1. Susan Brice Merili Seale Donald Cole October 2016
Toxic Substances Control Act (“TSCA”) Enters the 21st Century: Business and Legal Implications of the First Reforms Made to TSCA in 40 years
Susan Brice
Merili Seale
Donald Cole
October 2016

2. Overview TSCA - What Is It? The Lautenberg Act
Nuts and Bolts of the Lautenberg Act
New Chemicals
Testing and Data
Confidential Business Information
Preemption
Funding
What Does This All Mean?

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TSCA– What Is It?

4. TSCA - What Is It? The 1976 Toxic Substances Control Act (TSCA)
Purpose
Coverage
Three Key Sections
Impact

5. TSCA - Purpose
The Toxic Substances Control Act (15 U.S.C et seq.) authorizes the EPA to screen existing and new chemicals used in manufacturing and commerce to identify potentially dangerous products or uses

6. TSCA - Coverage
Both naturally occurring and synthetic chemicals are subject to TSCA
Exceptions: Chemicals regulated by other federal laws concerning food, drugs, cosmetics, firearms, ammunition, pesticides, tobacco, or mixtures

7. TSCA – Key Sections Three Key Sections: Section 4: Chemical Testing
Section 5: New Chemical Review
Section 6: Permissive authority to regulate chemicals if EPA determines it has a reasonable basis to conclude the chemical may present unreasonable risk to health or the environment

8. TSCA – Impact The “Toothless Tiger”
Impact: The "toothless tiger." Considered by many to be a failure.
Act placed burden on EPA to make risk findings without equipping EPA with the regulatory tools to require health and safety information from companies (Catch 22)
TSCA – Impact
The “Toothless Tiger”
Act grandfathered existing chemicals
Controls were not mandatory
Risk and control decisions contained cost benefit analysis and EPA was required to choose “least burdensome” control alternative
Act placed burden on EPA to make risk findings without equipping EPA with the regulatory tools to require health and safety information from companies
Testing could only be required via rulemaking process
Companies could shield information from third parties as Confidential Business Information (“CBI”)

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The Lautenberg Act

10. The Lautenberg Act
“Frank R. Lautenberg Chemical Safety for the 21st Century Act” enacted on June 22, 2016
 First reform of TSCA in 40 years
 Bipartisan support in both the U.S. House and Senate
 Aims to fix the TSCA problems by:
Broadening the coverage of the Act - applies to all chemicals in commerce or intended for commerce
Giving EPA the power to act - EPA must conduct risk assessments on all new chemicals and existing high priority chemicals and EPA must take action on chemicals deemed to present an unreasonable risk
Giving EPA the tools to act - EPA can issue an order or enter into a consent agreement requiring testing and additional information regarding a chemical, instead of going through rulemaking process

11. Nuts and Bolts of the Lautenberg Act
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Nuts and Bolts of the Lautenberg Act

12. Nuts and Bolts of the Lautenberg Act
Existing Chemicals
New Chemicals
Testing and Data
Confidential Business Information
Preemption
Funding

13. Nuts and Bolts of the Lautenberg Act Existing Chemicals
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Nuts and Bolts of the Lautenberg Act Existing Chemicals

14. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
Step One - Inventory Reset
Inventory Inaccurate: EPA to establish rule requiring manufacturers and possibly processors to notify EPA of the chemicals/mixtures it has manufactured/processed in the previous 10 years
The manufacturer/processor will be required to provide this notification no longer than 6 months after the rule is finalized (rule must be final by June 22, 2017)
Once the reporting is done, EPA will use the results to identify chemicals on the current chemical inventory list as active or inactive

15. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
Step Two - Prioritization
EPA to establish a rule that sets forth a risk-based process to determine how to prioritize chemicals as either “high” or low” - Rule must be final by June 22, 2017
The process must include a consideration of: (i) the hazard and exposure potential of a chemical; (ii) the conditions of use; and (iii) the volume of the chemical substance manufactured or processed
Rule must require EPA to request information from interested persons first (designations will be subject to notice and comment)
High priority – EPA determines the chemical “may present an unreasonable risk of injury to health or the environment because of a potential hazard and a potential route of exposure under the conditions of use, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant by the Administrator”
Low priority – the chemical fails to satisfy standard for high-priority, based upon sufficient information
Insufficient information - EPA can require testing

16. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
Step Three: Risk Evaluations
High priority designations evaluated to determine whether they actually do present “an unreasonable risk of injury to health or the environment” without regard to cost
Each evaluation cannot take more than 3 years and draft evaluations will be subject to notice and comment
EPA must establish a procedural rule establishing the exact process for evaluating the risk of chemicals by June 22, 2017
Low priority designation does not require further action
Companies can request risk evaluations and pay full cost (unless already listed in TSCA Workplan, then pay only 50% of cost)
EPA must publish list and begin evaluations on 10 chemicals that were on the Update to the 2014 TSCA Workplan for Chemical Assessments by December   

17. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
EWG, a nonprofit, is advocating for the first ten chemicals to be:
asbestos
tetrachloroethyene (PERC - solvent)
phthalates
bisphenol A
chlorinated phosphate fire retardants
tetrabromobisphenol A (bromated fire retardant)
brominated phthalate fire retardants
1-bromopropane (solvent)
Bis(2-ethylhexyl) adipate (DEHA - platicizer)
p-dichlorobenzene (used to control moths and mold)

18. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
Step 4: Controls
If chemical or mixture determined to present an unreasonable risk, EPA must impose prohibitions or restrictions “to the extent necessary so that the chemical no longer presents an unreasonable risk”
This is done by rulemaking and includes a consideration of costs and available alternatives
EPA must take final risk management action within 2 years (limited extensions)
If risk is not unreasonable, no action is taken

19. Nuts and Bolts of the Lautenberg Act – Existing Chemicals
Key Changes From Old TSCA
Risk Evaluation: Old TSCA did not require risk evaluation for all chemicals = risk assessment done on < 2% of chemicals
Controls: Under old TSCA, EPA was not required to control unreasonable risk, restrictions were permissive
EPA could initiate rulemaking process to restrict substance, but (i) EPA lacked the power to obtain the necessary data; and (ii) burden was on EPA to choose the “least burdensome alternative”
Corrosion Proof Fittings, Fifth Circuit struck down EPA's attempt to ban most uses of asbestos, finding that EPA failed to abide by the statutory process, failed to consider all alternatives and failed to choose the least burdensome alternative
Result: EPA has only tried 5 times to restrict or ban a chemical substance - EPA officials reported that controlling a chemical through the old TSCA process was a “last resort”

20. Nuts and Bolts of the Lautenberg Act New Chemicals
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Nuts and Bolts of the Lautenberg Act New Chemicals

21. Nuts and Bolts of the Lautenberg Act – New Chemicals
Step One- Pre-manufacture Notification
Manufacturer/processor submits notice to EPA 90 days prior to the manufacture of new chemical or 90 days in advance of subjecting an existing chemical to a significant new use, as determined by EPA
Effective immediately – For companies that submitted pre-manufacture notices (PMNs) prior to enactment and which were undergoing review at the time, the new law effectively resets the 90-day review period
Step Two - EPA conducts risk review and can order a company to provide additional data

22. Nuts and Bolts of the Lautenberg Act – New Chemicals
Key Changes from Old TSCA
- EPA's Failure to Act - Old TSCA - if EPA did not act within 90 days (and find an unreasonable risk), company could begin to manufacture. As a result, EPA rarely acted to preclude manufacture of new chemicals.
Nuts and Bolts of the Lautenberg Act – New Chemicals
Step Three - EPA decides one of the following:
Chemical not likely to present unreasonable risk;
Chemical presents unreasonable risk; or
Insufficient information to make determination or that the chemical may present an unreasonable risk
Step Four - Controls
Old TSCA – If EPA failed to find unreasonable risk within 90 days, manufacture could proceed
Risk
Control
Risk Unlikely
May commence manufacture.
Risk Present
Cannot manufacture. EPA must by rule or order prohibit or impose restrictions necessary to protect against risk.
Risk Possible/More Information Needed
Cannot manufacture immediately. EPA must issue order prohibiting or imposing restrictions necessary to protect against risk and person may commence manufacture only in compliance with order.

