United States: 10 Key Revisions To EPA's Final TSCA Inventory Reset Rule: Trump Administration Provides Some Regulatory Relief

The US Environmental Protection Agency (EPA) has issued its final regulation governing the update of the nearly forty-year-old Toxic Substances Control Act (TSCA) list (the Inventory) of chemical substances manufactured, imported, or processed in the United States (TSCA Inventory Reset Rule).1 This advisory summarizes ten of the key differences between EPA's final and proposed TSCA Inventory Reset Rule that collectively should reduce entities' regulatory burden, although the extent of this regulatory relief will vary widely within the regulated community.

BACKGROUND

In 2016, Congress amended TSCA to, among other things, require EPA to (1) designate chemical substances on the Inventory as either "active" or "inactive" in US commerce; and (2) issue a final regulation by June 22, 2017 establishing the process by which manufacturers, importers, and processors must provide EPA the information needed to update the Inventory in this manner. The final TSCA Inventory Reset Rule follows the same general approach as the proposed rule about which we have previously written.

In brief, the final Rule imposes two new reporting requirements on chemical substance manufacturers, importers, and processors (e.g., companies that purchase and use chemical substances to blend or formulate other products that are distributed in U.S. commerce). First, the Rule requires "retrospective" reporting to confirm which substances have been "active" in US commerce at any time between June 21, 2006, and June 21, 2016 (the "lookback period"). Active substances include not only substances that have been manufactured in (or imported to) the US during that period, but also substances that were processed in the US at any time during that 10-year period. Such substances, once properly reported, will be placed on the "active" portion of the Inventory.

Second, for any substance that is not on the active portion of the Inventory, the Rule requires entities to provide "forward-looking" reports of the re-commencement of manufacturing or processing of such substances. If a chemical is placed on the "inactive" portion of Inventory, the continued manufacture (including import) or processing of the chemical in the United States for a nonexempt commercial purpose would be unlawful, unless a "forward-looking" report is provided to the EPA no more than 90 days before the anticipated date of resuming manufacturing (including importing) or processing of the substance. (Substances which do not appear on the Inventory at all are considered "new" chemical substances for which a different document, a pre-manufacture notification, must be provided to EPA before manufacture may commence for any non-exempt commercial purpose.)

The final TSCA Inventory Reset Rule seeks to efficiently manage a daunting task. The non-confidential portion of the Inventory included more than 67,000 substances as of January 2017,2 with tens of thousands more presumably on the confidential portion of the Inventory (listing substances the manufacturer or importer has asserted a confidential business information (CBI) claim). Businesses from across the country large and small will need to ensure that the substances they have used within the ten year lookback period that they either continue to manufacture, import, or process or plan to do so in the future are placed on the active portion of the TSCA Inventory to avoid any business disruptions and legal consequences from having a substance designated "inactive." EPA's initial list contains over 9,600 "active" substances based on the 2012 and 2016 CDR reports and Notices of Commencement (NOCs) filed during the ten-year lookback period and is available here.

KEY REVISIONS TO FINAL RULE

Below are ten of the key revisions to the final TSCA Inventory Reset Rule that should provide some regulatory relief to entities seeking to comply with the Rule.

1. Both non-CBI and  CBI Substances Reported During the 2012 and 2016 CDR Reporting Cycles Are Exempt from Retrospective Reporting, If Entities Are Willing to Risk Waiving Existing CBI Claims.

In the proposed TSCA Inventory Reset Rule, EPA proposed that only those "substances on the non-confidential portion of the Inventory would be from reporting if" the substances were reported by any party in response to the 2012 or 2016 chemical data reporting (CDR).3 In response to numerous comments, EPA expanded the scope of this exemption to include substances with chemical identities claimed as CBI (CBI substances) listed on the confidential portion of the Inventory.4 Accordingly, under the final TSCA Inventory Reset Rule for substances on the non-confidential portion of the Inventory (non-CBI substances) and CBI substances, a manufacturer, importer, or processor need not submit retrospective reports. Importantly, however, an entity still must submit a retrospective report for CBI substances if it wants to maintain its CBI claim for a substance's specific chemical identity.5 Failure to do so would result in EPA moving the CBI substance "to the non-confidential portion of the Inventory," making the specific chemical identity public.

