By Zameer Qureshi
On October 4, 2016, Bergeson & Campbell, P.C. (B&C®) hosted its fourth and final webinar in its series of webinars on the new Toxic Substances Control Act (TSCA) in collaboration with Chemical Watch. The webinar addressed numerous important issues for a wide array of stakeholders. The webinar was moderated by Lynn L. Bergeson, Managing Partner at B&C, and the expert panel included Charles M. Auer, Richard E. Engler, Ph.D., Lisa R. Burchi, and Sheryl L. Dolan.
Mr. Auer, Senior Regulatory and Policy Advisor at B&C, addressed “Administration of the Act” and described important changes between old and new TSCA. Mr. Auer’s presentation consisted of three segments: (1) “Section 26 Science Requirements”; (2) “Section 26 Information and Guidance”; and (3) “Section 26 ‘Savings’ Provision.”
Mr. Auer addressed the “Scientific Standards” requirements of new TSCA Section 26(h), the “Weight of Scientific Evidence” requirements of Section 26(i), and the Section 26(o) provisions of new TSCA relating to Consultation with the Science Advisory Committee on Chemicals (SACC). Mr. Auer addressed a number of additional rules and requirements in Section 26, including the U.S. Environmental Protection Agency’s (EPA) obligation to submit a report to Congress and issue an Annual Plan under Sections 26(m)-(n).
Ms. Burchi, Of Counsel at B&C, discussed “Preemption” under Section 18 of new TSCA. Ms. Burchi described preemption as “one of the most debated subjects in [the TSCA reform] debate” and stated that she had heard it referred to as a “linchpin” in terms of reaching agreement on provisions for TSCA reform to occur. Ms. Burchi stated “Everything in the new Section 18 is new or very significantly changed from what we were used to with regard to preemption … The final provisions are fairly complicated … It will remain to be seen whether states continue to act with regard to chemical substances in the way that they have been.”
Ms. Burchi addressed the three “main” provisions related to preemption under new TSCA Sections 18(a)(1)(A)-(C), and analyzed more specific issues (e.g., pause preemption) and the related exceptions. Ms. Burchi described the TSCA Section 18(d)-(e) provisions relating to “Exceptions” and “Preservation of Certain Laws.” Ms. Burchi also addressed new TSCA’s Section 18(f) “Waivers” provisions and concluded her segment of the presentation with the following statement: “It remains to be seen whether states are going to be jumping in to [take action] when EPA has already identified a chemical for prioritization and review … [There will be some interesting provisions and interplay] to be seen as we move forward under new TSCA.”
Ms. Dolan, Senior Regulatory Consultant at B&C, analyzed “Fees” under new TSCA and addressed EPA’s obligations to: (1) set lower fees for small business concerns; (2) consider balance between manufacturers and processors; and (3) consult with the regulated community. Ms. Dolan stated “new TSCA directs EPA to review its fee program on a three-year cycle and revise it as needed to raise the target fees … While new TSCA did not set a deadline for developing the fees program, it really didn’t have to -- EPA, of course, has every incentive to knock this rulemaking out quickly.”
Ms. Dolan indicated that a final rule is expected on fees under new TSCA by June 2017, and provided an overview of comments received on the proposed rule. Ms. Dolan stated that “overarching themes” in the comments included that: (1) fees should be tied to the level of required effort; (2) fees should encourage innovation; and (3) fees should not be overly complex or difficult to administer. In relation to (3), Ms. Dolan quoted a commenter that stated “don’t give us the [Internal Revenue Service (IRS)] Code.”
Ms. Dolan stated “everyone seems to want to know how much will a [pre-manufacture notice (PMN)] cost in the future … I think the answer to that [will come with a big red bow] in December. Specifically, EPA states that it will send a proposal to [the Office of Management and Budget (OMB)] in mid-October … EPA may well set a comment period of at least 60 days for this proposed rule.”
Dr. Engler, Senior Chemist at B&C, discussed Sustainable Chemistry (i.e., Green Chemistry) under new TSCA. Dr. Engler stated “new TSCA is largely silent on sustainability” and indicated that the “primary benefit” to Sustainable Chemistry under new TSCA is the abbreviated review period when EPA determines that a new chemical is “not likely to present” an unreasonable risk (i.e., 90-day period waived and manufacturers can commence manufacturing immediately). Dr. Engler addressed chemicals that EPA considers to present low hazard for health and ecotoxicity (“low/low” chemicals) and stated that new TSCA could be “more of a driver for Sustainable Chemistry,” if only low/low chemicals escape regulation.
