Susan Brice Merili Seale Donald Cole October 2016 Toxic Substances Control Act (“TSCA”) Enters the 21st Century: Business and Legal Implications of the First Reforms Made to TSCA in 40 years Susan Brice Merili Seale Donald Cole October 2016

Overview TSCA - What Is It? The Lautenberg Act Nuts and Bolts of the Lautenberg Act New Chemicals Testing and Data Confidential Business Information Preemption Funding What Does This All Mean?

3 TSCA– What Is It?

TSCA - What Is It? The 1976 Toxic Substances Control Act (TSCA) Purpose Coverage Three Key Sections Impact

TSCA - Purpose The Toxic Substances Control Act (15 U.S.C. 2601 et seq.) authorizes the EPA to screen existing and new chemicals used in manufacturing and commerce to identify potentially dangerous products or uses

TSCA - Coverage Both naturally occurring and synthetic chemicals are subject to TSCA Exceptions: Chemicals regulated by other federal laws concerning food, drugs, cosmetics, firearms, ammunition, pesticides, tobacco, or mixtures

TSCA – Key Sections Three Key Sections: Section 4: Chemical Testing Section 5: New Chemical Review Section 6: Permissive authority to regulate chemicals if EPA determines it has a reasonable basis to conclude the chemical may present unreasonable risk to health or the environment

TSCA – Impact The “Toothless Tiger” Impact: The "toothless tiger." Considered by many to be a failure. Act placed burden on EPA to make risk findings without equipping EPA with the regulatory tools to require health and safety information from companies (Catch 22) TSCA – Impact The “Toothless Tiger” Act grandfathered existing chemicals Controls were not mandatory Risk and control decisions contained cost benefit analysis and EPA was required to choose “least burdensome” control alternative Act placed burden on EPA to make risk findings without equipping EPA with the regulatory tools to require health and safety information from companies Testing could only be required via rulemaking process Companies could shield information from third parties as Confidential Business Information (“CBI”)

9 The Lautenberg Act

The Lautenberg Act “Frank R. Lautenberg Chemical Safety for the 21st Century Act” enacted on June 22, 2016  First reform of TSCA in 40 years  Bipartisan support in both the U.S. House and Senate  Aims to fix the TSCA problems by: Broadening the coverage of the Act - applies to all chemicals in commerce or intended for commerce Giving EPA the power to act - EPA must conduct risk assessments on all new chemicals and existing high priority chemicals and EPA must take action on chemicals deemed to present an unreasonable risk Giving EPA the tools to act - EPA can issue an order or enter into a consent agreement requiring testing and additional information regarding a chemical, instead of going through rulemaking process

Nuts and Bolts of the Lautenberg Act 1111 Nuts and Bolts of the Lautenberg Act

Nuts and Bolts of the Lautenberg Act Existing Chemicals New Chemicals Testing and Data Confidential Business Information Preemption Funding

Nuts and Bolts of the Lautenberg Act Existing Chemicals 1313 Nuts and Bolts of the Lautenberg Act Existing Chemicals

Nuts and Bolts of the Lautenberg Act – Existing Chemicals Step One - Inventory Reset Inventory Inaccurate: EPA to establish rule requiring manufacturers and possibly processors to notify EPA of the chemicals/mixtures it has manufactured/processed in the previous 10 years The manufacturer/processor will be required to provide this notification no longer than 6 months after the rule is finalized (rule must be final by June 22, 2017) Once the reporting is done, EPA will use the results to identify chemicals on the current chemical inventory list as active or inactive

Nuts and Bolts of the Lautenberg Act – Existing Chemicals Step Two - Prioritization EPA to establish a rule that sets forth a risk-based process to determine how to prioritize chemicals as either “high” or low” - Rule must be final by June 22, 2017 The process must include a consideration of: (i) the hazard and exposure potential of a chemical; (ii) the conditions of use; and (iii) the volume of the chemical substance manufactured or processed Rule must require EPA to request information from interested persons first (designations will be subject to notice and comment) High priority – EPA determines the chemical “may present an unreasonable risk of injury to health or the environment because of a potential hazard and a potential route of exposure under the conditions of use, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant by the Administrator” Low priority – the chemical fails to satisfy standard for high-priority, based upon sufficient information Insufficient information - EPA can require testing

