The reformed Toxic Substances Control Act (TSCA) is the first major environmental law passed since 1990. President Barack Obama signed the Frank R. Lautenberg Chemical Safety for the 21st Century Act (H.R. 2576) into law on June 22, 2016. The bill radically amends TSCA after nearly 40 years of dormancy since TSCA first become law. Chemical industry associations and manufacturers praise the revamped legislation for providing regulatory certainty that the “old” TSCA failed to provide since states were free to pass their own laws. Now, federal preemption provides uniform standards and much-needed regulatory certainty.

Business Impact The amended TSCA will have significant impacts on chemical manufacturers, importers, distributors, processors and other downstream users. Important issues include the restriction and ban of chemicals, reporting of chemical data, chemical testing, CBI claims and access, and federal preemption.

Affected companies need to understand the revised statutory concepts in the bill in order to adapt to and comply with a new U.S. regulatory framework for chemical management. In addition, the legislation has early indicators of new regulations from the U.S. Environmental Protection Agency (EPA), which will have more practical day-to-day impacts on the industry. Lastly, as EPA prioritizes, evaluates for risks, gathers chemical information, and possibly restricts individual chemicals in the upcoming months and years, affected businesses should consider participating at each stage.

Specifics of the Legislation Under the revised TSCA, EPA must evaluate new and existing chemicals against a new risk-based standard that includes considerations for vulnerable populations (such as infants, children, pregnant women, workers, or the elderly). Under this new standard, EPA must designate as a high-priority substance, a chemical substance that EPA concludes – without consideration of costs or other nonrisk factors – may present an unreasonable risk of injury to health or the environment, including an unreasonable risk to vulnerable populations. EPA now has authority to require the testing and information collection necessary to support those evaluations. Notably, the new legislation eliminates a requirement that EPA must first make a preliminary finding about risk before EPA can require testing by manufacturers or processors.

Other key changes to TSCA relate to: (1) new EPA deadlines; (2) the treatment of confidential information; (3) expanded EPA authority for funding; and (4) federal preemption of state laws.

EPA Deadlines The reform bill establishes deadlines for the review of prioritized chemicals and action on identified risks. EPA has one year after the date of enactment of the bill to issue a rule establishing the risk evaluation process. In addition, EPA has 180 days after the date of enactment of the bill to ensure that risk evaluations are conducted on 10 priority chemical substances which were drawn from a 2014 update of the TSCA Work Plan for Chemical Assessments. Not later than three-and-a-half years after the date of enactment, EPA must ensure risk evaluations are being conducted on at least 20 high-priority substances, and at least 20 chemical substances have been designated as low-priority substances. Fifty percent of all chemical substances on which risk evaluations are being conducted by EPA must be drawn from the update of the TSCA Work Plan for Chemical Assessments.

Confidential Information The bill increases the public transparency of chemical information by limiting confidentiality claims and provides further clarity on what constitutes confidential information. For instance, information relating to safety assessments and safety determinations and banned or phased-out chemicals is not considered confidential information. Manufacturers or processors of a chemical substance must substantiate their claims that certain chemical identities of chemical substances should remain confidential in accordance to a specific procedure. EPA protection of disclosure of confidential business information is limited to 10 years, with extensions of 10 years. Some confidential information may be released to states, health and environmental professionals, and first responders in emergencies.

Funding and Fees EPA’s authority under the amended TSCA allows it to collect fees to carry out its new responsibilities. EPA must establish a fee on manufacturers or processors of certain chemicals to annually defray certain costs of the bill. The fee amounts are not to be “more than reasonably necessary” to defray administrative costs and will be used to cover up to 25 percent of EPA’s costs. The amounts generated by the fee must be deposited in a newly established TSCA Service Fee Fund. EPA's authority to collect fees terminates 10 years after the date of enactment of the new bill.

Preemption The new legislation significantly differs from the “old” TSCA on certain preemption issues. If EPA determines a chemical substance does not present an unreasonable risk and requires no regulatory action, EPA’s decision preempts state laws that may contradict that finding. EPA’s preemption authority is limited to the scope of EPA's risk evaluation. Further, states may not enforce statutes or administrative actions that require the development of information that would provide the same information required under EPA.

Another key difference is the “high-priority pause,” which is a limited preemption of state laws that occurs when EPA is considering whether a chemical presents an unreasonable risk. The pause goes into effect as soon as EPA begins conducting its risk evaluation. It will end on the date when EPA’s deadline for completion of the risk evaluation expires, or, on the date on which EPA publishes the risk evaluation (whichever is earlier).

However, states are not stripped entirely of their power to regulate chemical substances, and certain exceptions are in place to limit the scope of federal preemption. Key provisions and amendments are as follows:

• Any state statutory or regulatory action taken before April 22, 2016, relating to a specific chemical substance is not subject to federal preemption. Further, state action taken pursuant to a state law that was in effect on August 31, 2003, is exempted from preemption.
• States are free to implement reporting, monitoring, or other information obligations for chemical substances not otherwise required by EPA under the revised TSCA or any other federal law.
• States are free to enact a new requirement that is identical to a requirement prescribed by EPA without being subject to preemption.
• States may apply for waivers from federal preemption based on certain considerations, such as “compelling conditions” that warrant granting the waiver to protect health or the environment.
• No later than 18 months after EPA initiates the prioritization process for a chemical substance or on the date EPA publishes the scope of the risk evaluation for a chemical substance (whichever is sooner), states may enact a statute or propose or finalize an administrative action intended to prohibit or restrict the manufacture, processing, distribution in commerce, or use of a chemical substance, without being subject to preemption while EPA evaluates the chemical.

If you have any questions or would like additional information on the material covered in this Alert, please contact one of the authors or the Reed Smith lawyer with whom you regularly work.

Client Alert 2016-159