Dr. Engler addressed “Relative Risk under New TSCA” and EPA’s “Safer Choice Program” (SCP). Dr. Engler discussed the Senate Report on S. 697, which suggested that EPA should consider “private sector voluntary consensus standards as an alternative” to SCP. Dr. Engler indicated that as the relevant section of the Senate report concerns Section 23, the Sustainable Chemistry Section that was not included in the enacted new TSCA, it is unclear how it applies to new TSCA as enacted. Dr. Engler stated that EPA is proceeding with SCP and hosting a summit in November on this topic.
The webinar concluded with a Questions and Discussion (Q&D) session, and B&C’s expert panel provided useful answers and analyses in response to attendees’ questions. Ms. Bergeson moderated the Q&D session, which was organized by topic.
In the Q&D session, Ms. Bergeson stated and asked Ms. Dolan: “Fees are super important … [small businesses and startups] might have a hard time mustering any type of financial liquidity to get their notifications through the gauntlet of EPA -- so how would you expect EPA to be defining lower fees for purposes of small business provision?”
Ms. Dolan responded by stating “[currently, the ratio is $2,500 and $100 for small businesses. I would imagine there will be some kind of comparable proportionality and currently there are other submissions (e.g., Low Volume Exemptions) that don’t require any fees. EPA has got to raise the money somewhere -- the more they put it on something else or the more they try to avoid charging fees for things, the more it’s going to jack up the cost and other things. I would imagine that they are going to charge something for everything. Whether they maintain that proportionality of 100:2500 remains to be seen. Another consideration is what constitutes a small business. There is a lot of conversation about that and the fact that definition hasn’t been updated in quite a while … This might be something that is the focus of a lot of attention in the proposed rule.]”
Ms. Bergeson drew on Mr. Auer’s extensive experience with EPA on several occasions during the Q&D session, starting questions with “If you were back at EPA,” and Mr. Auer’s responses were comprehensive. Dr. Engler responded to questions regarding Green Chemistry and discussed Persistent, Bioaccumulative, and Toxic (PBT) substances under new TSCA, and Ms. Burchi answered questions on California’s Safer Consumer Products Regulation (SCPR) and preemption under new TSCA.
More information on TSCA reform and B&C’s “The New TSCA: What You Need to Know” webinar series is available online.
On September 19, 2016, the U.S. Environmental Protection Agency (EPA) posted a notice on the Chemical Data Reporting website that it has amended the CDR regulations to extend the 2016 submission deadline from September 30, 2016, to October 31, 2016. According to the pre-publication version of the Federal Register notice for the final rulemaking, EPA received a request for an extension, citing problems with certain aspects of the electronic reporting system that impact a business’s ability to submit within the required timeframe, and agreed that additional time should be afforded. EPA clearly states, however, that the extension is a one-time extension for the 2016 reporting period only. The action does not impact the reporting timeframe for the 2020 CDR.
Because the original reporting deadline of September 30, 2016, was imminent, EPA will utilize discretion under the Administrative Procedure Act that allows it to issue a final rule if standard public review and comments are impracticable (Section 553(b)(3)(B)) and for “good cause” (Section 553(d)).
The rulemaking will be effective upon publication in the Federal Register.
By Sheryl L. Dolan and Kathleen M. Roberts
In anticipation of the second meeting, EPA shared its general observations as to a way forward for fee assessment under TSCA Sections 4, 5, 6, and 14 and some of EPA’s key take aways from the comments submitted to the docket. In its meeting presentation, EPA outlined its estimated annual costs by 2019 (i.e., once the Section 6 risk evaluation schedule is ramped up). While no specific fee proposals emerged from the meeting discussions, the following information was discussed, which provides some insight into EPA’s ongoing process:
- EPA’s projected annual cost for implementing TSCA Sections 4, 5, 6 and 14 includes both direct and indirect/overhead costs, with a 22.75 percent adjustment to cover overhead, consistent with EPA’s overall budget practice.
- In estimating the anticipated number of Section 5 submissions, EPA stated that based on industry comments regarding the effect of fees, it assumed a 30 percent reduction from recent years. EPA essentially stated that 30 percent is an educated guess, noting that Notices of Commencement (NOC) are only filed on approximately 50 percent of premanufacture notices (PMN).
