On January 13, 2017, the U.S. Environmental Protection Agency (EPA) published a proposed rule that would require an electronic notification for chemical substances listed on the Toxic Substances Control Act (TSCA) Inventory that were manufactured (including imported) for non-exempt commercial purposes during the ten-year time period ending on June 21, 2016. 82 Fed. Reg. 4255. EPA would also accept such notices for chemical substances that were processed. The recent TSCA amendments require EPA to designate TSCA Inventory substances as active or inactive in U.S. commerce. EPA would then use these notifications to distinguish active substances from inactive substances for prioritization reviews and include the active and inactive designations on the TSCA Inventory. EPA also proposes to establish procedures for forward-looking electronic notification of chemical substances on the TSCA Inventory that are designated as inactive, if and when the manufacturing or processing of such chemical substances for non-exempt commercial purposes is expected to resume. According to the proposed rule, upon receipt of a valid notice, EPA would change the designation of the pertinent chemical substance on the TSCA Inventory from inactive to active. The proposed rule includes the procedures to submit Notices of Activity (NOA) both for the retrospective (Inventory “reset”) and forward-looking (“activation”) activity notifications, the details of the notification requirements, exemptions from such requirements, and procedures for handling claims of confidentiality. Comments are due March 14, 2017.

What Chemical Substances Would be Reportable?

Reportable Chemical Substances

According to the proposed rule, as a general matter, the retrospective reporting requirement would apply to chemical substances listed on the TSCA Inventory that were manufactured for nonexempt commercial purposes during the ten-year period ending on June 21, 2016. EPA notes that this lookback period is set by new TSCA, which also establishes forward-looking reporting requirements with respect to chemical substances listed on the TSCA Inventory that EPA designates as inactive.

Exemptions from Reporting

Statutory Background

EPA states that the proposed rule provides exemptions from reporting based on new TSCA Sections 8(b)(4) and (5) and “the general objectives that EPA can infer from that text.” New TSCA requires EPA to issue final retrospective reporting requirements by June 22, 2017, and all mandatory reporting under TSCA Section 8(b)(4) must be completed by no later than 180 days thereafter. The reporting requirements apply to “each chemical substance” on the TSCA Inventory, subject to the provision that reporting obligations shall only be triggered by manufacturing or processing for a “nonexempt commercial purpose.” The retrospective reporting requirements under Section 8(b)(4) are expressed as being “subject to the limitations” of TSCA Section 8(a)(5)(A). TSCA Section 8(a)(5)(A), in turn, specifies that “to the extent feasible,” EPA shall: (1) avoid requiring reporting that is “unnecessary or duplicative”; (2) “minimize the cost of compliance” to small manufacturers and processors; and (3) apply reporting obligations to the persons likely to have information relevant for effective implementation.

EPA states that, as it interprets its statutory authority, the reporting is intended to support two key objectives:

1. To enable EPA to determine which reportable chemical substances are active in U.S. commerce. EPA will accomplish this based on notices received. Reportable chemical substances for which no notices are received would be considered inactive in U.S. commerce; and

2. With respect to chemical substances identified as being active in commerce that are listed on the confidential portion of the TSCA Inventory, require that persons manufacturing or processing such chemical substances request that existing claims for protection against disclosure of the specific chemical identity be maintained.

Excluded Chemical Substances

If a chemical substance is not listed on the TSCA Inventory, then by the terms of new TSCA Sections 8(b)(4) and (5), it is not subject to reporting under the proposed rule. For example, according to EPA, chemical substances that are manufactured under a TSCA Section 5(h) exemption are not added to the TSCA Inventory. Accordingly, the proposed rule would not require that reporting occur with respect to such substances. This is reflected in the proposed definitions at 40 C.F.R. Section 710.23, which EPA drafted in such a manner that if a chemical substance was not on the TSCA Inventory as of June 22, 2016, it would not be subject to reporting.

