News
July 19, 2019

Two Recent EPA Announcements Can Have Unexpected Consequences

Advisory

The US Environmental Protection Agency (EPA) has been on an incredible roll during the past two years; publishing countless regulatory actions, framework rules, and operating policies that have enabled the agency to consistently meet the daunting deadlines imposed by the sweeping 2016 amendments to the Toxic Substances Control Act (TSCA). Chemical manufacturers, importers, processors, and users should pay close attention to two recent EPA announcements because the failure to appreciate their implications can have significant adverse consequences. The two announcements are: (1) the publication of a proposed rule that would regulate the production and use of four substances EPA considers to be persistent, bioacculmulative, toxic (PBT) chemicals as well as manufactured products that contain any one of these substances and (2) the announcement of a change in EPA's procedure for handling documents it receives which contain confidential business information (CBI).

The PBT rule. On the third anniversary of enactment of the 2016 amendments to TSCA, the agency announced its proposed TSCA Section 6 rule intended to reduce exposures to four substances EPA had determined in the fall of 2016 to be candidates for so-called "expedited' rulemaking. The substances are assessed by EPA to be persistent, bioaccumulative and toxic and, by implication, to potentially present risks for exposed populations including the general population, consumers and commercial uses, as well as certain susceptible subpopulations (such as workers, subsistence fishers, members of Native American tribes, and children). The amended Section 6(h) of TSCA requires EPA to propose such a rule no later than June 22, 2019 "to address the risks of injuries to health or the environment . . . and to reduce exposures to the substance to the extent practicable."  The final rule must follow no more than 18 months later (i.e., late December 2020). The four substances identified for risk mitigation actions in the proposed rule are:

  • Decabromodiphenyl ether (DecaBDE);
  • Phenol, isopropylated phosphate (3:1) or PIP (3:1);
  • 2,4,6-tris(tert-butyl)phenol (2,4,6-TTBP); and
  • Pentachlorothiophenol (PCTP).

Hexachlorobutadiene (HCBD) has been evaluated by EPA and the agency has announced it did not identify any practicable ways of further reducing human or environmental exposure to that substance. (HBCD is already regulated by EPA as a hazardous air pollutant under the Clean Air Act.) The proposed PBT rule prohibits the import or manufacture of the substances for specific uses and includes recordkeeping requirements for several of the chemicals and downstream notification requirements for one chemical. Read more about the rulemaking.

Important, and Often Overlooked, Implications of Proposed TSCA Section 6 Rules. Businesses in the US that export (or later develop the intent to export) products that contain any substance subject to a proposed Section 6 regulation must provide advance notification to EPA of export shipments containing even small concentrations of the substances. This requirement is imposed by operation of law when certain TSCA regulatory actions are barely commenced because Section 12(b) of TSCA requires any person who exports or intends to export a chemical substance or mixture subject to certain proposed TSCA regulations to notify EPA of the export activities.1 (EPA is expected to provide information about the exported chemical and EPA's related regulatory actions to the government of the destination country.) Because for the preceding 40 years, EPA has proposed very few TSCA Section 6 rules, not many companies fully appreciate that TSCA Section 6 rules are among those which trigger commencement of the export notification requirements when such a rule is merely proposed.2

To complicate matters, the export notification obligation does not apply solely to exports of bulk chemicals. The Section 12(b) obligation also applies to commercial and consumer products comprised of mixtures and solutions incorporating even small quantities of a regulated substance. Thus, an entity that exports a product that contains measurable quantities of decaBDE; PIP (3:1); 2,4,6-TTBP; or PCTP must determine as soon as possible whether it must provide notice to EPA of its export shipments.3  For substances or mixtures subject to TSCA Section 6 actions, exporters must notify EPA of the first export within each calendar year of export on a per chemical, per country basis. Moreover, export notices must be postmarked within seven days of forming the intent to export or on the date of export, whichever is earlier. Notification of export generally is not required for manufactured "articles" that contain one of the regulated substances  or those which contain the substance at levels below specified de minimis concentrations.4

New TSCA CBI Procedure. EPA has long-standing procedures concerning the identification, handling and storage of commercially sensitive information. Among the agency's more helpful and constructive practices has been notifying an entity that has asserted a CBI claim for a particular document when EPA has determined the manner in which the claim has been asserted and/or substantiated is deficient. A "deficiency" notice typically gave the recipient 30 days during which to perfect (typically the need to substantiate) its claim.

EPA appears to have abandoned that helpful practice and to be taking a more ruthless approach to instances in which an entity has failed to properly substantiated CBI claims. 

On July 16, 2019 EPA published a Federal Register notice announcing the agency will, commencing August 15th, stop sending notices of deficiency to businesses whose submissions do not meet all the statutory requirements. Read the Federal Register notice announcing this change. Instead, the agency will provide written notice to affected document submitters that because they submitted procedurally flawed CBI claims, including unsubstantiated CBI claims, those claims will be considered "invalid," and the underlying information will not be protected from disclosure under TSCA Section 14.

Unlike the notice of deficiency, the written notice EPA intends to provide going forward will not provide the affected business 30 calendar days to remedy their deficient CBI claims. Rather, the written notice will inform the entity that their procedurally-flawed CBI claims may be disclosed to the public without further notice (presumably, in response to a FOIA request or other circumstances).

On January 19, 2017, EPA announced it interprets the 2016 amendments to Section 14 to require that entities that want to protect information they submit from public disclosure must assert the claim for CBI protection concurrent with submission of the information, and provide "up front" substantiation of the claim.

The implications of this policy change could be staggering. If an entity inadvertently fails to enclose the full substantiation for its CBI claims at the time the information is provided to EPA (or an EPA staff person potentially has inadvertently lost or mislaid the substantiation document which the entity timely submitted), EPA could simply make the information claimed as CBI available to the general public and the entity's competitors. While the failure to assert a CBI claim does not lead to the potential liability for "violating" TSCA, the potential loss of control over valuable intellectual property and the company's competitive advantage nevertheless could be devastating to the business. For further information on how to timely assert and substantiate CBI claims, see Confidential Business Information under TSCA.

Summary. Recent and even seemingly routine announcements by EPA should be considered carefully by the regulated community to determine whether and how they could adversely affect your company's business. Be sure to follow our quarterly newsletter, The Chemical Compound, to keep current on regulatory, legislative and litigation developments of importance to your business.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. The export notification obligation arises for exporters of substances for which: The submission of data is required under TSCA sections 4 or 5(b); An order has been issued under TSCA section 5; A rule has been proposed or promulgated under TSCA sections 5 or 6; or An action is pending, or relief has been granted under TSCA sections 5 or 7.

  2. It is worth noting that EPA also proposed Section 6(a) regulations for Methylene Chloride, Trichloroethylene (TCE), andN-Methylpyrrolidone (NMP) prior to the inauguration of the Trump administration and has issued the Methylene Chloride regulation in final form earlier this year.

  3. At least one of the PBT substances, decaBDE, previously was subject to a proposed Significant New Use Rule, however, this announcement of the Section 6 PBT rule will change the frequency with which Section 12(b) notices must be given to EPA.

  4.  See 40 CFR 707.60(b) and 40 CFR 707.60(c). Because the proposed PBT regulation also addresses articles containing the substances in certain respects, the PBT rule proposal creates certain ambiguity in this regard.

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