During Inventory Reset in 2017-2018, did your company assert on Form A confidentiality claims for chemical identities on the confidential Toxic Substances Control Act (TSCA) Inventory?  If so, you risk having EPA make those identities public – whether or not you have already substantiated those claims – unless you take timely action, thanks to a final rule published on March 6, 2020.

Has your company asserted a confidentiality claim on Form B for a chemical identity on the confidential Inventory?  If so, those claims are also in jeopardy unless you take even timelier action.

The final rule adds substantiation questions on reverse engineering not previously included in the Inventory Reset regulations and not included in EPA-recommended substantiation templates.  As a result:

• Companies that asserted confidentiality claims for chemical identities on Form A but deferred substantiating those claims must answer those questions (as well as the other substantiation questions) by November 1, 2020. 

• If they previously substantiated but did not answer the new reverse engineering questions, they must answer them by November 1 also.

• Companies that asserted such claims on Form B must answer the questions substantially earlier, by June 4, 2020.

Failure to answer these reverse engineering questions in a timely manner means that EPA will deny the confidentiality claim.  40 C.F.R. § 710.49.  In that case, EPA will move each affected chemical identity from the confidential Inventory to the pubic Inventory unless someone else timely substantiates confidentiality claims for those identities.

Companies should take particular care to respond to the reverse engineering questions substantively.

Background – Inventory Reset Reporting

Under TSCA § 8(b)(4), added by the 2016 TSCA amendments, EPA required all manufacturers to report as “active” all chemical substances that they had manufactured for non-exempt purposes during the 10 years prior to enactment of the 2016 amendments, in a process commonly known as Inventory Reset.  An EPA rule at 40 C.F.R. Part 710, Subpart B (which EPA calls the “Active/Inactive Rule”), required manufacturers to report by February 7, 2018 on Notice of Activity Form A.  Processors had the option of reporting on that form the substances they had processed during that period until October 5, 2018.  40 C.F.R. §§ 710.25(a) and (b), 710.30(a).

EPA’s February 2019 press release about the initial list of “active” substances indicated that the Inventory then included 86,228 substances, of which 40,655 (47%) were “active.” 

Since EPA completed the initial “active” designations and the TSCA Inventory has been formally “reset,” no one may manufacture, import, or process a chemical substance on the Inventory but not designated as “active” without first submitting a notification to EPA.  Anyone who intends to manufacture or process an “inactive” substance (i.e., one not designated as “active” on the Inventory) must first submit a Notice of Activity Form B that includes the chemical identity and anticipated date of manufacture or processing to EPA within the 90-day period before the anticipated date of manufacturing or processing. 

Upon receiving such a notice, EPA will change the designation of the chemical substance to “active,” and manufacturing or processing may commence.  40 C.F.R. §§ 710.25(c), 710.30(b).  Per an EPA notice, submission of Form B became mandatory on August 5, 2019. 

Confidentiality Claims on Notice of Activity Form A

As part of Inventory Reset reporting, where a reported substance was on the confidential Inventory, the manufacturer or processor could request EPA to keep the identity confidential by asserting a claim of confidentiality on Form A.  40 C.F.R. § 710.37(a).  EPA was required to move to the public Inventory all substances on the confidential Inventory for which no confidentiality claim was received, per section 8⁠(b)⁠(4)⁠(B)⁠(iv).

EPA announced that a total of 7,757 substances on the confidential Inventory were the subject of confidentiality claims through Inventory Reset.  They amounted to 19% of the substances reported as “active.” 

TSCA § 14(c)(3) requires confidentiality claims to be substantiated, but EPA gave reporting companies an option.  They could substantiate their confidentiality claims at the time of Inventory Reset reporting (unless previously substantiated within the previous five years), or later.  40 C.F.R. § 710.37(a)(1).  Some companies had already substantiated their claims; others substantiated at the time of Inventory Reset reporting; but many deferred substantiating those claims until later, when required by EPA to do so.  “Later” has now become “by November 1, 2020.” 

Section 8(b)(4) directs EPA to adopt a final rule requiring substantiations for chemical identity confidentiality claims asserted through Inventory Reset and establishing a plan to review all those claims.  The rule was due one year after EPA compiled the initial list of “active” substances on the Inventory.  That was on February 19, 2019, when EPA released the updated TSCA Inventory indicating all “active” substances.  Right on time, on February 19, 2020, EPA released the prepublication version of the final rule.  It later appeared in the Federal Register, 85 Fed. Reg. 13062 (Mar. 6, 2020).  That rule requires substantiations for Form A confidential chemical identity claims to be submitted no later than November 1, 2020.  It is codified at 40 C.F.R. Part 710, Subpart C.

The new rule also affects those Form A submitters that had previously substantiated their confidentiality claims or that did so at the time of submission.  TSCA § 14(c)(1)(B)(iv) provides that a person asserting a confidentiality claim must state that it has “a reasonable basis to believe that the information is not readily discoverable through reverse engineering.”  Section 14(c)(3) provides that the claimant must substantiate its claim, in accordance with EPA rules.

