On February 19, 2020, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of its final rule on procedures for review of confidential business information (CBI) claims made under the Toxic Substances Control Act (TSCA). The final rule includes the requirements for regulated entities to substantiate certain CBI claims made under TSCA to protect the specific chemical identities of chemical substances on the confidential portion of the TSCA Inventory, and EPA’s plan for reviewing certain CBI claims for specific chemical identities. The substantiation requirements describe the applicable procedures and provide instructions for regulated entities. EPA sets out the review criteria and related procedures that it will use to complete the reviews within the five-year time frame set in TSCA. The final rule will be effective 60 days after publication in the Federal Register.

CBI Claims for Specific Chemical Identities Asserted in NOAs Form A

Substantiation Requirements

Scope

The final rule establishes the substantiation requirements for manufacturers and processors who previously filed Notices of Activity (NOA) Form A or Form B seeking to maintain existing CBI claims to protect the specific chemical identities of active chemical substances on the confidential portion of the TSCA Inventory.

Persons Subject to Substantiation Requirements

The final rule provides that any person who filed an NOA requesting to maintain an existing CBI claim for a specific chemical identity must substantiate that confidentiality claim by addressing the substantiation questions in this rule, unless the person is eligible for an exemption. There are two exemptions in this rule that set forth reduced requirements for certain persons who have previously substantiated their CBI claims. According to EPA, these exemptions are substantively unchanged from the supplemental proposed rule.

The first exemption applies to those persons who previously completed the voluntary substantiation process set forth in the 2017 Active-Inactive Rule at 40 C.F.R. Section 710.37(a)(1). EPA states that these persons may rely on their previously submitted substantiation in lieu of answering the first six substantiation questions in the final rule, and they are required to submit answers to only the two questions relevant to reverse engineering that are being promulgated in 40 C.F.R. Section 710.45(b)(7) and (8), signed and dated by an authorized official, and to complete the certification statement in 40 C.F.R. Section 710.37(e).

The second exemption applies to those persons who previously substantiated their CBI claims for specific chemical identities in different submissions made to EPA less than five years before the substantiation deadline set forth in the rule. EPA states that as long as that prior substantiation contains information that is responsive to all substantiation questions set forth in this rule at 40 C.F.R. Section 710.45, these persons may rely on their prior substantiation in lieu of answering the substantiation questions in this rule. To establish eligibility for this exemption and to ensure that EPA can locate and match the prior substantiation with the proper NOA Form A filer, persons who seek to rely on this exemption must report to EPA the submission date; submission type; and case number, transaction ID, or equivalent identifier for the previous submission that contained the substantiation, not later than the deadline specified in this rule. According to EPA, for example, substantiations for CBI claims for specific chemical identities submitted with 2016 or 2020 Chemical Data Reporting (CDR) submissions in accordance with the substantiation procedures at 40 C.F.R. Section 711.30(b)(1), or with Notices of Commencement (NOC) in accordance with the substantiation procedures at 40 C.F.R. Section 720.85(b)(3)(iv), serve as a basis for this exemption.

A person who is eligible for an exemption may choose whether to take advantage of the reduced reporting under this rule afforded by the exemption or submit a new full substantiation in accordance with all requirements of this rule. EPA notes that persons who have previously submitted a substantiation may prefer to complete a new substantiation under this rule if, for example, they wish to provide updated or additional information to support their CBI claim for a specific chemical identity.

Contents of Substantiation

The final rule provides that a person substantiating a CBI claim for a specific chemical identity must submit written answers to the questions set forth in the rule at 40 C.F.R. Section 710.45, signed and dated by an authorized official, and complete a certification statement. If information submitted in response to the substantiation questions is itself claimed as CBI, the submitter must clearly indicate such by marking that information as CBI.

EPA notes that in response to public comments, it revised several of the proposed substantiation questions to improve clarity and reduce any unnecessary burden. First, EPA chose not to include a proposed question that asked whether the information claimed as confidential is exempt from substantiation pursuant to TSCA Section 14(c)(2). EPA states that it agrees with several commenters that the question was neither necessary nor appropriate because no TSCA Section 14(c)(2) exemption would ever apply to the CBI claims for specific chemical identities at issue in this rule. Second, in response to comments, EPA clarified several of the substantiation questions proposed. According to EPA, while these questions remain substantively the same as those proposed, EPA rewrote them for clarity and to solicit answers potentially more responsive to the substantive criteria it uses in making CBI determinations.

