and data file ( e.g., XML file) that can be uploaded into the data repository
nvolve less clerical effort insofar as opening mail and returning extraneous mailings, but still require clerical effort to conduct QA activities and to key the data into the data repository.
Third, the One Year Rule provided TSDFs with the alternative of submitting the data from paper manifests to EPA as an image file and data file ( e.g., XML file) that can be uploaded into the data repository. The receipt of data files from the TSDFs would involve less processing effort for EPA, as the data could be loaded to the data repository and merged with e-Manifest data directly with little, if any, QA or manual data entry.
Thus, for purposes of this proposed rule, EPA believes there would be four distinct types of manifests that may be submitted to the system for processing. These are electronic manifests submitted in accordance with the national electronic format supported by the system, and three possible types of manifest submissions arising from the continued use of paper manifests: Paper manifests mailed to the EPA system operator, scanned images of paper manifests uploaded to the system, and an upload of both an image file produced from a paper manifest and a
As explained in detail later in this document, EPA believes that the several types of manifest submissions discussed here would involve differing effort and burden for EPA or its system operator to process. Indeed, since the premise of this proposed rule is that e-Manifest user fees should be charged on a per manifest basis, the Agency believes that the varying processing burden associated with these four distinct types of manifest submissions would be the key differentiating factor insofar as determining the appropriate user fee for manifests that would be submitted to the system. The varying processing effort involves varying manual labor and other costs arising from each type of submission
on a per manifest basis, the Agency believes that the varying processing burden associated with these four distinct types of manifest submissions would be the key differentiating factor insofar as determining the appropriate user fee for manifests that would be submitted to the system. The varying processing effort involves varying manual labor and other costs arising from each type of submission. These varying human labor and related costs can be thought of as the marginal costs of entering the data from each method of submission and ultimately merging the information into the national e-Manifest data system. Therefore, in the several user fee formula options that EPA considered for this action, we focus on this differing marginal cost per manifest submission type as a significant factor distinguishing the fees calculated by the proposed formula. As further explained in the discussion of the proposed formula, another key factor distinguishing the amount of the calculated fees would be the extent to which the different manifest types are assumed to share in the other O&M costs associated with operating the electronic manifest system and also the paper processing center. The result would be a fee schedule that would announce four distinct per-manifest fee categories based on the four types of manifest submissions, and the varying extent to which marginal labor costs and other system O&M costs would be allocated to each of the submission types by the formula.
4. What formula options did EPA consider?
EPA considered three distinct fee formula options, which vary by the extent to which they distribute the marginal manifest processing costs and other system O&M costs across the different manifest submission types. As a result, the three fee formula options vary by the extent to which they differentiate the applicable fees for each of the four manifest submission types.
The fee formula options can be compared on the basis of three important characteristics: Simplicity, Equity, and Resilience
te the marginal manifest processing costs and other system O&M costs across the different manifest submission types. As a result, the three fee formula options vary by the extent to which they differentiate the applicable fees for each of the four manifest submission types.
The fee formula options can be compared on the basis of three important characteristics: Simplicity, Equity, and Resilience. Simplicity refers to the presence or absence of fees differentiated by manifest type. Equity refers to the extent to which a fee formula generates fees that reflect the true costs of each manifest type. Resilience refers to the extent to which uncertainty in the component variables of a formula affects its ability to assess accurate fees, and by extension realize full cost recovery.
Each fee formula option entails a different trade-off between these characteristics, with no formula option outperforming the other two on every characteristic. The first option, the average cost fee, prioritizes simplicity over equity and resilience. The second option, the marginal cost fee, prioritizes resilience and equity over simplicity. The third option, the marginal cost highly differentiated fee, is the most equitable but at the loss of resilience and simplicity. The three fee formula options are explained in greater detail in the following sections.
a. Average Cost Fee Option. The first option is a basic “average cost fee” formula. Under this option, all the manifest submission types would pay the same average fee. This option first calculates a weighted average marginal cost for processing all manifest submission types. To this weighted marginal cost is added another factor which distributes all other system setup and O&M costs equally across all manifests expected to be in use. In other words, under this option, marginal costs are averaged, setup and O&M costs are allocated equally to all manifest types, and there is no attempt to use the fee formula to differentiate among the manifest types
st submission types. To this weighted marginal cost is added another factor which distributes all other system setup and O&M costs equally across all manifests expected to be in use. In other words, under this option, marginal costs are averaged, setup and O&M costs are allocated equally to all manifest types, and there is no attempt to use the fee formula to differentiate among the manifest types.
