What’s New About the Revised TSCA

After years of effort, comprehensive legislation to reform the Toxic Substances Control Act (TSCA) passed the House of Representatives on May 24, 2016. The Frank R. Lautenberg Chemical Safety for the 21st Century Act is expected to pass the Senate the week of June 6. President Obama is expected to sign the legislation shortly thereafter. At that point, the Environmental Protection Agency (EPA) will begin its implementation of the new TSCA.

This alert first highlights key ways in which passage of TSCA amendments will impact the industry. Next, it outlines the key changes that the legislation will make to TSCA. It then identifies those provisions of the bill as passed by the Senate in December 2015 that are retained in the bill as passed by the House on May 24 (thus expected to remain in the final Senate-passed version) and those provisions that are changed. Finally, it considers what is likely to happen in the early days of implementation of the new TSCA.

How Passage of TSCA Reform Legislation Will Affect Industry

Alone among major environmental statutes, TSCA had not been significantly amended since its enactment in October 1976, almost 40 years ago – until now. During much of that time, EPA has regarded TSCA’s principal control provision, section 6, as unworkable. As a result, EPA has not proposed any rulemaking under section 6 in 25 years, ever since a court invalidated the EPA ban on asbestos in 1991. Other aspects of TSCA have also shown their limitations.

Once enacted, this legislation will amend section 6 to make it much easier for EPA to evaluate and, if appropriate, regulate chemicals. The bill contains provisions mandating that EPA identify substances that are high priorities for risk evaluations; evaluate the health and environmental risks of those substances; decide, without regard to cost or other non-risk factors, whether a high-priority substance presents an unreasonable risk; and regulate those substances found to present an unreasonable risk under the conditions of use. All of these steps are subject to tight time deadlines. EPA must meet some quotas in the first five years. This means that industry can expect EPA to review more chemicals, to review them more systematically and thoroughly, and to regulate those chemicals that it finds to be in need of regulation.

This, in turn, will mean that industry stakeholders will need to be prepared to engage with EPA early, well before EPA proposes a rule to restrict a chemical. The following critical points in the march toward restriction provide for an opportunity to influence EPA’s decisions about a chemical being considered for restriction:

• Before EPA designates a chemical as high-priority, stakeholders may submit relevant information (section 6(b)(1)(C)(i));
• Once EPA has proposed to designate a chemical as high-priority, stakeholders may submit requested information (section 6(b)(1)(C)(ii));
• A manufacturer of a chemical may request that EPA designate that chemical as high-priority (section 6(b)(4)(C)(ii), subject to a fee (section 6(b)(4)(E)(ii));
• Stakeholders may comment on a draft risk evaluation (section 6(b)(4)(H)); and
• Stakeholders may comment on a proposed risk management rule (section 6(c)(1(A)).

Industry can also expect to be impacted by:

• Testing obligations imposed by unilateral EPA orders (section 4(a)(1), (2));
• Possibly increased scrutiny of premanufacture notices (PMNs) now that EPA must make an affirmative finding for each PMN chemical (section 5(a)(3));
• The need by manufacturers to report as active substances chemicals that they have manufactured in the last 10 years (and the opportunity of processors to report as active substances for the chemicals they have processed in the last 10 years) (section 8(b)(4)(A)(i));
• The need to notify EPA and substantiate confidentiality claims for substances on the confidential Inventory (section 8(b)(4)(B));
• Increased substantiation requirements for, and EPA scrutiny of, confidentiality claims (section 14(c));
• The payment of fees for submitting test information under section 4 or for manufacturing or processing a chemical that is being evaluated under section 6 (section 26(b)(1)); and
• Likely increases in the current $2,500 ceiling on fees for PMNs and significant new use notices (section 26(b)(1)).

