Toxic Substances: EPA Should Focus Its Chemical Use Inventory on
Suspected Harmful Substances (Letter Report, 07/07/95, GAO/RCED-95-165).

Pursuant to a congressional request, GAO reviewed the Environmental
Protection Agency's (EPA) efforts to develop a Chemical Use Inventory,
focusing on the: (1) extent to which agreement exists on the chemicals
and data to be included in the inventory; and (2) status of EPAs efforts
to develop the inventory.

GAO found that: (1) EPA and various other organizations differ on which
chemicals should be included in the inventory, the specific types of
data that should be obtained, and the source of the data; (2) EPA has
proposed collecting general data on chemical use and exposure from
chemical manufacturers and importers on about 12,000 chemicals; (3) EPA
officials intend to protect legitimate confidential business information
contained in the chemical use inventory; and (4) EPA has not decided
whether to implement the inventory through the regular federal
rulemaking process or through negotiations with interested parties.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-165
     TITLE:  Toxic Substances: EPA Should Focus Its Chemical Use 
             Inventory on Suspected Harmful Substances
      DATE:  07/07/95
   SUBJECT:  Toxic substances
             Data collection operations
             Confidential records
             Prioritizing
             Chemical research
             Consumer protection
             Health hazards
             Manufacturing industry
             Environmental monitoring
IDENTIFIER:  EPA Toxics Release Inventory Program
             EPA Chemical Use Inventory
             EPA Inventory Update Rule
             EPA Toxic Release Inventory
             
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Cover
================================================================ COVER


Report to Congressional Requesters

July 1995

TOXIC SUBSTANCES - EPA SHOULD
FOCUS ITS CHEMICAL USE INVENTORY
ON SUSPECTED HARMFUL SUBSTANCES

GAO/RCED-95-165

EPA's Chemical Use Inventory


Abbreviations
=============================================================== ABBREV

  EPA -
  GAO -
  TSCA -

Letter
=============================================================== LETTER


B-261203

July 7, 1995

The Honorable Joseph I.  Lieberman
The Honorable Harry M.  Reid
United States Senate

Little is known about the risks of many of the chemicals to which
millions of consumers and workers as well as the general public are
potentially exposed.  While the amount of exposure to a chemical can
vary greatly depending on its use, the Environmental Protection
Agency's (EPA) information on chemical use is often scarce,
incomplete, or outdated.  To obtain the data it needs to assess the
risks posed by chemicals, EPA is planning to develop a Chemical Use
Inventory. 

Concerned about the adequacy of information on chemical risks, you
requested that we review EPA's efforts to develop this inventory.  On
the basis of discussions with your office, we focused our review on
(1) determining the extent to which agreement exists on the chemicals
and data to be included in the inventory and (2) the status of EPA's
efforts to develop the inventory. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The chemical industry, public interest groups, and other
organizations have conflicting views on key issues relating to the
Chemical Use Inventory that may be difficult for EPA to reconcile
with its own views.  EPA and the various organizations and groups
differ concerning which and how many chemicals should be included in
the inventory, the specific types of data that should be obtained,
and the sources of these data.  Although EPA has not yet made final
plans for implementing the inventory, the agency has proposed
collecting general data on chemical use and exposure from chemical
manufacturers and importers on up to 12,000 chemicals.  However, most
organizations believe that the inventory should include substantially
fewer chemicals than the number EPA has proposed.  Our past work has
shown that EPA does not have the resources to effectively compile and
analyze information on a large number of chemicals.  Therefore, the
inventory could be more useful to EPA and other interested parties if
it initially focused on a smaller number of the highest-priority
chemicals known to present risks to health and the environment and
was expanded as necessary.  Furthermore, while chemical industry
members are concerned about revealing confidential business
information that would harm their competitive positions, EPA
officials maintain that the agency will ensure that legitimate
confidential business information is protected in the inventory. 