The practical effect of this revision is that it provides relief to "a company, which had previously sought a CBI claim for a specific chemical identity, [but] may no longer view the CBI status as necessary or currently defensible"—i.e., companies that are willing to drop their CBI claim.6 Companies that want to maintain their CBI claim must still file retrospective reports. (New CBI claims for the specific identity of a substance already listed on the public Inventory may not be asserted in Inventory reset reports.) Based on EPA's initial list of over 9,600 "active" substances compiled from the 2012 and 2016 CDR reports and Notices of Commencement (NOCs) filed during the ten-year lookback period, approximately 820 are CBI substances for which retrospective reports are necessary, unless the CBI claim is to be waived.7

2. Substances with a Notice of Commencement Filed During the Lookback Period Also Are Exempt from Retrospective Reporting, but CBI Claims Should be Reasserted.

In response to comments, EPA also has revised the final TSCA Inventory Reset Rule to exempt from retrospective reporting those substances for which a NOC was filed with EPA during the ten-year lookback period. EPA reasoned that "[r]equiring retrospective reporting" of such substances "would be duplicative because EPA already has an equivalent report (the NOC itself) indicating that the substance was manufactured or processed during the lookback period."8 This exemption applies to substances that are manufactured or imported below the CDR report reporting volume thresholds, and therefore may not have been included in the 2012 or 2016 CDR reports. Accordingly, under the final Rule, relatively small volume substances for which a NOC was filed during the lookback period may be exempt from retrospective reporting, whereas they were not under the proposed rule.

As with the exemption noted for substances reported for the 2012 and 2016 CDR rules, an entity would be well advised to submit a retrospective report for a substance listed on the confidential portion of the Inventory to have certainty it will be able to maintain its claim for specific chemical identity, regardless of whether the substance was the subject of a NOC during the lookback period.9

3. EPA Adds Exemptions from Retrospective Reporting Substances Manufactured, Imported, or Processed Under the Existing PMN Exemptions for Test Marketing and Substances Manufactured or Processed Solely for Export.

TSCA Section 5 requires manufacturers, importers, or processors of new substances that are not on the Inventory to file a pre-manufacture notice (PMN). There are numerous exemptions to this PMN requirement (PMN exemptions). In the final TSCA Inventory Reset Rule, EPA confirmed that a substance manufactured, imported, or processed under a PMN exemption "and not listed on the Inventory" "is not subject to reporting under this" Rule.10

Some ambiguity arises for an entity that relies on a PMN exemption to manufacture for exempt purposes, but the substance nonetheless appears on the Inventory due to a listing sought by another entity who did not rely on the PMN exemption. In the proposed Rule, EPA exempted only those substances that met one of the following PMN exemptions: (1) small quantities for research and development; (2) imported as part of an article; and (3) those listed in 40 C.F.R. § 720.30(g) and (h). EPA retained these exemptions in the final Rule and added two more PMN exemptions: (4) "manufacturing or processing of a chemical substance solely for test marketing purposes;" and (5) "manufacturing or processing of a chemical substance solely for export from the United States as described in § 720.30(e) or § 721.3, except where" EPA has made an unreasonable risk finding under TSCA Section 12(a)(2).11

EPA declined, however, to add the so-called polymer exemption and the low release/low exposure exemption, contending that these exemptions "are predicated upon a risk determination," rather than the view that the activity at issue did not constitute commercial activity.12 The practical effect of this position is that, if (for example) an entity's exempt polymer also appears on the Inventory (because another company submitted a PMN for the polymer), the entity may want to file a retrospective report to ensure its polymer is not placed on the "inactive" portion of the Inventory, even if the entity continues to satisfy the polymer PMN exemption. More broadly, any entity that has relied upon one of the PMN exemptions for their substance will want to review the Inventory to determine whether such a substance is on the Inventory, and therefore whether it is at risk of being moved to the "inactive" portion if a retrospective report is not filed.