Nuts and Bolts of the Lautenberg Act – Existing Chemicals Step Three: Risk Evaluations High priority designations evaluated to determine whether they actually do present “an unreasonable risk of injury to health or the environment” without regard to cost Each evaluation cannot take more than 3 years and draft evaluations will be subject to notice and comment EPA must establish a procedural rule establishing the exact process for evaluating the risk of chemicals by June 22, 2017 Low priority designation does not require further action Companies can request risk evaluations and pay full cost (unless already listed in TSCA Workplan, then pay only 50% of cost) EPA must publish list and begin evaluations on 10 chemicals that were on the Update to the 2014 TSCA Workplan for Chemical Assessments by December 2016   

Nuts and Bolts of the Lautenberg Act – Existing Chemicals EWG, a nonprofit, is advocating for the first ten chemicals to be: asbestos tetrachloroethyene (PERC - solvent) phthalates bisphenol A chlorinated phosphate fire retardants tetrabromobisphenol A (bromated fire retardant) brominated phthalate fire retardants 1-bromopropane (solvent) Bis(2-ethylhexyl) adipate (DEHA - platicizer) p-dichlorobenzene (used to control moths and mold)

Nuts and Bolts of the Lautenberg Act – Existing Chemicals Step 4: Controls If chemical or mixture determined to present an unreasonable risk, EPA must impose prohibitions or restrictions “to the extent necessary so that the chemical no longer presents an unreasonable risk” This is done by rulemaking and includes a consideration of costs and available alternatives EPA must take final risk management action within 2 years (limited extensions) If risk is not unreasonable, no action is taken

Nuts and Bolts of the Lautenberg Act – Existing Chemicals Key Changes From Old TSCA Risk Evaluation: Old TSCA did not require risk evaluation for all chemicals = risk assessment done on < 2% of chemicals Controls: Under old TSCA, EPA was not required to control unreasonable risk, restrictions were permissive EPA could initiate rulemaking process to restrict substance, but (i) EPA lacked the power to obtain the necessary data; and (ii) burden was on EPA to choose the “least burdensome alternative” Corrosion Proof Fittings, Fifth Circuit struck down EPA's attempt to ban most uses of asbestos, finding that EPA failed to abide by the statutory process, failed to consider all alternatives and failed to choose the least burdensome alternative Result: EPA has only tried 5 times to restrict or ban a chemical substance - EPA officials reported that controlling a chemical through the old TSCA process was a “last resort”

Nuts and Bolts of the Lautenberg Act New Chemicals 2020 Nuts and Bolts of the Lautenberg Act New Chemicals

Nuts and Bolts of the Lautenberg Act – New Chemicals Step One- Pre-manufacture Notification Manufacturer/processor submits notice to EPA 90 days prior to the manufacture of new chemical or 90 days in advance of subjecting an existing chemical to a significant new use, as determined by EPA Effective immediately – For companies that submitted pre-manufacture notices (PMNs) prior to enactment and which were undergoing review at the time, the new law effectively resets the 90-day review period Step Two - EPA conducts risk review and can order a company to provide additional data

Nuts and Bolts of the Lautenberg Act – New Chemicals Key Changes from Old TSCA - EPA's Failure to Act - Old TSCA - if EPA did not act within 90 days (and find an unreasonable risk), company could begin to manufacture. As a result, EPA rarely acted to preclude manufacture of new chemicals. Nuts and Bolts of the Lautenberg Act – New Chemicals Step Three - EPA decides one of the following: Chemical not likely to present unreasonable risk; Chemical presents unreasonable risk; or Insufficient information to make determination or that the chemical may present an unreasonable risk Step Four - Controls Old TSCA – If EPA failed to find unreasonable risk within 90 days, manufacture could proceed Risk Control Risk Unlikely May commence manufacture. Risk Present Cannot manufacture. EPA must by rule or order prohibit or impose restrictions necessary to protect against risk. Risk Possible/More Information Needed Cannot manufacture immediately. EPA must issue order prohibiting or imposing restrictions necessary to protect against risk and person may commence manufacture only in compliance with order.

