06/30/2017 | News release | Distributed by Public on 06/30/2017 11:46
The TSCA Inventory Reset Clock to Start Ticking
Authors: Mark N. Duvall, Timothy M. Serie, Ryan J. Carra
June 30, 2017
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Virtually all manufacturers and importers of chemicals for the past 11 years are now subject to a new TSCA reporting requirement known informally as the TSCA Inventory Reset. Reports will be due six months after the final rule is published. All processors of chemicals have an opportunity and an incentive to report as well. EPA released a prepublication version of the final Inventory Reset rule on June 22, 2017.
Unlike the other framework rules under the amended Toxic Substances Control Act (TSCA) that EPA also released on June 22, the Inventory Reset rule (known formally as 'TSCA Inventory Notification (Active-Inactive Requirements)') imposes immediate reporting obligations on all manufacturers and importers of chemical substances in the United States. It may affect almost all companies across the manufacturing supply chain. This article lays out the basic Inventory Reset framework, explains what information must be reported to EPA and by whom, and provides recommendations for what companies can do to make sure they are prepared. The prepublication version of the rule is available here. The rule will be codified as 40 C.F.R. Part 710, Subpart B.
The TSCA Inventory Reset Framework
Inventory Reset was a key feature of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (LCSA), the sweeping legislation enacted last year overhauling TSCA. As amended, TSCA section 8(b) requires EPA to determine which of the 85,000 chemicals substances on the TSCA Inventory are actually active in commerce. To achieve this end, the Inventory Reset rule sets forth a process to designate chemical substances on the TSCA Inventory as either 'active' or 'inactive' based on notifications from manufacturers and processors over the course of the next 14 months. After the initial Inventory Reset is complete, companies that intend to manufacture or process an inactive substance must notify EPA prior to commencing manufacturing or processing.
The Reset: Retrospective Reporting
The rule requires manufacturers, which term includes importers, to notify EPA regarding the manufacture or import of chemical substances for non-exempt commercial purposes during the 10 years prior to enactment of the LCSA, from June 21, 2006 to June 21, 2016 (known as the 'lookback period'). Manufacturers will be required to report this information to EPA within 180 days after the Inventory Reset rule is published in the Federal Register. After the reporting period for manufacturers has ended, EPA will compile an interim list of active chemical substances.
The rule allows, but do not require, processors to notify EPA regarding chemical substances that they processed for non-exempt commercial purposes during the lookback period within 420 days from the publication date. The proposed rule would have only given processors 360 days to report, but EPA extended this timeframe by 60 days in the final rule to give processors sufficient time to review the interim list of active chemical substances to reduce duplicative reporting.
The rule requires manufacturers, and those processors who choose to report, to report the chemical identity of each chemical substance being reported. They must also indicate whether they seek to maintain an existing claim to protect the chemical identity from disclosure as confidential business information (CBI). They must report to EPA electronically through a Notice of Activity Form A (EPA Form No. TBD-1). Notably, EPA dropped the other, more-burdensome reporting elements from the proposed rule that would have required reporting the type of commercial activity (e.g., whether the chemical substance was manufactured domestically, imported, and/or processed), and date range of manufacture for non-exempt commercial purposes during the 10-year lookback period.
The rule establishes a joint submission procedure for situations where a manufacturer, importer, or processor cannot provide the specific chemical identity of a reportable chemical substance to EPA because the information is claimed CBI by a supplier. Under these circumstances, the submitter is required to ask the supplier to provide the CBI chemical identity information directly to EPA in a joint submission.
After reporting is completed, EPA will designate all chemical substances on the TSCA Inventory as either active or inactive, based on the notifications it receives during the retrospective reporting period.
After the Reset: Forward-Looking Notification
Once EPA has completed its final active/inactive substance designations and the TSCA Inventory has been formally 'reset,' no one will be permitted to manufacture, import, or process an inactive chemical substance without first submitting a notification to EPA. Anyone who intends to manufacture or process an inactive substance must submit a notification within the 90-day period before the anticipated date of manufacturing or processing. (This implies that the notification could be as late as the day before the anticipated date of manufacture or processing.) The proposed rule would have required companies to submit the notification within only 30 days of the actual date of manufacturing or processing. Under the final rule, companies now have additional time and are no longer bound to a specific date to commence commercial activity. The notification must include the chemical identity and anticipated date of manufacture or processing.
This information must be submitted electronically through the use of a Notice of Activity Form B (EPA Form No. TBD-2). Upon receiving notice, EPA will change the designation of the chemical substance from inactive to active, and manufacturing or processing may commence.
What Chemical Substances Must Be Reported?
The final rule only requires reporting of 'chemical substances subject to commercial activity designation.' Inventory Reset reporting covers chemical substances that are listed on the Inventory that were manufactured for non-exempt commercial purposes, including chemicals on both the confidential and non-confidential portions of the Inventory. Chemical substances that have not been added to the Inventory are therefore not subject to the reporting requirements.
The Inventory Reset rule excludes certain other types of chemical substances and listed activities from the notification requirements. For example, naturally occurring substances are excluded from the reporting requirement provided the manufacturing or processing of such chemical substances meets certain criteria under the regulations. 'Naturally occurring' is a defined term that excludes certain methods of manufacture or processing. Substances that are manufactured or processed under an exemption - such as the low-volume, polymer, research and development, or test marketing exemptions - would also not be subject to the reporting requirements. Further, substances that were manufactured or processed for exempt commercial purposes are not subject to the reporting requirements either, which include impurities and byproducts that have no separate commercial purpose, and substances that are imported or processed solely as part of articles.
One of the more important aspects of the rule is an exemption from the retrospective reporting requirement for circumstances in which EPA has already received equivalent notification that a chemical substance is being manufactured for a commercial purpose. The rule describes three circumstances in which EPA has already received equivalent notification:
What Level of Diligence is Expected?
Manufacturers and processors should be prepared to do their homework. The rule requires information that is 'known to or reasonably ascertainable by' the manufacturer or processor to be reported. The rule defines the term 'known to or reasonably ascertainable by' to mean 'all information in a person's possession or control, plus all information that a reasonable person similarly situated might be expected to possess, control, or know.' The rule further defines the term 'possession or control' as information that is in the possession or control of the company, or its subsidiary, parent company, or partner if they are involved in the research, development, test marketing, or commercial marketing of the chemical substance in question. Under this definition, information is in the possession or control of a person if it is in the company's files; in a commercially available data base to which the company has access; or maintained in the files of other agents of the person.
The preamble makes it clear that if the information is in a company's possession or control, or the company actually knows the information, then the information is considered to be known or reasonably ascertainable and thus subject to reporting. EPA acknowledges, however, that prior loss of records due to document retention policies, for example, is relevant for determining what information is known or reasonably ascertainable. This recognizes that a company may not currently possess documentation regarding the previous manufacture or import of a chemical substance dating back to 2006. If this information is no longer 'known or reasonably ascertainable,' a manufacturer would not be responsible for reporting.
EPA has relied on the concept of 'known or reasonably ascertainable' information in the past for other reporting under TSCA, such as the CDR, and EPA has provided useful prior guidance regarding this standard.
Protecting Confidential Business Information
Companies should be aware that they must protect their CBI when notifying EPA under the rule. One of the goals of Inventory Reset is to remove chemical substances from the confidential Inventory for which there is no more need for protection from disclosure. Companies that submit notifications during the retrospective reporting period and forward-looking period thereafter for substances on the confidential Inventory must claim protection for CBI, or such protection will be lost. If no manufacturers or processors claim CBI protection for a particular substance, all previous CBI claims regarding the substance will be considered waived, and EPA will move the substance from the confidential to the non-confidential portion of the Inventory. At that point, anyone will be able to learn the substance's specific identity.
Notifications to EPA may contain two different types of CBI claims: claims to protect the chemical identity itself, and claims to protect information other than the specific chemical identity. The rule requires submitters to indicate whether they seek to protect the specific chemical identity of the chemical substance, but does not require mandatory substantiation at this time. EPA will conduct a separate rulemaking in the future to establish a review plan that includes mandatory substantiation requirements for specific chemical identities. For CBI claims related to information other than the specific chemical identity, companies are required to provide a CBI certification statement and supporting substantiation, if substantiation is required, at the time of submission.
As soon as the Inventory Reset rule is published in the Federal Register, the 180-day countdown for manufacturers and importers to report will begin. Here is what a company can do to ensure it is prepared to meet its compliance obligations.
Beveridge & Diamond's Chemicals, Products & Nanotechnology Practice Group provides strategic, business-focused advice to the global chemicals industry. We work with large and small chemical companies from industries including basic and specialty chemicals, pharmaceuticals, electronics, crop protection, food contact materials and additives, and consumer products, and have substantial experience representing clients whose products and activities are subject to EPA's broad chemical regulatory authority under the Toxic Substances Control Act. For more information on TSCA and implementation of TSCA reform, please contact Mark Duvall.
 40 C.F.R. § 710.25(a).
 TSCA Inventory Notification (Active-Inactive) Requirements, 82 Fed. Reg. 4255 (Jan. 13, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-01-13/pdf/2016-31923.pdf.
 40 C.F.R. § 710.29.
 40 C.F.R. § 710.29(d)(4).
 40 C.F.R. § 710.25(c).
 40 C.F.R. § 710.25(a).
 40 C.F.R. § 710.27(b).
 40 C.F.R. § 710.27(a).
 40 C.F.R. § 710.27(a).
 40 C.F.R. § 710.23.
 40 C.F.R. § 710.25(a).
 40 C.F.R. § 710.25(a).
 TSCA section 3(9) defines 'manufacture' to mean 'import into the customs territory of the United States…, produce, or manufacture.'