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Chemical Reporting and Compliance Basics: Many Changes to Manage article continued

This, the third article in the Chemical Reporting and Compliance Basics series, covers the re-invigorated TSCA regulatory activity after a long period of stagnation. The first article covers accidental chemical release reporting and the second article discusses TRI program changes affecting all kinds of releases

TSCA Risk Assessment Fee Assessment Progress

As part of the Lautenberg Amendments to TSCA, EPA now has a statutory mandate to designate High-Priority Substances for additional risk evaluation and study. The initial 20 substances to be studied (see Table 1), and the known manufacturers and importers of those substances, have been identified in a proposed rule that is currently open for public comment. Where EPA is required by TSCA to initiate a risk evaluation, it is also required to assess fees on manufacturers (or importers) of those chemicals to fund the risk evaluations. Manufacturers of these substances must self-identify to EPA that they are a manufacturer so that the overall cost of each substance's risk evaluation ($1,350,000) can be apportioned across the responsible manufacturers and importers in accordance with the TSCA Fee Payments rule.  EPA-initiated risk assessments subject to such fees can also be triggered through other mechanisms, including submission of a Premanufacture Notification (PMN) or Significant New Use Notification (SNUN).

The self-identification requirement for manufacturers and importers of High Priority Substances initially had no de minimis thresholds or exemptions-in theory, any entity that has manufactured or imported any quantity of a listed chemical for any purpose in the last five years must report. In January 2020, EPA published a preliminary list of manufacturers of each of these chemicals based on TRI and CDR reports. EPA initially intended to take comments on this list until March 27, 2020, and to allow those on the list to certify that they do or do not manufacture the High-Priority chemicals. The list included many companies who report under TRI because they manufacture chemicals as a byproduct (for example, formaldehyde as a byproduct of combustion). EPA is reconsidering the breadth of its initial approach that included no exemptions from the fee rule because, among other reasons, it would be unreasonable and infeasible to require every combustion source in the U.S. to report itself as a formaldehyde manufacturer. As a result of complaints about that issue, EPA plans a rulemaking that would provide an exemption from the TSCA fees for those entities that only import a fee-subject chemical in an article, only produce it as a byproduct, or only produce or import it as an impurity. Because that rulemaking will not be completed before the current reporting deadline, EPA has also issued a “No Action Assurance” letter indicating that it will not take enforcement action against those that would be exempted from TSCA fees through one of the proposed exemptions. Concurrent with the proposed rulemaking, EPA extended the deadline to comment on the preliminary list to May 27, 2020. Manufacturers and importers that need to self-identify, or those that were included as manufacturers/importers on EPA's preliminary list but needed to report that they should not be on the list, must do so in EPA's CDX system no later than May 27, 2020. 

It should also be noted that this prioritization, fee assessment, and risk assessment process will continue with the designation of new High-Priority Substances once the risk evaluation is completed for a previously designated High-Priority Substance. Given this and a variety of other changes introduced in response to the Lautenberg Amendments, companies must be mindful of TSCA compliance on a continuous basis. Many companies that were not thought of as “chemical manufacturers” have historically viewed TSCA as just a report to be submitted every fourth year. This approach has become untenable in light of the realities that come with the new TSCA. It is a full environmental regulation with a variety of requirements and programs that are not part of, and are not related to, the quadrennial CDR reporting cycle.

New TSCA CDR Amendments Signed March 17, 2020

On April 9, 2020, EPA published two final rules affecting the CDR program. The first rule simply extends the deadline of 2020's reporting period to November 30, 2020, in order to allow additional time for the regulated community to learn and adapt to the substantive amendments in the other rule, which are being published later in the reporting year than would be ideal given the traditional quadrennial reporting deadline of September 30. The second rule makes miscellaneous clarifications and improvements to the CDR reporting requirements and updates them to make the reporting program conform to the 2016 Lautenberg amendments to TSCA.

The most significant of the revisions and improvements introduce a new exemption from the CDR reporting requirement for specified byproduct substances generated by the Portland cement manufacturing process and the Kraft pulping process. It also adds a mechanism by which EPA can exempt additional manufacturing processes and related byproducts upon its own initiative or as requested by the public through a petition process.

Other CDR enhancements require more details on foreign parent companies and reporting of Dun and Bradstreet numbers for the reporting site, the top-level domestic parent company, and the top-level foreign parent company. The data codes for reporting of the industrial function and end uses of each substance are being adjusted to conform to international norms. Additionally, the amendments further restrict exactly which data elements of the report can be claimed as confidential business information. Listed below are the most sensitive of the elements that can no longer be claimed as confidential for each substanceEHSQ_1_Chemical_Image 3.

