In our June 29, 2016 memorandum, Brazil Moves Closer to National Chemical Inventory, we discussed Brazil's pending Industrial Chemicals Regulation (Regulação de Substâncias Químicas Industriais, or Regulação) predicting its imminent publication in the Brazilian Official Gazette, the Diário Oficial. On June 30, 2016, the Regulação was released for an approximately 45-day comment period. While generally adhering to both industry expectations for the Regulação and the criteria of many other national chemical inventories, there are some unique aspects in the proposed Regulação that should be noted.

Companies should note that while Article 6 allows for a three-year transition period under the Regulação, Article 15 directs the Executive Branch to "regulate" (promulgate) the law within 180 days of the date of its publication -- December 27, 2016. Therefore, full compliance will be required as of December 27, 2019.

The Regulação consists of 17 sections, or Articles, that follow a stepwise approach as follows:

Article 1: Article 1 serves as the preamble to the Regulação, and uses language specific to chemical legislation in the European Union (EU), Korea, and other chemical management authorities -- "o cadastro, a avaliação e o controle de substâncias químicas industriais, com o fim de minimizar os impactos adversos à saúde e ao meio ambiente" ("The registration, evaluation and control of substances industrial chemical, in order to minimize adverse impacts on health and the environment").

Article 2: This Article establishes the definitions for substances at issue in the Regulação. Specifically: additive, impurity, intentional mixture (same as "mixture" under the Toxic Substances Control Act (TSCA), at 40 C.F.R. § 710.4(c)(2)), and finished product (defined as the final product intended for the consumer, which does not require modifications "or preparations" to be marketed).

Article 3: Article 3 lays out the specific exclusions from the Regulação. Specifically outside the scope are radioactive chemicals, chemicals under development or intended exclusively for research (e.g., TSCA's Research and Development exemption at 40 C.F.R. § 720.36), intermediate reactions (defined as non-isolated substances, as well as impurities, contaminants and substances produced by unintended reactions, including those produced in storage or by environmental factors), metals and their alloys, active ingredients of pesticides, active ingredients of drugs, active ingredients of veterinary drugs, and ores and concentrates (including coal, coke, crude oil, natural gas, and gas and mineral components of production processes) except for those that are chemically modified or that consist of substances classified as hazardous according to GHS). It is unclear from the draft text that "GHS" refers to the Brazilian GHS regulation, Health and Safety Labour Standard Number 26, although it is presumed to be so.

Article 4: This Article establishes the Cadastro Nacional de Substâncias Químicas Industriais, or the National Register of Industrial Chemicals, which will be administered by the Ministry of Environment (Ministério do Meio Ambiente, or MME).

Article 5: This Article is the fundamental crux of the new Regulação and lays out the requirements producers and importers of industrial chemicals, in amounts greater than or equal to one ton per year, must follow. Specifically:

• Identification of the producing company or the importer;

• Identity of the chemical substance, including the Chemical Abstrcts Service (CAS) Registry name and number and, where applicable, its structural formula. At present, the "where applicable" criteria is not defined;

• The quantity produced or imported during the year;

• The uses of the chemical; and

• The hazard classes -- specifically health and environmental -- according to GHS (see note in Article 3, above, regarding GHS).

• Per Article 5 also, the Deliberative Committee of Industrial Chemicals may elect to set specific volumes less than one ton for certain chemicals, for which the above information must be provided. Further, for intentional mixtures, only the industrial chemicals that comprise the mixture should be registered (see Article 3, above).

Article 6: Article 6 sets out the phase-in time period for compliance: three years from the date the Regulação enters into force. Furthermore, the data identified in Article 5 must be updated whenever there is a change in use, quantity produced or imported per year, or GHS health and environmental classification changes. The final section of Article 6 discusses very briefly confidential business information/trade secret information, but is largely lacking in terms of specific protection information.

Article 7: This Article reiterates that industrial chemicals submitted under Article 5 should be classified by the manufacturer or importer according to GHS.

Article 8: Article 8 directs that the responsible Agencies/Ministries for the Regulação are those representing the Environment, Health, Labor and Industry, who will collectively manage the Regulação and evaluate risks relating to industrial chemicals.

Article 9: This Article lays out the criteria by which industrial chemicals will be "flagged" for further review by the Industrial Chemicals Technical Committee. These criteria are those that are known to be persistent, bioaccumulative, and toxic (PBT), and carcinogenic, mutagenic, reproductive toxicants; those that exhibit the characteristics of endocrine disruptors; those that have specific human or environmental exposure issues; and those that appear on the lists of international conventions to which Brazil is a signatory. Producers or importers of such substances will be required to provide information, such as studies and Safety Data Sheets (SDS), to support the risk assessment.

Article 10: Article 10 directs that the Agencies identified in Article 8 will form the Deliberative Committee of Industrial Chemicals, with the purpose of determining applicable risk management measures to be adopted, which may include restriction of production or import, establishment of specific concentration limits, and requiring prior authorization to produce or import the chemical.

Article 11: This Article details how the risk management efforts must be met by producers or importers.

Article 12: Article 12 is the violations section of the Regulação. The sanctions set forth are warnings, fines, partial or total suspension of activities, and the requirement to support "compensatory actions," such as programs, projects, and studies aimed at improving industrial chemicals management.

Article 13: This Article lays out the actions that may result in the application of Article 12 actions (e.g., providing false or misleading information, failing to update the Regulação when conditions warrant, and related conditions).

Article 14: Article 14 directs that the monitoring of compliance with the Regulação is the responsibility of the Ministries/Agencies identified in Article 8.

Article 15: This Article directs the Executive Branch to "regulate" (promulgate) the law within 180 days of the date of its publication -- December 27, 2016.

Article 16: Article 16 directs that the Regulação shall establish procedures for the registration and evaluation of chemicals submitted under Article 5.

Article 17: Article 17 directs that the law will enter into force on the date of its publication.