By Lynn L. Bergeson and Margaret R. Graham
The U.S. Environmental Protection Agency (EPA) posted guidance regarding changes to the requirements for making confidential business information (CBI) claims under the Toxic Substances Control Act (TSCA), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act. The “key changes” that EPA notes are:
New Certification Requirement. Pursuant to TSCA § 14(c), a submitter of information claimed as CBI must now certify agreement with several statements. The certification language is incorporated into electronic reporting tools for TSCA submissions requiring or permitting electronic reporting. Entities who make TSCA submissions on paper must now also include the following statements in the submission:
- I hereby certify to the best of my knowledge and belief that all information entered on this form is complete and accurate.
- I further certify that, pursuant to 15 U.S.C. § 2613(c), for all claims for confidentiality made with this submission, all information submitted to substantiate such claims is true and correct, and that it is true and correct that:
- (i) My company has taken reasonable measures to protect the confidentiality of the information;
- (ii) I have determined that the information is not required to be disclosed or otherwise made available to the public under any other Federal law;
- (iii) I have a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of my company; and
- (iv) I have a reasonable basis to believe that the information is not readily discoverable through reverse engineering.
- Any knowing and willful misrepresentation is subject to criminal penalty pursuant to 18 U.S.C. § 1001.
Substantiation Requirements. Existing substantiation requirements for certain types of CBI claims continue to remain in effect. EPA notes that it may develop further guidance and require additional requirements in the future.
Generic Names. A structurally descriptive generic name is now required where specific chemical identity is claimed as CBI. EPA will be relying on existing generic name guidance for the creation and approval of generic names until updated guidance is developed.
EPA’s Review of Claims. EPA will be reviewing and approving or denying a CBI claim for specific chemical identity and a proportion of CBI claims for other types of information in accordance with TSCA § 14. EPA states that it may contact submitters of CBI to corroborate their CBI claims to the extent that substantiation has not already been provided.
While the guidance is welcomed and useful, it sheds no light on how best to corroborate a claim of CBI and how best to respond to an EPA allegation that the CBI claim is lacking. These questions will continue to be debated; when in doubt, consult legal counsel.
More information is available on EPA’s website. Please also join Bergeson & Campbell, P.C. (B&C®) and Chemical Watch on September 12, 2016, for the third complementary webinar in the series on “‘The New TSCA -- What You Need to Know,” featuring information on the TSCA Inventory, Chemical Data Reporting (CDR), and CBI.
Monday, September 12, 2016
8:00 a.m. Pacific Daylight Time/11:00 a.m. Eastern Daylight Time/16:00 British Summer Time
With passage by unanimous consent voice vote of the U.S. Senate of the Frank R. Lautenberg Chemical Safety for the 21st Century Act on June 7, 2016, this bill, that profoundly alters the regulation of industrial chemicals in the U.S. under TSCA, has cleared all hurdles and was signed into law by President Obama on June 22, 2016.
All chemical stakeholders doing business in the U.S., as well as foreign entities with business interests in the U.S., will need to understand the fundamental shifts in requirements, and the new concepts and approaches that are introduced by the law.
Bergeson & Campbell, P.C. has collaborated with Chemical Watch in assembling an impressive faculty of TSCA experts representing the perspectives of industry, environmental organizations, and U.S. federal and state regulatory authorities to present a series of complimentary webinars titled "'The New TSCA' -- What You Need to Know."
Webinar 3: Inventory, CDR, and CBI (Sections 8 & 14)
- Charles M. Auer, Charles Auer & Associates, LLC, former Director of the Office of Pollution Prevention and Toxics (OPPT), U.S. Environmental Protection Agency (EPA)
- Lynn L. Bergeson, Managing Partner, Bergeson & Campbell, P.C.
- Richard E. Engler, Ph.D., Senior Chemist, Bergeson & Campbell, P.C., former senior staff scientist in OPPT and leader of EPA's Green Chemistry Program
- Kelly Franklin, Chemical Watch
- Kathleen M. Roberts, Vice President, B&C® Consortia Management, L.L.C.
