The U.S. Environmental Protection Agency (EPA) announced on July 15, 2019, that it will cease sending notices of deficiency to businesses that submit procedurally flawed confidential business information (CBI) claims under the Toxic Substances Control Act (TSCA). This is a significant change from the interpretation EPA announced in January 2017, and a company’s failure to appreciate its consequences could prove damaging. Effective August 15, 2019, EPA will provide written notice to affected business submitters that because they submitted procedurally flawed CBI claims, including unsubstantiated CBI claims, those CBI claims are invalid, and the underlying information is not protected from disclosure under TSCA Section 14.

Background

On January 19, 2017, EPA published in the Federal Register an interpretation of TSCA Section 14 concerning substantiation of CBI claims for information submitted to EPA. Under the interpretation, EPA expressed its view that new TSCA required substantiation of all non-exempt CBI claims at the time the information claimed as confidential was submitted to EPA. In the notice, EPA also stated that the action would “facilitate [its] implementation of TSCA section 14(g) to review all CBI claims for chemical identity, with limited exceptions, as well as to review a representative sample of at least 25% of other non-exempt claims.” EPA states in the Federal Register notice issued on July 16, 2019, that under that interpretation, it undertook a “non-statutorily required practice of sending a notice of deficiency to an affected business that submitted a non-exempt CBI claim without a substantiation, providing an opportunity to correct the deficiency.” 84 Fed. Reg. 33939. More information on EPA’s January 19, 2017, interpretation is available in our January 26, 2017, memorandum, “TSCA: EPA Issues Interpretation of Statutory Requirements for Substantiation of CBI Claims under TSCA.”

New Policy on Claims of Deficiency

In its July 16, 2019, Federal Register notice, EPA announced that it will stop sending notices of deficiency to businesses whose submissions do not meet all the statutory requirements. Under the new policy, EPA will provide written notice to affected business submitters that because they submitted procedurally flawed CBI claims, including unsubstantiated CBI claims, those CBI claims are invalid, and the underlying information is not protected from disclosure under TSCA Section 14. EPA notes that unlike the notice of deficiency, this written notice will not provide affected businesses 30 calendar days to remedy their deficient CBI claims. Instead, the written notice will inform affected businesses that their “procedurally flawed” CBI claims may be disclosed to the public without further notice.

EPA states that since publication of its January 2017 interpretation, it has engaged in a variety of communications and outreach activities to educate the interested public on the interpretation. These activities included webinars, meetings with members of the public, and teleconferences with TSCA submitters, trade groups, and others on the requirements of TSCA Section 14. EPA also updated its web pages on CBI, providing detailed guidance intended to facilitate compliance with the new requirements of TSCA. According to EPA, its communications and outreach have been effective: since the March 21, 2017, effective date of the interpretation, EPA has sent out 984 notices of deficiency, the vast majority relating to submissions received before March 21, 2017. EPA states that only 97 notices have been generated, to date, that relate to filings directed to EPA after March 21, 2017.

According to EPA, by no longer sending out the “non-statutorily required notices of deficiency,” it will more efficiently implement the TSCA Section 14(g) requirement to review within 90 days of receipt all CBI claims for chemical identity, with limited exceptions, as well as to review a representative subset of at least 25 percent of other non-exempt claims.

Commentary

Since June 22, 2016, EPA has been working extensively with submitters to ensure that CBI claims are asserted appropriately and properly substantiated. The Lautenberg amendments made substantial changes to the CBI provisions of TSCA, and EPA and the regulated community devoted considerable time and effort to implement the new statutory provisions. This announcement signals, and not inappropriately, EPA’s interest in winding down its transition efforts in educating submitters on what claims are permissible, what is now necessary to substantiate non-exempt claims for CBI protection, and how submitters are best able to protect their CBI.

We expect that EPA will now focus on reviewing CBI claims made during active notice reporting. EPA must develop a substantiation process for reviewing claims made during Form A reporting, and has five years to review the thousands of substantiated CBI claims it receives. As reported in our April 11, 2019, memorandum, “EPA Announces Proposed Procedures for Review of CBI Claims for the Identity of Chemicals on the TSCA Inventory,” since EPA released the updated TSCA Inventory on February 19, 2019, the deadline for issuing a final rule is February 19, 2020, and the deadline for completing all the CBI claim reviews is February 19, 2024. If EPA invokes the two-year extension under TSCA, the deadline for completing all the CBI claim reviews would then become February 19, 2026.

Data submitters are urged to be keenly aware of the new rules of engagement. The safety net that EPA extended is now gone and confidential information inadvertently offered to EPA will not be protected from disclosure. In other words, putting that toothpaste back in the tube is not an option.