TSCA Reform: Implications for Business

1. 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?

3. 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. 2601 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” • 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”)

9. 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

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 ActExisting 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 prioritydesignations 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 prioritydesignation 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 2016   

17. Nuts and Bolts of the Lautenberg Act – Existing Chemicals • EWG, a nonprofit, is advocating for the first ten chemicals to be:

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 ActNew 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 • 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

23. Nuts and Bolts of the Lautenberg ActTesting & Data

24. 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 ActConfidential Business Information

26. 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 ActPreemption

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 ActFunding

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

32. 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. 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: • 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 Yoususan.brice@bryancave.com