EPA proposes to exclude naturally occurring chemical substances from reporting, “so long as the manufacturing and processing of such substances meets the criteria set forth” in 40 C.F.R. Section 710.27(b). EPA notes that when it required notices in support of the original compilation of the TSCA Inventory in 1977, EPA made clear that reporting on naturally occurring chemical substances would not be necessary, as these substances would automatically be included in the Inventory as a category: “Naturally Occurring Chemical Substances.” EPA proposes to designate the entire category of Naturally Occurring Chemical Substances as active substances, by rule, without reporting to differentiate among such substances.

TSCA Section 8(b)(6) requires EPA to compile an interim list of active substances reported under 40 C.F.R. Part 711 for the purposes of TSCA Section 6(b) (prioritization), before promulgation of the (inventory reset) rule. EPA states that the definition of the interim list “is somewhat ambiguous, since it refers to the ‘reporting period that most closely preceded June 22, 2016,’” and the term “reporting period” is not defined under 40 C.F.R. Part 711. According to the proposed rule, in light of the definitional ambiguity of TSCA Section 8(b)(6) and EPA’s weighing of the statutory objectives noted previously, EPA construed the “interim list of active substances” to include 2012 Chemical Data Reporting (CDR) data, “which avoids delay of this proposed rule, but would allow for the 2016 CDR data to give rise to a reporting exemption as soon as they are publicly released in final form.” Under the proposal, manufacturers and processors of chemical substances on the non-confidential portion of the Inventory would be exempt from reporting if the manufacture of that chemical substance was already reported (by any party) in response to the 2012 or the 2016 CDR.

With respect to chemical substances listed on the confidential portion of the TSCA Inventory, EPA states that such reporting still serves a statutory function under TSCA Sections 8(b)(4)(B)(ii) and 8(b)(4)(C) (regarding manufacturer assertion of and EPA review of confidentiality claims), even where there is already adequate evidence, prior to reporting, that the substance was in active commerce during the lookback period.

Manufacturing or Processing for an Exempt Commercial Purpose

TSCA Section 8(b) directs EPA to limit reporting obligations to manufacturing and processing for “nonexempt commercial purpose.” According to EPA, this phrase had a commonly-accepted usage when TSCA was amended in 2016. Since reporting under TSCA Section 8(b) is a form of existing chemical reporting, EPA states that it construes the phrase “nonexempt commercial purpose” consistent with the manner in which the 40 C.F.R. Section 720.30 exemptions from pre-manufacture reporting requirements were adapted for use in the CDR at 40 C.F.R. Section 711.10. Thus, for example, the manufacturing or processing of chemical substances solely in small quantities for research and development would not trigger reporting obligations under the proposed rule. Similarly, according to EPA, the manufacturing or processing of impurities, or byproducts that have no subsequent commercial purpose, would not trigger reporting obligations under the proposed rule. Finally, since the CDR integrates reporting exemptions for persons who import chemical substances solely as part of articles with reporting exemptions for nonexempt commercial purposes, EPA construes the TSCA Section 8(b) reference to “nonexempt commercial purpose” as also encompassing this article exemption. EPA states: “[f]urther supporting this interpretation, EPA believes it would be incongruous to establish a more comprehensive reporting obligation for the import of inactive existing chemical substances under TSCA section 8(b)(5) (i.e., including import as part of an article), than would be applicable to the import of new chemical substances under TSCA section 5 (i.e., excluding import as part of an article).”

Chemical Substances Added to the Inventory on or after June 22, 2016

Under the proposed rule, chemical substances added to the Inventory on or after June 22, 2016, would be designated as active, without the need for any reporting to establish that the chemical substance is active and without the need for any statement by manufacturers or processors indicating whether such persons wish to maintain an existing claim for protection against disclosure of the specific chemical identity of the chemical substance. Reporting under TSCA Section 8(b)(4) is based on manufacturing or processing, for nonexempt commercial purposes, that occurred between June 21, 2006, and June 21, 2016. EPA states that a substance added to the Inventory on or after June 22, 2016, would be added so recently that it has no manufacturing or processing overlapping with the lookback period, and “[i]t would be illogical to designate a very recent addition to the Inventory as inactive, on the grounds that the chemical substance was too recently added to the Inventory to be captured in the retrospective reporting of current manufacturing and processing.” EPA notes that if a chemical substance was added to the Inventory on or after June 22, 2016, then any claim for the protection against disclosure of the specific chemical identity of such a substance would be a new claim rather than the maintenance of an existing claim for protection of the information.

