Be Prepared for the New World of Chemical (and Product) Management and Regulation
Kelley Drye Client Advisory
The nation’s primary law for managing chemicals, from manufacture to their use in a wide array of consumer and commercial products, is set for a fundamental transformation now that Congress has passed, and President Obama signed into law on June 22, 2016, the Frank R. Lautenberg Chemical Safety for the 21st Century Act. The new law comprises the first-ever amendments to the Toxic Substances Control Act (TSCA), since its adoption in 1976, and imposes an aggressive implementation schedule on the U.S. Environmental Protection Agency (EPA), with several important rulemakings required within the next year.
While the wave of EPA regulation that is soon to come will impose many challenges, the revised TSCA also provides some opportunities that should not be overlooked. In fact, the primary reason that the TSCA reform legislation received bipartisan (and industry) support is because of the largely accurate perception that TSCA has failed to instill confidence in the public generally as to the safety of chemicals in the products that we use and consume. It is hoped that a more functional TSCA will restore consumer confidence and do a better job of identifying and regulating the risks posed by some chemicals in certain exposure scenarios.
The amendments to TSCA are dramatic and will affect a wide range of manufacturing businesses, not simply the “chemical producers” that traditionally have been the focus of regulations under the original law. By strengthening EPA’s authority to assess and potentially impose restrictions on new and existing chemicals, including potential regulation of chemicals in products, the new TSCA promises to have a much greater impact in the marketplace than historically has been the case. For example, as part of its work to evaluate the safety of a substance, EPA is expected to examine the risks from the potential exposures to that chemical from its various end uses, including exposures from products. EPA action under the old TSCA was constrained by regulatory standards that proved to be too high of a hurdle to ban even substances that are widely recognized as unreasonably dangerous, such as asbestos. No more.
Among the most important provisions of the new TSCA are:
- Prioritization of Existing Chemicals for Assessment: EPA must establish a risk-based process to determine which chemicals it will prioritize for assessment, identifying them as either “high” or low” priority substances. “High priority” substances are chemicals that may present an unreasonable risk of injury to health or the environment due to potential hazard and route of exposure, including to susceptible subpopulations.
- Risk Evaluation of High Priority Substances: The “high priority” designation triggers a requirement and deadline for EPA to complete a risk evaluation on that chemical to determine its safety. Within the first 6 months of the law’s passage (by the end of 2016), EPA must initiate at least 10 risk evaluations, and have at least 20 ongoing risk evaluations within the first 3.5 years. The initial 10 substances for evaluation are to be drawn from EPA’s existing “TSCA Work Plan.” (The current list of 90 Work Plan substances can be found on EPA’s website here).
- New Risk-Based Safety Standard: Chemicals are evaluated against a new safety standard to determine whether a chemical poses an “unreasonable risk” under specified conditions of use. Importantly, the potential for exposure to a chemical is to be evaluated, in addition to the potential hazard. Cost is not a factor at the risk evaluation stage. Risks to susceptible and highly exposed populations must be considered.
- Risk Management: When unreasonable risks are identified, EPA must take final risk management action within two years (with an extension to four years possible). Costs and the availability of alternatives are to be considered when determining appropriate risk management actions. Action, including bans and phaseouts, must begin as quickly as possible, but no later than five years after issuance of the final risk management regulation. Critically, the new TSCA eliminates the prior mandate that EPA adopt the “least burdensome” means of regulating a chemical, whereby the agency had to establish that a chemical risk could not be mitigated by any other regulatory means. This proved to be the fatal flaw in EPA’s efforts over the last 40 years to take action against chemicals found to present an unreasonable risk, including the infamous case involving asbestos.
- Manufacturer-Requested Assessments and Industry Fees: One particularly interesting provision allows manufacturers to request (and pay for) EPA assessment of a chemical. Such assessments must account for between 25-50% of the number of ongoing risk evaluations for high-priority chemicals. In short, manufacturers can seek an EPA “safe to use” determination – which could have obvious marketing advantages (and forestall potential state regulations).