EPA officials have made no firm decisions about the specific features
of the inventory or how it will be implemented.  EPA officials met
with representatives of the chemical industry, public interest
groups, and others in April 1995 for technical discussions on
alternative proposals for implementing the inventory.  According to
EPA officials, the agency has not yet decided whether to implement
the inventory through the regular federal rulemaking process, which
may take 2 years or more to complete, or through negotiations with
interested parties to facilitate and expedite the rulemaking. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Little is known about the ill effects that many chemicals in commerce
might have on the people exposed to them.  Adverse health effects
result from the chemicals' toxicity as well as the extent of human
exposure to them.  To fully assess human exposure to a chemical, EPA
needs to know the number of persons exposed, the means of exposure,
and the amount and duration of the exposure.  Actual measurements of
exposure for the thousands of chemicals in use are not practicable
because of the extensive monitoring equipment and staff resources
required.  Consequently, EPA estimates the types and amounts of
exposure on the basis of a chemical's physical properties and use,
the industrial processes used to produce and process the chemical,
the production volumes, and the types and amount of the releases of
the chemical into the environment. 

The Toxic Substances Control Act (TSCA) authorizes EPA to collect
information about the hazards posed by chemical substances and to
take action to control unreasonable risks by either preventing
dangerous chemicals from entering commerce or placing restrictions on
those already in the marketplace.  Under the act, EPA can control the
production, distribution in commerce, use, and disposal of chemicals. 
TSCA applies to new and existing chemicals; it does not apply to
pesticides, tobacco, nuclear materials, firearms and ammunition,
food, food additives, drugs, cosmetics, or medical devices. 

Information about chemical use is important for estimating potential
exposure because the amount of exposure to a chemical can vary
substantially depending on its use.  However, although EPA officials
believe that TSCA provides the authority to collect some data on
chemical use and exposure, the agency's current reporting rules do
not require the chemical industry to provide this information. 

The Chemical Use Inventory that EPA plans to develop is intended to
provide the data on chemical use and exposure that the agency needs
to assess risks.  EPA envisions the inventory as a data base that
will enable the agency to screen chemicals to identify those of
highest concern as well as those that are potentially safer and can
be substituted for more harmful chemicals in some applications.  To
implement the inventory, EPA intends to amend the TSCA Inventory
Update Rule. 

The Inventory Update Rule generally requires chemical manufacturers
and importers to report to EPA certain information about the
chemicals they produce or import in excess of 10,000 pounds per year. 
According to EPA officials, the rule covers approximately 9,000
chemicals produced or imported by about 2,400 facilities.  The
current rule generally requires chemical manufacturers and importers
to provide data every 4 years on a chemical's identity, plant sites,
and production volume but not on use or exposure.  Such chemicals as
inorganic substances,\1

polymers, microorganisms, and certain naturally occurring substances
are excluded from the rule's reporting requirements.  EPA plans to
amend the rule in order to gather data on how chemicals are used and
to make other changes to reporting requirements. 


--------------------
\1 Generally, inorganic substances are those chemicals that do not
contain carbon. 


   NO AGREEMENT ON THE CHEMICALS
   AND DATA FOR THE INVENTORY
------------------------------------------------------------ Letter :3

Beginning in July 1993, representatives of EPA, the chemical
industry, public interest organizations, and other groups interested
in information on chemical use met to discuss the agency's proposal
for the Chemical Use Inventory.  Following these meetings, these
groups provided written comments to EPA on key issues such as (1) the
chemicals that should be included in the inventory, (2) the types of
data that should be obtained, and (3) the sources from which data
should be collected.  The most extensive comments were received from
the chemical industry, public interest groups, and the Consumer
Product Safety Commission--the federal agency responsible for
protecting consumers from harmful products. 

Some of the views expressed by these organizations may be difficult
for EPA to reconcile with its own views.  Most of these organizations
believe that the inventory should address a limited number of
high-risk chemicals.  While EPA agrees with this position, agency
officials believe that the data available on exposure are
insufficient to identify such chemicals.  To develop a more
comprehensive data base, EPA has proposed obtaining information on
the approximately 9,000 chemicals included under the current
Inventory Update Rule plus about 3,000 inorganic chemicals that are
now excluded under the rule.  Furthermore, the various organizations
differ among themselves concerning which chemicals and data should be
included in the inventory and which information sources should be
used.  Members of the chemical industry also expressed concern about
revealing confidential business information, saying their competitive
positions could be harmed as they provide EPA with data for the
inventory. 


