What began in 2008 with a few states enacting laws to address the perceived threats to children from chemicals in toys and kids’ products has become a full-fledged “green chemistry” movement in dozens of states. These laws are taking hold, predominately directed at manufacturers and distributors of children’s products, except in California where green chemistry regulations are not so limited.
With Congress still unable to come to an agreement on a strategy to update the Toxic Substances Control Act — the 1976 law designed to regulate chemicals in consumer goods nationally — the future will involve more of the same. That is, more states will adopt their own laws to address chemicals in certain products sold in those states. While the idea of preventing harmful chemicals to children or citizens is a laudable goal, it presents a growing burden to companies trying to do business nationwide.
As we are seeing in the states that have recently passed these chemical laws, there are differences in some cases between what is required of a company to comply in one state versus another. And, perhaps more importantly, in this push toward individual state regulation, companies need to be prepared to devote more time and resources to monitoring and understanding them given that many of these laws include the ability for states to impose penalties, including in some cases the ability to bar a company’s product from being sold if it is deemed not to comply with the law.
We hear the term green chemistry frequently now. For our purposes here, it refers to the concept of government regulation trying to impose on the marketplace a method to ensure “safer” products are sold to consumers. The thinking behind these laws is that they will encourage companies to eliminate “harmful chemicals” from products in the design phase. These laws ask whether certain chemicals are necessary in the product at all and, if they are, are there “safer alternatives” through the use of different substances that can be used?
These questions are answered by the state first identifying target chemicals from scientific bodies and other supposedly reputable sources, and then requiring in certain cases that companies report if the products they sell in the state contain any of these chemicals. These laws also can require a company to conduct a scientific alternatives assessment demonstrating whether or not any safer alternative chemical can be used to make the product. If one can, and if the cost is not unduly prohibitive, then the laws are designed to encourage a product’s redesign by replacing the offending chemical or chemicals and empowering states to impose penalties on a company that refuses, including imposing fines and even barring the product from being sold in the state. Given that we are early in the green chemistry revolution at the state level, we have not yet seen examples of the alternative assessment or penalty phases, but we can expect these uncharted waters will present risk and expense to companies who must sail them as there remain many unknowns.
To date, the most sweeping green chemistry law in the nation is in California. The “Safer Consumer Products Regulations” took effect when they were approved by the state administrative office on Oct. 1, 2013. This finalization was the fruition of a tortuous years-long rulemaking process by the California Department of Toxic Substances Control ("DTSC"). The regulations were developed after the law creating them was enacted in 2008. The regulations call for the DTSC to list annually “priority products.” These are a combination of a type of product and then a chemical, or chemicals, from the state’s list of chemicals which it can regulate. (Priority product = widget containing Chemical X from the state’s list.)
The DTSC has proposed three priority products to be regulated and, after the public comment period, these will likely be finalized for enforcement later this year. Companies making these product-chemical combinations will have to adhere to the regulations, namely reporting to the state that they make the product, listing the chemicals in them and, if they intend to keep selling the products in California, conducting an alternatives assessment analysis showing that the chemical is necessary for the product’s manufacture or design and analyzing whether there are any other chemicals that could make the product safer. The regulations allow the DTSC to impose penalties on companies who do not comply with the regulations, including imposing fines and, in the extreme instance, banning the sale of a product in the state. And, something we see in California and in virtually all the legislation that has been proposed in other states considering similar laws, the regulations require the information companies report to be made available to the public through a website. This part of the law has yet to go live in California, so how this reporting and searching of data publicly, and whether the information will be accurately posted by the DTSC, remains to be seen.
What of the rest of the nation?
Since 2008, at least 15 states either have some form of chemical reporting law, limited chemical ban on children’s products or pending legislation concerning chemicals in products. Unlike California, these other states’ laws are all directed at children’s products. Maine and Washington were the first states to enact omnibus regulations targeting children’s products and mandated chemical reporting. Since Maine and Washington, the green chemistry push centered on children’s products in the states has ramped up considerably. States that have considered similar legislation, or bans on certain chemicals in children’s products, in the last couple of years include Alaska, Connecticut, Delaware, Florida, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, North Carolina, New Jersey, New York, Oregon and Vermont.
Though not all efforts resulted in laws passed, the fact that legislatures in both “red” and “blue” states are seriously debating and advancing them underscores how chemical regulation of consumer products has now become the province of the states when such a notion would have been unheard of a decade ago. Of the states that are proposing chemical reporting schemes, the proposals share most of the basic framework as the California regulations detailed above, meaning lists of chemicals would be created by state agencies, companies doing business in the state must report if their products contain certain chemicals, the information is in most cases supposed to eventually be publicly available to some extent, the state in certain instances may be able to compel some form of scientific alternative assessment by the companies selling products with targeted chemicals in them and to impose penalties for noncompliance.