The mathematical expression of the Average Cost Fee Option is as follows:
EP26JY16.003
Where: EP26JY16.004
System Setup Cost = Procurement Cost + EPA Program Cost O&M Cost = Electronic System O&M Cost + Paper Center O&M Cost + Help Desk Cost + EPA Program Cost + CROMERR Cost + LifeCycle Cost to Modify or Upgrade eManifest System Related Services This option has the advantage of simplicity, as it results in one average or standard fee to be paid on a per-manifest basis for all four of the manifest submission types. However, it is quite sensitive, meaning it may not collect sufficient revenue, since the use of a weighted average marginal cost assumes that EPA can accurately predict the prevalence of each manifest submission type each year. If the actual distribution of manifest types differs from these projections, then this formula will likely under- or over-collect fee revenue relative to program costs.
Additionally, this option is not very equitable. There is simplicity in using this formula to arrive at a standard fee, but it results in this option permitting a portion of the costs of paper manifest use to be subsidized by electronic manifests. Paper manifest submission types will almost certainly bear greater marginal costs than fully electronic manifests, but this formula does not recognize such differential costs when it prescribes one average fee for all manifests. Therefore, this option would not be very helpful in effectuating the Agency's goal of promoting the greater use of electronic manifests in the system.
b. Marginal Cost Differentiated Fee Option
n types will almost certainly bear greater marginal costs than fully electronic manifests, but this formula does not recognize such differential costs when it prescribes one average fee for all manifests. Therefore, this option would not be very helpful in effectuating the Agency's goal of promoting the greater use of electronic manifests in the system.
b. Marginal Cost Differentiated Fee Option. The second option considered by EPA would attempt to differentiate among the different manifest submission types by focusing most on the varying marginal or human labor cost of processing each manifest submission type into the national e-Manifest data system. As a part of the economic analysis EPA conducted for these fee formula options, EPA
The mathematical expression of the Marginal Cost Differentiated Fee Option is as follows:
EP26JY16.005
Where: System Setup Cost = Procurement Cost + Program Cost O&M Cost = Electronic System O&M Cost + Paper Center O&M Cost + Help Desk Cost + EPA Program Cost + LifeCycle Cost to Modify or Upgrade eManifest System Related Services + CROMERR Cost This fee formula option is premised on our belief that the marginal, human labor costs of opening mail, conducting QA on paper submission types, and conducting data key entry on the paper submission types (other than XML file uploads that load directly into the system) are the costs that most clearly and significantly differentiate manifest submissions for purposes of determining fees. This option further assumes that since data from all manifest types will be entered into the e-Manifest system's data repository, it is appropriate for all paper submission types to contribute to the electronic system's setup and O&M costs. The option is the most resilient as it does not involve any projections of the prevalence of manifest types such as is involved with the calculation of a weighted average marginal cost under Option 1, so it is less likely to under- or over-collect revenue should such projections not pan out
is appropriate for all paper submission types to contribute to the electronic system's setup and O&M costs. The option is the most resilient as it does not involve any projections of the prevalence of manifest types such as is involved with the calculation of a weighted average marginal cost under Option 1, so it is less likely to under- or over-collect revenue should such projections not pan out. Another significant advantage of this option is that because it would result in higher differential fees for paper manifest submission types, it is consistent with our goal of promoting the greater use of electronic manifests.