- Section 8 Reporting and Retention of Information
- Small Manufacturer Definition
- Reporting by Processors
- Byproduct Rulemaking and Reporting
- Toxic Substances Control Act (TSCA) Inventory
- Section 14 Confidential Business Information (CBI)
- Information Not Protected
- Asserting CBI
- Presumptive CBI
- Requirements for CBI Claims
- Exemptions to Protection from Disclosure
- Review and Resubstantiation
- Duties of Administrator
- Criminal Penalties
Additional Webinars in "The New TSCA" Series:
||Webinar 1: Overview and Summary of Major Changes: What to Expect and When to Expect It, presented June 13, 2016.
||Webinar 2: Impacts on New Chemical Programs, presented July 14, 2016.
||Webinar 4: Other Provisions -- PBTs, Preemption, Green/Sustainable Chemistry -- will be presented on September 26, 2016.
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.
On July 28, 2016, the U.S. Environmental Protection Agency (EPA) proposed to update the Toxic Substances Control Act (TSCA) Significant New Use Rule (SNUR) procedures. 81 Fed. Reg. 49598. As discussed in our previous memorandum on this proposed rule, Proposed Revisions to Significant New Use Rules Reflect Current Occupational Safety and Health Standards, while some of the proposed changes are not consequential, other changes, such as those related to workplace protections, are more clearly consequential. An issue that was noted but not discussed in detail in our previous memorandum is EPA's proposal to modify the procedures for determining if a specific substance or chemical use is subject to a SNUR when the substance, production volume, or use is claimed as confidential business information (CBI). Specifically, EPA has proposed changes to 40 C.F.R. § 721.11 to address these procedures. Below, we review the current procedures and then address how the proposed language would change those procedures -- changes of which stakeholders should be aware.
To put the changes into context, we first consider the current regulations relating to establishing a bona fide intent to manufacture (bona fide intent) a substance that has confidential identity or confidential conditions in a SNUR. Under the current procedure, determining if a specific substance is listed on the confidential portion of the TSCA Inventory (Inventory) and if the substance is subject to a SNUR requires the submission of a bona fide intent notice (BFN), according to the procedures codified at 40 C.F.R. § 721.11(b). If EPA determines that the submitter has established a bona fide intent, EPA will inform the submitter that the substance is listed on the Inventory and provide "which section in subpart E of this part [40 C.F.R. § 721] applies." This provision would not necessarily reveal any CBI information regarding use or production volume restrictions that are conditions of the SNUR, only the specific 40 C.F.R. § 721 citation.
Whether the identity of a substance is confidential or not, the substance may have SNUR restrictions applied to it that are considered CBI. In particular, production volume and/or specific use(s) may be considered CBI and be part of a SNUR imposed on the substance. The procedures for determining the confidential SNUR restrictions are similar to the procedures to determine if a substance is listed on the confidential portion of the Inventory. It requires submitting a BFN to EPA. In the past, when EPA needed to refer to the procedures for submitting a BFN to determine the confidential SNUR conditions, it referred to the procedures codified at 40 C.F.R. § 721.1725(b)(1). This is in contrast to the BFN procedures for determining if a specific substance is subject to a SNUR listed in 40 C.F.R. § 721.11(b).
To put these changes in context, let us first examine the current procedures for EPA's response to a BFN submitted to determine the CBI provisions of a SNUR. 40 C.F.R. § 721.1725(b)(1)(iv) states:
If EPA determines that the person has a bona fide intent to manufacture, import, or process the chemical substance, EPA will tell the person whether the use for which the person intends to manufacture, import, or process the substance is a significant new use [(SNU)] under paragraph (a)(2)(i) of this section. If EPA tells the person that the intended use is not a significant new use under paragraph (a)(2)(i) of this section, EPA will tell the person what activities would constitute a significant new use under paragraph (a)(2)(ii) of this section.
This means that upon making its determination that a submitter has demonstrated a bona fide intent, EPA either:
- Tells the BFN submitter that the use specified in the BFN is a SNU, in which case the submitter must prepare and submit a Significant New Use Notice (SNUN) at least 90 days prior to manufacturing the substance for the particular use of the substance; or
- Tells the BFN submitter that the use specified in the BFN is not a SNU, in which case EPA tells the submitter what activities would constitute a SNU for the substance.