The preemption provision is the product of extensive and prolonged negotiation. It is not the broad preemption for which some in the industry had hoped. For example, all state restrictions in effect on or before April 22, 2016, are exempt from preemption based on EPA actions under the amended TSCA, and Proposition 65 is also exempt even into the future. Other exemptions from preemption also apply, including for most state green chemistry laws. Even when preemption would apply, states can apply for a waiver. However, the preemption section does contain two remarkable provisions. One is the “high-priority pause,” i.e., limited preemption of new state restrictions while EPA considers whether it should regulate a high-priority substance. The other is that once EPA decides that a chemical does not pose an unreasonable risk under the conditions of use, both existing and future state restrictions for that chemical (within the scope of EPA’s review) are also preempted (subject to some exclusions), even though EPA’s decision means that it will not promulgate any new federal restrictions for the chemical. Both provisions are unique among federal regulatory statutes.

Testing

EPA has been hamstrung by the need to use notice-and-comment rulemaking to impose testing requirements in most cases. Rulemaking typically takes 3 years or longer. The bill gives EPA the authority to bypass rulemaking altogether and instead issue orders requiring manufacturers and processors to conduct testing.

New Chemicals

For the first time, EPA will have to make public determinations on whether or not PMN chemicals are likely to present an unreasonable risk.

Prioritization

EPA has suffered from shifting priorities over its history, leaving work on some chemicals unfinished. EPA will now have to set priorities publicly, then follow through to evaluate their risk and, if appropriate, regulate them, all on a challenging timetable for completing the process. 

Systematic Evaluation

EPA will have to evaluate the risks of high-priority substances systematically, without regard to cost or other non-risk considerations, and reach decisions about whether or not those risks need to be addressed through regulation.

Risk Management

Ever since the 1991 court decision invalidating the EPA ban on asbestos, EPA has regarded the principal risk management provision of TSCA, section 6, as an insurmountable obstacle to regulating chemicals. The legislation deletes the “least burdensome requirements” language and other provisions that the court found EPA failed to satisfy with its asbestos ban, and it drives EPA to evaluate appropriate considerations.

Inventory Reset

The TSCA Inventory contains more than 84,000 chemicals, but only a fraction of them are in commerce today. The Inventory reset provision will identify the chemicals that are now or were recently in commerce so that EPA can focus its attention on these “active” chemicals.

Confidential Business Information

EPA has struggled to provide the public with some information about chemicals due to longstanding confidentiality claims that may no longer be necessary. The legislation sets a 10-year lifespan for new confidentiality claims unless renewed and substantiated. It directs EPA to scrutinize confidentiality claims, including those for active substances whose chemical identities are on the confidential Inventory.

Preemption

As EPA now acquires the tools it has lacked to evaluate and regulate chemicals, the relationship of federal and state restrictions of chemicals is in need of change. The legislation gives the regulated community limited protection from new state restrictions while EPA is actively evaluating whether to regulate a chemical itself, and it sets a limited bar on state restrictions when EPA has determined that restrictions are not necessary.

Fees

The revised legislation funds up to 25% of the cost of administering its principal provisions with fees to be paid by affected manufacturers and processors.

Use of Science

The legislation directs EPA to make decisions under sections 4, 5, and 6 based on the weight of the scientific evidence, and to ensure that its decisions are consistent with the best available science.

What is Retained from the Bill Passed by the Senate in December 2015

As passed in June 2015, the House bill ran 46 pages, whereas the Senate bill as passed in December 2015 ran 211 pages. The version passed on May 24 runs 177 pages. Most of the Senate provisions were adopted in the version passed by the House on May 24. For example, the House-passed version from June 2015 would not have amended section 5 or included a prioritization provision, both of which appeared in the Senate-passed version from December 2015 and appear in the version passed by the House on May 24.

The bill as passed by the House on May 24 retains (with editorial changes) many of the provisions of the bill passed by the Senate in December 2015, including the following, among others:

