August 15, 2016

e-Manifest User Fee Methodology Proposed

The e-Manifest Act authorizes EPA to impose user fees as necessary to recover costs incurred in developing, operating, maintaining, and upgrading an electronic hazardous waste manifest system. The agency proposed the method it will use to set e-manifest user fees on July 26, 2016. [81 FR 49072]. The agency also hosted a webinar on June 30, 2016 entitled “Overview of EPA’s User Fee Proposed Rule,” and slides from that presentation are also available. Below is a summary of the proposal and webinar.

Most importantly, EPA is projecting that it will have a fully tested and functional e-manifest system in place by June 2018. Although paper manifests may continue to be used after that date, in addition to the electronic version, there will almost certainly be higher fees for using paper manifests.

Who will pay the user fees?

The agency is proposing that the approximately 400 U.S. commercial TSD facilities (but not hazardous waste generators or transporters) will pay the fees. Two approaches are being considered:

Preferred approach—TSD facilities would receive monthly electronic invoices showing their actual manifest activity from the previous month, or
Alternate approach—A fixed monthly payment would be automatically debited from a commercial bank account based on a TSD facility’s previous year’s manifest activity.

Since it would be the TSD facilities and not generators who will pay e-manifest user fees, TSD facilities will presumably increase the waste management prices they charge to generators to recoup those expenses. However, EPA is not regulating any pass-along costs but is deferring to business arrangements between the parties. The agency would also not charge members of the public or any officials from federal, state, or tribal agencies any user fees when accessing manifest data from the e-manifest system.

How will EPA set user fees?

When up and running, EPA envisions four types of manifests for which data will be entered into the e-manifest system: 1) fully electronic manifests that have been completed and distributed electronically using the system, 2) paper manifests that TSD facilities will mail to EPA, 3) paper manifests that TSD facilities will scan into an image file and transmit to the agency, and 4) paper manifests that TSD facilities will submit as an image file along with a corresponding data file (e.g., XML file). For the last three types, there will be varying additional costs associated with a “paper center” (where data from paper copies will be entered into the system), and these additional costs will have to be factored into the per-manifest fees.

The proposed rule contains complicated formulas that would be used to calculate per-manifest user fees and that would include system development costs, operating costs, and indirect costs (e.g., overhead, maintenance, utilities, and rents on land, buildings, or equipment). The proposed formulas would differentiate costs for each of the four types of manifests noted above and would calculate user fees as follows:

Initial approach—Differentiated cost formula wherein human labor costs of opening mail, conducting QA on paper submissions, and entering data from the paper submission types (other than XML files that load directly into the system) would be included in the fees when paper manifests are used.
Subsequent approach—If e-manifest use does not reach 75% of total manifest use after four years of operation, the “highly differentiated” cost formula would be used to calculate subsequent fees. This approach would add the nonlabor operating costs of the paper center, along with the human labor costs, to the cost burden to be borne by paper-submission types.

Based on these proposed formulas, EPA gave some preliminary estimates of e-manifest user fees (using EPA’s best estimate of 3.2 million manifests initiated annually):

Fully electronic manifests—$13–$15.50/manifest,
XML data submissions from paper manifests—$15–$18/manifest,
Image file submissions from paper manifests—$20.50–$23.50/manifest, and
Postal mail paper manifests—$24.50–$27.50/manifest.

Compare those numbers to the current paper manifest costs of $0.40–$0.50/each. Even though the fees for the e-manifest may seem high, the agency estimates that the e-manifest system will result in net cost savings of $34 million/year when discounted at 7% and annualized over 6 years. Note that the final user fee rule will include a fee schedule developed using the rule’s fee methodology.

Miscellaneous issues

Other issues addressed by the proposed rule include:

e-Manifest user fees would be reevaluated every two years and adjusted based on 1) prevailing inflation rates, and 2) revenue recaptures (i.e., adjustments to make up for revenue shortfalls or excesses).
User fee premiums would apply to 1) data correction submissions by TSD facilities, and 2) sorting and returning stray or erroneous paper documents.
If a TSD facility does not pay its monthly user fees within 30 days, a 4-tier set of ratcheting sanctions would be imposed.

EPA also proposed three non-fee related changes to the existing regulations for hazardous waste manifests:

Once a manifested shipment is en route, generators would be allowed to 1) make changes in the transporter designation on the manifest for non-emergency purposes; or 2) authorize transporters or brokers, by contract, to change the transporters designated on the manifest without prior approval from the generator.
Within 90 days of waste receipt, the TSD facility would be required to correct any errors in manifest data that are uncovered post-receipt. These corrections to data would be made electronically in the e-manifest system, regardless of whether the data undergoing correction comes from a paper or electronic manifest.
A generator would be allowed to sign and retain a paper copy of the manifest (also signed by the initial transporter), in lieu of initiating the manifest electronically. This option would enable the transporter and subsequent waste handlers to complete the remainder of the manifest copies electronically.

EPA will accept comments until September 26, 2016. The agency is requesting that comments be submitted electronically on a pilot comment platform. Alternatively, commenters may choose to submit comments by postal mail or electronically through regulations.gov.

The uniform hazardous waste manifest requires consistency in its implementation. Thus, any changes EPA makes to the federal manifest requirements must be implemented consistently in all states, regardless of whether the changes would be considered more stringent or broader in scope than existing regulations. When the user fee rule is finalized, therefore, it shall take effect in all states on the effective date of the rule in the Federal Register, and it will be implemented and enforced by the EPA regions until the states adopt the user fee provisions.

McCoy and Associates has provided in-depth information to assist environmental professionals with complex compliance issues since 1982. Our seminars and publications are widely trusted by environmental professionals for their consistent quality, clarity, and comprehensiveness.

Disclaimer

Considerable care has been exercised in preparing this document; however, McCoy and Associates, Inc. makes no representation, warranty, or guarantee in connection with the publication of this information. McCoy and Associates, Inc. expressly disclaims any liability or responsibility for loss or damage resulting from its use or for the violation of any federal, state, or municipal law or regulation with which this information may conflict. McCoy and Associates, Inc. does not undertake any duty to ensure the continued accuracy of this information.

This document addresses issues of a general nature related to the federal RCRA regulations. Persons evaluating specific circumstances dealing with the RCRA regulations should review state and local laws and regulations, which may be more stringent than federal requirements. In addition, the assistance of a qualified professional should be enlisted to address any site-specific circumstances.