A potential weakness in this option is that it may not be sufficiently aggressive insofar as requiring paper manifest types to bear the full differential costs associated with managing paper manifest submissions. Under this option, for example, electronic manifests share in the costs of establishing the paper processing center and in the O&M costs (other than labor costs) of running the paper center. EPA believes that this option could represent a useful bridge toward the greater use of electronic manifests, particularly in the initial years of e-Manifest program implementation. It will likely require several years for the full transition to electronic manifesting to occur, as manifest users will need to acquire the hardware and capability to participate in e-Manifest, and they will need to gain confidence in the reliability of electronic manifests relative to the paper forms that are so familiar and have served the needs of the program for many years
n the interim arrangements—the submission of XML files produced from paper manifests—becoming the end result. While such an outcome would produce a robust data base of manifest data from designated facilities, it would perhaps leave in place a regime in which inefficient and burdensome paper manifests remain in wide circulation among all manifest users.
c. Marginal Cost Highly Differentiated Fee. As a third option for determining the e-Manifest user fee, EPA also considered an approach that goes further than the previous option in requiring paper manifest submission types to bear more of the program costs arising from the continued use of paper manifests. This third fee formula option, the Marginal Cost Highly Differentiated Fee option, is structured similarly to the second option, but with one key difference. Under the third option, the O&M costs of running the paper processing center are allocated only to paper manifest submission types, and not shared equally with the electronic manifests. The premise of this option is that since fully electronic manifests will have no contacts or dealings with the paper processing center, then these fully electronic manifests should bear no part of the costs of operating the paper center. Thus, in addition to the marginal, human labor costs of processing paper manifest types that are allocated to paper manifest submissions under Option 2, this option more fully allocates the program costs of managing paper manifests to the paper submission types, by adding the other non-labor O&M costs of the paper center to the cost burden to be borne by paper submission types. This also may encourage industry users to migrate to electronic manifests more expeditiously, since it will not mask the true costs of processing paper manifests by subsidizing the non-labor costs of the paper processing center, as occurs with Option 2.
This option does not present the simplicity of Option 1, as the fees it would produce clearly differentiate among several manifest submission types
s also may encourage industry users to migrate to electronic manifests more expeditiously, since it will not mask the true costs of processing paper manifests by subsidizing the non-labor costs of the paper processing center, as occurs with Option 2.
This option does not present the simplicity of Option 1, as the fees it would produce clearly differentiate among several manifest submission types. This option would also appear to be the most equitable of the options, as it would require paper manifest submissions to bear both the labor and non-labor costs of the paper processing center, rather than sharing the non-labor costs with electronic submissions. However, the equity of this option is achieved at the expense of resiliency, as
Mathematically, the Marginal Cost Highly Differentiated Fee option can be expressed as follows:
EP26JY16.006
Where: System Setup Cost = Procurement Cost + Program Cost O&M fully electronic = Electronic System O&M Cost + EPA Program Cost + CROMERR Cost + LifeCycle Cost to Modify of Upgrade eManifest System Related Services O&M all other = Electronic System O&M Cost + Paper Center O&M Cost + Help Desk Cost EPA Program Cost + CROMERR Cost + LifeCycle Cost to Modify or Upgrade eManifest System Related Services 5. What fee formula is EPA proposing?
EPA's preferred option for this proposed rule is actually a combination of the second and third options discussed earlier. In other words, EPA is proposing that it would initially implement the Marginal Cost Differentiated Fee Option (2nd option), but would reserve the ability to transition to the Marginal Cost Highly Differentiated Fee Option (3rd option), should a triggering condition included in this rule be actuated, suggesting that a more aggressive fee formula is needed to promote greater levels of electronic manifest use
ords, EPA is proposing that it would initially implement the Marginal Cost Differentiated Fee Option (2nd option), but would reserve the ability to transition to the Marginal Cost Highly Differentiated Fee Option (3rd option), should a triggering condition included in this rule be actuated, suggesting that a more aggressive fee formula is needed to promote greater levels of electronic manifest use.
By proposing this combined or hybrid option, EPA acknowledges that the second option represents a useful compromise between promoting electronic manifest use initially, while recognizing that a transition from paper submissions, to XML submissions, to fully electronic submissions may be a useful path for industry and the e-Manifest system to pursue. EPA believes that the Marginal Cost Differentiated Fee Option is consistent with such a transition approach. Indeed, if the e-Manifest option is fully adopted by most hazardous waste handlers, the fee formula represented by this option may be the only fee formula necessary to determine fees for the e-Manifest program.
