United States: TSCA Inventory Reset Rule: Whats Next For Processors?

Important Considerations for Companies that Purchase and Use Chemical Substances

Numerous US businesses that manufacture and import chemical substances breathed a sigh of relief after struggling to meet the initial deadline established by EPA's Toxic Substances Control Act (TSCA) "Inventory Notification (Active-Inactive) Requirements" Rule. Now, entities that purchase and process chemical substances in the US are facing an upcoming deadline under the new rules; those businesses must decide soon how they will respond. For some companies that do not import or manufacture chemicals, but merely acquire and use chemical formulations in their manufacturing and blending operations, this might be the first time they have faced a TSCA reporting rule.

Background

Also known as the "Inventory Reset Rule" or "Active-Inactive Rule," these new EPA requirements took effect in August 2017—approximately one year after the 2016 amendments to TSCA became law. As discussed in our June 2017 Advisory, the final Active-Inactive Rule is intended to permit EPA to clarify which chemical substances currently listed on EPA's TSCA Inventory of chemical substances are actually "active" in US commerce. The rule establishes certain "retrospective reporting requirements" which required manufacturers (including importers) of chemical substances to notify EPA, by no later than February 7 of this year, which chemical substances appearing on the current TSCA Inventory have been manufactured in or imported to the United States between June 21, 2006 and June 21, 2016 (the "lookback period"). The February deadline remained in effect despite litigation in the DC Circuit challenging certain portions of the rule.

The Active-Inactive Rule also includes certain "forward-looking reporting requirements" obligating manufacturers and processors to provide a forward-looking report to EPA when they intend to commence, manufacture, or processing any chemical substance that is designated as "inactive" on the updated Inventory. (Regulations that were codified by EPA shortly after the statute was originally enacted in 1976 already require notification to be submitted to EPA prior to manufacturing or importing a "new" chemical substance—one that is not listed on any portion of the TSCA Inventory.)

A list published by the Agency in January 2018 reveals that over 14,700 notices of activity had been received by EPA pursuant to the Rule. These substances, as well as any others reported to EPA prior to the February 7 deadline, will be identified on the TSCA Inventory as "active." EPA intends to publish a "draft" version of the updated Inventory approximately 60 days after the February 2018 close of the manufacturer reporting period. This draft version of the TSCA Inventory is likely to be of particular interest to processors of chemical substances. Although entities that processed Inventory-listed chemical substances during the lookback period were not required to submit a notice, they were permitted to do so voluntarily—and may continue to submit a notice to activate a substance until October 5, 2018. Processors who might not manufacture or import chemicals themselves, but who acquire and blend or further react chemical substances, should assume the October 2018 deadline, like the initial February 2018 deadline, will not change. Accordingly, they should monitor the most current lists of "active" substances as they are released by EPA.

Important Considerations For Processors

Although the deadline for manufacturers to comply with the retrospective reporting requirements has passed, a number of potential challenges lie ahead for processors of chemical substances on the TSCA Inventory. First, because processors are not required under the final Active-Inactive rule to comply with the retrospective reporting requirements, they should determine whether they will choose to do so. Processors should make this decision bearing in mind that they may not commence to process a substance which ultimately is designated as "inactive" until an appropriate notice seeking to "reactivate" a chemical substance has been submitted to EPA. Thus, the prudent course of action for processors is to take all possible steps to ensure the continued commercial availability of materials upon which they rely to manufacture the various goods they produce and distribute. Processors who plan to submit "retrospective reports" for substances they processed during the 10-year lookback period must do so by October 5, 2018.

A few alternative approaches can be considered by processors who did not submit reports voluntarily during the reporting period that culminated on February 7, 2018. First, if this has not occurred already, a processor should identify all of the raw materials required for its continued operations and then seek to communicate with each supplier of those materials to request assurances that all chemical components in such materials have been activated. Unfortunately, seeking assurances does not guarantee timely receipt of an assurance from every supplier, and even then will not insulate a processor from liability if it processes at a later date a substance which is placed on the "inactive" portion of the final Inventory. Second, processors could chose to continue to review EPA's updates to the on-line versions of the active substances designation list and wait to submit notifications only for those substances a processor acquires which are listed on the draft Inventory as inactive. A third alternative is for a processor to simply submit a retrospective report for all important raw materials which it is has been unable to confirm will appear on the forthcoming draft Inventory. For the reasons discussed immediately below, some combination of these three approaches is likely to be necessary.

