On January 19, 2017, the U.S. Environmental Protection Agency (EPA) issued an interpretation of Toxic Substances Control Act (TSCA) Section 14 concerning substantiation of confidential business information (CBI) claims for information submitted to EPA.  82 Fed. Reg. 6522.  Under the interpretation, EPA expresses its view that new TSCA requires substantiation of all non-exempt CBI claims at the time the information claimed as confidential is submitted to EPA.  In the notice, EPA also states that the action will “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.”

The notice states information that is (or will be) submitted and claimed as CBI between June 22, 2016, and March 19, 2017, must be substantiated by September 18, 2017(all dates are inclusive).  CBI claims made as part of an existing submission in EPA’s Central Data Exchange (CDX), such as a premanufacture notice (PMN), must be substantiated by amending the CDX submission.  Other information should be substantiated using the same mechanism (e.g., substantiate claims made in paper submissions by submitting substantiations on paper).  This action will become effective on March 20, 2017, after which any non-exempt CBI claims must be substantiated at the time of submission.  Under all of these procedures, any CBI claims that are not substantiated as outlined will be considered deficient and EPA will send a notice to the affected business.  The notice will inform the business that it must remedy the substantiation deficiency within 30 calendar days or the information may be made public.

As it is an EPA interpretation, the guidance will apply but can be challenged in a legal proceeding.

EPA’s Legal and Administrative Arguments

EPA’s notice outlines the legal and administrative basis for its interpretation that new TSCA requires affected businesses to substantiate all TSCA CBI claims at the time the information is submitted.  This substantiation requirement does not apply to Section 14(c)(2) “information [that is] generally not subject to substantiation requirements.”

EPA in its determination notes that:

• Section 14(c)(1) requires that CBI claims be asserted at the time of submission in accordance with existing or future rules.
• Section 14(c)(3) requires that businesses asserting CBI claims “shall substantiate the claim, in accordance with such rules as [EPA] has promulgated or may promulgate pursuant to this section.”

EPA interprets the latter requirement to apply to all non-Section 14(c)(2) (“non-exempt”) CBI claims and argues that the requirement is statutory and operative as of the March 21, 2017, effective date of the interpretive action without the need for rulemaking.  EPA finds support for this interpretation in several cited items from the legislative history and also cites Section 14(i)(2), a savings provision, which provides that “nothing in this [Act]” prevents EPA from requiring substantiation before the effective date of rules promulgated after June 22, 2016, new TSCA’s date of enactment.  The notice proceeds to posit and then offer EPA’s legal analysis of alternative interpretations of the provisions.

EPA also notes that in an initial Question and Answer response posted shortly after the date of new TSCA’s enactment, it stated that EPA would use existing authorities to obtain CBI substantiations and that it may revise these requirements in subsequent rulemakings.  By way of walking back the initial interpretation, EPA claims that a combination of stakeholder comments as well as EPA’s more careful reading of the statute and legislative history (as outlined above), while also considering the operational considerations associated with the interpretation of Section 14(c)(3), lead to the revised interpretation.  The operational considerations discussed by EPA include the large volume of CBI claims received, the way that upfront substantiation “significantly enhances” EPA’s ability to meet the CBI claim review deadlines in Section 14(g), avoidance of requests for extensions to substantiate CBI claims, and that upfront substantiation “may help limit unwarranted claims of CBI.”  Be these additional points as they may, EPA concludes that Section 14(c)(3) is best read to create a requirement that non-exempt CBI claims be substantiated concurrent with their submission.

Implementation

EPA suggests that businesses look to the substantiation questions found at 40 C.F.R. Part 2, Section 2.204(e) for guidance as to how to meet the Section 14(c)(3) substantiation requirements for information not currently subject to regulatory requirements for upfront substantiation.  EPA states that the answers to those questions typically form the basis of EPA final confidentiality determinations and that substantiations that do not address those questions “might not provide sufficient information to uphold” a Section 14(g)(1) determination that the information is eligible for CBI protection.  For information currently subject to regulatory upfront substantiation, such as for chemical identity claims in certain TSCA reporting rules, the terms of those requirements will continue to govern the substantiation.

Recognizing that this is a revised interpretation from what it had outlined before, EPA sets out different procedures for those entities that have submitted or will submit non-exempt CBI information before the March 20, 2017, effective date of the interpretation and for those who submit information claimed as CBI after this date, as follows:

• For TSCA CBI submissions filed between June 22, 2016, and March 20, 2017, substantiation of non-exempt CBI claims must be provided by September 18, 2017 (i.e., within six months).  To the extent claims have already been substantiated, no additional substantiation is needed, although EPA cautions companies that the requirement applies to all non-exempt CBI claims, noting that some claims may have been substantiated while others not.
• For non-exempt CBI claims filed after March 20, 2017, the submission must provide substantiation at the time of submission.

The notice goes on to state that in both of these cases, any CBI claims that are not substantiated will be considered deficient and EPA will send a notice of deficiency to the entity.  The notice will state that substantiation must be received within 30 calendar days to remedy the deficiency, or the CBI claims will be considered withdrawn and the information may be made public forthwith.

EPA’s notice also makes clear that the substantiation requirement should be met using the same reporting mechanism used in the original submission (e.g., substantiate claims made in paper submissions by submitting substantiations on paper).

Commentary

The matters addressed in the notice are significant and of great importance to companies, given their need to meet the business imperative to obtain and preserve CBI protection of intellectual property and commercial information from public disclosure.  The matters are also of keen interest to environmental advocates, many of which will want to ensure that CBI protections are no broader than legally allowed under new TSCA.  We will not get into a legal analysis of the points that EPA makes in the notice to support its interpretation other than to note that, while the analysis is a good one as far as it goes, it is not without chinks.

We do, however, applaud the measured and stepwise way that EPA plans to implement the new interpretive requirement, particularly the six-month window for companies to meet substantiation requirements for submissions made prior to the March 20, 2017, effective date.  We also acknowledge and appreciate EPA’s statement that it will send a notice “letter” of deficiency to companies that assert but do not substantiate CBI claims, that such claims will be considered withdrawn if a timely response is not received.  While EPA does not commit to a timeframe or to a certain procedure (e.g., certified mail/return receipt requested) for sending such letters, companies will want to monitor carefully their incoming mail for such letters, particularly in the weeks and months after the September 18, 2017, deadline for substantiation of CBI claims in submissions made between June 22, 2016, and March 20, 2017.