Companies often submit confidential business information (CBI) to the U.S. Environmental Protection Agency (EPA) under the Toxic Substances Control Act (TSCA) with the expectation that EPA will not divulge that information to the public. After all, TSCA section 14 protects CBI from disclosure, right? Yes, but only if companies properly assert and substantiate their CBI claims. EPA recently published a proposal to centralize and revise all CBI requirements under TSCA. If adopted, it would make what is now a relatively informal process much more formal, with loss of confidentiality as the penalty for non-compliance. Companies, take note!

The proposal, 87 Fed. Reg. 29078 (May 12, 2022), would establish a new 40 C.F.R. Part 703, “Confidentiality Claims.” It would revise the CBI provisions in EPA’s other TSCA regulations to delete most provisions and replace them with a cross-reference to Part 703. It would also delete most of the TSCA-specific provisions in EPA’s Freedom of Information Act (FOIA) regulations, 40 C.F.R. § 2.306. Comments on the proposal are due July 11, 2022.

This alert highlights some of the aspects of the proposal that companies and trade associations may want to consider addressing in comments.

The New Rules Would Apply to CBI Submitted Under Statutes Other Than TSCA

Proposed section 703.1 would apply the new rules to CBI submitted under other statutes, even by third parties, but which EPA uses to carry out its TSCA responsibilities. This provision would be more expansive than the current provision in the FOIA regulation, 40 C.F.R. § 2.306(b).

If the other statute provides more protection from disclosure than does TSCA, however, the other statute’s public disclosure protections would apply (for the most part) instead of Part 703. This could arise concerning studies submitted under the Federal Insecticide, Fungicide, and Rodenticide (FIFRA), for instance, where FIFRA § 10(d) provides more protection for submitters than does TSCA § 14.

Assertion and Substantiation of CBI Claims

The 2016 amendments to TSCA added substantially to the requirements for asserting and substantiating CBI claims. Compliance with these requirements is critical. In 2021, EPA moved 377 chemical substances from the confidential to the public portion of the Inventory because previously at least one Chemical Data Reporting (CDR) reporting company had failed to claim as confidential the identity of a substance on the confidential portion of the Inventory; see here.

The proposed rule would incorporate EPA interpretations of the 2016 amendments into the various TSCA regulations. For example, proposed section 703.5(b)(1) would require submitters to assert their CBI claims at the time of submission, which is consistent with TSCA § 14(c)(1)(A). It would also require submission of a substantiation for the claim at the time the CBI itself is submitted. TSCA § 14(c)(3) requires substantiation but is silent on the timing. Instead, it says substantiations are due as provided in EPA rules. Most TSCA rules do not specify the timing for submitting substantiations, suggesting flexibility in timing. However, EPA has previously interpreted TSCA § 14(c)(3) as implicitly requiring substantiations to be submitted, 82 Fed. Reg. 6552 (Jan. 19, 2017). The proposal would codify that interpretation.

Proposed section 703.5(c) would caution against claiming most information in a document as confidential:

Generally, a public copy that removes all or substantially all of the information would not meet the requirements of this paragraph (c) of this section and the submission may be temporarily put on hold as deficient.

Among the requirements added in 2016 is that a person asserting a CBI claim must make several statements, including that the person has “a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of the person.” Ironically, the Supreme Court’s decision in Food Marketing Institute vs. Argus Leader Media, 139 S. Ct. 2356 (2019), dropped a longstanding requirement to show competitive harm under FOIA, but the 2016 TSCA amendments incorporated the then-current FOIA competitive harm requirement into TSCA § 14(c)(1)(B) and (C).

The proposal would revise the substantiation questions in current CBI provisions. For example, the premanufacture notice (PMN) confidentiality provision for information other than chemical identity, 40 C.F.R. § 720.80, does not ask any questions. Concerning the “competitive harm” aspect of substantiating CBI claims for chemical identities, 40 C.F.R. § 720.85(b)(4)(A) asks:

What harmful effects to your competitive position, if any, do you think would result if EPA publishes on the Inventory the identity of the chemical substance? How could a competitor use such information given the fact that the identity of the substance otherwise would appear on the Inventory of chemical substances with no link between the substance and your company or industry? How substantial would the harmful effects of disclosure be? What is the casual relationship between the disclosure and the harmful effects?

The corresponding CDR rule CBI provision, 40 C.F.R. § 711.30(b)(1), asks:

Will disclosure of the information claimed as confidential likely cause substantial harm to your business's competitive position? If you answered yes, describe the substantial harmful effects that would likely result to your competitive position if the information is disclosed, including but not limited to how a competitor could use such information, and the casual relationship between the disclosure and the harmful effects.

The proposed rule would revise the two PMN provisions (but not the CDR provision, which had been updated after 2016) to simply refer to Part 703, which would put standardized questions in place. For example, proposed section 703.5(b)(3)(i) would ask with respect to competitive harm:

Please specifically explain what harm to the competitive position of your business would be likely to result from the release of the information? How would that harm be substantial? Why is the substantial harm to your competitive position likely (i.e., probable) to be caused by release of the information rather than just possible?

No current TSCA confidentiality provision equates “likely” to “probable,” as opposed to “possible,” but proposed Part 703 would do so for all TSCA regulations.