Nuts and Bolts of the Lautenberg Act Testing & Data 2323 Nuts and Bolts of the Lautenberg Act Testing & Data

Nuts and Bolts of the Lautenberg Act – Testing & Data Key Changes from Old TSCA - Rulemaking: Old TSCA - Testing only required if EPA found that chemical/substance may pose an unreasonable risk of injury though a formal rulemaking process. EPA stated that it takes 5 years for agency to promulgate a test rule and 2 additional years for the company to complete the testing. Nuts and Bolts of the Lautenberg Act – Testing & Data EPA may use rulemaking, orders or consent agreements to require testing of chemicals by manufacturers (including importers) and processors of chemicals (prepare a chemical substance/mixture, after manufacture, for distribution in commerce) Orders can be used to require the development of new information when EPA is: (1) reviewing a pre-manufacturing notice; (2) performing a risk evaluation; and (3) prioritizing a chemical substance Old TSCA – Testing only required if chemical found to pose unreasonable risk via rulemaking – EPA says 5 years to issue test rule

Nuts and Bolts of the Lautenberg Act Confidential Business Information 2525 Nuts and Bolts of the Lautenberg Act Confidential Business Information

Key change from old TSCA Nuts and Bolts of the Lautenberg Act – Confidential Business Information Manufacturers must now substantiate and certify claims for CBI, including chemical identity - All CBI claims sunset after 10 years Information submitted regarding chemical health and safety studies is not protected EPA must review and make determinations on all new confidentiality claims for the identity of chemicals EPA must review past confidentiality claims for chemical identity to determine if still warranted Key change from old TSCA - Easy to claim CBI. EPA was forbidden from sharing the CBI. Report: 90% of pre-manufacture notices and 20% of all reported health and safety studies were held by EPA as CBI

Nuts and Bolts of the Lautenberg Act Preemption 2727 Nuts and Bolts of the Lautenberg Act Preemption

Nuts and Bolts of the Lautenberg Act – Preemption Preserved: Certain state actions are off limits State can act on chemical risks not acted on by EPA State actions taken before April 2016 are still in force (e.g., California’s Proposition 65)

Nuts and Bolts of the Lautenberg Act – Preemption Preemption: Certain state actions can be preempted, depending upon timing After EPA has taken final agency action If chemical is deemed safe, state action is preempted if it contradicts finding If chemical is not deemed safe, state restrictions on production, distribution processing or use taken after 4/22/16 are preempted if they apply to same use/risk During the Evaluation Process, new state action is paused during review New state restrictions on high priority substances are prohibited during this time (low priority are not preempted) If risks are identified with high priority chemical during evaluation, pause is lifted and new state provision can be put in place temporarily until EPA risk management rule is issued If EPA misses deadline for risk evaluation, pause is lifted  Waivers - States can apply for waivers from general preemption or pause EPA must grant waiver from preemption from pause in certain circumstances EPA may grant exception from general preemption via rulemaking if specific criteria are met, including “compelling conditions” that necessitate waiver Waivers can be challenged in court

Nuts and Bolts of the Lautenberg Act Funding 3030 Nuts and Bolts of the Lautenberg Act Funding

Nuts and Bolts of the Lautenberg Act – Funding Under new law, EPA can collect fees from companies that: Must submit test data Submit pre-manufacture notification Manufacture a chemical undergoing risk evaluation Request a risk evaluation on existing chemical

3232 What Does This All Mean?

What Does This All Mean? Chemical manufacturers, importers and processors subject to TSCA must be prepared REACH vs. the Lautenberg Act Credibility of the Science Availability of Test Data Citizen Suit Provision