      NUMBER OF CHEMICALS TO BE
      INCLUDED IN THE INVENTORY
---------------------------------------------------------- Letter :3.1

The Chemical Manufacturers Association, representing companies that
account for over 90 percent of the U.S.  bulk chemical production,
has expressed concerns about EPA's proposal for a comprehensive
Chemical Use Inventory.  The association believes that an inventory
as proposed by EPA, including several thousand chemicals, would be
overly broad, impose an extraordinary reporting burden on the
industry, and present EPA with a significant challenge in information
management.  The association believes that EPA should narrow the list
of chemicals in the inventory by taking into account the chemicals'
hazards, production volumes, and potential for exposure. 

The Chemical Manufacturers Association is developing a method for
identifying high-risk chemicals to be included in the inventory, and
it intends to propose this method to EPA.  Although this proposal is
not yet completed, EPA and association officials generally agree on
the concept and the data elements that should be used to identify
priority chemicals for the inventory but differ on the screening
process to be employed. 

The Consumer Product Safety Commission and public interest
organizations also provided EPA with their views on the chemicals to
be included in the inventory.  The Commission generally supports
EPA's plans to include the chemicals covered by the Inventory Update
Rule, in addition to inorganic substances.  However, the Commission
believes that EPA should also include polymers, naturally occurring
substances, and the chemicals produced by microorganisms, which are
currently exempt from reporting under the rule.  EPA officials were
unable to estimate how many chemicals are included in these three
categories.  The Commission believes that data are needed on how
these types of chemicals are used in order to provide a comprehensive
view of the chemicals in products and to identify potential concerns
about exposure.  Public interest groups did not identify the specific
types or numbers of chemicals to include in the inventory.  However,
the groups said that the chemicals included should be selected on the
basis of factors such as their toxicity and production levels.  Such
a selection process would limit the number of chemicals in the
inventory. 

As noted, EPA believes that the inventory should include the
chemicals now covered by the Inventory Update Rule, in addition to
inorganic substances.  Although EPA officials told us that the agency
is considering measures to reduce the number of chemicals in the
inventory, EPA believes that it is important to include a relatively
large number of chemicals in order to gather an appropriate amount of
data on chemical use and exposure.  These data can then be evaluated
to identify the chemicals that pose the greatest risks because of
their toxicity and potential for human exposure.  EPA also believes
that information is needed on a large number of chemicals to ensure
that data are available for identifying those chemicals that can be
used as substitutes in processes in which more hazardous substances
are now used.  However, EPA believes that including polymers,
naturally occurring substances, and the chemicals produced by
microorganisms in the inventory would not add to the usefulness of
the data on chemical use and exposure because these chemicals are
generally considered to be of less concern than the other chemicals
EPA is proposing for the inventory. 

EPA acknowledges that a comprehensive inventory will add to the
chemical industry's reporting requirements and the agency's data
management responsibilities.  Although EPA has not yet determined the
extent of the inventory's potential effects on its data management
burden, the agency is currently assessing the likely impact on the
industry of the increased reporting requirements.  EPA plans to
analyze the inventory's costs to the agency as part of the rulemaking
process.  EPA officials told us that the agency is considering using
thresholds of production volume (for example, amounts above a certain
production level) and limited hazard screening to reduce the number
of chemicals in the inventory, thereby reducing the reporting and
data management burdens. 

Although EPA indicates that it needs data on a large number of
chemicals, our past work shows that EPA needs to establish some means
of setting priorities to ensure that risks to health and the
environment are addressed in an appropriate and timely manner.\2 In
this regard, our past work noted that EPA needs to focus the agency's
resources on those chemicals that, on the basis of their toxicity,
production volumes, and potential for exposure, present the highest
risk to human health and the environment. 

