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February 21, 2017
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If you manufacture or import a chemical subject to the Toxic Substances Control Act (“TSCA”) Chemical Substance Inventory, the U.S. Environmental Protection Agency (“EPA”) has proposed to require you to confirm each such chemical’s active status using a ten-year lookback period of June 21, 2006 to June 21, 2016. In addition to manufacturers and importers, the proposal may affect “processors” of chemicals—basically anyone who adds a TSCA-regulated substance to its products for distribution in commerce. This proposed rule, the TSCA Inventory Notification (Active-Inactive) Requirements (the “Inventory Proposal”), is one of many rules that will implement the 2016 TSCA reform. It accomplishes the 2016 TSCA reform’s mandate to “reset” the Inventory through identification of “active” and “inactive” chemical substances. Key considerations under the Inventory Proposal include:

• If a chemical is not confirmed as “active,” the EPA will designate it as “inactive” and you will be subject to new notification requirements and potential penalties for failure to properly report.
• A notice process is required for resumed use of “inactive” or new chemicals.
• Chemical processors will receive an additional reporting period to determine whether their chemical was otherwise reported by a manufacturer or importer, or if they will need to separately report before the chemical is designated as inactive.

The current TSCA Inventory has more than 85,000 chemicals listed, so the scope of the Inventory Proposal is quite encompassing. The Inventory Proposal was issued on January 13, 2017 and is open for comment until March 14.

Timing and Next Steps

Timing to finalize the Inventory Proposal is controlled by statutory deadlines, so this rule should not be affected by the Trump administration’s various regulatory relief actions. Under the TSCA reform, a final version of the Inventory Proposal must be issued by June 22, 2017.

The Inventory Proposal provides 180 days for chemical manufacturers and importers to report so that the mandated “reset of the TSCA Inventory” will meet the statutory deadline of no later than December 22, 2017. Processors have an additional 180 days, once manufacturers and importers report, to ensure that their chemicals are “active.”

If you are subject to reporting, which will utilize EPA’s Central Data Exchange (“CDX”) platform, you should review the Inventory Proposal carefully and consider commenting to ensure that the requirements are reasonable as applied to you and that, as a practical matter, you are capable of implementing them. Also, because the deadlines are statutory, you should consider whether to now begin the task of evaluating your operations during the ten-year lookback period to determine what you must report. Because this internal auditing process could uncover past noncompliance with TSCA and its related rules (each violation subjects you to penalty of up to $37,500/day), it is important to be mindful of potential liability risks associated with this exercise and, as appropriate, consider participation in the EPA’s voluntary disclosure program. Paticipation in this program can minimize or eliminate penalties associated with noncompliance reporting.

Additional Details

The initial TSCA Inventory was required in 1977 under TSCA Section 8(b), 15 U.S.C. § 2607(b). The reform’s amendments to TSCA Section 8(b)(4) refine the EPA’s management of the Inventory to differentiate between “active” and “inactive” chemicals. The “active” chemicals are those noticed for the ten-year lookback period from June 21, 2006 to June 21, 2016. Once the reset list is established, the Inventory Proposal becomes forward-looking for manufacturers, importers, and processors of chemical substances for nonexempt commercial purposes to satisfy their notice obligations under TSCA Section 8(b). Under the Inventory Proposal, the EPA is limiting the submission period for new notices such that any person who intends to manufacture or process an unlisted or “inactive” substance for a nonexempt commercial purpose must first notify the EPA before the date on which the inactive substance is manufactured or processed. The submission period for such notices is limited to no more than 30 days before the actual date of manufacturing or processing.

Co-manufacturers and co-processors will be allowed to coordinate their submissions into a single commercial activity submission instead of separately reporting. However, each co-manufacturer and co-processor will be held separately accountable for compliance with the Inventory Proposal.

Exemptions. The Inventory Proposal exempts certain chemicals. These include: chemical substances manufactured under a TSCA Section 5(h) exemption; naturally occurring chemical substances per 40 C.F.R. § 710.27(b) (which will be designated active without the need for reporting); and substances on both the non-confidential portion of the list and on the interim list of active substances per TSCA Section 8(b)(6). In addition, the EPA interprets “nonexempt commercial purposes” consistent with exemptions from pre-manufacture reporting under 40 C.F.R. § 711.10. For example, the manufacturing or processing of chemical substances solely in small quantities for research and development would not trigger reporting obligations under the Inventory Proposal. Likewise, the manufacturing or processing of impurities or byproducts that have no subsequent commercial purpose would not trigger reporting under the Inventory Proposal. Finally, the EPA interprets the phrase to exempt the import of chemical substances solely as part of articles (defined in 40 C.F.R. § 710.3).

Confidentiality Claims. Special rules and procedures provide for claimed confidential business information (“CBI”). The EPA has maintained a separate list for confidential chemicals, and the Inventory Proposal hopes to cull that list to its bare minimum by requiring timely justification. If an importer cannot provide the specific chemical identity of a reportable substance to the EPA because the information is claimed confidential by a supplier and unknown to the importer, the importer would be required to ask the supplier to provide the confidential chemical identity information directly to the EPA in a joint submission.

Reporting is required via the electronic CDX platform. Management of CBI is addressed by the Inventory Proposal and other EPA actions. For new, non-exempt claims, there must be substantiation at the time of submission, as explained in the EPA’s notice on its interpretation of the Statutory Requirements for Substantiation of CBI Claims under TSCA (notice published Jan. 19, 2017; effective March 20, 2017). For existing CBI claims, EPA will be promulgating a separate rule to establish a review plan. In the interim, for existing claims, companies may elect to submit early substantiation at the time they submit their notices and, if they do, additional substantiation under the new rule would not be required for up to five years. For existing claims, any submitter may seek to maintain a CBI claim for a chemical that another submitter claimed CBI during the ten-year lookback period. However, if no current reporter requests CBI treatment, that chemical will be moved from the confidential portion to the non-confidential portion of the list.

Takeaway

Companies that manufacture, import, or process chemical products in the U.S. must take note of the Inventory Proposal, which is statutorily required to be finalized in some form by June 22, 2017. Failure to do so could result in noncompliance for unlawful manufacture, importation, or processing and invoke a requirement for reactivation. The Inventory Proposal, and several other EPA actions on TSCA that are forthcoming, are technical and complex, requiring careful consideration. If you have questions regarding application of TSCA rules to your operations, would like assistance in conducting your internal investigations, or would like assistance in formulating comments to the EPA’s actions, please contact: Rick Friedman at 717.237.5469 (rfriedman@mcneeslaw.com), Scott Gould at 717.237.5304 (sgould@mcneeslaw.com), or Steve Matzura at 717.237.5276 (smatzura@mcneeslaw.com).

© 2016 McNees Wallace & Nurick LLC
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