When Would Reporting Be Required?

Retrospective Reporting Period for Manufacturers

The proposed rule would require manufacturers to report no later than 180 days after EPA publishes the final rule in the Federal Register. The 180-day time period for retrospective reporting for manufacturers is the maximum time allowed under TSCA Section 8(b)(4)(A). Following the retrospective reporting for manufacturers, EPA would include the active and inactive designations, determined by the notices received, on the TSCA Inventory.

Retrospective Reporting Period for Processors

The proposed rule would allow processors to report no later than 360 days after EPA publishes the final rule in the Federal Register. According to EPA, the 360-day time period for the retrospective reporting for processors would allow processors to search EPA’s publication of a first draft of the TSCA Inventory with active designations and draft inactive designations, based on retrospective reporting by manufacturers, and to report only those chemical substances not already reported. EPA notes that the first draft with active designations and draft inactive designations would not have the legal effect of designating any chemical substance as inactive. Under the proposed rule, processors would have the option not to report under TSCA Section 8(b)(4) and to continue processing until such time when EPA actually designates a chemical substance as inactive. At that time, any further processing of the chemical substance, without prior notification to EPA, would be prohibited by TSCA Section 8(b)(5). Prior notification would allow EPA to add the chemical substance to the TSCA Inventory as an active substance. We also note that such notice would also avoid possible future commercial disruption.

Forward-Looking Reporting

After EPA completes its review of submitted notices, it must designate as inactive any chemical substance (subject to designation) for which no notice was received. TSCA Section 8(b)(5)(B) provides that, once a chemical substance has been designated as inactive, any person who intends to manufacture or process that inactive substance for a nonexempt commercial purpose must first notify EPA before the date on which the inactive substance is manufactured or processed. EPA proposes to limit the submission period for such notices, so that they may not be submitted more than 30 days before the actual date of manufacturing or processing. According to the proposed rule, EPA based the 30-day time period for forward-looking reporting on its experience with Premanufacture Notices (PMN). EPA states: “[a]lthough persons often form the intent to commercially manufacture or process chemical substances several months ahead of time, EPA’s experience with processing PMNs is that business decisions, technical difficulties, and other unforeseen circumstances may delay a company’s plans to commercialize.” EPA believes that a commercial activity notice “reflects a more tentative or provisional intent to manufacture or process if it is submitted more than 30 days prior to the actual date of manufacturing or processing of the chemical substance.” As such, according to EPA, it is less reliable as evidence that an active designation is warranted. EPA states that reassigning chemical substances from inactive to active status, based on relatively unreliable indicia of intent to manufacture, could affect the reliability of the Inventory designations. The proposed rule would thus require that forward-looking reporting of chemical substances designated as inactive on the TSCA Inventory occur not earlier than 30 days before companies intend to manufacture or process for nonexempt commercial purposes.

Information that Would be Reported

Retrospective Reporting Period for Manufacturers

The proposed rule would require that manufacturers reporting for the retrospective reporting period provide certain information including chemical identity, type of commercial activity (i.e., whether it is domestic manufacture and/or import), date range of manufacture for nonexempt commercial purpose during the ten-year reporting period ending on June 21, 2016, and whether they seek to maintain an existing claim for protection against disclosure of a confidential chemical identity, if applicable.

Retrospective Reporting Period for Processors

The proposed rule would allow processors to report for the retrospective reporting period, provided that the processor “reports timely and consistent with the pertinent reporting requirements,” including providing certain information such as chemical identity, date range of processing for nonexempt commercial purpose during the ten-year reporting period ending on June 21, 2016, and whether they seek to maintain an existing claim for protection against disclosure of a confidential chemical identity, if applicable.