Although EPA recognizes the advantages of focusing on the chemicals
of greatest concern, the agency does not believe that it has the
chemical use and exposure data it needs to set priorities for the
chemicals to be included in the inventory according to their relative
risk.  However, our past work indicates that, while EPA may not have
complete information to assess chemicals' risks, the agency has
enough data on chemicals' toxicity and production volumes from other
sources to assess risk.  These sources include EPA's reviews of new
and existing chemicals and other sources that the agency uses to
identify chemicals of concern and to target priority testing, such as
those included in the Toxic Release Inventory\3 and the TSCA Master
Testing List.\4

While EPA officials acknowledge that the existing data might provide
a basis for selecting priority chemicals for the Chemical Use
Inventory, they maintain that a more limited inventory focusing only
on the most hazardous chemicals would necessarily exclude those that
are less harmful, thus preventing EPA from identifying safer
substitute chemicals for certain uses.  Nevertheless, it is doubtful
that EPA could obtain and analyze the information it needs to
identify such substitute chemicals in a timely manner.  As our past
work indicates, EPA reviews only about 100 chemicals a year.  At this
rate, it would take over a century to review the approximately 12,000
chemicals the agency has proposed for the Chemical Use Inventory. 
Given EPA's limited capability to review chemicals, it is unlikely
that the agency could effectively utilize data on the use and
exposure of this large number of chemicals.  Therefore, given the
need for EPA to set priorities and industry's concerns about
reporting burdens, a more moderate approach, at least initially
focused on a smaller number of priority chemicals, could be more
manageable for EPA and the industry and more valuable for the agency
and other interested parties. 


--------------------
\2 Toxic Substances Control Act:  Preliminary Observations on
Legislative Changes to Make TSCA More Effective (GAO/T-RCED-94-263,
July 13, 1994) and Toxic Substances Control Act:  Legislative Changes
Could Make the Act More Effective (GAO/RCED-94-103, Sept.  26, 1994). 

\3 The Toxic Release Inventory reports on about 600 toxic chemicals
released into the environment, transferred from plant sites, and
present in waste from U.S.  manufacturing facilities. 

\4 The TSCA Master Testing List includes chemicals that, on the basis
of available knowledge, EPA believes to be of concern and has
designated for priority review. 


      DATA TYPES AND SOURCES
---------------------------------------------------------- Letter :3.2

The views of chemical industry representatives on the type and
sources of data needed for the inventory vary.  The Chemical
Manufacturers Association believes that if the inventory is to be a
reliable basis for determining risk, it must include data on a
chemical's users and toxicity as well as on the conditions under
which the chemical is used--for example, whether it is isolated in a
sealed environment or is accessible for human exposure. 

Although the Inventory Update Rule currently requires reporting only
by chemical manufacturers and importers, the Chemical Manufacturers
Association believes that chemical processors can also provide the
inventory with detailed data on how chemical products are used. 
Other members of the chemical industry, however, favor limiting the
reporting requirements to manufacturers and importers.  For example,
the Chemical Specialties Manufacturers Association, representing
specialty chemical producers, told EPA that including data from
processors in the inventory would greatly increase the industry's
reporting burden and EPA's data handling requirements. 

EPA agrees that the inventory should include data that would allow it
to characterize risks.  For this purpose, EPA is considering amending
the rule to require manufacturers and importers to report data on the
number of workers potentially exposed at processing and other sites
and on the volumes of chemicals used in different categories of
industrial and consumer products.  Furthermore, EPA believes that
including data from chemical processors might make the inventory more
comprehensive and accurate by identifying more facilities that handle
toxic chemicals and by providing additional information on workers'
exposure.  However, EPA acknowledges that including such data would
increase the industry's overall reporting requirements and the
agency's data management responsibilities.  EPA officials told us
that the agency currently is not planning to include data from
processors in the inventory.  Furthermore, although EPA officials
recognize the value of obtaining data from the industries that are
final users of the chemicals, they told us that TSCA does not provide
the agency with the authority to collect such data. 