However, EPA is concerned that after the desired transition period has run, that it may require some additional incentives to effectuate a fuller migration to electronic manifest usage. Under the second formula option, the fee differential between electronic manifests and those paper manifest submissions uploaded by TSDFs as XML files is not very great, with the XML submissions bearing fees that are perhaps only 15% greater than the electronic manifests. Paper manifests mailed to EPA for processing would incur a per-manifest fee about 88% greater than the fee for electronic manifests. Thus, there is a possibility that the transition to XML file submissions from paper manifest use could become a plateau in the program implementation that is difficult to move beyond without greater fee incentives
rhaps only 15% greater than the electronic manifests. Paper manifests mailed to EPA for processing would incur a per-manifest fee about 88% greater than the fee for electronic manifests. Thus, there is a possibility that the transition to XML file submissions from paper manifest use could become a plateau in the program implementation that is difficult to move beyond without greater fee incentives. So, upon an appropriate triggering condition, EPA believes it would be useful to change the fee formula to the third formula option, so that the paper submission types bear a fuller share of the program costs related to using and processing paper manifests.
Another issue for this proposed rule, therefore, is what is the appropriate condition that should trigger the implementation of the Marginal Cost Highly Differentiated Fee Option after a transition period? For several years, EPA has indicated to stakeholders and to the program's overseers that the Agency believed that it could accomplish significant paperwork burden reductions and cost savings if 75% electronic manifest usage could be attained after program implementation. Based on very preliminary estimates of possible program adoption rates, EPA further postulated that under favorable conditions, adoption of electronic manifesting by some of the larger manifest user companies might bring about a 75% use rate after a period of about five years. That being the estimate or goal previously announced, EPA believes that this stated goal, with a slight modification to comport with our proposed two-year cycles 13 for reviewing and revising our fee schedules, could represent a useful trigger condition for this proposed rule. Therefore, EPA is proposing that the e-Manifest user fee schedule would be initially developed using the second option's Marginal Cost Differentiated Fee formula for the base fee
A believes that this stated goal, with a slight modification to comport with our proposed two-year cycles 13 for reviewing and revising our fee schedules, could represent a useful trigger condition for this proposed rule. Therefore, EPA is proposing that the e-Manifest user fee schedule would be initially developed using the second option's Marginal Cost Differentiated Fee formula for the base fee. EPA is also proposing that if, however, EPA finds after four years of e-Manifest system operations that electronic manifest usage has not yet reached our goal of 75% penetration, then EPA will thereafter use the third option's Marginal Cost Highly Differentiated Fee formula for developing the applicable user fee schedules.
13 The proposal to publish revised fee schedules at two-year intervals is discussed in the following section III.D, of this preamble. Because we propose to revise the fee schedules at two-year intervals, it makes sense to examine whether electronic manifest use has reached a 75% adoption rate after four years, rather than five years.
6. Request for Comment
EPA requests comment on its preferred option that would initially calculate per-manifest fees based on the Marginal Cost Differentiated Fee formula, and then transition to the Marginal Cost Highly Differentiated Fee formula should electronic manifests not attain a 75% usage rate after four years of system operations (If submitting comments on this issue, please use comment header: 3. Fee Methodology )
requests comment on its preferred option that would initially calculate per-manifest fees based on the Marginal Cost Differentiated Fee formula, and then transition to the Marginal Cost Highly Differentiated Fee formula should electronic manifests not attain a 75% usage rate after four years of system operations (If submitting comments on this issue, please use comment header: 3. Fee Methodology ). Do commenters agree that the combination of these two formula options is superior to the other options alone? Do commenters agree with EPA's strategy of starting with the less aggressive fee formula in the initial years of program implementation, to foster a smoother transition from paper manifest use to electronic manifesting? Do commenters agree that after an initial period of transition, it makes sense to adopt a fee formula that more aggressively allocates paper manifest management costs to the paper manifest submission types that remain in use? Has EPA proposed a sensible trigger condition for shifting between the fee formulas? Is the goal of 75% electronic
In addition, EPA would appreciate comments addressing these fee formula questions (If submitting comments on any of the questions in the following seven bullets, please use comment header: 3. Fee Methodology).