• Section 3 – Definitions – the Senate-passed definitions for “conditions of use” and “potentially exposed or susceptible subpopulation” are retained;
• Section 4(a)(2) – Testing – EPA is authorized to require testing based on a need to address issues under sections 5 or 6, using either a rule, order, or testing consent agreement;
• Section 4(a)(4) – Tiered Testing – EPA must use a tiered testing approach unless it can justify more advanced testing without first conducting screening-level tests;
• Section 5(a)(3) – New Chemicals and Significant New Use Rules (SNURs) – EPA must reach a decision about whether or not a PMN chemical or significant new use meets the TSCA standards for regulating these chemicals and uses;
• Section 5(a)(5) – SNURs for Articles – EPA may apply SNURs to articles only to the extent necessary to protect against risks from exposure to the SNUR chemical from articles;
• Section 6(a) – Least Burdensome Requirements – current TSCA’s requirement that EPA use “the least burdensome requirements” in regulating unreasonable risks has been deleted;
• Section 6(b)(1) – Prioritization – EPA must identify chemicals that are a high priority for a risk review and those that are a low priority, and have a process for doing so;
• Section 6(b)(3) – Risk Evaluations – EPA must conduct risk evaluations (called safety assessments and safety determinations in the December 2015 Senate version) for high-priority substances, subject to some limitations;
• Section 6(b)(4)(C)(ii) – Manufacturer Recommendations – EPA must conduct risk evaluations for chemicals nominated by manufacturers;
• Section 6(b)(4)(D) – Scope of Risk Evaluation – EPA must publish the scope of a risk evaluation (called a safety assessment in the December 2015 Senate version) for a high-priority substance within 6 months after initiation of the risk evaluation;
• Section 6(c) – Risk Management Rules – EPA must adopt risk management rules within 2 years (subject to a limited extension) following a risk evaluation that finds that a chemical presents an unreasonable risk (the Senate version has “does not meet the safety standard”);
• Section 6(c)(2)(E) – Articles – EPA may apply risk management rules to chemicals in articles only to the extent necessary to protect against risks from exposure to the chemicals from the articles;
• Section 8(a)(3)(C) – Small Businesses – EPA must reconsider its standard for what constitutes a small business within 6 months after enactment;
• Section 8(b)(3) – Nomenclature – EPA must retain the use of Class 2 nomenclature and must acknowledge in appropriate instances that a single chemical may appear under different CAS numbers and names on the TSCA Inventory;
• Section 8(b)(4) – Inventory Reset – EPA must compile lists of active substances and of inactive substances based on information provided by manufacturers and processors and must require notification and substantiation of confidentiality claims for active substances on the confidential Inventory;
• Section 14 – Confidential Information – the extensive Senate provision on confidential information is retained;
• Section 18 – Preemption – most of the Senate provision on preemption is retained, with some changes discussed below;
• Section 18(a)(1)(B) – Chemicals Not Found to Present an Unreasonable Risk – upon finding that a chemical does not present an unreasonable risk under the conditions of use, existing and new state restrictions for that chemical falling within the scope of the risk evaluation are preempted;
• Section 18(b) – “High-Priority Pause” – after EPA announces the scope of risk evaluation for a chemical, states may not enact new restrictions for that chemical that fall within that scope until the risk evaluation is completed or three years pass from the start of the risk evaluation;
• Section 18(d)-(f) – Exceptions to Preemption – preemption does not apply to a state restriction that implements a reporting or monitoring requirement; relates to air, water, or waste except to the extent that it impacts the manufacture, processing, distribution, and use of a chemical; is identical to a TSCA restriction; was adopted before a recent date (changed to April 22, 2016); or that is Proposition 65; and
• Section 26(b) – Fees – manufacturers and processors must pay fees for specified activities.

What is Changed from the Bill as Passed by the Senate in December 2015

Among the changes to the December Senate version are the following:

