TSCA Reform Presents Solutions and Questions for Industry

by Eversheds Sutherland (US) LLP
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On June 22, 2016, President Obama signed into law the Frank R. Lautenberg Chemical Safety for the 21st Century Act, the first amendments to the Toxic Substances Control Act (TSCA) since its passage in 1976. The amendments significantly change the way that the U.S. Environmental Protection Agency (EPA) administers TSCA, granting EPA new regulatory authority while providing manufacturers with greater consistency in the implementation of the law after decades of regulatory inconsistency.

TSCA has faced criticism from some who feel that it fails to adequately protect against exposure to hazardous chemicals and to ensure regulatory uniformity across industries. After the U.S. Supreme Court’s 1991 decision that TSCA did not authorize EPA to regulate the known carcinogen asbestos, environmental groups’ continuing criticism of the law’s ineffectiveness only heightened. The subject of intense negotiations, the Lautenberg bill passed through the House and Senate with bipartisan support and attempts to address these deficiencies, while presenting new questions for implementation.

EPA’s Revamped Chemical Inventory
The new TSCA will require EPA to reset its chemical inventory in its entirety. In one year from the bill’s passage into law, EPA must update its chemical inventory to include all chemicals in commerce in the United States, must determine which chemicals in its inventory are high priority, and create a risk evaluation process to identify which of those chemicals present an unreasonable risk to human health. While the original TSCA granted EPA this authority, EPA was not mandated to specifically follow through; the new TSCA provides a clear mandate for EPA to assess all chemicals in commerce.

As EPA undertakes its inventory reset, companies should be aware of which products they purchase, understand which chemicals are on EPA’s revamped inventory, learn which of those chemicals are designated as high priority to anticipate risk assessments and EPA orders for testing, and be prepared to disclose to EPA all chemical substances along their supply chains.

EPA’s New Authority to Order Testing
EPA also gains a significant new tool under the new TSCA; the agency will be able to unilaterally order testing of substances for its chemical assessments. This new authority is in addition to EPA’s existing tools for requiring testing as part of rulemakings or consent agreements. While orders may become a quicker method of deciding whether to regulate, EPA must include a statement of need justifying its use of an order instead of a rulemaking or consent agreement to require testing.

Companies will soon find out how heavily EPA will lean on this new authority. What remains to be seen is whether this statement of need will be a cursory exercise by EPA to do away with input from industry, or if EPA will articulate well-reasoned justifications for imposing testing requirements on companies outside of rulemakings and consent decrees.

High Priority Chemicals and Cost Considerations
The new TSCA makes explicit that EPA is required to assess chemicals without consideration of costs or benefits and with consideration of impacts on vulnerable populations. EPA must regulate chemicals that present an “unreasonable risk of injury to health or environment, without consideration of costs or other nonrisk factors, including an unreasonable risk to a potentially exposed subpopulation identified as relevant by the Administrator under the conditions of use.”

To determine which chemicals present this unreasonable risk, EPA must conduct risk evaluations. But not all chemicals within EPA’s inventory will be subject to a risk evaluation. Rather, EPA can identify high priority chemicals through a screening process, which must be developed within a year of the law’s passage. If EPA’s screening demonstrates that a chemical may present an unreasonable risk, it is designated as “high priority” and subject to a risk evaluation with a slew of quickly applicable deadlines for evaluating risk. A “low priority” result will relax that timetable. A manufacturer could also elect to have the agency designate a chemical for a risk evaluation in exchange for paying EPA’s administrative costs.

EPA’s risk evaluations are likely to have significant impacts on the regulated industry. In conducting the evaluations, EPA can order companies to conduct testing, as discussed above. The new TSCA amendments appear to place few limits on the scope and frequency of those testing requirements, so companies may face more administrative hurdles and costs during the evaluation process. In addition to scientific information gathered from testing, the new TSCA amendments require an assessment of risk to vulnerable populations. Of particular interest is how this intersects with the Technical Guidance for Assessing Environmental Justice in Regulatory Analysis recently released by EPA, which instructs the agency on considering the risks faced by vulnerable populations when developing regulatory actions. The new technical guidance may create an opportunity for EPA to create further justification for identifying higher risk potentials in a chemical substance.

If EPA finds that a chemical substance poses an unreasonable risk, then it must regulate the substance. When issuing a rulemaking regulating those substances that are found to pose an unreasonable risk, EPA must limit the regulation to the scope of its risk evaluation and must take into account the reasonably ascertainable economic impacts of the rule, including its effect on “the national economy, small business, technological innovation, the environment, and public health,” and the costs and cost effectiveness of the rule and of one primary alternative.

Preemption and Regulatory Consistency
Strengthened federal preemption is the highlight of the TSCA reform. Under the “high priority pause,” while EPA considers whether a chemical substance presents an unreasonable risk, a state is preempted from issuing a law, a criminal penalty or an administrative action on the substance. The pause ends once EPA concludes its assessment, and the states are then subject to EPA’s findings. The high priority pause will prevent the current scenario of multiple states regulating a single chemical in conflicting ways while manufacturers await yet another layer of regulation.

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.

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