The Consumer Product Safety Commission also provided EPA with its
views on the data to be included in the inventory.  The Commission
told EPA that it needs information on the quantity of chemicals in
specific consumer products or categories of products and data to
estimate the amount of human exposure to the chemicals in these
products.  The information that the Commission needs to estimate
exposure includes a chemical's function in the product--for example,
as a solvent or a pigment; the conditions under which consumers may
be exposed to the chemical in the product; and the chemical's vapor
pressure or evaporation rate. 

EPA officials recognize the value of obtaining data on specific
consumer products or product categories.  However, as noted above,
they believe that obtaining these data would be difficult because the
agency lacks the authority under TSCA to collect information from the
segments of the industry that are the final users of chemicals.  In
lieu of this information, EPA proposes to require manufacturers to
identify the industrial and consumer uses of the chemicals they
produce.  However, EPA acknowledges that the quality of the data on
end uses that it would receive from manufacturers could be
questionable, because these companies may not be aware of all of the
final uses of their chemicals. 

Representatives of a number of public interest groups also provided
their views.  Generally, these representatives believe that the
inventory should be used to place public pressure on the chemical
industry to reduce its use of toxic chemicals.  Towards this end,
they believe that the inventory should provide data from each
chemical production and processing facility on the (1) chemicals
flowing into, used in, and emitted from the facility; (2) chemical
end-users and purchasers of toxic chemicals; (3) number of workers
and consumers handling products; and (4) chemical processors and
processes. 

Because these groups' concerns focus on individual chemical
facilities and their chemical flows, EPA believes that the groups'
data needs can best be addressed under the Toxic Release Inventory. 
EPA is considering revising the reporting requirements for the Toxic
Release Inventory in order to obtain site-specific data on industrial
facilities' chemical flows.  EPA officials told us that the agency
will consider the data needs of the public interest groups in its
planned revisions to the Toxic Release Inventory's reporting
requirements.  EPA will not initiate the proposed revisions to this
inventory until it completes ongoing efforts to expand the number of
chemicals and reporting facilities included in this inventory.  EPA
expects this effort to take several years. 


      INDUSTRY IS CONCERNED ABOUT
      CONFIDENTIALITY OF DATA
---------------------------------------------------------- Letter :3.3

Although EPA, the Consumer Product Safety Commission, and public
interest groups believe that the data in the inventory should be made
public, members of the chemical industry are concerned that the
information they provide might be used by competitors to harm their
business positions.  The Chemical Manufacturers Association is
concerned that reporting data on chemical use would damage companies'
competitive positions by disclosing key information about the
ingredients of chemical products, plans for new products, chemical
processes, or improvements to processes. 

TSCA provides that chemical manufacturers, processors, and
distributors may designate the data submitted to EPA as confidential. 
Information entitled to confidential treatment includes trade secrets
and certain commercial or financial information.  EPA generally must
protect information entitled to confidential treatment from public
disclosure. 

EPA believes that the number of claims of confidential information
made by the industry under TSCA has been excessive and that many of
these claims have been inappropriate.  Consequently, EPA has recently
initiated a number of actions to reduce the number of claims,
including proposing regulatory changes to require companies to
substantiate their claims.  Despite industry's concerns over the
public availability of data in the inventory, EPA officials believe
that these concerns are insupportable and told us that the agency
will fully protect legitimate confidential business information. 
They also said that EPA will require reporting of data by ranges, in
aggregates, or in other ways to avoid claims concerning confidential
business information. 


   STATUS OF EPA'S EFFORTS TO
   DEVELOP INVENTORY
------------------------------------------------------------ Letter :4

EPA officials have made no final decisions about the specific
features of the Chemical Use Inventory, including the chemicals and
data to be included and how the inventory will be implemented.  These
decisions will be made on the basis of future discussions with the
chemical industry and other interested parties. 