• Is the proposed fee formula sufficiently clear insofar as identifying the program costs that will be allocated among manifests, and explaining how the fee amounts will be determined? How can the clarity of the fee formula be improved?
• Do commenters agree with the general premise of the fee formula that per-manifest fees should be charged to manifests based on the type of manifest submission, and that the marginal cost (human labor cost of data key entry and QA activities) should be a significant factor in determining the appropriate fees? What other bases are there for differentiating manifest fees?
• Do commenters agree with the proposed fee methodology that first determines the marginal human labor cost for processing each manifest submissio
sed on the type of manifest submission, and that the marginal cost (human labor cost of data key entry and QA activities) should be a significant factor in determining the appropriate fees? What other bases are there for differentiating manifest fees?
• Do commenters agree with the proposed fee methodology that first determines the marginal human labor cost for processing each manifest submission type, and then adds to that cost estimate a factor that distributes setup and O&M costs over the numbers of manifest in use? Are there other fee models that would more effectively and equitably allocate program costs to users and determine appropriate fees for the various manifest submission types?
• Do commenters agree that a five-year amortization period is an appropriate period of time over which to recover system setup costs? Is there another amortization period that EPA should adopt for this purpose, and if so, why?
• Do commenters agree with EPA's analysis of the options considered, and that EPA has selected the most desirable fee option? Does the proposed fee approach promote EPA's goals of accomplishing full program cost recovery and promoting electronic manifest use?
• Has EPA omitted any program costs that should be included in our determination of e-Manifest user fees?
• In developing its fee methodology, EPA has not proposed any specific fee or other incentives to promote desirable materials management behaviors, such as waste minimization or recycling of hazardous secondary materials. In many instances, our hazardous waste regulations provide manifest exemptions for hazardous secondary materials, so in one sense, the user fee costs that this action would impose on shipments subject to the manifest may provide some additional incentive for recycling or waste minimization
ble materials management behaviors, such as waste minimization or recycling of hazardous secondary materials. In many instances, our hazardous waste regulations provide manifest exemptions for hazardous secondary materials, so in one sense, the user fee costs that this action would impose on shipments subject to the manifest may provide some additional incentive for recycling or waste minimization. Are there other incentives that could be included in this user fee regulation that would promote greater recycling of these materials? If such incentives would involve fee discounts or monetary incentives, how should EPA allocate the revenue effects of such incentives among the manifest users who would pay fees under this action? Are there other incentives that EPA could consider for this user fee regulation? EPA welcomes comments on these matters.
Finally, EPA emphasizes that this proposal addresses the submission of paper manifests by adopting a fee approach that assigns fees to paper manifest submissions from TSDFs based upon the difference in marginal costs of processing the various paper manifest types. The submission of paper forms to EPA by mail would bear the highest fees, while submission of image files, or data and image files, would involve less processing effort and thus reduced fees under the proposed fee methodology.
EPA has heard from TSDFs that they generally would prefer to submit data files from their paper manifests to EPA, rather than incurring the costs of mailing paper forms to EPA for full processing. However, EPA has consulted primarily with a trade association (the ETC) that is comprised of larger TSDFs, so we do not know whether mid-size or smaller TSDFs would be similarly inclined to submit data files and scanned images of manifests to EPA and avoid mailing paper forms to EPA for processing. The differential fee approach we propose should itself discourage TSDFs from submitting large numbers of manifests by mail