Forward-Looking Reporting

TSCA Section 8(b)(5) requires that manufacturers and processors of inactive substances notify EPA before the date on which they manufacture or process an inactive substance for nonexempt commercial purposes. The proposed rule stipulates that they would do so in the following manner: by reporting certain information, including chemical identity, type of commercial activity (i.e., whether it is domestic manufacture, import, and/or processing), actual date of manufacturing or processing for nonexempt commercial purpose, and whether they seek to maintain an existing claim for protection against disclosure of a confidential chemical identity, if applicable.

Reporting Forms

EPA developed two versions of a NOA reporting form. NOA Form A (EPA Form No. TBD-1) would be used by manufacturers for the retrospective reporting period. It would also be used by processors who report for the retrospective reporting period. NOA Form B (EPA Form No. TBD-2) would be used by manufacturers and processors for forward-looking reporting. EPA based the NOA forms on its Notice of Commencement (NOC) form, “since much of the information submitted in an NOC form is the same or similar to the information proposed in the NOA.”

The forms require “very basic” explanatory information about the type of commercial activity at issue (domestic manufacture, import, or processing), as well as the date range over which the activity occurred, or the date when the activity is intended to resume. EPA states that the collection of explanatory information “is intended to reduce the likelihood of receiving erroneous notices (e.g., notices regarding commercial activity outside the lookback period), to support EPA’s capacity to inquire into the accuracy of activity notices, and thus to increase the reliability of commercial activity designations on the TSCA Inventory.”

Requirement to Report Electronically

The proposed rule would require electronic reporting similar to the requirements established in 2013 for submitting certain other information under TSCA. The proposed rule would require submitters to use CDX, EPA’s electronic reporting portal, and EPA’s Chemical Information Submission System (CISS), a web-based reporting tool, for all reporting under the proposed rule. The proposed rule would require persons submitting NOAs to follow the same electronic reporting procedures used for other TSCA submissions, i.e., to register with CDX and use CISS to prepare a data file for submission.

CBI Claims and Requests

EPA notes that notices pursuant to this rulemaking may contain two different types of confidential business information (CBI) assertions: claims for protection of information other than specific chemical identity, and requests to maintain existing claims for protection of specific chemical identify.

Information Other than Specific Chemical Identity

For all new claims for protection (i.e., for all CBI assertions under this rule other than requests to maintain existing claims for protection of specific chemical identity), TSCA Sections 14(c)(1)(B) and 14(c)(5) require that persons claiming CBI must provide a specific certification statement regarding the basis for the CBI claims. The proposed rule would require that all such claims be substantiated at the time of submission, except for claims for information exempted from substantiation under Section 14(c)(2). In view of the “rapid EPA review of claims” required by TSCA Section 14(g)(1), and to reduce the likelihood of unwarranted claims, EPA states that it believes that a concurrent substantiation is required. EPA will review a representative subset of these claims as specified by TSCA Section 14(g)(1).

Requests to Maintain Existing CBI Claims for Chemical Identity

Requests to maintain existing CBI claims for specific chemical identity on Form A are governed in part by TSCA Sections 8(b)(4)(C-E). EPA notes that TSCA Section 8(b)(4)(C), in particular, requires EPA to issue a rule to establish a review plan for these requests. The review plan must specify a time when the Form A CBI requests for specific chemical identity are to be substantiated. According to the proposed rule, EPA will conduct a separate rulemaking to establish this review plan, and did not include mandatory substantiation requirements in the proposed rule for Form A CBI requests for chemical identity. Mandatory substantiation requirements will be part of the review plan promulgated under TSCA Section 8(b)(4)(C). EPA proposes to allow companies to submit early substantiation at the same time that their Form A is filed, however, if they so choose. According to EPA, as long as the period between the date EPA receives these earlier substantiations and the due date to be established in the review plan (yet to be proposed) is not more than five years, the early substantiations would exempt the company from the requirement to submit additional substantiation for their Form A under the terms of the review plan. EPA states that it will review requests to maintain CBI claims for specific chemical identity in accordance with the TSCA Section 8(b)(4)(D) review plan in the timeframe mandated by TSCA Section 8(b)(4)(E).