But the substantiation questions in the 40 C.F.R. Part 710, Subpart C regulations for confidential chemical identities, 40 C.F.R. § 710.37(c)(2), 82 Fed. Reg. 37520, 37544 (Aug. 11, 2017), did not include a question on reverse engineering.  A court subsequently ruled that omitting a question on reverse engineering was arbitrary and capricious.  EDF v. EPA, 922 F.3rd 446, 459 (D.C. Cir. 2019).  The final rule amends Subpart B to add two questions on reverse engineering.  40 C.F.R. § 710.37(c)(2)(ii), (iii).  It also includes those questions in the new Subpart C, which pertains to EPA’s plan for reviewing confidentiality claim substantiations.  40 C.F.R. § 710.45(b)(7), (8).  Accordingly, unless a company submitting a Form A for Inventory Reset asserting a confidentiality claim for a chemical identity went beyond the rule’s questions, all of those substantiations submitted during Inventory Reset are incomplete, because they did not substantiate that the submitter had a reasonable basis to conclude that the confidential chemical identity is not readily discoverable through reverse engineering.

Furthermore, even substantiations submitted prior to Inventory Reset reporting may be incomplete as well.  The EPA-suggested substantiation templates did not include questions on reverse engineering, so those substantiations may be similarly incomplete.

Confidentiality Claims on Notice of Activity Form B

Companies submitting Form B are required to substantiate their confidentiality claims within 30 days of submission.  40 C.F.R. § 710.37(a)(1)(ii).  Until EPA adopted the March 6 final rule, however, the substantiation questions in Subpart B lacked the new reverse engineering questions.  Accordingly, unless a company supplemented those questions in its substantiation to address reverse engineering, all of those substantiations are incomplete.

The New Questions on Reverse Engineering

New Subpart C includes the following questions related to reverse engineering in 40 C.F.R. § 710.45(b)(7) and (8) (the same questions now appear in Subpart B as well):

(7) Does this particular chemical substance leave the site of manufacture or processing in any form, e.g., as product, effluent, emission?  If so, what measures have been taken to guard against the discovery of its identity?

(8) If the chemical substance leaves the site in a product that is available to the public or your competitors, can the chemical substance be identified by analysis of the product?

These questions may be familiar, as they also appear in the Chemical Data Reporting rule and premanufacture notification (PMN) regulations, 40 C.F.R. § 711.30(b)(1)(viii), (ix) and 40 C.F.R. § 720.85(b)(3)(iv)(H), (I).  Nevertheless, answering these questions can be tricky, for several reasons.

First, EPA is likely to review the answers to these questions with more scrutiny than in the past.  Prior to the 2016 amendments, EPA had no obligation even to review substantiations in the absence of a request under the Freedom of Information Act (FOIA).  But those amendments added section 8(b)(4)(D)(ii), which requires EPA to review each substantiation in connection with Inventory Reset and determine if the confidentiality claim qualifies for protection from disclosure.  In addition, section 14(g)(1)(C) (also added in 2016) requires EPA to “review all claims for protection for protection from disclosure of the specific chemical identity of a chemical substance,” except for substances that have not yet been offered for distribution in commerce (e.g., PMN substances during EPA review). 

The criteria that EPA must now consider in evaluating substantiations for chemical identity confidentiality claims include whether the submitter has “a reasonable basis to believe that the information is not readily discoverable through reverse engineering,” per section 14(c)(1)(B)(iv), also added by the 2016 amendments.  The new Subpart C requires EPA to review Inventory Reset confidentiality claims in accordance with the section 14 and FOIA criteria.  40 C.F.R. § 710.55(a).  It calls for EPA to update the Inventory based on its reviews of those claims.  40 C.F.R. § 710.55(c).

Second, NGOs may be more aggressive in submitting FOIA requests for chemical identity information, as suggested by the success of the argument about substantiating the reverse engineering criterion in EDF v. EPA.  Even if EPA upholds a chemical identity confidentiality claim, NGOs may challenge that determination in court.  A court would review EPA’s determination based on the administrative record, primarily the submitter’s substantiation.

Third, the new reverse engineering questions do not align with section 14(c)(1)(B)(iv) and are inconsistent with it.  Straightforward responses to the questions may not adequately substantiate that the submitter has “a reasonable basis to believe that the information is not readily discoverable through reverse engineering.”

The first question does not address whether the identity is discoverable, much less whether it is “readily” discoverable.  Instead, it asks if the submitter has taken measures to prevent discovery.  Taking measures might be relevant to whether the identity is discoverable, but such measures are not necessary or even implicit in the term “discoverable.”  Other factors may be more relevant to the statutory criterion.

The second question asks only about the possibility of discovery through reverse engineering, assuming availability of a sample.  The question does not ask for an explanation of the factors that make discovery relatively easy or difficult.  Some chemicals are simply not discoverable, such as some UVCBs, some biologically-based products, and some polymers.  In most cases, however, given sufficient resources, equipment, expertise, and time, an identity can be identified by analysis of the product.  The relevant question is whether the identity can be “readily” identified through analysis. 

Answers to the substantiation questions must be supported by records kept for five years.  40 C.F.R. § 710.53.

Companies are advised to provide substantive, substance-specific information in responding to the reverse engineering questions.  EPA may consider that boilerplate answers applicable to many substances fail to substantiate the reverse engineering criterion.