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New Legislation Dramatically Alters Chemical Regulation in the U.S.

July 22, 2016

Four Things Every Company Should Know

On June 22, 2016, President Obama signed into law the Frank R. Lautenberg Chemical Safety for the 21st Century Act. This legislation, which amends the 40-year old Toxic Substances Control Act (TSCA), completely overhauls how chemical products are regulated in the U.S. In this article we highlight four key aspects of the law that every company should be aware of.

1. If you manufacture (or import) products in the US, you are affected by the new law.

Although the acronym TSCA stands for “Toxic Substances Control Act” the law applies to virtually all chemical products in the U.S. – not just “toxic” chemicals. Only a very few specific types of products – such as foods, drugs and cosmetics – are excluded from regulation under the law. In addition, TSCA does not only apply to “chemical companies.”1 Any company that uses a chemical product as part of the manufacture of an article is subject to regulation as a “processor” of chemical substances; and any company that imports or exports chemical products, including chemical products incorporated into articles, is also subject to regulation under TSCA.

Moreover, even if a company’s activities are not directly regulated under TSCA, the new law may affect the future availability of products that the company needs for its operations. So, for example, if your company has depended on a specific fragrance for a product line or a particular coating for a finished part, the new TSCA may prevent your company from continuing to use those materials. As we discuss below, this is because the new law requires EPA to reassess all chemicals in commerce – including chemicals that have been in use for decades.

2. EPA is establishing a list of chemicals that are “active” in commerce; make sure the chemicals you care about are on that “active” list.

One of the first steps EPA must take under the New TSCA is to establish a list of substances that are “active” in commerce in the U.S. The law directs EPA to compile this list by promulgating regulations requiring manufacturers, importers and, possibly, processors of chemical substances to report to EPA on the chemical substances they manufactured, imported or processed over the past ten years. Substances that are reported to EPA in this manner will be designated as “active” in commerce. All other substances will be designated as “inactive.” This process has widely been referred to as the TSCA “Inventory Re-set.”2

The Inventory Re-set is important because, even if your company does not manufacture or import chemicals, per se, it may utilize chemical products purchased from vendors that may be critical to the company’s products or operations. In order to avoid any interruption in the availability of a key chemical product, companies need to ensure that the chemicals they utilize are reported for the Inventory Re-set. If a chemical is not reported for the Re-set, and is therefore designated as “inactive,” the chemical will have to complete a brand new EPA notification process before it can be manufactured, imported or processed in the U.S. again.

As with many of the provisions of the new law, EPA is required to promulgate regulations to implement the Inventory Re-set process. Companies that utilize chemical products in their operations should monitor EPA’s development of those regulations to ensure that they, as users of chemical products, have an adequate opportunity to report as “active” those substances that are important to their operations. This opportunity will be especially important in instances where the manufacturer or importer of a chemical fails to report that substance for the Re-set.

3. EPA will be conducting risk assessments on all substances active in commerce; this may result in restrictions or prohibitions being placed on substances your company has relied on for years -- or decades.

Probably the biggest single change under New TSCA is an unprecedented requirement for EPA to conduct a systematic risk review of all existing chemicals that are “active” in commerce. Prior to passage of the new law, one of the most common criticisms of TSCA was that the statute did not require EPA to review the safety of substances that were already listed on the TSCA Inventory (i.e., “existing” substances). The new law changes that dramatically. Very briefly, New TSCA directs EPA to conduct a risk screen on all chemicals that are “active” in commerce. Based on that risk screen (referred to as “prioritization”) EPA will prioritize substances for more in-depth “risk evaluations.” During the risk evaluation process EPA will examine hazard and exposure information on a substance to determine whether, based on all foreseeable uses of the substance, the substance presents an “unreasonable risk of adverse effects to human health or the environment.” Two aspect of this risk evaluation process are worth highlighting:

  1. In determining whether a chemical presents an “unreasonable risk” for a particular use, EPA is only allowed to consider the hazards and exposures associated with that use of the chemical. Under the new law EPA is specifically prohibited from considering the costs and benefits of the chemical, the availability of suitable alternatives or any other non-risk factors.
  2. Also, in determining whether a chemical presents an “unreasonable risk” for a particular use, EPA is explicitly required to consider the risks to susceptible subpopulations, such as pregnant women and children, or workers who may receive particularly large exposures to the substance.

If, based on its risk evaluation, EPA determines that a chemical presents an unreasonable risk to health or the environment, the Agency must proceed to rulemaking, to impose restrictions or prohibitions on the continued use of the chemical. It is only during this “risk mitigation” step – when deciding what restrictions to impose on a chemical -- that EPA can consider costs, feasibility, the availability of alternatives and other similar factors.

This aspect of New TSCA has the potential to cause significant disruption for manufacturers and other companies that utilize chemical products in their operations, because EPA is required to conduct risk reviews of all “active” chemicals, including products that have been available on the market for years – or decades. Moreover, if EPA determines that a chemical presents an unreasonable risk, the new law requires EPA to act quickly to impose restrictions. Generally, under the new law, the Agency must issue proposed risk mitigation regulations within one year of determining that a chemical presents an unreasonable risk, and EPA must finalize the proposed restrictions within two years of making the unreasonable risk determination. So companies that rely on these chemical products could easily be caught flat-footed if they are not vigilant in monitoring EPA’s risk evaluations.

4. Determine whether any chemicals that are critical to your operations will be part of the first wave of substances to be reviewed by ERA.

Finally, although the new risk evaluation process may prove disruptive for industry, Congress has helped to dispel some of the uncertainties associated with the process by specifying which chemicals will comprise the first wave of substances to undergo risk evaluation. For at least the first few years of implementation, the new law directs EPA to focus its risk evaluations largely on those substances that were included in EPA’s 2014 Chemical Work Plan.3 Therefore, since the Work Plan chemicals will be among the first to undergo risk evaluation and, presumably, restriction, companies would be well-advised to review the 2014 Work Plan to ascertain whether any of the chemicals listed there are critical to the companies’ operations.

* * *

The New TSCA represents a sea change in the way that chemical products will be regulated in the U.S., and these changes will reverberate across most sectors of industry. Companies can and should be taking steps now, to minimize the disruption caused by these changes.

Please visit Crowell & Moring’s online TSCA Modernization Resource Center for more information.

1 We have prepared a separate client alert intended specifically for chemical manufacturers, which is available here.

2 The TSCA Inventory of Existing Substances (or “Inventory” for short) has been a central feature of TSCA since the law was first enacted in 1976. Substances that are listed on the Inventory are considered to be “existing” chemicals, because they were previously reported to EPA as being in commerce in the US. Substances that are not listed on the Inventory are deemed to be “new.” New substances must complete pre-market review by EPA before they can be manufactured or imported into the U.S.

3 The Work Plan, which was developed under “old” TSCA, identifies approximately 90 “existing” chemicals that EPA had targeted for further risk assessment.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Warren Lehrenbaum
Partner – Washington, D.C.
Phone: +1.202.624.2755
Preetha Chakrabarti
Partner – New York
Phone: +1.212.895.4327