lted primarily with a trade association (the ETC) that is comprised of larger TSDFs, so we do not know whether mid-size or smaller TSDFs would be similarly inclined to submit data files and scanned images of manifests to EPA and avoid mailing paper forms to EPA for processing. The differential fee approach we propose should itself discourage TSDFs from submitting large numbers of manifests by mail. However, it is difficult for EPA to project with confidence how many paper manifests will be mailed to the Agency in the initial years of e-Manifest operations. This is a concern for EPA, as the processing of mailed forms could involve significant personnel and contractor costs for opening and screening mail, for data key entry, document archiving, and for QA activities related to resolving data quality issues. Paper processing costs could dominate the O&M costs in the early years of operation, and if mail submissions occur in unexpectedly large numbers, EPA may need to increase fees or consume more of its appropriated funds than anticipated to process mailed manifests. Therefore, EPA is requesting comment on another approach under which TSDFs would be restricted to submitting their paper manifest data to EPA by electronic means only, that is, by uploading image files to EPA, or by uploading a data file ( e.g., XML file) of manifest data accompanied by an image file (If submitting comments on this issue, please use comment header: 4. Disallow Postal Mailed Manifests )
fore, EPA is requesting comment on another approach under which TSDFs would be restricted to submitting their paper manifest data to EPA by electronic means only, that is, by uploading image files to EPA, or by uploading a data file ( e.g., XML file) of manifest data accompanied by an image file (If submitting comments on this issue, please use comment header: 4. Disallow Postal Mailed Manifests ). Would TSDFs support an option that precluded their mailing paper manifest forms to the Agency, as this would reduce EPA's processing costs and the associated user fees? Are there TSDFs that would find this approach objectionable, because it requires the capacity to scan documents and upload data to EPA, or for other reasons? Is the proposed differential fee approach for paper manifest types sufficient to regulate the number of mail submissions to EPA, or is a more forceful approach ( i.e., restricting paper copy data submissions to digital methods only) necessary to keep the paper processing costs and fees in check? Are the processing efforts related to mailed paper manifests that different from the effort related to processing image files sent to the Agency? 14 EPA requests specific comments on the merits of an approach that would restrict TSDFs to submitting their paper manifest data to the Agency by digital methods only, and not by mailing hard copies to the EPA system.
14 EPA anticipates that fees for processing mailed manifests will be about 20-25% greater than for scanned images, because manifests delivered by mail will need to be opened, sorted for errant submissions, logged, stored and retrieved prior to processing, scanned by paper center personnel, and then disposed of after scanning.
7. Illustrative Range of User Fees Using the Proposed Fee Formula
EPA has developed illustrative ranges of user fees based on varying the system development costs and allocating such costs across a large range of possible manifest usage numbers
orted for errant submissions, logged, stored and retrieved prior to processing, scanned by paper center personnel, and then disposed of after scanning.
7. Illustrative Range of User Fees Using the Proposed Fee Formula
EPA has developed illustrative ranges of user fees based on varying the system development costs and allocating such costs across a large range of possible manifest usage numbers. These illustrative ranges are intended to show the relative difference in possible fee amounts among the various manifest submission types. The illustrative ranges also suggest generally the users' possible exposure to fees, and show the effect on fees of varying the overall system-related costs and the numbers of manifests that will share in these costs when fees are assessed. The result is a possible or illustrative range of user fee estimates that are displayed in the following tables. Since EPA's fee determination model was based on the varying marginal cost of processing the
Per Manifest Fee, Fully Electronic Manifests Number of manifests (millions) System procurement costs (millions $) 10 15 20 5 9.00 9.00 9.50 4.5 10.00 10.00 11.00 4 11.50 11.50 12.00 3.5 13.00 13.00 14.00 3 15.00 15.50 15.50 2.5 18.00 18.50 19.00 2 23.00 23.50 24.00 Per Manifest Fee, XML Submissions From Paper Manifests Number of manifests (millions) System procurement costs (millions ) 10 15 20 5 11.50 11.50 12.00 4.5 12.50 12.50 12.50 4 14.00 14.00 14.50 3.5 15.00 15.50 15.50 3 17.50 18.00 18.00 2.5 20.50 21.00 21.50 2 24.50 25.00 25.50 Per Manifest Fee, Image File Submissions from Paper Manifests Number of manifests (millions) System procurement costs (millions ) 10 15 20 5 17.00 17.00 17.50 4.5 18.00 18.00 18.50 4 19.00 19.00 20.00 3.5 20.50 21.00 21.50 3 23.00 23.50 23.50 2.5 25.50 26.50 27.00 2 30.50 31.00 31.50 Per Manifest Fee, Postal Mail Manifests Number of manifests (millions) System procurement costs (millions ) 10 15 20 5 21.00 21.00 21.50 4.5 22.00 22.00 22.00 4 23.50 23.50 24.00 3.5 24.50 25.00 25.00 3 27.00 27.50 27.50 2.5 30.