Most notably, according to EPA, it divided into three sub-questions the proposed substantiation question asking whether the confidential information appears in any public documents. Though EPA intended the question as originally worded to capture information in patents and patent applications, state, local, or federal agency files, and any document required to be publicly disclosed under any other federal law, EPA states that it rewrote the question to make this more explicit. In addition, EPA clarified the proposed reverse engineering question asking whether the chemical substance can be identified by analysis of the product. The final question asks more directly whether the specific chemical identity can be readily discovered by analysis of the substance (e.g., product, effluent, or emission), in light of existing technologies and any associated costs, difficulties, or limitations. Finally, EPA clarified the proposed substantiation question pertaining to substantial competitive harm to make clearer that responses should include an explanation of how a competitor could use such information and the causal relationship between the disclosure and the harmful effects.

When to Submit Substantiation or Information on Previous Substantiation

The final rule provides at 40 C.F.R. Section 710.47 that manufacturers and processors seeking to maintain CBI claims for specific chemical identities asserted in an NOA Form A will have 180 days from the effective date of the rule to submit substantiations, including responses to the two new substantiation questions, or, in the case of one of the exemptions, information identifying a previously submitted substantiation. EPA notes that this deadline applies to all persons who asserted CBI claims for specific chemical identities in an NOA Form A, including: (1) persons newly substantiating their claims; (2) persons who voluntarily substantiated under the 2017 Active-Inactive Rule and need submit only responses to two substantiation questions under this rule; and (3) persons who substantiated their claims in some other submission within the past five years and need submit only information identifying that prior substantiation. EPA states that the final rule includes a 180-day deadline in response to several comments from industry groups expressing concerns about meeting the proposed 90-day deadline.

Failure to Report

In the proposed rule, EPA addressed the situation where a person filed an NOA Form A and asserted a CBI claim for a specific chemical identity, but never, either as a voluntary submission or per this rule, provided a substantiation or notice of prior substantiation. EPA had proposed to treat the CBI claim for a specific chemical identity as deficient because no substantiation was provided or referenced and proposed that it may release the specific chemical identity to the public without further notice to the NOA Form A submitter. EPA states that in response to comments, the final rule provides that when a person who asserted a CBI claim for a specific chemical identity in an NOA Form A failed to submit timely a substantiation or notice of prior substantiation, EPA will deny the CBI claim and provide the submitter notice and an opportunity to seek judicial review of the final confidentiality determination in accordance with TSCA Section 14(g)(2) and 40 C.F.R. Section 2.306(e).

Electronic Filing

The final rule provides that information must be submitted electronically via EPA’s Central Data Exchange (CDX) in accordance with the existing regulation at 40 C.F.R. Section 710.39. Prior to submission, this information must be generated and completed using the e-NOA software module. According to EPA, this is unchanged from the proposed rule.

Record-Keeping Requirements

The final rule provides that persons subject to this rule must retain records for a period of five years beginning on the last day of the submission period. This is unchanged from the proposed rule.

EPA’s Review Plan

The final rule also addresses the CBI claim review process, the duration of protection from disclosure, TSCA Inventory updates, the posting of annual review goals and results, and the time frame for completion of EPA reviews. According to EPA, these provisions are substantively unchanged from the proposed rule.

Review Criteria and Procedures

The final rule provides that EPA will review and approve or deny CBI claims for specific chemical identities asserted in NOAs Form A in accordance with the criteria and procedures in TSCA Section 14 and 40 C.F.R. Part 2, Subpart B. EPA notes that the final rule differs from the proposal in that it added a TSCA Section 14 reference to the regulatory text to make explicit that its review criteria and procedures will follow the statutory requirements of TSCA. EPA states that to the extent that there is any conflict between TSCA Section 14 and 40 C.F.R. Part 2, Subpart B, the statutory provision controls.

Duration of Protection from Disclosure

The final rule provides that a specific chemical identity whose CBI claim was approved by EPA will generally be protected from disclosure for a period of ten years from the date on which the confidentiality claim was first asserted by any submitter after June 22, 2016. According to EPA, the main exceptions to this period of protection from disclosure are: (1) that if prior to the expiration of the period, the claimant notifies EPA that the person is withdrawing the confidentiality claim, EPA will not protect the information from disclosure from that date forward; or (2) if EPA otherwise becomes aware that the information does not qualify for protection from disclosure, it will take the actions described in TSCA Section 14(g)(2) to notify the claimant of EPA’s intent to disclose the information. The period of protection is also subject to the exceptions and extensions to protection from disclosure enumerated in TSCA Section 14. This is unchanged from the proposed rule.