- Chemical Testing and Information Collection Authority: Significantly expands EPA authority to require manufacturers to conduct toxicity testing and provide information for prioritizing or conducting risk evaluations on a chemical, including information ion exposure and use. Such exposure and use information often will include information about chemicals used in consumer and commercial products. In lieu of EPA having to conducting a rulemaking to obtain data from manufacturers, the new process for exercising this authority is expedited by granting EPA the power to use administrative orders to compel testing and information submission.
- Persistent, Bioaccumulative, and Toxic (PBT) Chemicals: So-called “PBT” chemicals on the TSCA Work Plan are subject to a new fast-track process, whereby risk evaluation is not required, and only use and exposure information is needed for a risk management determination. Action to reduce exposure to these substances to the extent practicable must be proposed within 3 years and finalized 18 months later. Significantly, metals are excluded from consideration as PBTs.
- Pre-Market Review of New Chemicals: Effective immediately, in a dramatic reversal of existing practice, before a new chemical is allowed into the marketplace EPA now must make an affirmative finding that the chemical (or a significant new use of an existing chemical) meets the safety standard (does not pose an “unreasonable risk”). EPA may take a range of actions to address potential concerns including ban, limitations, and additional testing on the chemical. If EPA does not take affirmative action on a new chemical within 90 days, the EPA must refund the processing fee, but the chemical cannot proceed to manufacturing. Under the old TSCA, if EPA failed to act within 90 days then the chemical could proceed to market.
- Confidential Business Information (CBI): Requires up-front substantiation of claims to protect CBI. Provides that CBI claims expire after 10 years unless they are re-substantiated. EPA must review existing confidentiality claims for chemical identity to determine if still warranted. Enhances access to confidential information for states, medical professionals and first responders.
- Industry Fees and Funding: Allows EPA to collect up to $25 million in fees annually from industry producers and processors when they: (1) submit test data for EPA review; (2) submit a pre-manufacture notice for a new chemical or a new use; (3) manufacture or process a chemical substance that is the subject of a risk evaluation; or (4) request that EPA conduct a chemical risk evaluation. These funds will be used to fund, in large part, the agency’s implementation of the new TSCA.
- Preemption of State Laws: State action on a chemical is preempted when (1) EPA finds (through a risk evaluation) that the chemical is safe, or (2) EPA takes final action to address the chemical’s risks. State action on a chemical is temporarily “paused” when EPA’s risk evaluation on the chemical is underway, but lifted when EPA (1) completes the risk evaluation, or (2) misses the deadline to complete the risk evaluation. States can continue to regulate any chemical, or particular uses or risks from a chemical, that EPA has not yet addressed. Existing state requirements (prior to April 22, 2016) are grandfathered – including California’s “Proposition 65” and Green Chemistry laws. Existing and new state requirements under state laws in effect on August 31, 2003, are preserved. States can apply for waivers from both general and “pause” preemption.
In preparation for the new TSCA, businesses should review and inventory the chemicals they use as part of their operations, especially those that are present in products that they manufacture, distribute, or sell. Identifying potential “high-priority” chemicals now can help companies prepare to develop information or defend a chemical when the regulatory process gets started. It also can provide an opportunity for a business to evaluate the potential risks of regulation, including the likelihood of “chemical deselection” in the marketplace, the need for product reformulation, and disruptions that may occur if use of a chemical is restricted. In certain situations, examination of the availability of potential alternatives to a chemical may be appropriate. The need to defend the confidentiality of information associated with a potential “high priority” chemical also should be evaluated.
Kelley Drye has extensive experience providing counsel to consumer good and manufacturing clients on compliance with TSCA and associated state requirements. We would be happy to assist your company in assessing the potential impact of the new TSCA on your business operations, including developing an appropriate compliance program. For more information about this client advisory or TSCA in general, please contact:
Kelley Drye’s Environmental Law Practice Group specializes in providing comprehensive solutions to complex problems. We provide both advice and representation for clients participating in rule-making and policy-making activities by federal regulatory agencies, including the U.S. Environmental Protection Agency and the Occupational Safety & Health Administration, and similar state agencies. We have decades of experience advising companies and industry trade organizations with respect to chemical management requirements and related compliance and litigation matters.