Note that in the first scenario, where a SNUN is required, EPA does not inform the submitter of the existing confidential SNUR conditions. EPA subsequently makes a determination based on the information in the SNUN when submitted, and informs the SNUN submitter of any restrictions imposed to manage risks associated with the use described in the SNUN. The new restrictions could either be unique to the conditions of the SNUN or could result in a modification of the previously established CBI SNUR restrictions. Also, EPA could amend the confidential portion of the SNUR to include any new permissible activities as a result of the SNUN (e.g., add another CBI use) without informing either manufacturer of the other's confidential SNUR conditions.
In the second scenario, where EPA determines that the BFN submitter's use is not a SNU, EPA informs the BFN submitter of any restrictions associated with that use that might further restrict the BFN submitter or its customers (e.g., the BFN submitter's use is permitted, but that the production volume is capped by the SNUR). As a matter of practice, EPA informs the original submitter that another submitter has demonstrated a bona fide intent, but this practice is not codified in the C.F.R. Furthermore, the original submitter is not informed of the BFN submitter's intent, only that the BFN submitter's use was not a SNU, whereas the BFN submitter knows the heretofore confidential specific use and production volume ceiling (if any). These two outcomes are not aligned. The first scenario is more protective of both entities' CBI. The second scenario provides the BFN submitter some visibility of the original submitter's CBI, but not the reverse.
For example: Manufacturer 1 submits a premanufacture notice for a non-confidential chemical substance to be used as an intermediate to manufacture a pesticide and claims the use as confidential (with a generic use of "intermediate"). EPA makes a determination that the use specified in the PMN does not present an unreasonable risk to health or the environment, but other uses may present issues, so EPA imposes a SNUR invoking 40 C.F.R. § 721.80(j) limiting its use to the use listed in the PMN (intermediate to manufacture a pesticide). Manufacturer 1 then commences commercially manufacturing the substance and files a Notice of Commencement (NOC), placing the substance on the public portion of the Inventory. Some time later, Manufacturer 2 seeks to use the same substance as an intermediate to manufacture an anti-oxidant lubrication additive. Manufacturer 2 submits a BFN and EPA informs Manufacturer 2 that its use is a SNU. Manufacturer 2 then submits a SNUN for its use, also claiming the specific use as confidential and listing "intermediate" as the generic use. EPA evaluates the SNUN and determines that this particular use is not likely to present unreasonable risk to health or the environment, but other uses may present issues, so EPA adds the new use to the confidential uses permitted for the substance, but leaves the other SNUR provisions in place and neither manufacturer knows the specific use of the other.
We note that manufacturers must communicate SNUR restrictions to their customers. 40 C.F.R. § 721.5 requires that to avoid submitting a SNUN, each manufacturer must provide the SNUR conditions to its customer(s). 40 C.F.R. § 721.5(a)(2) requires that "[a] person who intends to manufacture, import, or process for commercial purposes a chemical substance [with a SNUR], and intends to distribute the substance in commerce" must submit a SNUN. Most manufacturers avoid this SNUN requirement by taking advantage of the provisions of 40 C.F.R. § 721.5(a)(2)(i) that state that a SNUN is not required if the manufacturer can document:
That the person [manufacturer] has notified the recipient [customer], in writing, of the specific section in subpart E of this part which identifies the substance and its designated significant new uses.
In the example above, each manufacturer notifies its own customers of the appropriate C.F.R. citation and SNUR restrictions (Manufacturer 1 informs its customer that the use is limited to use as an intermediate for a pesticide; Manufacturer 2 informs its customer that the use is limited to use as an intermediate for an antioxidant). The customers of each manufacturer remain in compliance with the SNUR and 40 C.F.R. § 721.5, assuming each customer restricts its use based on the information provided by the separate manufacturers. In this scenario, all four parties (both manufacturers and both customers) can be in compliance without EPA disclosing the confidential use of one manufacturer to the other.