23. Nuts and Bolts of the Lautenberg Act Testing & Data
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Nuts and Bolts of the Lautenberg Act Testing & Data

24. Nuts and Bolts of the Lautenberg Act – Testing & Data
Key Changes from Old TSCA
- Rulemaking: Old TSCA - Testing only required if EPA found that chemical/substance may pose an unreasonable risk of injury though a formal rulemaking process. EPA stated that it takes 5 years for agency to promulgate a test rule and 2 additional years for the company to complete the testing.
Nuts and Bolts of the Lautenberg Act – Testing & Data
EPA may use rulemaking, orders or consent agreements to require testing of chemicals by manufacturers (including importers) and processors of chemicals (prepare a chemical substance/mixture, after manufacture, for distribution in commerce)
Orders can be used to require the development of new information when EPA is: (1) reviewing a pre-manufacturing notice; (2) performing a risk evaluation; and (3) prioritizing a chemical substance
Old TSCA – Testing only required if chemical found to pose unreasonable risk via rulemaking – EPA says 5 years to issue test rule

25. Nuts and Bolts of the Lautenberg Act Confidential Business Information
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Nuts and Bolts of the Lautenberg Act Confidential Business Information

26. Key change from old TSCA
Nuts and Bolts of the Lautenberg Act – Confidential Business Information
Manufacturers must now substantiate and certify claims for CBI, including chemical identity - All CBI claims sunset after 10 years
Information submitted regarding chemical health and safety studies is not protected
EPA must review and make determinations on all new confidentiality claims for the identity of chemicals
EPA must review past confidentiality claims for chemical identity to determine if still warranted
Key change from old TSCA - Easy to claim CBI. EPA was forbidden from sharing the CBI. Report: 90% of pre-manufacture notices and 20% of all reported health and safety studies were held by EPA as CBI

27. Nuts and Bolts of the Lautenberg Act Preemption
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Nuts and Bolts of the Lautenberg Act Preemption

28. Nuts and Bolts of the Lautenberg Act – Preemption
Preserved: Certain state actions are off limits
State can act on chemical risks not acted on by EPA
State actions taken before April 2016 are still in force (e.g., California’s Proposition 65)

29. Nuts and Bolts of the Lautenberg Act – Preemption
Preemption: Certain state actions can be preempted, depending upon timing
After EPA has taken final agency action
If chemical is deemed safe, state action is preempted if it contradicts finding
If chemical is not deemed safe, state restrictions on production, distribution processing or use taken after 4/22/16 are preempted if they apply to same use/risk
During the Evaluation Process, new state action is paused during review
New state restrictions on high priority substances are prohibited during this time (low priority are not preempted)
If risks are identified with high priority chemical during evaluation, pause is lifted and new state provision can be put in place temporarily until EPA risk management rule is issued
If EPA misses deadline for risk evaluation, pause is lifted
 Waivers - States can apply for waivers from general preemption or pause
EPA must grant waiver from preemption from pause in certain circumstances
EPA may grant exception from general preemption via rulemaking if specific criteria are met, including “compelling conditions” that necessitate waiver
Waivers can be challenged in court

30. Nuts and Bolts of the Lautenberg Act Funding
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Nuts and Bolts of the Lautenberg Act Funding

31. Nuts and Bolts of the Lautenberg Act – Funding
Under new law, EPA can collect fees from companies that:
Must submit test data
Submit pre-manufacture notification
Manufacture a chemical undergoing risk evaluation
Request a risk evaluation on existing chemical

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What Does This All Mean?