Under the proposed rule, any manufacturer or processor submitting an active chemical notification under TSCA Section 8(b)(4)(A) may seek to maintain an existing CBI claim for specific chemical identity, regardless of whether that person asserted the original claim that caused the specific chemical identity to be treated as confidential. According to the proposed rule, EPA “believes this is the correct interpretation of ‘a manufacturer or processor . . . that seeks to maintain an existing claim for protection of against disclosure’ of specific chemical identity.” EPA states that a number of manufacturers and processors may “legitimately benefit” from the confidential status of a specific chemical identity, and the initial claimant may no longer exist. EPA does not believe that Congress intended for specific confidential chemical identities to be disclosed without providing the opportunity for manufacturers and processors to make a request that the identities should remain confidential simply because the original claimants no longer manufacture the chemical substances.

Pursuant to TSCA Section 8(b)(4)(B)(iv), EPA would move an active chemical substance from the confidential portion of the Inventory to the non-confidential portion if no manufacturer or processor submitting an active chemical notification under TSCA Section 8(b)(4)(A) requests to maintain the existing CBI claim for the specific identity of that chemical substance. Requests to maintain existing CBI claims for specific chemical identity on Form B are governed by TSCA Section 8(b)(5)(B), which provides that the request to maintain the claim must be substantiated no later than 30 days after submitting Form B.

Although TSCA Section 8(b)(5) provides that substantiation for requests to maintain existing CBI claims for specific chemical identity must be provided no later than 30 days after submitting a Form B, persons submitting a Form B may find it more efficient to provide the substantiation for a CBI claim for specific chemical identity at the time of filing. TSCA Section 8(b)(5)(iii)(II) provides that EPA shall “promptly” review CBI claims for specific chemical identity in Form B. EPA states that it intends to review these claims within 90 days of receipt of the substantiation.

Request for Comments

EPA states that it seeks comment on all aspects of the proposed rule, including the following:

• Considerations for EPA’s Economic Impact Analysis: EPA evaluated the potential costs for manufacturers and processors of chemical substances reportable under the proposed rule. As an example, EPA estimated the “typical costs per firm” at $1346 with an estimated seven chemicals per submission. This cost estimate strikes us as low, particularly in light of the extra-statutory requirement to provide and certify date ranges for manufacture, import, or processing. EPA states that it specifically seeks additional information and data that it could consider in developing the final economic analysis. In particular, EPA seeks data that could facilitate its further evaluation of the potentially affected industry and firms, including data related to potential impacts for those small businesses that would be subject to reporting.

• Electronic Reporting: By requiring electronic reporting under the proposed rule, EPA expects to save time, improve data quality, and provide efficiencies for both submitters and EPA. EPA states that it is interested in comments related to the adoption of the existing mechanisms and procedures for use in transmitting the notices proposed in this rule, including comments related to the extent to which potential reporting entities are already familiar with these mechanisms and procedures because of their existing use for other TSCA reporting. EPA is also interested in feedback on how electronic reporting affects potential reporting entities in terms of reporting time, reporting efficiency, and potential burden associated with training to use the electronic systems (i.e., CDX and CISS).

Commentary

Manufacturers and importers should note that there are some key differences between retrospective reporting of active substances and reporting under CDR:

• Polymers that are listed on the Inventory and that do not appear on the interim list of active substances will be subject to retrospective reporting.

• There is no exemption for substances that are listed on the Inventory that are produced at low volumes (this is in contrast to substances manufactured or imported under a Low Volume Exemption that are not listed on the Inventory).

EPA does not explicitly address whether small businesses are required to submit NOAs. A small business that is the exclusive manufacturer (or importer) of a substance would be well advised to submit a NOA to ensure that the substance is identified as active.