As most entities that acquire chemical substances from suppliers have experienced, there often is not complete transparency with respect to the chemical components that comprise any mixture of substances. Considerations of intellectual property and competitive advantages very often make suppliers reluctant to reveal with complete specificity all components in a formulation delivered to a customer. Thus, even the most diligent of processors is likely to find it difficult to verify by CAS Registry number (or EPA accession number) that each component in a product it acquires has been listed on the "active" portion of the forthcoming draft Inventory. Further, many chemicals in the supply chain might be lawfully produced and distributed pursuant to an exemption from the general TSCA Inventory listing requirements. The legal status of an "exempt" chemical (such as certain polymers, or chemicals produced at a low volume under the terms of an explicit exemption granted by EPA) may be difficult to confirm and validate, even if the CAS registry number of the substance is known. Often, a processor might not be aware there are multiple chemicals in a raw material it acquires; frequently suppliers change components (or their own source of supply) in a formulated product without notice to customers of the formulation change. This can alter the product's legal status vis-a-vis the TSCA Inventory. Moreover, many chemical substances are listed only on the confidential portion of the Inventory. Thus, even if a CAS number might be known to a processor, its presence on the Inventory using the CAS number might not be obvious if it was claimed as confidential business information (CBI) at the time of the original listing. Finally, the Active-Inactive Rule makes it possible under certain circumstances for a manufacturer or importer to choose to withdraw or modify a retrospective report previously submitted until the close of the processors' reporting deadline. For these reasons we recommend that processors adopt a proactive and multifaceted approach to ensure that they will not risk interruptions in supply or disruptions to their ability to deliver products to their customers. This approach is discussed further below.

EPA has advised that it plans to issue a notice announcing the availability of the draft version of the active-inactive TSCA Inventory perhaps as early as April 2018. The draft will reflect all information submitted by manufacturers on or before the initial February 7, 2018 deadline and allow EPA to integrate the reports with the previously released "interim" and "exempt" substances lists. The draft Inventory will include a list of substances that EPA is considering designating as "inactive." Thereafter, processors of chemical substances will have about 6 months to review the updated draft TSCA Inventory before they must have filed retrospective reports they intend to submit. In preparation for the October 5, 2018 reporting deadline, processors should consider taking the following steps.

First: If they have not done so already, processors should take steps now to identify the raw materials in all formulations they purchase that are used in manufacturing and processing operations for commercial products.

Second: Prior the publication of the draft version of the TSCA Inventory, processors should take affirmative steps to reach out to suppliers and identify and confirm that components in formulations have been reported or are considered to be exempt from the reporting requirement. Seeking the chemical names, CAS Numbers, or EPA accession number for each component chemical in a formulation will make it easier for a processor to make informed decisions about whether to submit a notice of activity when the draft Active-Inactive Inventory finally appears. If a supplier is reluctant to provide that information, the supplier can be asked to provide assurances in writing that it has verified the active status designation of all components. When a supplier is unwilling or unable to verify that a timely submittal was made to obtain an active designation listing, or that such a listing already is present, or is hesitant to disclose the exact formulation of a product to a processor, a processor and a supplier may take advantage of the "joint submission" process described in the final rule.1 The joint submission process allows processors to submit retrospective reports containing the chemical information that they have in their possession, and then delegate to the supplier the responsibility of providing the specific (confidential) chemical information to EPA.

Third: Processors should examine the draft Active-Inactive Inventory when issued and then prepare and timely file a notice of activity report for any substances present in formulations that the processor acquired and processed during the lookback period. This will ensure that, going forward, these materials will remain eligible for processing—even if a processor has not received a response from a supplier to its request for information about the chemical formulation of a product. In these cases, processors should, to the best of their knowledge, attempt to identify the chemical substances at issue, drawing from the EPA-developed list of "non-CBI chemical identifiers, EPA accession number(s) and generic name(s)," for retrospective reporting.2

If a processor knows the chemical substances in a formulation, but cannot find them on the active substances portion of the draft active/inactive TSCA Inventory—either because the manufacturer of a substance did not submit a retrospective report, or because the chemical identity in the retrospective report may have been claimed as CBI and is therefore not available on the public Inventory—the processor can submit its own retrospective report. In instances where the processor believes, but is not certain that, a manufacturer submitted a retrospective report that is protected by CBI, it is in the processor's best interest to submit a retrospective report to gain certainty that commercially important substances remain on the "active" portion of the Inventory. Such reporting also ensures that the decision by a supplier or manufacturer to withdraw or revise a previously-submitted retrospective report for a substance of importance to a processor does not create potential compliance issues if a processor does not learn about the withdrawal or revision until after the October 2018 deadline.

Conclusion

Although processors are not required to submit retrospective notice of activity reports under the TSCA Inventory Notification (Active-Inactive) Requirements Rule, we recommend they do so to protect themselves against potential supply chain interruptions and issues that could adversely affect their relationship with suppliers if the TSCA compliance status of a processor's products should come into question. If a chemical substance used by a processor unexpectedly is placed on the "inactive"portion of the TSCA inventory, a processor might have to halt processing until it can prepare and file a "forward-looking" report to resume processing of the chemical substance, or the processor (and potentially down-stream customers) could risk become subject to steep penalties under TSCA.

Footnotes

1. 82 Fed. Reg. 37,520, 37536 (Aug. 11, 2017).

2. 82 Fed. Reg. 37,520, 37536 (Aug. 11, 2017).

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Arnold & Porter
Smith Gambrell & Russell LLP
Arnold & Porter
Arnold & Porter
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Arnold & Porter
Smith Gambrell & Russell LLP
Arnold & Porter
Arnold & Porter
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions