How will expansion of chemical safety law impact Arizona businesses?

Business News | 21 Feb, 2018 |

In 2017, the U.S. Environmental Protection Agency (“EPA”) promulgated significant amendments to its chemical regulations to implement new requirements of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (the “Lautenberg Act”).  These “framework” rules, covering all existing chemicals in commerce, are currently being challenged in Federal courts by environmental groups.  EPA’s framework rules, coupled with the ongoing litigation challenging them, will shape the future of chemical manufacture and use within the U.S.  Manufacturers and processors of chemicals in Arizona will need to keep abreast of developments to ensure that their operations are not adversely affected by EPA’s actions, or any resulting litigation.

Introduction

Chris S. Leason is a shareholder practicing environmental law at Phoenix-based law firm Gallagher & Kennedy.

The Lautenberg Act, named after the late Senator Frank Lautenberg from New Jersey, reflects the most substantial amendments to the Toxic Substances Control Act (“TSCA”) since its original enactment in 1976.  The Lautenberg Act imposes mandatory requirements on EPA to (1) identify all existing chemicals in commerce as either “high” or “low-priority” for risk evaluations, (2) apply a new risk-based safety standard when performing a risk evaluation of designated “high-priority” chemicals, which excludes costs and other non-risk factors, and (3) implement actions within designated time periods to address any “unreasonable risks” posed by a chemical. 

Although many think of TSCA as the law that regulates the manufacture of chemicals, the law also applies to “processors,” those that neither manufacture nor import chemicals, but use chemicals in their manufacturing processes.  As such, actions by EPA in both implementing the Lautenberg Act and evaluating chemicals pursuant to it, and lawsuits brought by environmental groups challenging EPA’s actions, will shape the application of the Lautenberg Act to Arizona businesses.

This article discusses the primary obligations and EPA rulemakings under the Lautenberg Act and litigation challenging EPA’s actions.

EPA’s Framework Rules

To ensure that EPA performed its non-discretionary duties under the Lautenberg Act, Congress mandated that EPA promulgate three framework rules within one year of its enactment. 

TSCA Inventory “Reset” Rule

 The TSCA Inventory sets forth a list of chemicals that are manufactured or processed in the U.S.  The initial Inventory was compiled through manufacturer and processor reporting in 1978, and has been modified over the years as new chemicals have been introduced into commerce.  The TSCA Inventory now contains approximately 85,000 chemicals.

The Lautenberg Act requires EPA to evaluate chemicals to determine whether they present a “high” or “low-priority” for a risk evaluation.  However, recognizing that the TSCA Inventory has never been “scrubbed” to determine which chemicals on the Inventory are currently being used in commerce, the Lautenberg Act first requires EPA to perform an Inventory “reset” to identify “active” or “inactive” chemicals.

On August 11, 2017 (82 FR 37,520), EPA finalized its TSCA Inventory “reset” rule.  The rule sets forth a mandatory retrospective electronic reporting period for chemicals identified on the TSCA Inventory and manufactured during a ten-year “look-back” period (between June 21, 2006 and June 21, 2016), and a voluntary reporting period for TSCA Inventory chemicals that were processed during the “look-back” period.  The mandatory reporting period for manufacturers runs from August 11, 2017 to February 7, 2018, and the voluntary reporting period for processors runs from August 11, 2017 to October 5, 2018. 

Chemicals reported during the applicable reporting periods will be designated as “active” by EPA, meaning that they will be subject to a mandatory evaluation of whether they represent a “high” or “low-priority” for a risk evaluation.  Any substance not reported during the period will be deemed “inactive,” meaning that once EPA publishes its final list of “active” substances, the “inactive” substance cannot be manufactured or processed without an entity first filing a notice with EPA of its intent to manufacture or process the chemical.  Thus, even if an entity is using a chemical (i.e., it is a processor, not a manufacturer), it should either (1) confirm with the manufacturer that they will report the chemical as “active,” or (2) report the chemical during the processor voluntary reporting period.

EPA intends to release the initial list of “active” substances in November 2018 (after the close of the processor reporting period), and the initial list will become final 90 days thereafter (anticipated in February 2019). 

The Environmental Defense Fund filed a legal challenge to EPA’s TSCA Inventory “reset” rule in the U.S Court of Appeals for the District of Columbia Circuit.  A coalition of chemical industry trade associations entered the litigation as intervenors in support of EPA.  To date, the Court has not set a briefing schedule for the litigation.

Prioritization Rule

Each “active” TSCA Inventory chemical must be run through a risk prioritization process to determine if the chemical represents either a “high” or “low-priority” for a risk evaluation and possible limits on the chemical’s use in commerce.  The Lautenberg Act mandates that by December 22, 2019, EPA must designate at least 20 chemicals as either “high” or “low-priority,” and that upon completion of a risk evaluation on a “high-priority” chemical, EPA must designate at least one additional “high-priority” chemical to takes its place.  The Lautenberg Act requires that EPA complete the prioritization process for a chemical within nine to twelve months of identifying the chemical for prioritization.

On July 20, 2017 (82 FR 33,753), EPA published its final prioritization rule.  The rule identifies EPA’s chemical selection process, initiation of prioritization process, screening protocols, and designation (as “high” or “low-priority”) protocols.  Throughout the prioritization process, there are opportunities for public comment.  EPA will publish its final designation of the substance as “high” or “low-priority,” and a “high-priority” designation will identify the conditions of use that were the basis for the designation.  A “high-priority” designation will lead to the commencement of a risk evaluation to determine whether the substance presents an unreasonable risk of injury to health or the environment.

A number of environmental groups challenged both EPA’s final TSCA risk prioritization rule and risk evaluation rule (discussed below) in three U.S. Courts of Appeal, the Second, Fourth, and Ninth Circuits.  Initially, a multidistrict judicial panel randomly selected the Fourth Circuit to hear the challenge to the prioritization rule, and the Ninth Circuit to hear the challenge to the risk evaluation rule.  However, as a result of various motions, the Fourth Circuit granted the environmental groups’ request to have both cases heard in the Ninth Circuit.  The Ninth Circuit has not issued a briefing schedule, and has not ruled on a motion to intervene filed on behalf of industry trade associations. 

Risk Evaluation Rule

Once a chemical is designated as a “high-priority,” it must undergo a risk evaluation to determine whether it presents an unreasonable risk to health or the environment under its conditions of use, including an unreasonable risk to a potentially exposed or susceptible subpopulation.  As part of the evaluation process, EPA must evaluate both the hazard and exposure, excluding consideration of costs or other non-risk factors, and ensure that its decisions are based on the “weight of scientific evidence.”  By the end of 2019, EPA must have at least 20 “high-priority” chemicals undergoing risk evaluation. 

On July 20, 2017 (82 FR 33,728), EPA published its final risk evaluation rule.  The risk evaluation process includes (1) identification of the scope of the risk evaluation, including the conditions of use that the chemical will be evaluated under, (2) a hazard assessment, including the adverse health or environmental effects caused by exposure to the chemical, (3) an exposure assessment, identifying the likely duration, intensity, frequency and number of exposures to the chemical under the identified conditions of use, (4) a risk characterization, integrating the hazard and exposure results, and (5) a risk determination, concluding whether the chemical substance under the conditions of use presents an unreasonable risk to health or the environment.

EPA will publish a draft scope of the contemplated risk evaluation and its draft risk evaluation for public comment, and must complete its risk evaluation of a chemical within three years of commencing the process, with up to a six-month extension permitted by the Lautenberg Act.  If EPA determines that a chemical presents an unreasonable risk to health or the environment under one or more conditions of use, it must initiate a rulemaking to impose requirements on the use of the chemical to the extent necessary so that the substance no longer presents such risk. 

The Lautenberg Act mandates that EPA propose a rule to eliminate any unreasonable risk not more than one year after completion of the risk evaluation.  And, EPA must promulgate a final rule within two years of the final risk evaluation, although extensions are allowed under the Lautenberg Act.

Possible EPA actions to eliminate the risk include (1) warnings and instructions regarding the use, distribution in commerce, or disposal of the chemical, (2) restrictions on the quantity of the chemical that may be manufactured, processed, or distributed in commerce, or (3) a ban or phase-out of the chemical associated with a particular use, a particular use at a concentration in excess of a certain level, or all uses.

Conclusion

The Lautenberg Act imposes substantial obligations and deadlines on EPA to evaluate and regulate the manufacture and processing of chemicals.  The litigation involving EPA’s framework rules will shape how EPA implements its statutory requirements.  Manufacturers and processors of chemicals in Arizona will need to keep abreast of these developments to ensure that their operations are not adversely affected by EPA’s actions, or any resulting litigation.

 

Chris S. Leason is a shareholder practicing environmental law at Phoenix-based law firm Gallagher & Kennedy. Before becoming an attorney, Chris was educated and worked as a chemical engineer in the nuclear industry.

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