Chemicals, Compliance and the Toxic Substances Control Act

by Pillsbury Winthrop Shaw Pittman LLP
Contact

Pillsbury Winthrop Shaw Pittman LLP

The TSCA Inventory Reset Rule will require affected businesses to evaluate past and future operations.

Takeaways

  • The TSCA Inventory Reset Rule will require affected businesses to evaluate past and future operations.
  • Importers who do not know the compositions of the products they import must ensure that EPA obtains the necessary information.
  • Companies will want to prioritize efforts to target chemicals they plan to import in the future.

The Toxic Substances Control Act (TSCA) required the compiling of a national register of chemicals that were manufactured in or imported into the United States for a non-exempt commercial purpose, and the first TSCA Inventory in 1979 included approximately 62,000 chemicals. Since then, the Inventory has been expanded to include approximately 90,000 chemicals—a rate of over 700 new chemicals per year. However, Congress did not provide an adequate way to prioritize among these chemicals in conducting health and safety reviews under TSCA Section 6(b). One of the outstanding issues that the 2016 TSCA Amendments sought to resolve was how to prioritize among these chemicals in conducting health and safety reviews. The 2016 amendments to TSCA modified Section 8(b) of the Act and required the U.S. Environmental Protection Agency (EPA) to designate each chemical substance on the TSCA Inventory as either “active” or “inactive” in U.S. commerce. The TSCA Inventory Reset Rule fulfills this statutory requirement.

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.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Winthrop Shaw Pittman LLP | Attorney Advertising

Written by:

Pillsbury Winthrop Shaw Pittman LLP
Contact
more
less

Pillsbury Winthrop Shaw Pittman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.