• Section 3 – Definitions – the version passed by the House on May 24 does not refer to a safety standard but instead refers to unreasonable risk of injury to health or the environment under the conditions of use; there is also a new definition of “guidance;"
• Section 4 – Testing – the December 2015 Senate bill would have deleted current section 4(a), which requires EPA to find that a chemical “may pose an unreasonable risk” before requiring testing, and the version passed by the House on May 24 retains section 4(a), with changes, but also adopts the Senate’s version authorizing testing for limited purposes solely on a showing of need;
• Section 5 – New Chemicals and SNURs – The December 2015 Senate bill would have required EPA to decide whether, after review of a premanufacture notice (PMN) for a new chemical or a significant new use notice (SNUN), that the chemical or new use was likely to meet the safety standard or not likely to meet the safety standard, and the version passed by the House on May 24 requires EPA to find that a PMN chemical or SNUN chemical “presents an unreasonable risk,” “may present an unreasonable risk,” or “is not likely to present an unreasonable risk;” 
• Section 6(a) – “Presents” an Unreasonable Risk – current TSCA’s phrase “presents or will present” an unreasonable risk has been changed to refer only to whether a chemical “presents” an unreasonable risk; 
• Section 6(b)(1) – High-Priority and Low-Priority Substances – in the version passed by the House on May 24, EPA must designate as a high-priority substance a chemical that EPA determines, without consideration of costs or other non-risk factors, “may present an unreasonable risk,” whereas the December 2015 Senate version had other criteria that would have avoided any kind of “unreasonable risk” finding;
• Section 6(b)(2)(A) – Initial Prioritizations – under the version passed by the House on May 24, within the first 180 days after enactment, EPA must designate as high priority 10 chemicals drawn from the 2014 updated list of TSCA Work Plan chemicals, and the Senate-passed version would only have required 5 of the 10 to be the TSCA Work Plan chemicals and had no deadline;
• Section 6(b)(2)(B) – Quotas for Prioritization – the period for EPA to designate 20 high-priority substances and 20 low-priority substances has been increased from three to three and a half years, after which at least 50% must be TSCA Work Plan chemicals (not present in the Senate version);
• Section 6(b)(2)(D) – Preferences for Prioritization – with the version passed by the House on May 24, EPA is to give preference to TSCA Work Plan chemicals with a Persistence and Bioaccumulation score of 3 and to those that are human carcinogens and have high acute and chronic toxicity;
• Section 6(b)(4)(A) – “Risk Evaluation” ­– the Senate terms “safety assessment” and “safety determination” have been replaced by the June 2015 House bill’s term “risk evaluation;”
• Section 6(b)(4)(C)(ii) – Requests for High-Priority Chemicals – EPA is only required to consider requests for designation of high-priority chemicals received from manufacturers, whereas the Senate version would also have required EPA to consider requests received from processors;
• Section 6(b)(4)(D) – Scope of Risk Evaluations – for the first 10 TSCA Work Plan chemicals designated as high-priority and for high-priority substances nominated by manufacturers, EPA must publish the scope of the risk evaluation not less than 3 months after designating them as high-priority, and for other chemicals designated as high-priority, it must publish the scope of the risk evaluation no less than 12 months after designation (not present in the Senate version);
• Section 6(b)(4)(E)(i) – Percentage of Requested High-Priority Chemicals – between 25% and 50% of the risk evaluations must be for chemicals that manufacturers have requested to be high-priority substances, whereas the Senate-passed bill set a 30% ceiling on requested high-priority substances;
• Section 6(b)(4)(E)(iv) – No “High-Priority Pause” for Manufacturer-Requested Chemicals – chemicals for which EPA conducts a risk evaluation because a manufacturer requested that it do so are not subject to the section 18(b) “high-priority pause;"
• Section 6(c)(1) – Timing for Risk Management Rules – EPA must publish a proposed rule within 1 year of finding that a high-priority substance presents an unreasonable risk under the conditions of use, which may be extended up to 2 years, except for TSCA Work Plan chemicals or chemicals that score high for persistence or bioaccumulation and either high or moderate for the other; final rules for these chemicals must be completed within 2 years of publishing the risk evaluation finding an unreasonable risk;
• Section 6(c)(2)(A)-(C) – Statement of Effects for Risk Management Rules – EPA must publish with a final rule a statement that addresses, among other things, the effects of the chemical; its benefits; the reasonably ascertainable economic consequences of the rule, including the costs and benefits of at least one alternative to the rule considered by EPA; and the cost-effectiveness of the rule and of at least one alternative considered by EPA; the Senate version had no counterpart to these provisions, which are adapted from those appearing the in the June 2015 House-passed bill;