Related to the “competitive harm” criterion is a proposed set of questions on patents, questions that already appear in the PMN and CDR confidentiality provisions. The preamble suggests that patents may not reveal the CBI sought to be protected:

In the Agency’s experience, patents related to information claimed as CBI under TSCA rarely if ever disclose information in the same context or with the same level of detail as in the related TSCA submission.

On the other hand, the preamble suggests that the existence of a patent may negate a claim of competitive harm:

Also, if the information is covered (i.e., legally protected) by a patent in such a way that no substantial harm to the competitive position of the business would result from the release of the information, then the information is not subject to confidential treatment on that ground as well.

The new question would require patent numbers to be provided, so that EPA may determine for itself whether a patent negates a CBI claim.

Companies will want to review carefully all the rewritten confidentiality questions in the proposal and may want to submit comments.

Generic Names for Confidential Chemical Identities

Proposed section 703.5(d) would implement TSCA § 14(c)(2)(C) that “structurally descriptive generic names” for chemical identities “be consistent with guidance developed by the Administrator.” The most recent EPA guidance on generic names is available here; it was announced at 83 Fed. Reg. 30173 (June 22, 2018). The guidance says:

Although examples [in the guidance] primarily include masking one structural element, masking more than one structural element can be acceptable, provided that the submitter can justify their need for any additional masking.

The proposed rule would be narrower, saying:

In most cases, only one structural element of a specific chemical name may be masked to protect a confidential chemical identity – if the submitter of a proposed generic name wishes to mask more than one such element, the submission must include an explanation of why masking only one element is insufficient to protect the confidential identity.

Similarly, the proposal would also amend the notice of commencement or manufacture or import (NOC) provision in the PMN regulations, 40 C.F.R. § 720.102, with respect to generic names by providing:

The generic name should generally only obscure one structural feature, but in any case, should conceal only the feature(s) necessary to avoid a likelihood of substantial competitive harm to the submitter.

This language arguably would have the effect of creating a presumption that only one structural element may be masked. This would be a departure from current practice, where EPA often allows more than one element to be masked.  For example, the monthly PMN report for April 2022, 87 Fed. Reg. 31882 (May 25, 2022), announced the approval of an NOC for “Thio organic substituted metal salt.” The PMN report for March 2022, 87 Fed. Reg. 24154 (Apr. 22, 2022), announced the approval of an NOC for a name with a multiplicity of masking:

Saturated and unsaturated hydrocarbon waxes, oxidized, polymers with alkenoic acid, alkyl alkanoate, alkenedioic acid, polyalkylene glycol ether with substituted carbomonocycle (alkylidene)bis-, polyalkylene glycol ether with substituted carbomonocycle (alkylidene)bis-, substituted carbomonocycle, disubstituted carbomonocycle and substituted heteropolycycle, alkyl peroxide-initiated.

Health and Safety Studies

TSCA § 14(b)(2) provides that, with some exceptions, health and safety studies are not protected from disclosure. Proposed section 703.3 would allow protection of information in studies identifying individuals, the laboratory, internal product codes, and certain other information. The identity of the chemical that is the subject of the study could not be protected, however, subject to the exceptions in TSCA § 14(b)(2).

Proposed section 703.5(g) would require all submitters of studies to provide both the studies and a summary of the studies using an appropriate OECD template, if one exists. The template would have boxes available to indicate specific CBI claims. This provision would have particular relevance under the PMN regulations and the section 8(d) regulations, both of which require submission of studies.

Reporting by CDX

Most current TSCA regulations require submission of CBI claims and substantiations electronically through EPA’s Central Data Exchange.

In addition, the proposal would extend a requirement for electronic reporting via CDX to TSCA regulations that currently require delivery to a physical EPA address, including

• Export notifications under TSCA § 12(b) (revising 40 C.F.R § 707.65(c))

• Submissions of allegations of significant adverse reactions under TSCA § 8(c) (revising 40 C.F.R. § 717.17(c))

• Submissions of polymer exemption notices (revising 40 C.F.R. § 723.250(f))

Implications of Reporting by CDX

Sometimes, EPA may have follow-up questions or need to notify a submitter of the pending expiration of a CBI claim. It plans to provide notice via CDX, using the available contact information. Thus, companies must ensure that they keep that contact information current. This is particularly important in the situation where a company has acquired a business that had already made CBI claims. Proposed section 703.5(h)(1) would mandate updates, including the following:

In circumstances where ownership of the company or unit of a company has changed, such that contact information for one or more prior TSCA submissions that include confidentiality claims is affected, a notice of transfer of ownership must be directed to EPA via CDX. Instructions for providing this notice and for requesting access to copies of a prior TSCA submission are available at https://cdx.epa.gov/.

EPA also plans to provide public notice of expiring CBI claims, as provided in proposed section 703.5(h)(3), but the notice would be by the EPA-assigned identifier:

Such TSCA submissions will be referred to by the TSCA case or document identifier (as described in paragraph (f)(3) of this section) that was assigned to the submission by EPA when it was originally submitted.

Such a notice would be of no value to a company that has not compiled a list of the identifiers it received for the CBI submissions it has made during the previous 10 years. This means that companies should not file and forget; instead, they should be diligent in keeping track of their CBI submissions to be able to renew expiring confidentiality periods if appropriate.

In summary, the proposal is intended to narrow CBI claims and make assertion, substantiation, and tracking of CBI claims more rigorous. The proposed changes may affect every company that submits confidential information to EPA. Now is the time to consider commenting.