By distinguishing between those chemicals that are still active in U.S. commerce and those that are not, the TSCA Inventory Reset Rule is intended to serve as a functional prioritization scheme to ensure that governmental resources are administered efficiently to this end. Alongside the so-called Prioritization and Risk Evaluation Process Rules, the TSCA Inventory Reset Rule is one of three framework rules specified by the 2016 amendments. EPA issued the proposed rule on January 13, 2017 and a pre-publication version of the final rule on June 22, 2017. The final rule was published in the Federal Register on August 11, 2017.

As set forth in the final rule, the TSCA Inventory Reset Rule amends 40 CFR Part 710 to require “manufacturers,” a term that includes “importers,” to provide a retrospective electronic notification for each chemical substance on the TSCA Inventory that they manufactured for non-exempt commercial purposes from June 21, 2006, to June 21, 2016. Such chemicals would be deemed “active” and distinguished from “inactive” chemicals—i.e., chemicals that were not manufactured or imported during the ten-year period ending on June 21, 2016. This retrospective notification is due 180 days following publication of the final rule, i.e., on February 7, 2018. The final rule also provides for discretionary retrospective reporting for processors. Chemical substances designated as “active” may be manufactured without further notification to EPA.

In addition, the final rule imposes ongoing, prospective notification requirements on manufacturers and processors of chemical substances deemed inactive. Once a chemical substance is designated as inactive, a future notice must be submitted to EPA before it can be manufactured, imported or processed for non-exempt commercial purposes. This future notice may trigger a health and safety review of the chemical, which may impose additional costs.

Who Reports under the TSCA Inventory Reset Rule?

Retrospective Reporting: The retrospective reporting requirement of the TSCA Inventory Reset Rule applies to manufacturers and importers of listed chemical substances on the TSCA Inventory that were manufactured or imported for non-exempt commercial purposes during the look-back period of June 21, 2006 to June 21, 2016. To determine whether the manufacture or importation occurred for a non-exempt commercial purpose, it is necessary to confirm that none of the following exemptions from the requirement to submit a pre-manufacture notification (PMN) under TSCA Section 5 applied at the time of manufacture or importation:

• Research and development exemption;

• Test marketing exemption;

• Importation or manufacture for export only;

• As part of an article; and

• The exemptions for impurities, byproducts, reactants, and non-isolated intermediated pursuant to 40 CFR § 720.30(g) and (h).

This exemption analysis can create practical problems for companies. For example, a trading company that imported a chemical in 2008 that, at that time, appeared on the TSCA Inventory would not have had to conduct an analysis of potential exemptions to determine whether its importation of the chemical substance was TSCA-compliant, for the chemical was already listed and, thus, not a “new chemical substance” within the meaning of the Act. However, under the TSCA Inventory Reset Rule, the importer would be required to determine whether the chemical was imported for a non-exempt commercial purpose. This analysis may be difficult to perform, given limitations imposed by corporate document retention policies and employee turnover.

An added layer of complexity involves the fact that, for both the retrospective and prospective reporting requirements, the above analysis must be performed for each chemical substance within a mixture. This treatment of mixture-constituents is consistent with that under TSCA Section 5 and the Chemical Data Reporting (CDR) Rule. Given the relatively tight compliance deadlines under the TSCA Inventory Reset Rule, the obligation to account for each constituent emphasizes the need for advance-planning.

The chemicals identified during the 10-year retrospective reporting period will be designated as “active chemical substances.” Active and inactive designations will become finalized 90 days after EPA publishes a draft inventory of active and inactive substances. The due date for retrospective reporting will be 180 days following publication of the final rule.

Although the 2016 amendments authorize EPA to issue regulations requiring retrospective reporting by chemical processors (e.g., companies that repackage chemicals for commercial distribution, manufacture mixtures, or produce articles), the final rule does not contain such a requirement. However, the proposed rule allows discretionary retrospective reporting by chemical processors up to 420 days after the final rule is published in the Federal Register (i.e., October 5, 2018). Processors have an incentive to perform this reporting to ensure that their supply chains are not disturbed in the event that manufacturers or importers fail to fulfill their reporting obligations.

Prospective Reporting: The prospective reporting requirement of the TSCA Inventory Reset Rule applies to manufacturers, importers and processors of those substances that are deemed “inactive” based on the results of the retrospective notification. Such entities must provide notice to EPA at least 90 days in advance of the manufacture, importation, or processing of an inactive chemical substance. Once such a notice is received for a given substance, EPA will switch the designation for that chemical from “inactive” to “active.”

Because there is a 90-day transitional period from when EPA first proposes to designate a chemical as inactive to when the inactive designation goes into effect, companies may also provide notice during the transitional period. This discretionary notice should be submitted as soon as possible within the transitional period to avoid complications.