- EPA stated that, consistent with industry’s comments, it most likely will not propose to charge separately for individual confidential business information (CBI) claims, but instead will incorporate that into overhead costs.
- EPA stated that it is implementing a time accounting system, which may support future refinements of its cost estimates; EPA is required to review its fee program every three years under TSCA Section 26(b)(4)(F).
- EPA stated that it is pursuing consultation with the Small Business Administration regarding revisiting the applicable definition of a small business concern. While clarifying that this is not a proposal, EPA noted that if the producer price index is applied to the small business concern definition in 40 C.F.R. § 700.43, the $40 million revenue cap in the definition would increase to $91 million. As reflected in the circulated spreadsheet, EPA plans to propose reduced fees for small businesses as required by TSCA Section 26(b)(4)(A). EPA also stated that approximately 14 percent of TSCA submissions are made by small businesses.
- Section 6 risk evaluation fees remain one of the greater uncertainties. During the September 13, 2016, meeting, suggestions were made that these fees should be assessed incrementally, perhaps tied to milestones, with a schedule that perhaps could allow tying the fees to actual costs. In response, EPA noted that OMB requirements preclude federal agencies from seeking fees in reimbursement for completed activities.
Based on its projected costs, EPA will seek to raise the $25 million annual maximum allowed by new TSCA. Regardless of how these costs are distributed among Sections 4, 5, and 6 (assuming EPA’s proposal does not separately charge for Section 14 activities), it is clear that the proposed rule will be a significant change from the $2,500 PMN fee in place since the 1980’s.
By Lynn L. Bergeson and Richard E. Engler, Ph.D.
On September 2, 2016, the U.S. Environmental Protection Agency (EPA) released additional guidance on its implementation of the new Toxic Substances Control Act (TSCA) in the form of additional questions and answers (Q&A). EPA added a series of Q&As of particular relevance given the fast-approaching TSCA Section 6(h) deadline of September 19, 2016, for industry to request a risk evaluation for persistent, bioaccumulative, and toxic (PBT) chemicals listed in the 2014 TSCA Work Plan. Section 6(h) outlines a procedure requiring “expedited” regulatory action that is intended to reduce exposures to these chemicals to the “extent practicable.” As written, chemicals subject to Section 6(h) will not undergo a risk evaluation as with other high-priority chemicals. Instead, EPA will proceed immediately to assess and identify appropriate risk management actions for these chemicals that EPA believes achieves the goal of reduced exposure to the “extent practicable.” EPA is required under new TSCA to issue the proposed risk management rules by June 2019, three years from enactment of new TSCA, and issue the final rules six months thereafter.
As we noted in an earlier blog, this deadline poses ups and downs. On the one hand, absent a risk evaluation, fast tracking the process necessarily invites worst-case assumptions and a high degree of probability that regulatory actions will be extensive. On the other hand, in the absence of a defined risk evaluation process and a yet-to-be-defined fee assessment process or schedule, volunteers may be few and far between. Understandably, a potential requester can be expected to want to know what the risk evaluation cost will be before making a commitment to pay that amount. Even with these uncertainties, under some circumstances the election may be worth considering and stakeholders are urged to consider the risks and benefits quickly, as September 19 is only days away.
EPA’s new Q&As pertinent to PBTs relate to:
Interestingly, EPA’s Q&As address some, but not all, questions. Careful review of the questions and EPA’s answers is advised. In short:
- There are seven substances on the Work Plan list that are PBTs;
- There is no formal request form; all that is required is the substance and company identity, along with the contact information of the requesting official;
- Entities requesting the assessment are disallowed from defining the scope and EPA intends to “evaluate the chemical substance in accordance with TSCA section 6(b)” regardless of a more narrowly defined set of uses of interest to the submitter;
- The submitter will be expected to pay for the full assessment; and
- The request is irrevocable and cannot be withdrawn.
While EPA’s interpretation comes as no surprise, reasonable people are likely to disagree as to whether the law must be read as EPA reads it. EPA may find more willing sponsors if, for example, the fee is limited to cover the scope of nominated uses. EPA could evaluate a broader scope, but the additional expense would not be entirely borne by the nominating company.