osts (millions ) 10 15 20 5 17.00 17.00 17.50 4.5 18.00 18.00 18.50 4 19.00 19.00 20.00 3.5 20.50 21.00 21.50 3 23.00 23.50 23.50 2.5 25.50 26.50 27.00 2 30.50 31.00 31.50 Per Manifest Fee, Postal Mail Manifests Number of manifests (millions) System procurement costs (millions ) 10 15 20 5 21.00 21.00 21.50 4.5 22.00 22.00 22.00 4 23.50 23.50 24.00 3.5 24.50 25.00 25.00 3 27.00 27.50 27.50 2.5 30.00 30.50 31.00 2 34.00 34.50 35.50 D. How does the proposal address fee trajectory issues?
1. Background
The topic of fee trajectory is concerned with the actions that EPA will take to adjust e-Manifest user fees to inflationary or other program cost changes, so that fee schedules and resulting revenues keep pace with program costs. In the document, Federal User Fees, A Design Guide, GAO emphasized the significance of this issue in ensuring that a user fee program is able to maintain full cost recovery. GAO noted that if fees are not reviewed and adjusted regularly, programs will run the risk of overcharging or undercharging users, while also raising equity, efficiency, and revenue adequacy concerns. GAO further noted that the questions affecting fee trajectory and revisions include:
• What are the fixed and variable costs of fee-funded activities?
• What are the timing and pattern of program spending?
• How quickly can the program adjust fee rates in response to changes in collections or costs?
• Are there other sources of funding or authority for a reserve that may mitigate shortfalls?
• Can the Agency update its fees more frequently by rule, and if so, how will the Agency enhance stakeholders' trust in its revision methodology?
The e-Manifest Act does speak to several of these matters. Sections 2(c)(1) and 2(c)(3)(B) of the Act clearly confer discretion on EPA to set and periodically adjust e-Manifest fees to ensure alignment with program costs
that may mitigate shortfalls?
• Can the Agency update its fees more frequently by rule, and if so, how will the Agency enhance stakeholders' trust in its revision methodology?
The e-Manifest Act does speak to several of these matters. Sections 2(c)(1) and 2(c)(3)(B) of the Act clearly confer discretion on EPA to set and periodically adjust e-Manifest fees to ensure alignment with program costs. The latter section authorizes EPA to consult with the System Advisory Board on fee revisions, and to increase or decrease the amount of fees to a level that results in the collection of revenue that is sufficient, but not more than reasonably necessary, to cover current and projected system related costs (including upgrades). Fee adjustments are also required to maintain revenues at a level that will minimize the accumulation of unused amounts in the System Fund. 15
15 EPA must recover the system development costs and repay the Treasury for the funds advanced for system development work. EPA will amortize development costs over 5 years, and while the fee collections corresponding to these development costs may accumulate in the System Fund, they would not be counted toward any surplus.
On the question of the timing of fee revisions, the Act provides that an initial adjustment to user fees shall be made at the time at which initial system development costs have been recovered, and periodically thereafter, upon receipt of information in annual financial accounting or audit reports, disclosing a significant disparity between fee collections for a fiscal year and expenditures made that year for program related costs. Thus, EPA does have discretion to revise fees as necessary to maintain balance between revenues from fee collections and program costs as changes occur over time
periodically thereafter, upon receipt of information in annual financial accounting or audit reports, disclosing a significant disparity between fee collections for a fiscal year and expenditures made that year for program related costs. Thus, EPA does have discretion to revise fees as necessary to maintain balance between revenues from fee collections and program costs as changes occur over time. The e-Manifest Act authorizes EPA to accumulate a revenue surplus of not more than $2 million over the initial three-year period of operations, presumably out of recognition that there might be imprecision in cost estimates and revenue forecasts in the initial period of system operations.
EPA attaches great significance to the role of the System Advisory Board in consulting with EPA on fee revisions. As the Board will be comprised of a cross-section of program stakeholders, EPA believes that this consultation role will be very important to maintaining trust in EPA fee setting and revision methodology. Financial reports and audits will be shared with the Advisory Board, and current and projected program budgets and their effects on proposed fee revisions will be a regular agenda item for EPA's discussions with the Advisory Board. Therefore, it is essential that these discussions, our fee setting methodology, and our fee revision methodology be rational and transparent to our stakeholders. Thus, this section of the preamble is intended to explain the fee revision methodology and schedule we propose to follow in our regular efforts to maintain balance between fee collections and program costs.
