United States: Toxic Substance Control Act Reform And Your Business

On December 17, 2015, the Senate passed a bill overhauling the Toxic Substances Control Act ("TSCA").  This bill is called the Frank R. Lautenberg Chemical Safety for the 21st Century Act (the "Lautenberg Act").  The Lautenberg Act follows the TSCA reforms that were passed by the House of Representatives in June 2015.  The passage of these bills in both the House and the Senate brings us closer to the most significant environmental reform our country has seen in decades.

This Alert summarizes the key changes that might affect your business if the Lautenberg Act is signed into law.  These reforms will not just affect manufacturers of products widely regarded as unsafe, such as asbestos products, but also manufactures of more typical consumer products, such as household cleaners.

A New Safety Standard

One of the biggest changes to the TSCA introduced by the Lautenberg Act is the revision of the standard for determining chemical safety.  Under the current TSCA, the Environment Protection Agency ("EPA") conducts a cost-benefit analysis to determine whether a chemical is safe for its intended use.  Specifically, this cost-benefit analysis allows the EPA to consider the cost of regulation when determining whether a chemical is safe for its intended use.

In comparison, the Lautenberg Act's safety standard explicitly precludes the consideration of cost or other nonrisk factors in determining whether a chemical poses an unreasonable risk of injury to health or the environment.  The proposed safety standard focuses solely on the potential for harm to health or the environment.  Taking away the cost side of this equation might increase the chance that the chemicals you manufacture or use in your products will be deemed "unsafe."  If a chemical is not likely to meet this new safety standard, it might be subject to regulation.  In some cases, to avoid regulation, chemical substances might even need to be reformulated.  Accordingly, this new safety standard may increase the chance that your products will be regulated.

Explicit Protection of Vulnerable Populations

The Lautenberg Act also explicitly protects populations that may be particularly vulnerable to chemical exposure.  These populations are defined as individuals who may be "differentially exposed" to chemical substances or individuals who are susceptible to greater than normal adverse health consequences as a result of chemical exposures.  These groups may include, but are not limited to, infants, children, pregnant women, the elderly and workers.  The proposed revisions expressly require the protection of these populations.  This increased effort to protect particular populations might affect your business if you manufacture or sell products to any of these vulnerable populations.  Additionally, manufacturers of chemical products may need to consider the increased protection these revisions provide for their workers.

Safety Reviews of Existing Chemicals

Additionally, the Lautenberg Act requires the EPA to review the safety of chemicals that are already in active commerce.  Thus, a chemical will not necessarily escape review under the Lautenberg Act's new safety standard even if it was previously assessed under the current TSCA cost-benefit approach.  To facilitate the EPA's review of all active chemicals, companies will likely need to identify the chemicals that they currently manufacture, process or use in their products and provide that list to the EPA.  For assistance in compiling a list of any such chemicals and disclosing that list to the EPA, please contact your Reinhart attorney or any member of the Reinhart Product Liability Group.

Safety Reviews of New Chemicals

Any new chemical also will be subject to a safety review before it may enter the market.  The Lautenberg Act requires the EPA to make an affirmative safety finding as a condition of any new chemical's market entry.  Accordingly, under the Lautenberg Act, products containing new chemical substances cannot be manufactured or produced until the EPA determines the chemical is likely to meet the updated safety standard discussed above.  This may impact the amount of time it takes to get a new product to market if that product contains a new chemical.

Cost-Benefit Requirements for Regulation

Under the current TSCA, if the EPA wants to regulate or restrict the use of a particular chemical, it is required to conduct a formal analysis and show that any benefits of the proposed restriction outweigh the costs of that regulation.  And even if regulation or restrictions on use of a particular chemical substance are warranted, the EPA must impose the least burdensome restriction to address the identified risks.

The Lautenberg Act makes it easier for the EPA to regulate or restrict the use of chemical substances.  This is because the proposed reforms state that cost considerations will not trump the requirement that restrictions ensure chemical safety.  Moreover, the costs and benefits of regulating a given chemical substance do not need to be considered in every case, but will be considered only "to the extent practicable based on reasonably available information."  Therefore, if your business uses any chemicals in consumer products that are subject to regulation or could be subject to regulation under the revisions to the TSCA, please contact your Reinhart attorney or any member of the Product Liability Group to consider options for minimizing your risk of unduly burdensome regulations.

New Standard for Claiming Chemical Identity Is Confidential Business Information

The Lautenberg Act also changes the analysis regarding confidentiality of chemical identities.  Generally speaking, these reforms err on the side of requiring disclosure of chemical identities and health and safety information.  This may affect businesses whose chemical substances constitute trade secrets.  Accordingly, if you manufacture or produce any chemical substances that currently enjoy protection as Confidential Business Information under the TSCA, please contact your Reinhart attorney or a member of the Reinhart Product Liability Group to ensure the continued protection of your confidential information.

EPA Given Broader Authority to Collect Fees

A final proposed change to the TSCA may affect your bottom line.  The Lautenberg Act reforms the TSCA's provisions regarding fees the EPA may collect.  Generally speaking, the current TSCA only allows the EPA to charge fees to cover specific costs of administering the TSCA.  These fees are capped at a maximum of $2,500 per entity.

The Lautenberg Act allows the EPA to collect fees for both new and existing chemicals.  These fees will be used to offset the costs of making safety determinations, collecting information on chemical substances and conducting necessary rulemaking, among other things.  Additionally, rather than provide a hard cap on fees, the Lautenberg Act allows the EPA to collect fees around 25% of its relevant program costs, up to $18 million per year.  Companies are also required to pay 100% of the costs of safety assessments they request, or 50% of the cost of safety assessments that the EPA has decided to conduct.

Conclusion

Reforms to the TSCA have not yet been signed into law.  However, the recent passage of both the Lautenberg Act and the related bill in the House of Representatives shows these changes are likely coming.  To prepare for this overhaul of the TSCA, you should start considering how the proposed changes might affect the products you sell, and your business overall.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Jennifer L. Naeger
 
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