Although EPA initially planned to implement the Chemical Use
Inventory through a regulatory negotiation process, the agency is
reconsidering this approach because some parties are reluctant to
participate in the process.  In this process, the agency would work
to resolve differences among chemical industry members, public
interest groups, and others before introducing a proposed amendment
to the Inventory Update Rule.  This approach is intended to
facilitate and expedite the normal rulemaking process, in which EPA
first proposes a rule and then works to resolve differences among the
interested parties.  This process can take 2 years or more to
complete. 

EPA officials met with representatives of the chemical industry,
public interest groups, and others in April 1995 for technical
discussions on alternative proposals for implementing the inventory. 
According to EPA officials, they will continue to work with the
interested parties in attempting to identify an approach that will
make the inventory most useful to the agency and others. 

EPA officials told us that the agency is uncertain whether the
restrictions on new regulations and the cost-benefit analysis
requirements that are currently under consideration in the Congress
will be enacted and, if they are passed, what the exact provisions of
the final legislation will be.\5 Consequently, EPA officials told us
that they do not know the effect that these proposed legislative
changes may have on the agency's plans to revise the Inventory Update
Rule.  Although EPA officials are proceeding to further develop
technical aspects of new reporting requirements, they have not yet
established a specific schedule for implementing the inventory. 


--------------------
\5 Several bills pending in the Congress would impose restrictions on
issuing regulations.  For example, S.  343 and H.R.  9 would
generally require agencies to conduct cost-benefit analyses before
issuing regulations.  Other bills, including S.  219 and H.R.  450,
would impose a moratorium on many regulatory actions by agencies. 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

EPA is developing its Chemical Use Inventory to obtain the data on
use and exposure the agency needs to assess chemicals' risks and to
set priorities for its programs for toxic substances.  While EPA has
made no firm decisions on the specific features of the inventory, the
agency has proposed including about 12,000 chemicals.  EPA officials
maintain that a broad approach will provide the comprehensive
information needed to identify those chemicals that pose risks as
well as those that can substitute for such chemicals.  However, the
chemical industry, public interest groups, and the Consumer Product
Safety Commission generally believe that the number of chemicals in
the inventory should be limited.  In our opinion, implementing the
inventory on a smaller scale than currently envisioned by EPA,
initially covering possibly as many as several thousand of the
chemicals suspected to present the greatest risk, would provide key
data on chemical use and exposure while limiting the reporting burden
on the chemical industry and EPA's data management requirements. 
This approach would also give EPA the opportunity to assess the data
obtained, reconsider the chemicals and type of data included in the
inventory, and make any necessary adjustments to its approach. 


   RECOMMENDATION
------------------------------------------------------------ Letter :6

To ensure that the Chemical Use Inventory provides the data on
chemical use and exposure that EPA and other interested organizations
need while at the same time minimizing the data management burden on
both the agency and the chemical industry, we recommend that when the
Administrator of EPA implements the inventory, the agency begin with
a limited number of those chemicals, perhaps as many as several
thousand, that are suspected of presenting the greatest risk to human
health and the environment.  As information is obtained through the
inventory, EPA may need to expand the number of chemicals included
and/or substitute other chemicals as appropriate. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We requested comments on a draft of this report from EPA.  On May 25,
1995, we met with the Director of the Economics, Exposure and
Technology Division in EPA's Office of Pollution Prevention and
Toxics to obtain the agency's oral comments on the draft report. 
During our meeting, this official stated that overall, the report is
a well-written description of issues concerning EPA's proposed
Chemical Use Inventory.  Nevertheless, EPA disagreed with our
recommendation as stated in the draft report because the agency did
not believe that the inventory should be limited to a few hundred of
the most toxic chemicals with the highest production volumes. 
However, after we discussed the recommendation and clarified that we
believe that EPA should initially limit its inventory to as many as
several thousand chemicals rather than the proposed 12,000, this
official said that the agency would consider our recommendation. 

As we discuss in our report, EPA has concerns about limiting the size
of the inventory because the agency (1) believes it is difficult to
screen high-priority chemicals for the inventory without data on
exposure and (2) wants information on a large number of chemicals
used in similar applications, or "use clusters," in order to identify
safer substitutes.  In addition, EPA believes that the agency's risk
management capacity should not determine the number of chemicals
included in the inventory. 