By Lynn L. Bergeson, Kathleen M. Roberts, and Margaret R. Graham
Section 6(h) of new TSCA addresses persistent, bioaccumulative, and toxic (PBT) chemical substances listed in the 2014 TSCA Work Plan. For such chemicals, Section 6(h) outlines a procedure requiring “expedited” regulatory action that is intended to reduce exposures to these chemicals to the “extent practicable.” As written, chemicals subject to Section 6(h) will not undergo a risk evaluation as will other high-priority chemicals. Instead, EPA will proceed immediately to assess and identify appropriate risk management actions for these chemicals that EPA believes achieves the goal of reduced exposure to the “extent practicable.” EPA is required under new TSCA to issue the proposed risk management rules by June 2019, or three years from enactment of new TSCA, and issue the final rules six months thereafter.
Importantly, manufacturers or other stakeholders of potential Section 6(h) chemicals can request that EPA conduct a risk evaluation prior to risk management decisions. Section 6(h)(5) expressly allows entities to request such risk evaluations, effectively blunting expedited action. The cost of the risk evaluation is borne by the entity requesting the evaluation. Such requests must be received prior to September 22, 2016, a fast-approaching deadline.
This deadline plainly poses ups and downs. On the one hand, absent a risk evaluation, fast tracking the process necessarily invites worst-case assumptions and a high degree of probability regulation actions will be extensive. On the other hand, in the absence of a defined risk evaluation process and a yet-to be-defined fee assessment process or schedule, volunteers may be few and far between. Understandably, a potential requester can be expected to want to know what the risk evaluation cost will be before making a commitment to pay that amount. Nonetheless, even with these uncertainties, under some circumstances the election may be worth considering and stakeholders are urged to consider the risks and benefits quickly as September 22 is less than a month away. Reportedly, EPA is preparing interim guidance for companies that wish to nominate a PBT for risk evaluation, and expects to issue it soon.
By Sheryl L. Dolan, Kathleen M. Roberts, James V. Aidala, and Lynn L. Bergeson
On August 11, 2016, the U.S. Environmental Protection Agency (EPA) convened a public meeting to solicit comments prior to development of a proposed rule to implement the revised Section 26 fees provision under the new Toxic Substances Control Act (TSCA). Public comments may be submitted through regulations.gov in docket EPA-HQ-OPPT-2016-0401 until August 24, 2016.
During the meeting, EPA solicited public comment in particular on the following five issues:
- To be able to defray 25 percent of costs of administering Sections 4, 5 and 6, and Confidential Business Information (CBI), does industry have considerations of weight amongst the three areas of fee collection?
- Does industry have thoughts on the types of factors (types of submissions, numbers of submissions, level of difficulty, etc.) that EPA should consider when structuring the fees?
- Has industry considered how to distribute payment amongst multiple manufacturers and/or processors?
- Does industry have thoughts on how to identify the whole universe of manufacturers, including importers and processors affected?
- Does industry have thoughts on how to arrive at an appropriate balance between manufacturers and processors?
In its presentation, EPA stated that it intends to publish a proposed rule by mid-December 2016, and a final rule in time for its statutory June 22, 2017, deadline.
Four industry trade associations gave prepared remarks during the meeting: the American Chemistry Council; the American Petroleum Institute; the Society of Chemical Manufacturers and Affiliates; and the American Fuel & Petrochemical Manufacturers. Their comments reflected several common but competing themes, including:
- EPA needs to share its expectations of internal costs as a starting point for discussions of the fee structure.
- The fee system should be straightforward to implement.
- EPA should be mindful in developing a fee structure so as not to stifle innovation; for example, placing too high of fees for review of new chemistries under Section 5 or confidentiality claims under Section 14.
- Not all sections should be given equal weight; in particular, as industry will pay for Section 4 data development, it should not be double-charged by assessing a fee for EPA’s review of these data.
- EPA must provide adequate consideration for the effect on small businesses.
- Consideration should be given to incremental fees, tied to EPA milestones.
- A business should have a way to exit from a Section 6 risk evaluation process if it elects to exit the market.
Congress recognized that the new TSCA tasks EPA with significant additional responsibilities, and included Section 26 as a venue to ensure adequate resources would be available to develop the infrastructure to meet these responsibilities according to the specified timelines and in conformity with sound science. Input from all affected stakeholders will be needed to devise a workable TSCA fee system, particularly in the compressed timeframe for rule development.