• Section 6(c)(2)(D) – Replacement Parts – the risk management rule must exempt replacement parts for complex durable goods and complex consumer goods that are designed prior to the date of publication of the final rule unless EPA finds that replacement parts contribute significantly to the risk;
• Section 6(h) – Expedited Action for Persistent, Bioaccumulative, and Toxic Chemicals (PBTs) – within 3 years after enactment, EPA must propose risk management rules for TSCA Work Plan chemicals that score high for persistence or bioaccumulation and high or moderate for the other by conducting exposure and use assessments, but it need not conduct a risk evaluation, and the final rule must be published within 18 months after publishing the proposal;
• Section 8(a)(5) – Chemical Data Reporting – EPA is required to apply section 8(a) reporting rules, including the Chemical Data Reporting rule (CDR), “to those persons likely to have information relevant to the effective implementation of this title;”
• Section 8(a)(6) – Inorganic byproducts – within 3 years, EPA must publish a proposed negotiated rule for reporting related to inorganic byproducts that are recycled, reused, or reprocessed; it had no counterpart in the Senate version;
• Section 8(b)(3) – Nomenclature – some changes were made to the Senate counterpart, including provisions related to statutory mixtures, and now the language requires EPA “to treat the individual members of the categories of chemical substances identified by the Administrator as statutory mixtures” as being listed on the Inventory;
• Section 8(b)(10) – Mercury – EPA is to publish an inventory of elemental mercury and mercury compounds supply, use, and trade in the U.S. every 3 years, but there was no Senate counterpart;
• Section 12(c) – Mercury Exports – the current ban on exporting elemental mercury will be expanded to include listed mercury compounds by 2020; other provisions relating to storage and disposal of mercury and mercury compounds are also added, but there was no Senate counterpart;
• Section 18 – Preemption – the “grandfather” date for state laws and administrative actions that are exempted from preemption has been changed from August 31, 2015, to April 22, 2016 (Earth Day) and the scope of preemption has been expanded slightly to include not only statutes and administrative actions, but also state criminal penalties; 
• Section 26(b) – Fees – fees will be assessed on manufacturers and processors who are subject to a testing requirement under section 4, who submit notices under section 5, or that manufacture or process a chemical that is the subject of a risk evaluation under section 6, set to defray up to 25% of the cost of administering sections 4, 5, and 6 and of handling confidential business information (CBI) and requests for access to CBI under section 14, subject to a ceiling of $25 million.;
• Section 26(h)-(j) – Scientific Standards, Weight of Scientific Evidence, and Availability of Information – the final language adopts the provisions on these matters that appeared in the June 2015 version as passed by the House, rather than the provisions that appeared in the version passed by the Senate, and Section 26 requires EPA to use the best available science, consider the weight of the evidence, and make the Agency’s scientific information available to the public; and
• Section 27 – Sustainable Chemistry Initiative – ASenate provision establishing a sustainable initiative does not appear in the bill as passed by the House.

What Happens Next

Once passed by the Senate and signed by President Obama, EPA must immediately begin implementing the amended TSCA. Within 180 days of enactment, EPA must:

• Ensure that risk evaluations are being conducted on 10 TSCA Work Plan chemicals (section 6(b)(2)(A));
• Report to Congress regarding its capacity to carry out risk evaluations (section 26(m)); and
• Establish a Science Advisory Committee on Chemicals (section 26(o)).

Within one year after enactment, EPA must:

• Establish a risk-based screening process and criteria for designating chemical substances as high- or low-priority substances for risk evaluations (section 6(b)(1)(A));
• Establish the process by which EPA will conduct risk evaluations (section 6(b)(4)(B));
• Develop guidance to help manufacturers conduct and submit draft risk evaluations for EPA’s consideration (section 26(l)(5)); and
• Promulgate an Inventory reset rule requiring manufacturers and processors to submit information regarding active and inactive chemical substances (section 8(b)(4)).

Key policy decisions and the fundamental framework for the TSCA program will be worked out in a flurry of rulemakings in the first few years of implementation. Stakeholders should, therefore, be prepared to engage with EPA and participate in the regulatory process as soon as the legislation is signed into law.