1) Comply with pre-construction manufacture notice rule immediately. 2) Look for key rules to be proposed in mid-December. Submit comments, if warranted. 3) Start preparing for Chemical Inventory reset. Past Chemical Data Reporting rules may be of help, and a nomenclature audit could help identify possible discrepancies between company records and inventory. 4) Think through CBI claims and how to address components of the statute. Be prepared to defend them. There are a number of questions companies will have to answer, and they will have to certify their substantiations are accurate. 5) If you manufacture/process (what will likely be) a high priority chemical, get involved in the process. EPA is required to request information from interested persons on chemicals before designating them. 6) If you make/process a chemical designated high priority and slated for risk evaluation, be part of the process and plan for possible restrictions/bans. 7) Prepare/update an internal TSCA compliance plan that educates employees on TSCA compliance, including pre-manufacture notification and recordkeeping requirements. Under TSCA, EPA can conduct inspections, impose large penalties and obtain injunctive relief (including the ability to seize chemicals distributed in violation of TSCA). What Does This All Mean? Chemical manufacturers, importers and processors subject to TSCA must be prepared Comply with pre-manufacture notice rule immediately Look for key rules to be proposed in mid-December (submit comments) Start preparing for Chemical Inventory reset (audit inventory and records) Think through CBI claims and how to address components of the statute - be prepared to defend them If you manufacture/process (what will likely be) a high priority chemical, get involved in the process If you make/process a chemical designated high priority and slated for risk evaluation, be part of the process and plan for possible restrictions/bans Prepare/update an internal TSCA compliance plan that educates employees on TSCA compliance (e.g., pre-manufacture notice) Violations: EPA can conduct inspections, impose penalties, obtain injunctive relief, seize product

What Does This All Mean? REACH vs. the Lautenberg Act The Burden: 1) The burden: REACH requires the manufacturer to take the first step. They must identify and assess the risks posed by substances they manufacture and market in the EU. They do this via submission of a registration dossier. Under TSCA, EPA takes the first step through designations of chemicals as high or low priority and the burden is largely on EPA to identify and assess the risks.   2) Scope of evaluation: Under REACH, every chemical that goes through registration process, goes through the risk evaluation process. Under new TSCA, existing low priority chemicals do not go through risk evaluation. Risk Factors: Under both, risk screening is done without regard to cost but control measures take cost into account. Note: The data supplied through REACH will likely need to be provided to EPA. During the evaluation process, EPA can order you to provide information and EPA will not necessarily treat it as CBI. What Does This All Mean? REACH vs. the Lautenberg Act The Burden: REACH requires the manufacturer to take the first step - identify and assess the risks posed by substances they sell into EU Under TSCA, EPA takes the first step through priority designations and burden is largely on EPA to identify and assess the risks Scope of Evaluation: Under REACH, every chemical that goes through the registration process, goes through the risk evaluation process Under TSCA, existing low priority chemicals do not go through the risk evaluation Risk Factors: Under both, risk screening is done without regard to cost but control measures take cost into account Note: Data supplied via REACH will likely be provided to EPA

What Does This All Mean? Credibility of the Science The statute aims to reduce testing on vertebrates Pay close attention to how this develops to ensure the efficacy of such testing These tests will be used in litigation down the road

What Does This All Mean? Availability of Test Data TSCA will make it much more difficult to protect your data and testing EPA’s risk assessments will be public information that can be used in litigation

What Does This All Mean? Citizen Suit Provision TSCA contains a citizen suit provision that has rarely been used It provides that any person may file a civil action against any person, including the US, who is “alleged to be in violation of the chapter or any rules promulgated or orders issued under the certain sections or against the EPA to compel EPA to perform any nondiscretionary act or duty” We likely will see an uptick in TSCA citizen suit litigation

Thank You susan.brice@bryancave.com 3939 Thank You susan.brice@bryancave.com