How did we get to this point where states are, or at least are considering, calling the shots when it comes to chemical regulation? Isn’t this a step backward from a uniform, easy-to-understand set of rules that the federal government ought to be tasked with? How did we get to a point where, to be vigilant and protect itself and its brand, a company need now devote resources to monitoring dozens of states’ individual regulations, or debates on proposed regulations, to know which chemicals are on what states’ individual chemical lists? How did we get to the point where companies now, ultimately, need to seek counsel on how to both comply with various state laws and report and protect sensitive — potentially trade secret — information required by the laws while avoiding penalties?
The answer is Congress. Congress has not updated the TCSA, even though the average consumer in America has changed a great deal in the last 30 years. More Americans want more information about what they buy, eat and drink. The Consumer Product Safety Improvement Act's targeting of heavy metals in children’s products was a significant step in terms of federal regulation. And though the U.S. Environmental Protection Agency has made some attempts to address broader chemical regulation, the significant updates needed to the law have yet to occur. Reforms and amendments have been repeatedly proposed to the TCSA in recent years, only to go nowhere in the House of Representatives.
The most recent push involves draft legislation in the form of the Chemicals in Commerce Act ("CICA"), which was authored by Rep. John Shimkus, R-Ill., and recently circulated for debate. The draft proposal would give the EPA the ability to designate chemicals either low or high priority. If a chemical were designated high priority then the EPA would have the ability to require the manufacturer to test the chemical for risks and these chemicals could be subject to restrictions on use and warning label requirements. Most importantly, the draft calls for preemption of state regulation of a chemical if the EPA found it would not pose a “significant risk.” That determination would apply in all states preempting more stringent state regulations of the chemical in question. Query whether the genie is out of the bottle now with the growing regulatory framework at the state level. And, even if Congress passed this legislation and some type of meaningful TCSA reform were enacted at the federal level, would the states that have started blazing this regulatory trail willingly give up their authority?
Such a question probably need not be answered yet. A betting man would say we shouldn’t expect action from Congress on changes to the TCSA anytime soon. If that bet wins, we can expect more states enacting more chemical reporting laws. This in turn means we should expect the existing laws will start to take hold and move to the next level, requiring more from companies — more information reported, more analyses on what chemicals are in their products and more assessments of whether there are other chemicals that can make the products “safer.”
The three priority products proposed under California’s green chemistry regulations will become official later this year and then each year the state will list additional products to regulate. Several states have already banned some chemicals in certain children’s products, such as bisphenol A. The states that have already enacted chemical reporting for children’s products will continue listing chemicals on their respective lists, increasing the number of chemicals that are subject to state regulation. These laws will eventually bring companies to the point where if they wish to sell the offending products in those states that have erected these laws, they will have to conduct the alternative analyses showing that the products cannot be made safer with any other chemical combinations.
Not only will this process likely involve significant cost, it will require the proper legal counseling to ensure sensitive information is reported to the states in ways so as not to hurt a company’s brand, but which will provide the proper context. In other words, just because "Chemical X" is in a widget does not mean that the widget is “dangerous” to a child or her parents. There needs to be a proper understanding of how much of a chemical it takes and over what period of time and in what uses, would a chemical pose a possible danger. Will these state regulatory schemes allow for this context? Will companies be able to present the truth and the sometimes complicated details? Will the public and consumer groups with agendas care about the details when they can use the information to prove that "Chemical X" is in a widget used by children? This all remains to be seen.
The best defense for companies is monitoring for now and preparing for compliance (i.e., knowing what has to be reported by ascertaining whether products contain any of the chemicals on lists) with the various states. Companies must also continue learning their supply chains — they need to know what is in the products supplied and ensure suppliers are agreeing to comply with all applicable state and federal laws. Companies should consider conducting spot testing from vendors. The risks for violations of state chemical laws, including established laws like California’s Proposition 65, are too great.
Considering whether the increased focus on chemical compliance calls for counseling in how best to understand and comply with these laws is also prudent, particularly with the unknowns of these laws requiring information from companies’ disclosures being made public. To protect branding and products, a company is better off understanding and being prepared ahead of time before finding itself on the receiving end of a state agency claiming noncompliance, threatening a penalty or banning a product’s sale.
(This article originally appeared in Law360 on June 16, 2014.)