  • Industrial sector of use (e.g., paper manufacturing, petroleum refining)
  • Industrial function category (e.g., dyes, abrasives, plasticizers)
  • Consumer and commercial product category (e.g., floor coverings, adhesives, batteries) and specification within each of whether the use is for consumers or commercial use
  • Whether any amount of the substance is present in any concentration in consumer products intended for use by children age 14 or younger
  • Estimated percentage of the site's total production volume of that substance that was associated with each reported consumer or commercial end-use

Other data elements can still potentially be reported on a confidential basis if a compliant substantiation of the confidentiality claim is submitted, and it meets the other restrictions and limitations on exactly when confidentiality claims can be asserted for TSCA CDR reporting. 

Other TSCA News

In the era of the “new TSCA” with the Lautenberg Amendments, manufacturers and importers should be more thoughtful and careful than ever regarding the TSCA PMN process when planning to manufacture or import a substance that is not currently listed on a TSCA Inventory and regarding the SNUN process when planning a new use for a substance. EPA data indicate that of the 1,355 PMN/SNUN reviews completed between June 22, 2016, and April 1, 2020:

  • 282 (21%) of applications were withdrawn before finalized;
  • 8 (0.6%) were issued a SNUR ordering that testing be conducted before commercialization;
  • 566 (42%) were issued SNUR placing restrictions on its commercialization; and
  • 499 (37%) were allowed to commercialize without restrictions.

The data indicate that the most likely outcome of a PMN/SNUN submittal is the issuance of a SNUR that will restrict commercial applications of the substance and likely create compliance burdens for the manufacturer, importer, and potential users of the substance. The need to wait for development and promulgation of a SNUR also delays commercialization of substances that might otherwise have been given prompt unrestricted approvals. 

How does the current SNUR rate compare with historical levels? For EPA Fiscal Year 2015, the last full year before the amendments, only 22% of PMN submissions resulted in the issuance of a SNUR. Therefore, the trend is that EPA now issues SNURs for nearly twice as many PMN submissions as it did before the amendments. This only increases the level of thought, planning, and strategy that should be involved in developing PMN/SNUN notices, as these efforts can improve the likelihood of receiving an unrestricted or less-restricted approval. 

An additional risk factor that operators should keep in mind pertains to the duty to confirm the TSCA Inventory status of a material before manufacturing or importing that substance. EPA has made it clear that this responsibility:

  • Extends to not only manufacturers and importers, but also users of chemical substances;
  • Extends to all chemical substances, regardless of whether the user is provided with imperfect information by a seller or importer through incomplete formula disclosure mechanisms, such as SDSs; and
  • Now requires not only that the substance be listed on the TSCA Inventory, but also that the listing be designated in Active status.

Therefore, the level of TSCA risk to ordinary manufacturing users of chemical substances, particularly in complex formulated chemical products, has dramatically increased in practice. For example, if a company buys and uses paint or adhesive from a domestic or foreign source, that company is ultimately responsible for having complete information regarding the chemical identity of every ingredient contained in that paint/adhesive and independently confirming the TSCA compliance status of every such ingredient in that formulation. If an ingredient in the formulation is not TSCA compliant, regardless of whether the purchasing company knew it was present, the user is also subject to TSCA enforcement action (as would be the manufacturer or importer). Users of such products, however, virtually never have access to complete formulation data, as product manufacturers consider such information to be their most valuable intellectual property and guard it against reverse engineering through minimizing disclosure even where partial disclosure is required (such as on SDSs). It is therefore advisable for operators of MOC systems to put great attention and care into selecting and evaluating purchased materials to ensure that ingredients are properly vetted, and the risk of TSCA compliance issues is appropriately mitigated.

Letters of assurance from suppliers may be useful in cases where complete formulation data cannot be shared, but users of such letters must always be aware that (1) the letter does not protect them from TSCA enforcement action; and (2) the suppliers themselves may have vetted TSCA compliance of the substances incorrectly, before the TSCA Inventory Reset that established the Active/Inactive inventory listing requirements, or may have incomplete formulation information on an ingredient they use (for example, if one of their ingredients turns out to be a third-party formulated product for which they face the same information barriers). Many TSCA compliance assurance letters being provided today, and many more still on file from historical pre-purchasing evaluations, were written many years ago and do not necessarily reflect a certification of compliance with TSCA as it functions in today's post-Lautenberg environment.  

In summary, as EPA continues its focus on tracking and understanding the impacts of chemicals in our society, industry will see more and more recordkeeping and reporting requirements. During a time when some regulations are being scaled back, EPA has not slowed with new rulemaking as prescribed by the Lautenberg Act. Additionally, we can expect to see continued impacts from EPA's chemical risk evaluations on release reporting activities. Therefore, it will be important for manufacturers and processors to develop more rigorous compliance programs to address chemical regulatory issues associated with this fast-paced rulemaking as new chemicals are introduced to their operations or become subject to regulation.