Protection for confidential business information (CBI) could be at risk under one provision of the amended Toxic Substance Control Act (TSCA) now under consideration by EPA. 

TSCA’s little-noticed section 14(g)(4) requires EPA to assign unique identifier codes (UIDs) to chemical identities for which CBI claims have been accepted.  Considering the volume of new TSCA framework rules and guidance documents^[1] released on June 22, EPA’s request for input on UIDs could be overlooked.  However, in light of a recent EPA proposal, this unique identifier requirement could jeopardize confidential chemical identity information submitted under TSCA, making unique identifiers worthy of further examination. 

What Are Unique Identifiers?

A year has now passed since President Obama signed into law the Frank R. Lautenberg Chemical Safety for the 21st Century Act (LCSA), Public Law 114-182, on June 22, 2016.  The LCSA amended TSCA in a variety of ways.  Since implementation, most attention has focused on incorporating changes to regulations of new and existing chemicals under TSCA sections 5 and 6.   In addition, the LSCA made extensive changes to TSCA’s section 14, Confidential Information.^[3]   EPA is soliciting comments on its plans to develop a system to implement the section 14(g)(4) UID requirement.  Recently, EPA published a notification in the Federal Register for a public meeting and solicited comments concerning UIDs.^[4] 

Section 14(g)(4) directs EPA to take several actions regarding UIDs.  It must:

• Develop a system to assign a UID for every specific chemical identity for which EPA approves a CBI claim.  The UID must not be either the specific chemical identity or a generic name.
• Apply the UID consistently to “all information relevant to the chemical substance.”
• Publish annually an updated list of UIDs for which EPA has approved CBI claims and the expiration dates of those claims.
• Identify any non-confidential information received by EPA about a chemical substance on the UID list by referring to the UID.
• To the extent practicable, clearly link the UID with the specific chemical identity once that chemical identity is made public after the CBI claim expires or is withdrawn.

The legislative history indicates that EPA’s use of UIDs “will be employed to meaningfully inform the public without [compromising] trade secrets.”^[5]

In its Federal Register notice requesting comments on UIDs, EPA indicated that it will not use accession numbers (assigned when a chemical is added to the confidential Inventory) as UIDs.  Section 8(b)(7) directs EPA to make public both UIDs and accession numbers for confidential chemical identities, suggesting that they are different.  Instead, EPA is considering using a numeric identifier that includes the year that EPA approved the CBI claim, to facilitate tracking of the expiration date for the claim.

EPA also indicated that UIDs will only be assigned to chemical identities for which CBI claims were approved after enactment of the LCSA.

EPA held a public meeting on May 24 to solicit comments and ideas about developing a system to implement UIDs.^[6]   Held at EPA’s Washington D.C. Headquarters, the meeting’s forum was unusual in that it included a roundtable discussion with an active exchange between stakeholders and EPA officials.  At the meeting, as in the Federal Register notice, EPA presented two alternative UID systems.  EPA also worked with the few industry and NGO participants in attendance to hear suggestions on how to further develop the UID system.  Proponents for each alternative shared their views during the meeting.

The Threat to CBI Protection

The key issue for EPA is how to implement the requirement that it apply UIDs consistently to all information relevant to the chemical substance without compromising trade secrets.  How EPA resolves that issue may depend on the extent to which EPA balances the competing interests of transparency and CBI protection.

At the May 24 public meeting, EPA representatives said that they are uncertain if EPA can both design a UID that fully shields chemical identities from disclosure and apply that same UID for all associated non-confidential information.  The Federal Register notice said that these two requirements “do not appear to be fully reconciled in the statute.”  It noted that EPA has identified several situations where applying the same UID to every instance where information pertaining to the confidential chemical identity could cause CBI to be revealed.^[7]  

EPA has developed two alternative approaches to implement the UID requirement.  Comments on those alternatives are due July 7, 2017.

First Alternative

EPA’s first alternative would assign a single UID to each chemical identity approved for confidential treatment.  Because the UID would also apply to the chemical identity’s associated non-CBI information, this option would require EPA to review all non-confidential information about a chemical whose identity is protected as CBI.  Under this alternative, EPA would screen and redact CBI details associated with trade secret chemicals to prevent CBI disclosure through the UID link to the non-CBI information.

For some stakeholders, this approach raises concerns that CBI could be released.  They feel that the public could gain access to the confidential information, either because EPA had posted the information on its website, or through a Freedom of Information Act request for non-CBI submissions relating to a particular UID.  Here, the non-CBI UID information could link to CBI through the UID, which could then potentially expose confidential information.  The Federal Register notice explained, “For example, Company A may file a PMN and later commence import of Chemical X, for which its CBI claim for chemical identity is approved by EPA, resulting in Chemical X having an assigned UID and being placed on the confidential portion of the TSCA inventory.”  Company B may then file a notice of substantial risk under TSCA section 8(e) on the same substance, which it is using for research and development, also claiming the chemical identity as CBI.  Because the chemical is identical for both companies, EPA would assign the same UID upon approval.  By EPA’s connecting submissions from different companies with the same UID, Company B could discover Company A’s confidential information, including:  (1) that Chemical X is in U.S. commerce; (2) that another company has an active interest in the same chemical; (3) potential uses; and (4) non-CBI information about Chemical X. 