Additional Federal guidance relating to fee revisions appears in OMB Circular A-25. In Section 8.e
thodology, and our fee revision methodology be rational and transparent to our stakeholders. Thus, this section of the preamble is intended to explain the fee revision methodology and schedule we propose to follow in our regular efforts to maintain balance between fee collections and program costs.
Additional Federal guidance relating to fee revisions appears in OMB Circular A-25. In Section 8.e. of this Circular, addressing Agency responsibilities, OMB states that each agency will review the user charges for agency programs biennially to include, among other things, “assurance that existing charges are adjusted to reflect unanticipated changes in costs or market values.” Thus, it is the objective of this action to propose a fee trajectory or revision methodology that implements the direction provided by the e-Manifest Act, as well as the applicable guidance in Circular A-25 and the GAO Design Guide.
2. What methodology and process is EPA proposing for e-Manifest fee revisions?
EPA is proposing a fee revision methodology under which the Rule's fee formula would be re-run at two-year intervals, with the most recent program cost and manifest usage numbers being
Thus, while EPA would develop the initial fee schedule under this action using notice-and-comment rulemaking procedures, it is not EPA's intent to issue the subsequent fee schedule revisions through notice-and-comment proceedings. Rather, EPA is proposing its methodology for fee calculations and revisions in this rulemaking, and when we finalize this rule in response to comments, our final methodology will be announced and used to calculate the initial set of program fees. However, with each two year fee revision cycle thereafter, EPA will re-run the fee calculations using the latest program costs and manifest numbers, but will not subject the revised fee schedules to notice-and-comment proceedings, as long as the fee revision calculations are based on the same fee methodology that we develop with this action
ed and used to calculate the initial set of program fees. However, with each two year fee revision cycle thereafter, EPA will re-run the fee calculations using the latest program costs and manifest numbers, but will not subject the revised fee schedules to notice-and-comment proceedings, as long as the fee revision calculations are based on the same fee methodology that we develop with this action. Our intent is to develop a fee setting and revision methodology that would be durable and could be used repeatedly over the coming years, with adjustments to fees being announced consistently with the formulas and adjusters included in this methodology. However, if EPA alters significantly its methodology for calculating or adjusting fees, or the fees are affected by significant new program costs not anticipated in the formulas we include in our initial fee-setting methodology, then EPA would follow notice-and-comment procedures before announcing any revised fees based on a significantly new fee methodology.
EPA also considered a process under which the Agency would run the fee formula with the most recent costs and manifest usage numbers on an annual basis. While this option would appear to be most responsive to program cost changes, it is not our preferred option for this proposal. EPA is instead proposing a two-year cycle for re-running the fee formula and publishing fee schedules, because we believe that a two-year cycle strikes a better balance between revenue accuracy, process burdens, and fee program stability for users. With a two-year cycle, the user community will know and be able to budget for the fees that will be owed for each manifest submission over a more stable period of two years, rather than having to deal with a fee schedule that is constantly under revision
because we believe that a two-year cycle strikes a better balance between revenue accuracy, process burdens, and fee program stability for users. With a two-year cycle, the user community will know and be able to budget for the fees that will be owed for each manifest submission over a more stable period of two years, rather than having to deal with a fee schedule that is constantly under revision. For EPA, there will also be advantages, in that the Agency will not need to incur the administrative costs of re-issuing fee schedules and publishing them each year, and explaining the resulting fee changes to the Advisory Board and user community. Moreover, EPA believes that a two-year cycle for issuing fee schedule revisions is consistent with the guidance of OMB Circular A-25, which requires agencies to conduct biennial reviews of its user fees, including adjustments in fee charges.
3. What adjusters would be included in the proposed fee revision methodology?
Obviously, with each re-running of the fee setting formula at our proposed two-year interval, the fees that are so determined will have been “adjuste

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FR_PRORULE_2016-15845. Check the current official text before relying on it. Not legal advice.