EPA and industry stakeholders are supportive of a simple framework, but the complexities and current unknowns of how new TSCA will operate will make this goal challenging. Many questions exist that will not be answered before next week’s comment deadline:
- Should a company have to pay fees for a Section 6 risk evaluation on uses that it does not support?
- Should there be fees associated with Section 6 prioritization actions? If not, does that mean that only high priority chemicals will have Section 6 fees assessed on them?
- Given the new threshold for affirmative findings under Section 5, will EPA complete the same number of new chemical notifications that it has in the past? If not, should that anticipated reduction in notification reviews be reflected in the fees proposal?
- Most industry stakeholders recognize that the current PMN fee of $2,500 will be increased, but how much is too much?
- As previously noted, is it appropriate to require industry to pay for testing under Section 4, and then charge for EPA review of that test data?
- To ensure that sufficient funds are raised, will we need to assess a fee for every “touch” that EPA has within Sections 4, 5, and 6? How can that cost be fairly allocated among all industry players, including small businesses?
While EPA did not offer to share information on budgets at the August 11, 2016, meeting, the Office of Pollution Prevention and Toxics (OPPT) presumably has pertinent information supporting its annual budgets that must be shared in the near term if it hopes to receive any meaningful ideas on a proposed fee structure. Although past program outputs done under old TSCA may bear little resemblance to the duties EPA now has under new TSCA, EPA’s new policies and responsibilities will be some scale of past program capabilities and budget.
Of more relevance will be the experience of OPPT’s sister program, the Office of Pesticide Programs (OPP). OPP has had a dedicated stream of user fees since the 1988 amendments to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and additional fees were imposed in 2004 with enactment of the Pesticide Registration Improvement Act (PRIA) fee-for-service program. While the FIFRA product licensing program is different in many respects from TSCA, there are relevant commonalities that OPPT should find helpful. OPP has a time accounting system, for example, that provides a principled basis on which to estimate the time required for study report review and risk evaluation.
With estimates derived from the time accounting system, OPP (and presumably OPPT) can estimate how much it costs EPA to review toxicity studies individually. For example, there is an estimate of how much it costs EPA to review a 90-day subchronic study, or how much to review a genotoxicity study. These calculations form the basis of the PRIA fee scheme, as PRIA is designed to generate one-third of the program costs involved. The “simple” general rule underlying a now elaborate fee schedule with almost 200 categories is that the more science review involved, the greater the required fee. The new law may not need or want to have so many different categories, but the operating principle can remain the same.
For OPPT, the dollar amounts could vary from OPP given the statutory limitation of the maximum amount to be generated, but the more difficult question will be how OPPT calculates its expected workload under the new law. Given the wealth of information available through OPP’s experience, sharing this information would further inform the public about what to expect in, or options for how to fashion, a fee scheme.
By Lynn L. Bergeson and Margaret R. Graham
On June 29, 2016, the U.S. Environmental Protection Agency (EPA) posted an Implementation Plan that outlines EPA’s plans for early activities and actions under the Frank R. Lautenberg Chemical Safety for the 21st Century Act, legislation that significantly amends many of the provisions of the Toxic Substances Control Act (TSCA). The amended TSCA has been identified as Public Law Number (Pub. L. No.) 114-182. EPA notes that the new law imposes new responsibilities on EPA, while providing “comparatively short” deadlines to implement them. EPA “takes these responsibilities and deadlines seriously,” and intends for the Implementation Plan to be a roadmap of the major activities on which EPA will focus during the initial year of implementation. EPA organizes the Implementation Plan by the statutory timeframes during which the activities must be completed, rather than by what is of importance to EPA. EPA states that the Implementation Plan is a living document, and EPA will further develop it over time. EPA cautions that the Implementation Plan “is NOT intended to be a comprehensive listing of all requirements in the new law.”
Bergeson & Campbell, P.C. (B&C®) is pleased that EPA is making strong early efforts to communicate and engage with stakeholders about its early implementation of the new TSCA and its thinking regarding specific provisions. Completing the items listed in the Implementation Plan represents a prodigious amount of work for EPA over the coming months and years. Stakeholders will need to be prepared to respond thoughtfully to rules, lists, and process descriptions as they appear in the Federal Register, or as they are posted.
More information on EPA’s Implementation Plan is available in our memorandum TSCA Reform: EPA Publishes First Year Implementation Plan.