Alert
Alert
05.31.17
The 2016 amendments to the Toxic Substances Control Act (TSCA or the Act), modified Section 8(b) of the statute to require the United States Environmental Protection Agency (EPA) to designate each chemical substance on the TSCA Inventory as either “active” or “inactive” in U.S. commerce. To fulfill this statutory requirement, on January 13, 2017, EPA published a proposed rule in the Federal Register (the TSCA Inventory Reset Rule).
The proposed rule would amend the TSCA Chemical Inventory Regulations to require a retrospective electronic notification of chemical substances on the TSCA Inventory that were manufactured or imported for non-exempt commercial purposes from June 2006 to June 2016. These chemicals would be deemed as “active” and distinguished from “inactive” chemicals—i.e., chemicals that were not manufactured or imported during the ten-year period ending in June 2016. For manufacturers and processors, the retrospective notification would be due 180 days following publication of the final rule, which, by statute, must occur before June 22, 2017.
The proposed rule also would further impose ongoing, prospective notification requirements on manufacturers and processors of chemical substances that were previously inactive—in other words, chemicals that were not manufactured or imported in the ten-year period between 2006 and 2016.
Although the final rule may differ, the retrospective notification requirement, as currently drafted, could compel companies to engage in time-consuming information gathering for past chemical manufacture or importation activities. It is important for companies potentially subject to the TSCA Inventory Reset Rule to begin preparing compliance strategies.
I. Who would be affected by the TSCA Inventory Reset Rule?
A. Retrospective reporting requirement
As noted, the retrospective reporting requirement of the TSCA Inventory Reset Rule applies to manufacturers and importers of listed chemical substances that were manufactured or imported for non-exempt commercial purposes between June 2006 and June 2016. To determine whether the rule applies, manufacturers and importers must therefore:
- Currently are listed on the TSCA Inventory; and
- At the time of manufacture or importation, were not subject to an exemption from the requirement to submit a pre-manufacture notification (PMN) under TSCA Section 5.
The last requirement is potentially onerous, for it requires manufacturers and importers to undertake an analysis that may not have been necessary at the time of initial manufacture or importation. For example, a trading company that imported a chemical in 2008 that, at that time, appeared on the TSCA Inventory would not have had to conduct an analysis of potential exemptions to determine whether its importation of the chemical substance was TSCA-compliant, since the chemical was already listed and, thus, not a “new chemical substance” within the meaning of the Act. However, under the proposed TSCA Inventory Reset Rule, the importer would be required to determine whether the chemical was imported for a non-exempt commercial purpose. This analysis may be difficult to perform, given limitations imposed by corporate document retention policies and employee turnover.
The chemicals identified during the 10-year retrospective reporting period will be designated as “active chemical substances.” The due date for retrospective reporting will be 180 days following publication of the final rule, which must occur by June 22, 2017.
Although the 2016 amendments authorize EPA to issue regulations requiring retrospective reporting by chemical processors (e.g., companies that repackage chemicals for commercial distribution, manufacture mixtures, or produce articles), the proposed rule does not contain such a requirement. However, the proposed rule allows discretionary retrospective reporting by chemical processors up to 360 days after the issuance of the final rule.
B. Prospective reporting requirement
The prospective reporting requirement of the TSCA Inventory Reset Rule applies to manufacturers, importers, and processors of those substances that are deemed “inactive” based on the results of the retroactive analysis described in Section II.A above. Specifically, the proposed rule requires any manufacturer, importer, or processor of a chemical substance for a non-exempt purpose to provide a notice to the EPA at least 30 days in advance of the manufacture, importation, or processing of a chemical substance that the initial retrospective analysis deemed to be “inactive” because it was not manufactured or imported within the 10-year period. Once a notice is received for a given substance, EPA will switch the designation for that chemical from “inactive” to “active.”
II. What form will the reporting take?
According to the proposed rule, the notifications will be made on special “Notice of Activity” Forms, using the CDX and CISS electronic portals maintained by EPA—the databases that EPA uses for chemical data reporting. However, both the use of these forms and the electronic portals may be changed in the final rule.
III. What information should manufacturers and importers obtain to comply with the Rule?
To make informed applicability determinations, manufacturers and importers must not only consult the TSCA Inventory but must also acquaint themselves with the criteria for seeking an exemption from the requirement of filing a pre-manufacture notification and gather information enabling them to evaluate whether these criteria apply. That information includes:
Much the same information must be gathered by entities potentially subject to the prospective reporting requirement. As a practical matter, the burden is on manufacturers and importers to demonstrate the applicability of an exemption; therefore, absent evidence supporting an exemption, the default position from EPA will like be that a listed chemical substance imported from June 2006 to June 2016 is subject to the notification requirement.
In the proposed rule, EPA acknowledges that importers may encounter difficulty in obtaining chemical composition and other manufacturing specifications from foreign suppliers. EPA has indicated that it is working on a practical solution to this dilemma that will satisfy the objective of the TSCA Inventory Reset Rule while accounting for the limitations that importers face in obtaining detailed information.
IV. What are the main ramifications of non-compliance?
Failing to provide either the retrospective or prospective notification by the applicable deadline would constitute a violation of TSCA Section 15. Under TSCA Section 16, violations are subject to a maximum daily penalty of $37,500 per violation.
The possibility exists that companies subject to the rule may discover evidence of past violations with TSCA Section 5 and, for importers, TSCA Section 13. The proposed rule does not address how historical violations should be addressed, so EPA’s standard penalty and enforcement response policies would likely apply.
V. Timeline of key dates (past and future) for the TSCA Inventory Reset Rule
January 13, 2017: Publication of the proposed rule
March 14, 2017: End of public comment period
June 22, 2017: Final rule to be published in the federal register
December 21, 2017: Deadline for manufacturers/importers to provide retrospective notification
June 16, 2018: Deadline for processors to provide retrospective notification; likely earliest date by which a list of active chemicals will be set
VI. Conclusion and practical tips
As with any proposed rule, the requirements of the proposed TSCA Inventory Reset Rule are subject to change. At minimum, however, the rule will require chemical manufacturers and importers to re-evaluate the chemicals that they have imported since June 2006. Particularly for importers, this may be an onerous and time-consuming process, which will require input from foreign suppliers and domestic customers, as well as input from expert counsel, given that the scope of many codified exclusions and exemptions from the PMN requirement remains ill-defined. It is also possible that compliance with the retrospective notification requirement will identify historical TSCA violations, in which case legal strategies for self-disclosure and obtaining penalty relief should be evaluated. In all events, advance planning is recommended.