Updating the TSCA Inventory

The final rule provides that EPA will periodically update the TSCA Inventory based on the results of the reviews of the confidentiality claims for a specific chemical identity. This is unchanged from the proposed rule.

Posting Annual Goals and Numbers of Reviews Completed

The final rule provides that at the beginning of each calendar year until all reviews are completed, EPA will publish an annual goal for reviews and the number of reviews completed in the prior year on its website. EPA will begin this activity in 2021 because substantiations are not required to be submitted until late 2020. According to EPA, the setting of annual review goals will take into consideration the number of claims needing review, available resources, and the statutory target completion date for all reviews to be completed not later than February 19, 2024. EPA notes that the final rule reflects a minor modification from the proposed rule to clarify that the posting of annual goals and number of reviews completed will cease upon completion of all reviews.

Extension

The final rule provides, consistent with TSCA, that in the event that EPA determines that the target completion date cannot be met based on the number of claims needing review and the available resources, then EPA will publish a notice in the Federal Register announcing an extension of the deadline to complete its review of all confidentiality claims. The extension may not be for more than two additional years. EPA will provide an explanation of the reasons for the extension in the Federal Register. This is unchanged from the proposed rule.

CBI Claims for Specific Chemical Identities Asserted in NOAs Form B

The final rule amends existing substantiation requirements set forth in 40 C.F.R. Section 710.37(a)(2) and (c)(2) for CBI claims for specific chemical identities asserted in an NOA Form B. These amendments add two substantiation questions relevant to a specific chemical identity’s susceptibility to reverse engineering, which claimants will be required to answer when substantiating such CBI claims in the future. The amendments also require any person who has already submitted an NOA Form B and substantiation on that form before the effective date of the final rule to supplement that substantiation within 30 days of the effective date of the final rule by adding responses to the two new questions. All other existing regulatory provisions in 40 C.F.R. Section 710.37 applicable to the assertion, substantiation, certification, and review of CBI claims remain unchanged.

Commentary

Review All Previously Submitted Substantiations

Simply put, any company that sought to maintain the identity of a chemical as CBI in a NOA Form A or Form B will have to review the previous substantiation to ensure that all of the current set of questions are addressed. This includes substantiations that were submitted with the NOA or substantiations submitted with an NOC or CDR Form U that was used to support the CBI claim in an NOA. If the questions relating to reverse engineering are not addressed at all in the substantiation, EPA may deny the CBI claim as deficient. If, on the other hand, the reverse engineering questions are addressed, but not adequately, EPA is more likely to engage with the submitter and give the submitter an opportunity to strengthen its arguments.

Submitters may amend or update original substantiations or file new substantiations consistent with the updated requirements. A submitter could also withdraw its CBI claim. Submissions must be made through CDX; at the time of this writing, the data flow for substantiation is not yet available, and the Form B data flow still has the old set of substantiation questions.

Content of Substantiations

Submitters should review all substantiations supporting NOAs and be sure that the substantiations follow EPA’s current guidance for substantiations. Submitters should pay special attention to the reverse engineering questions. There are two parts to the reverse engineering issue: how difficult would it be to determine the identity of a substance using fairly standard analytic methods and an “explanation of how a competitor could use such information and the causal relationship between the disclosure and the harmful effects.” In the first part, a submitter will have to explain why a competitor could not take a sample of the substance and run LC- or GC-MS, 1H- and 13C-NMR, IR, and other standard analytic methods and determine the identity of the substance. In the second part, a submitter will have to explain how that knowledge will (or may) lead to a harmful effect. In both parts, EPA will be looking for facts that support the submitter’s assertions; such facts might include scientific, business, and legal facts that relate to the difficulty of performing the analysis, the ease or difficulty of a competitor duplicating the technology, the company’s investment in the substance, and the presence or absence of legal protection (e.g., a patent) on the technology. EPA will likely be unsympathetic to arguments that the requirements for substantiation are too onerous; after all, the release of the information must potentially lead to substantial commercial harm, so surely it is worth a few hours to gather and explain the facts substantiating the CBI claim. If a company feels that it is not worth the effort to substantiate a CBI claim, the company is free to withdraw that claim.

Timing of Submissions

Companies substantiating CBI claims made on a Form A will have 180 days from the rule publication date to substantiate the claim or supplement or revise a previous substantiation of the claim. Companies that made CBI claims on a Form B will have just 30 days from the rule publication date to update the previous substantiation. Companies that made CBI claims on Form A and Form B NOAs should clearly prioritize updating its Form B substantiations.