Once EPA has published the interim list of active substances, it should add to the list on a rolling basis as Form As are processed. Having a rolling interim list would help reduce the number of duplicate Form As that must be submitted and processed, and help satisfy EPA’s obligation under Section 8(a)(5)(A) not to require unnecessary or duplicative reporting.

Presumably, substances that have been commenced through a NOC, but are not yet listed on the TSCA Inventory because the systematic nomenclature to identify them has not yet been established (e.g., carbon nanotubes), are not subject to retrospective reporting.

The proposed extra-statutory requirement that, for those substances that are not part of the interim active list, submitters provide a date range for the manufacture or processing of the notified chemical substance, suggests that it is EPA’s belief that the submitters’ certification is insufficient. According to the proposed rule, EPA states that its intent is to reduce the likelihood of receiving erroneous notices and support its capacity “to inquire into the accuracy of activity notices.” Without further explanation, this statement is troubling. Is EPA’s concern whether the chemical was actually manufactured, imported or processed during the ten-year period, or whether the dates are correct? The statute does not require such specificity and it is not clear that the benefit of the inclusion of a date range (to ensure the activity occurred within the ten-year lookback period) justifies the additional effort required to gather, submit, review, and certify the accuracy of those dates. It also remains to be seen how EPA will reconcile the requirement to document activity during a time period for which entities may not be required to keep records (i.e., more than five years, the required period for most recordkeeping). If EPA maintains the requirement to report a date of activity, EPA should consider carefully what it can legally require in this regard given recordkeeping requirements. When EPA developed the initial TSCA Inventory, there was not a similar requirement to document the date of commercial activity that made a chemical eligible for inclusion in the Inventory. If such information was not necessary when EPA undertook to develop the initial Inventory, it is hard to see why it is necessary now.

The rule requires Form A notification for any substance that was manufactured during the lookback period, without regard to the submitter’s intent to continue the activity on or after June 22, 2016. This likely reflects EPA’s interpretation of Section 8(b)(4)(A)(i), which obligates notification regardless of the submitters’ intent to continue the activity. On the other hand, one could argue that the “unnecessary or duplicative” limitation stipulated in Section 8(a)(5)(A) allows EPA not to require reporting of substances for which manufacture, import, and processing was discontinued; if such substances were not being manufactured on or after June 22, 2016, they are, arguably, not active, and a Form A would be “unnecessary.”

In cases of periodic “batch” manufacture, when manufacture or processing occurred several times for several periods over the course of several years, EPA should revise the proposed rule to clarify that only one instance of activity is required for an NOA Form A, and using the most recent instance satisfies the intent of the TSCA Inventory reset. If EPA retains the requirement for the date of activity, requiring only the most recent date of activity would suffice to demonstrate that a substance is active.

The proposed language for 40 C.F.R. Section 710.29(b)(2) only allows for initial reporting of manufacturing, importing, or both. As EPA proposes to allow processors to report activity notices for the lookback period, EPA should add processing to the list of commercial activities specified in Section 710.29(b)(2).

The proposed rule also has a clear tension between the intended date of manufacture for inactive chemicals and the actual date of manufacture. While it may be clear that a company knows in advance when it intends to manufacture, import, or process an inactive chemical, when it actually does so remains to be established. We also note our discomfort with EPA’s firm requirement that the notice occur no sooner than 30 days in advance. It is unclear why such precision in the reporting date is necessary given that the statute merely says that it must be “before the date” the activity occurs. Presumably the certification requirement will ensure that the information is as accurate as needed. To address EPA’s concern, rather than take the approach proposed, EPA could simply indicate the expected date of activity.

A final comment concerns the concept of “valid notice,” which appears in the Summary concerning the forward-looking reporting to move a chemical to the active list. A bit more discussion of the concept in the notice and how EPA planned to determine validity would have been useful. On the whole, EPA’s proposal reflects a thoughtful step in the right direction.