What Form Will the Reporting Take?

Notifications must be made on special “Notice of Activity” (NoA) Forms, using the CDX and CISS electronic portals maintained by EPA—the databases that EPA uses for chemical data reporting. The retrospective reporting will occur on NoA Form A and must include basic information identifying the submitting company, a technical contact for the company, and the chemical for which the submission is being made. Prospective reporters must use the NoA Form B and provide the information required for a Form A submittal, as well as the anticipated or—for submissions made during the transitional period—actual, date of manufacture, processing, or import.

No Need for Duplicate Reporting

The final rule does not incentivize duplicate submissions. Therefore, the retrospective reporting requirement does not apply to chemicals for which CDR reports have been submitted in 2012 or 2016. EPA has published an interim list of active chemical substances based on 2012 and 2016 CDR submissions.

Similarly, the final rule does not require companies to file a NoA Form A for a chemical that is the subject of a NoA Form A filed by another company, provided that companies seeking to avail themselves of this exemption have an official CDX receipt evidencing the other company’s submission. However, companies relying on this exemption will still be liable if the company that files the NoA Form A later rescinds the filing without informing the relying parties.

Special Provisions for Importers

Trading companies and chemical importers based in the United States often work with products, some or all of the chemical ingredients of which foreign manufacturers claim as confidential. In such cases, the TSCA Reset Rule requires that the domestic business attempt to achieve a dual submission to EPA, whereby the foreign manufacturer will separately provide the sensitive information to EPA under a claim of confidential business information. To satisfy this requirement, the domestic company must provide specific instructions, informing the foreign manufacturer about the requirements of the TSCA Inventory Reset Rule and directing the foreign manufacturer to the CDX website.

What Information Should Manufacturers and Importers Obtain?

To make informed applicability determinations, manufacturers and importers must not only consult the TSCA Inventory but must also acquaint themselves with the criteria for seeking an exemption from the requirement of filing a PMN and gather information enabling them to evaluate whether these criteria apply. Such information includes, without limitation:

• The manufacturing or importing volume (e.g., for the Low Volume Exemption or Low Reactivity and Exposure Exemption);
• The purpose of a chemical within a given product (e.g., for the exemptions for impurities and certain byproducts),
• The intended use of a chemical (e.g., for the Research & Development Exemption); and
• Chemical composition data.

Much the same information must be gathered by entities potentially subject to the prospective reporting requirement. As a practical matter, the burden is on manufacturers and importers to demonstrate the applicability of an exemption.

Furthermore, companies that plan to coordinate their filing efforts with third parties—e.g., importers of products of unknown chemical composition, companies relying on CDX submissions made by other businesses—are encouraged to begin reach out efforts as soon as possible.

Ramifications of Non-Compliance

Failing to provide the required retrospective notification by the applicable deadline would constitute a violation of TSCA Section 15. The same holds true for companies that manufacture, import, or process an inactive chemical without filing a timely NoA Form B. Under TSCA Section 16, such violations are subject to a maximum daily penalty of $37,500 per violation.

Key Milestones

• EPA issuance of pre-publication version of the final rule: June 22, 2017
• EPA publication of final rule in the Federal Register: August 11, 2017
• Deadline for retrospective reporting requirement for manufacturers and importers: February 7, 2018
• Deadline for discretionary retrospective reporting for processors: October 5, 2018
• EPA publication of the draft inventory of active and inactive chemicals: As soon as possible after the due date for retrospective reporting by manufacturers and importers (the Agency hopes that this will occur within 60 days of due date, or April 6, 2018)
• Final designation of active and inactive chemicals: 90 days after publication of the draft inventory (perhaps by July 5, 2018).

Conclusion and Practical Tips

The TSCA Inventory Reset Rule will require affected businesses to evaluate past and future operations. Therefore, companies potentially subject to the TSCA Inventory Reset Rule should begin preparing compliance strategies to ensure timely and adequate submissions. In particular, consideration should be given to the following:

• The retrospective notification requirement will require a dive into records of past manufacturing and importation activities, as well as, in cases, an analysis of potentially applicable exemptions (the parameters of which are not always clear).
• Practically speaking, companies will want to prioritize efforts to target chemicals they plan to import in the future.
• Importers who do not know the compositions of the products they import are obligated to reach out to foreign manufacturers to ensure that EPA obtains the necessary information.
• Consortium agreements may also be necessary for companies that plan to rely on submittals filed by third-parties.
• Reporting on the CDX database may be a time-consuming process.

Finally, the possibility exists that the records review necessary to comply with the retrospective notification requirement will result in the identification of historical TSCA violations. In all events, advance planning and consultation with legal counsel are recommended.