33. What Does This All Mean?
Chemical manufacturers, importers and processors subject to TSCA must be prepared
REACH vs. the Lautenberg Act
Credibility of the Science
Availability of Test Data
Citizen Suit Provision

34. 1) Comply with pre-construction manufacture notice rule immediately.
2) Look for key rules to be proposed in mid-December. Submit comments, if warranted.
3) Start preparing for Chemical Inventory reset. Past Chemical Data Reporting rules may be of help, and a nomenclature audit could help identify possible discrepancies between company records and inventory.
4) Think through CBI claims and how to address components of the statute. Be prepared to defend them. There are a number of questions companies will have to answer, and they will have to certify their substantiations are accurate.
5) If you manufacture/process (what will likely be) a high priority chemical, get involved in the process. EPA is required to request information from interested persons on chemicals before designating them.
6) If you make/process a chemical designated high priority and slated for risk evaluation, be part of the process and plan for possible restrictions/bans.
7) Prepare/update an internal TSCA compliance plan that educates employees on TSCA compliance, including pre-manufacture notification and recordkeeping requirements. Under TSCA, EPA can conduct inspections, impose large penalties and obtain injunctive relief (including the ability to seize chemicals distributed in violation of TSCA).
What Does This All Mean?
Chemical manufacturers, importers and processors subject to TSCA must be prepared
Comply with pre-manufacture notice rule immediately
Look for key rules to be proposed in mid-December (submit comments)
Start preparing for Chemical Inventory reset (audit inventory and records)
Think through CBI claims and how to address components of the statute - be prepared to defend them
If you manufacture/process (what will likely be) a high priority chemical, get involved in the process
If you make/process a chemical designated high priority and slated for risk evaluation, be part of the process and plan for possible restrictions/bans
Prepare/update an internal TSCA compliance plan that educates employees on TSCA compliance (e.g., pre-manufacture notice)
Violations: EPA can conduct inspections, impose penalties, obtain injunctive relief, seize product

35. What Does This All Mean? REACH vs. the Lautenberg Act The Burden:
1) The burden: REACH requires the manufacturer to take the first step. They must identify and assess the risks posed by substances they manufacture and market in the EU. They do this via submission of a registration dossier. Under TSCA, EPA takes the first step through designations of chemicals as high or low priority and the burden is largely on EPA to identify and assess the risks.
2) Scope of evaluation: Under REACH, every chemical that goes through registration process, goes through the risk evaluation process. Under new TSCA, existing low priority chemicals do not go through risk evaluation.
Risk Factors: Under both, risk screening is done without regard to cost but control measures take cost into account.
Note: The data supplied through REACH will likely need to be provided to EPA. During the evaluation process, EPA can order you to provide information and EPA will not necessarily treat it as CBI.
What Does This All Mean?
REACH vs. the Lautenberg Act
The Burden:
REACH requires the manufacturer to take the first step - identify and assess the risks posed by substances they sell into EU
Under TSCA, EPA takes the first step through priority designations and burden is largely on EPA to identify and assess the risks
Scope of Evaluation:
Under REACH, every chemical that goes through the registration process, goes through the risk evaluation process
Under TSCA, existing low priority chemicals do not go through the risk evaluation
Risk Factors: Under both, risk screening is done without regard to cost but control measures take cost into account
Note: Data supplied via REACH will likely be provided to EPA

36. What Does This All Mean? Credibility of the Science
The statute aims to reduce testing on vertebrates
Pay close attention to how this develops to ensure the efficacy of such testing
These tests will be used in litigation down the road

37. What Does This All Mean? Availability of Test Data
TSCA will make it much more difficult to protect your data and testing
EPA’s risk assessments will be public information that can be used in litigation

38. What Does This All Mean? Citizen Suit Provision
TSCA contains a citizen suit provision that has rarely been used
It provides that any person may file a civil action against any person, including the US, who is “alleged to be in violation of the chapter or any rules promulgated or orders issued under the certain sections or against the EPA to compel EPA to perform any nondiscretionary act or duty”
We likely will see an uptick in TSCA citizen suit litigation

39. Thank You susan.brice@bryancave.com
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Thank You