EPA has proposed incorporating the BFN procedures for determining whether an activity is a SNU under the confidential provisions of a SNUR into 40 C.F.R. § 721.11(a) (the proposed key changes are emphasized):
A person who intends to manufacture or process a chemical substance which is subject to a significant new use rule in subpart E of this part may ask EPA whether the substance or a proposed use is subject to the requirements of this part if that substance is described by a generic chemical name or if the significant new use is confidential and therefore not described specifically in the rule. EPA will answer such an inquiry only if EPA determines that the person has a bona fide intent to manufacture or process the chemical substance for commercial purposes.
This change is innocuous. It simply incorporates the two BFN procedures into a single paragraph. EPA's proposal on procedures for its response to such a BFN, proposed to be codified at 40 C.F.R. § 721.11(e) alters procedures for how EPA responds (again, proposed key changes emphasized):
If the manufacturer or processor has shown a bona fide intent to manufacture or process the substance and has provided sufficient unambiguous chemical identity information to enable EPA to make a conclusive determination as to the identity of the substance, EPA will inform the manufacturer or processor [the BFN submitter] whether the chemical substance is subject to this part and, if so, which section in subpart E of this part applies, and identify any confidential significant new use designations.
Under the proposed rule, once a submitter has established a bona fide intent, EPA will disclose to the BFN submitter any confidential significant new use designations, including specific use and production volume restrictions, whether or not those restrictions are relevant to or would limit the BFN submitter's commercial activity as proposed in the BFN. As proposed by EPA, this disclosure would be made to the BFN submitter without regard for the existing CBI claims on the information, and without informing the original entity holding the CBI claim before or after making this disclosure.
Importantly, this change means that EPA is switching from a presumption of protecting CBI in the SNUR to actively informing later submitters of information proprietary to the original submitter. While 40 C.F.R. § 721.11(f) states that informing later submitters of SNUR restrictions "will not be considered public disclosure of [CBI] under Section 14," it is an unavoidable fact that EPA's proposed approach involves disclosure of CBI to an additional party, one that could be a competitor to the original submitter (both are, after all, manufacturing the same substance), a fact pattern that is very likely to be of considerable concern to the original submitter.
We do not read provisions in either old or new TSCA to authorize EPA to disclose CBI in the way that is proposed in this notice. The CBI SNUR requirements do not fall into any of the information types discussed under Section 14(b) of new TSCA that concerns information not protected from disclosure. The BFN submitter cannot be considered to have official duties or needs related to those discussed at Section 14(d) of new TSCA, the provision that allows CBI disclosure under certain circumstances. The BFN submitter only needs to know if the proposed use is a SNU or not. If EPA informs the BFN submitter that the proposed use is not a SNU, the BFN submitter is effectively bound to the use terms laid out in the BFN and would need to submit a new BFN if other uses or changes in the initially proposed use are contemplated.
Based on the foregoing, with the proposed language, the second submitter is unavoidably privy to the CBI claimed by the first submitter, but there is no provision in the C.F.R to inform the first submitter of the conditions sought by the second submitter. This is in contrast to the provisions in 40 C.F.R. § 720.25(b)(6) in which the original submitter is notified if and when a second entity has demonstrated a bona fide intent that is listed on the CBI portion of the Inventory. Both the original submitter and the BFN submitter are informed that another entity is manufacturing the substance for a TSCA purpose.
EPA must provide the statutory basis and rationale for informing a BFN submitter of confidential use or production volume conditions. If EPA can provide the statutory basis for such disclosure, EPA must also explain why it must disclose such information to the BFN submitter. If EPA can somehow justify disclosing the CBI SNUR conditions, it should codify its obligation to notify the original CBI submitter that such disclosure has occurred. The current proposed SNUR provides for neither equal disclosure nor equal confidentiality as a result of BFN submission.
TSCA stakeholders should carefully consider commenting on the changes to 40 C.F.R. § 721.11 to be sure that EPA is acting within its statutory authority, justifying why disclosure is necessary, and providing for notification of the original CBI holder. While the consequences of these proposed provisions may be inadvertent, the proposed rule either needs to be withdrawn and re-proposed to reflect the law, or rationalized in a way that our careful reading of TSCA does not allow.