Another example where a UID could reveal CBI in the first alternative is if Company B did not claim CBI for the chemical in a section 8(e) substantial risk filing for that chemical.  In that situation, the section 8(e) substantial risk submission could be linked to Company A’s submission through the same UID, and could reveal Company A’s trade secrets to the public.  As opponents to the first alternative highlighted in EPA’s May 24 meeting, inadvertent disclosure of legitimate CBI may occur if EPA uses this single unique identifier for a particular substance.  For example, any information connecting the unique identifier to a specific chemical identity including non-confidential information could cause disclosure of all data under that identifier.  Critics of the first alternative pointed out at the public meeting that section 14(b)(1) specifically provides for the protection of CBI that may be mixed with non‐CBI information.  An industry representative further explained that associating the same chemical UID with information from different companies creates a link that inherently undermines the claim of the company that originally flagged the chemical as CBI.^[8]

EPA predicts implementation challenges with this alternative as well.  First, this approach would require EPA to carefully screen incoming, non-CBI submissions against a list of confidential chemical names and potentially treat as CBI information for which no claim is made.  As EPA explained at the public meeting, this alternative would present a “process that carries considerable risk of error.”^[9]  Second, EPA stated in the Federal Register notice that screening and redacting submissions in this way may be “such a burden on EPA resources as to be impracticable.”^[10]

Notwithstanding these concerns, some stakeholders argued at the public meeting that this first alternative is the only one which is consistent with both the language of section 14(g)(4) and the intent of Congress.

Second Alternative

EPA’s second alternative would assign UIDs to each chemical substance while limiting specific UIDs to substances submitted by the same person/company.  Under this approach, EPA would not give the same UID to the same chemical substance if submitted by different companies.  Instead, EPA would assign a different UID to additional submissions of the same substance submitted by different companies.  This would mean that the same chemical could potentially have different UIDs, depending on the person or company submitting the CBI claim.  In addition, the UID would not be applied to non-confidential information if the effect would be to reveal the CBI.  Under this alternative, the public would be able to link some submissions on the same chemical for the same company, but not link chemicals between different companies.  When a CBI claim expires or is withdrawn or denied, EPA would release to the public the specific chemical identity and corresponding UID.  Thus, CBI would remain protected, while providing information for the public. 

Some stakeholders have claimed this approach raises potential concerns regarding lack of public disclosure.  During EPA’s May 24 meeting, a stakeholder argued that section 14 should serve three purposes.^[11]  First, section 14 should ensure that while a chemical identity is protected from disclosure, the same unique identifier should link that chemical’s information so the public can understand the full extent of applicable information in aggregate.  Second, section 14 should ensure that once protection is lifted from a previously protected chemical identity, the UID links all the chemical’s information and the public can readily assess the specific identity.  Third, section 14 should ensure that the period of protection for CBI can be tracked allowing the public to understand when the claim was first allowed and when protection ends.

Second-alternative proponents disagreed with this interpretation at the May 24 meeting.  They supported the second alternative as striking the appropriate balance between the competing interests to protect CBI while linking the chemical identities to inform the public.  They cited the statute’s requirement for EPA to “develop a system” which allows EPA to use its expertise to balance competing interests.  They argued that EPA’s second alternative is most consistent with the statute to maximize transparency up to the point that CBI remains protected and the need to safeguard CBI to foster innovation and prevent competitive mischief.^[12]

What Happens Next

Comments regarding UID system development and alternative implementation strategies are due to EPA July 7, 2017.  As discussed in the May 24 meeting, EPA plans to finalize the UID system by December 2017. 

The authors gratefully acknowledge the assistance of Jennifer Leech in the preparation of this alert.

_{[1] See Beveridge & Diamond, EPA’s Risk Evaluation Framework Rule Incorporates Key Industry Suggestions (Jun. 30, 2017), and OSHA Proposes December 1, 2017 Deadline for First Phase of Electronic Reporting, Foreshadows Rulemaking on Anti-Retaliation Provisions (Jun. 30, 2017).}

_{[2] See Beveridge & Diamond, TSCA Reform Implementation Update (Feb. 22, 2017).}

_{[3] These changes are summarized in EPA, The Frank R. Lautenberg Chemical Safety for the 21st Century Act: Frequent Questions (Oct. 24, 2016), https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/frank-r-lautenberg-chemical-safety-21st-century-act-0.}

_{[4] Assignment and Application of the “Unique Identifier” Under TSCA Section 14; Notice of Public Meeting and Opportunity To Comment, 82 Fed. Reg. 21,386 (May 8, 2017), https://www.federalregister.gov/documents/2017/05/08/2017-09182/assignment-and-application-of-the-unique-identifier-under-tsca-section-14-notice-of-public-meeting.}

_{[5] H.R. Rep. No.114-176, at 30 (2015).}

_{[6] EPA, May 24, 2017 - Public Meeting on Unique Identifiers for Confidential Chemical Identities, https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/meetings-and-webinars-amended-toxic-substances-control.}

_{[7] 82 Fed. Reg. at 21,386.} 

_{[8] Transcript of EPA Public Meeting May 24, 2017 (Transcript) at 10, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2017-0144-0002.}

_{[9] 82 Fed. Reg. at 21,388.}

_{[10] Id. at 21,389.}

_{[11] Transcript at 3, 32.}

_{[12] Transcript at 32.}