Although EPA officials maintain that they are considering employing
limited hazard screening to reduce the number of chemicals in the
inventory, EPA believes that a limited set of potential high-risk
chemicals cannot be identified without the data on exposure supplied
through the inventory.  While we agree that risks may not be screened
with precision on the basis of data on production volumes only, we
believe that this type of information, in conjunction with data on
toxicity and other available data, can provide an indication of which
chemicals potentially pose the greatest risks.  Initial screening of
chemicals on this basis could result in a more manageable number of
chemicals for which data on exposure could be obtained.  Successive
screenings on this basis may provide the accuracy that EPA needs but
on a smaller universe of chemicals, which could be expanded as
needed. 

EPA also believes that data on chemical use and exposure are
essential to identifying groups of chemicals used in similar
applications, or use clusters.  EPA believes that this approach is
key to helping the users of the chemicals make informed choices that
include consideration of exposures and risks when selecting chemicals
for a specific use.  As we discuss in our report, EPA believes that
the agency needs such information on a large number of chemicals. 
While including a relatively large number of chemicals in the
inventory could provide EPA with the data needed to identify a range
of substitute chemicals for a given use, we continue to question the
need for, and EPA's ability to effectively manage and utilize, data
on as many as 12,000 chemicals.  Data on the use of a smaller number
of chemicals, perhaps as many as several thousand, would be more
manageable for both the chemical industry and the agency and would
provide EPA with data on a sufficient number of chemicals to identify
use clusters and potential substitutes that are safer. 

EPA believes that the agency's risk management capacity should not be
the limiting factor in determining the number of chemicals selected
for the inventory.  Although we agree that EPA's risk management
capacity should not be the sole determinant of the number included,
we believe that this capacity should be an important consideration in
implementing the inventory.  Similarly, EPA should consider its data
management capacity in deciding how many chemicals to initially
include in the inventory.  Given that EPA has not yet determined the
extent of the reporting burden on the industry or the data management
responsibilities of the agency that would result from the inventory,
we continue to believe that it would be prudent for EPA to initially
include a more limited number of chemicals in the inventory until the
agency has determined the value of the information obtained as well
as the costs to the industry of providing the data and to EPA of
managing it and making it available to interested parties. 

EPA provided additional technical comments on our draft report.  We
have made changes in our report as appropriate to accommodate these
comments. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

To identify the information needed by EPA, we interviewed EPA
officials, including the Director of the Economics, Exposure and
Technology Division, Office of Pollution Prevention and Toxics.  To
obtain information on EPA's efforts to develop the inventory, we
interviewed the Chief of the Chemical Engineering Branch, Economics,
Exposure and Technology Division, in EPA's Office of Pollution
Prevention and Toxics. 

We also reviewed EPA's internal and public documents on the inventory
program.  To identify the views of the potential users and suppliers
of the data in the inventory, we reviewed written comments on the
inventory submitted to EPA by the Consumer Product Safety Commission;
various public interest, environmental, environmental justice, and
labor groups; the Chemical Manufacturers Association; the Chemical
Specialties Manufacturers Association; other chemical industry
representatives; and some individual chemical manufacturing and
processing companies. 

We conducted our review between April 1994 and May 1995 in accordance
with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :8.1

As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 10 days after the date of this letter.  At that time, we will
send copies to the Administrator of EPA and the Director, Office of
Management and Budget.  We will also make copies available to others
on request. 

Please contact me at (202) 512-6111 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
I. 

Peter F.  Guerrero
Director, Environmental
 Protection Issues


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I


   RESOURCES, COMMUNITY, AND
   ECONOMIC DEVELOPMENT DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix I:1

Lawrence Dyckman, Associate Director
Edward A.  Kratzer, Assistant Director
J.  Kevin Donohue, Adviser
Vincent P.  Price, Evaluator-in-Charge
Frank J.  Gross, Senior Evaluator

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