4. EPA Reduces the Amount of Information That Must Be Reported.

The final TSCA Inventory Reset Rule no longer requires entities to provide in their retrospective reports either: (1) a date range during which the substance was manufactured or imported; or (2) the type of activity (i.e., whether it was manufactured, imported, or processed).13 Instead, entities must simply affirm in the retrospective report that the substance was manufactured, imported, or processed at some time during the ten-year lookback period. Similarly, the forward-looking reports need not indicate the type of activity contemplated.14 These revisions should reduce entities' burden and expense of reviewing records to determine, for example, the precise start and stop dates of manufacturing, importing, or processing a substance—a task that would have been especially burdensome for substances manufactured, imported, or processed episodically or at the beginning of the lookback period. Companies may nonetheless still face challenges locating information required under the final Rule, including those companies that have undergone mergers and acquisitions within or after the lookback period.

5. EPA Adds Flexibility to the Time Period within which Forward-Looking Reports Must Be Submitted.

Under the proposed TSCA Inventory Reset Rule, EPA provided that entities must file their forward-looking reports no "more than 30 days before the actual date of manufacturing or processing."15 In the final Rule, EPA relaxed this deadline in two respects. First, entities must submit the forward-looking report reporting "the anticipated date of reintroduction of a chemical substance in US commerce, rather than the actual date.";16 EPA explained that this revision was necessary because reporting "in advance of actual commercialization is based on information and schedules that are subject to change, and providing an actual date of commercialization in advance, therefore, is not always practical."17 Second, instead of 30 days in advance, EPA extended the submission window to up to 90 days before the anticipated date of reintroducing the substance into US commerce.18

6. EPA Delays Effective Date for "Inactive" Designations By 90 Days

The final TSCA Inventory Reset Rule provides a 90 day grace period after EPA issues its "active" and "inactive" designations before forward-looking reports must be submitted. The Rule accomplishes this by delaying the effective date of the inactive designations by 90 days.19 Therefore, rather than risk having EPA unexpectedly declare an important raw material to be inactive upon publication of the final updated Inventory (and potentially rendering an entity in immediate non-compliance if it continued to manufacture, import, or process the substance), such an entity will now have 90 days to review the final "inactive" list and file a forward-looking report for any "inactive" substances. This will enable the entity to continue to manufacture, import, or process the substance uninterrupted.

7. Grace Period Within Which to Withdraw or Revise a Retrospective or a Forward-Looking Report Without Penalty.

EPA also added two grace periods within which submitters may withdraw or revise their reports without penalty. First, EPA will allow retrospective reporting notices submitted by manufacturers, importers, or processors "to be withdrawn not later than 420 days after the publication of the final rule in the Federal Register."20 Second, submitters may withdraw a forward-looking report "if EPA has not yet altered the Inventory status of the chemical substance in response to the original submission (i.e., EPA has neither redesignated the substance from inactive to active nor moved the substance from the confidential portion of the Inventory to the public portion of the Inventory as a result of a request in the original submission for a CBI claim to be withdrawn)."21

If the reports are not withdrawn during these periods, the filing of the "incorrect information would be considered a prohibited act under [TSCA] Section 15(1) and 15(3)."22 EPA advises entities making corrections after these grace periods should avail themselves of EPA's Self-Disclosure policies and timely and voluntarily disclose the violation.23

8. EPA Further Extends Processors' Deadline to File Retrospective Reports to 420 Days.

EPA added another 60 days to the proposed deadline for processors to file retrospective reports, increasing the deadline for processors' retrospective reports to 420 days after the final Rule is issued.24 That said, unlike manufacturers or importers, processors do not need to file retrospective reports. Instead, they may wait to see if the substances on which they rely are placed on the "inactive" list and, if so, then provide a forward-looking notice within the 90 day window to ensure processing of the substance lawfully may continue. We have written previously here regarding the challenge facing processors under this Rule.

9. Entities Need Not File a Retrospective Report If They Have a Specific Form of Evidence That Another Entity Has Filed Such A Report for the Same Substance.

Under the proposed TSCA Inventory Reset Rule, EPA required each manufacturer or importer of a substance to file a retrospective report (unless otherwise exempt) regardless of whether another entity also filed a retrospective report for the same substance.25 Several commentators urged EPA to publish frequent or "real time" updates to the "active" and "inactive" lists based on the retrospective reports EPA receives and to exempt manufacturers and importers from having to file duplicative reports if EPA already had received one.26 Although EPA declined to commit to making "real time" or frequent updates to the list out of feasibility concerns,27 it did exempt manufactures and importers from having to file a retrospective report for a substance if they have "evidence in the form of a CDX receipt, document EPA's receipt of a [retrospective report] from another manufacturer."28

This may provide some relief to a small subset of manufacturers and importers, but in reality few entities likely will avail themselves of this exemption due to a combination of several factors, including: (1) the practical difficulties of obtaining a CDX receipt from another manufacturer or importer of the same substance (and potentially a competitor); (2) the reduced amount of the information EPA now requires be submitted in a retrospective report; and (3) as EPA identified in the final Rule, by not submitting the retrospective report, an entity runs the risk that the submitter will withdraw the report and the substance will be moved to the inactive list.29 However, processors may begin to request certification of compliance from their suppliers, including copies of the CDX receipts.

10. EPA Has Pre-Populated Its Electronic Reporting System with CBI Substances and Non-CBI Substances On the Inventory.

To expedite the submission of retrospective reports, "EPA expanded its electronic reporting system to include a pick list from which persons can select chemicals for reporting."30 "The pick list will include only reportable substances and will not include the specific chemical identities of CBI substances. Non-CBI substances will be listed by CASRNs and CA index names, as they appear on the Inventory, and CBI substances will be listed by EPA accession numbers and generic names, as they appear on public versions of the Inventory."31 This pre-populated list also may assist importers and processors who may not always know a substances' specific chemical identity and instead must rely upon the publicly available information provided to them by their supplier (e.g., EPA accession numbers; generic name).

CONCLUSION

EPA's stated intention has been to revise the final TSCA Inventory Reset Rule in part to provide some relief to regulated entities. The precise amount of relief experienced will likely vary for each manufacturer, importer, and processor of chemical substances affected by this Rule. Regardless, it remains the case that such entities must pay close attention to EPA's TSCA Inventory Reset Rule and EPA's active and inactive designations (both interim and final) to protect their existing CBI claims and their ability to continue to manufacture, import, and process chemical substances in US commerce.

Footnotes

1. As of the date of this advisory, the final TSCA Inventory Reset Rule was not yet printed in the Federal Register. See EPA's pre-publication version of the final TSCA Inventory Reset Rule.

2. EPA, How to Access the TSCA Inventory

3. TSCA Inventory Notification (Active-Inactive) Requirements. 82 Fed. Reg. 4,255, 4,259 (Jan. 13, 2017) (proposed rule).

4. Pre-Publication Version at 34 - 35.

5. Id.at 35.

6. Id.("In such circumstance, the company may take advantage of any retrospective reporting exemption for which it is eligible, and decline to submit a retrospective notice to EPA.").

7. EPA, Interim List of Active Substances

8. Pre-Publication Version at 36.

9. Id.at 37.

10. Id.at 28 (emphasis added).

11. Id.at 29.

12. Id.at 30.

13. Id.at 49 - 50

14. Id.at 50.

15. TSCA Inventory Notification (Active-Inactive) Requirements. 82 Fed. Reg. 4,255, 4,260 (Jan. 13, 2017) (proposed rule).

16. Pre-Publication Version at 43.

17. Id.

18. Id.at 43 - 44.

19. Id.at 48.

20. Id.at 56.

21. Id.at 57.

22. Id.;see also15 U.S.C § 2614 ("It shall be unlawful for any person to— (1) fail or refuse to comply with any requirement of this subchapter or any rule promulgated, order issued, or consent agreement entered into under this subchapter, or any requirement of subchapter II or any rule promulgated or order issued under subchapter II" . . . "(3) fail or refuse to (A) establish or maintain records, (B) submit reports, notices, or other information, or (C) permit access to or copying of records, as required by this chapter or a rule thereunder").

23. Pre-Publication Version at 57.

24. Id.at 42.

25. TSCA Inventory Notification (Active-Inactive) Requirements. 82 Fed. Reg. 4,255, 4,267 (Jan. 13, 2017) (proposed rule).

26. Pre-Publication Version at 39.

27. Id.at 38.

28. Id.at 40.

29. Id.

30. Id.at 58 - 59 ("Submitters can identify substances from the pick list and, therefore, do not have to manually enter chemical identity information.").

31. Id.at 58.

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