Dutch survey finds SMEs struggling with awareness, cost of REACH.

A recent Dutch survey found that the costs of implementing REACH are much higher for Small to Medium Enterprises (SMEs) than previously thought and awareness among SMEs is lower than expected. The survey findings highlight just some of the major issues facing SMEs subject to REACH.

The Dutch survey, which is believed to be the largest national assessment yet of impacts of the Regulation on SMEs, interviewed 1,143 Dutch SMEs by telephone. The companies were selected on the basis of research that indicated they would be affected by REACH. The survey produced the following results:

  • Less than 30% of the companies had knowledge that REACH existed.
  • The cost of complying with the Regulation for SMEs was estimated to be €425m in 2012.  Jan Wijmenga, of the Dutch Ministry of Infrasture and Environment, said that the costs are much higher than originally expected, considering the estimate by the European Commission (“the Commission”) that REACH would cost companies €10 billion to implement in total, until 2018.
  • The cost of access to data is cited as the highest contribution to REACH expenses; however, this element is largely outside the remit of national member states and ECHA.

Although the survey was conducted for the Dutch Ministry of Infrastructure and the Environment, Mr. Wijmenga said that the survey would also be of interest to the Commission and ECHA. The survey highlighted certain priorities for REACH, such as developing simpler, easy-to-read guidance to the Regulation, clear information on how Substance Information Exchange Fora (SIEF) work, digitalization of safety data sheets, and greater consistency between REACH and other EU legislation. These priorities can be added to the list of the issues that have received attention since the end of the REACH registration deadline for tier two pre-registered, phase-in substances (100-1,000 tonnes) on May 31, 2013. Some of the major issues include:

  • The high cost of submitting dossiers, even for low tonnage bands. Much of the cost is due to laboratory studies (although some of this cost can be reduced by participating in SIEFs).
  • The practical problems SMEs face when participating in SIEFs, including the cost of letters of access, transparency, and the powers of lead registrants.
  • The number of companies falsely declaring themselves to be SMEs (which allows them to pay lower registration fees). In 2012, 62% of companies who had registered as SME were unable to demonstrate eligibility; 56% were considered not to be SMEs.
  • The time frame in which SMEs must respond to public consultations on EU chemicals legislation, particularly SMEs’ need for more time to process the information, given their often limited resources.

In particular, the survey findings will help supplement the Commission’s ongoing investigation of the impact of REACH on SMEs. A REACH review addressed the subject in February 2013, and this summer, the Commission’s Directorate-General for Enterprise and Industry (DG ENTR) put out a tender for technical assistance to further assess SMEs “in the context of socio-economic analysis under REACH.” The Commission also plans to hold a workshop on December 10-11, 2013, in Brussels, to further discuss the challenges faced by SMEs under REACH.

Efsa revises draft guidelines for food contact materials, calls for proposals to study implications.

The European Food Safety Authority’s (Efsa) Panel on Food Contact Materials, Enzymes, Flavourings and Processing Aids (CEF) recently drafted revisions to its guidelines [PDF] for food contact materials (FCMs), incorporating new data requirements that could lead to substance re-evaluations. In response, Efsa’s Food Ingredients Packaging (FIP) unit has launched a call [PDF] for proposals to study the implications of the revisions.

The guidelines specify the data that must be submitted with applications for safety assessments of substances to be used in FCMs prior to authorization by the European Commission. CEF revisited the guidelines in light of recent scientific developments, opinions issued by Efsa, and experience gained from safety evaluations of many different substances. In the revisions, CEF proposes carrying out “an exposure assessment using a harmonised methodology” established by Efsa. The assessment would take into account specific consumption by subgroups of the population, such as infants and toddlers, in contrast to the current approach, which uses a single value. The CEF panel also suggests setting standardized consumption data for a number of food categories.

The exposure-based approach proposed by CEF could result in different requirements for submission of toxicological information and use restrictions for certain substances. Therefore, Efsa “considers it necessary” to assess the implications of the draft revised guidelines and the differences from the current guidelines, as specified in the call for proposals.

The draft revised guidelines are not yet publically available. The CEF panel plans to adopt the revisions at its plenary meeting next week, after which the guidelines will be released for public consultation.

California's Proposition 65 reformed to end "frivolous" lawsuits.

On October 5, 2013, California Governor Jerry Brown signed into law A.B. 227, amending Proposition 65. The bill aims to end “frivolous shakedown” lawsuits against businesses based on California’s Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Prop. 65, a voter-initiative-based law which requires businesses to post warnings about chemicals known to the state as causing cancer or reproductive harm. We previously discussed this legislation and Gov. Brown’s Prop. 65 reform package in June.

A.B. 227 amends the law so business owners faced with a private enforcement action may take corrective action, pay a $500 fine and provide notice of the fix – a solution that the bill’s sponsor, Assemblyman Mike Gatto (D-Los Angeles), compared to motorist “fix-it” tickets. The changes went into effect immediately, on October 5.

Under Prop. 65, private citizen enforcers must send a “60-day notice” of the violation to the alleged violator, along with the California’s Office of the Attorney General, before filing suit. Businesses sued for failing to post proper Prop. 65 warnings face steep penalties of $2,500 a day, plus the private enforcer’s attorneys’ fees and costs. Some of these private enforcement actions have led to the development of what some critics, including Gov. Brown, call a “cottage industry” based on “nuisance” suits and shakedowns.

Under A.B. 227, businesses that receive a 60-day notice of violation could avoid costly litigation or settlements by correcting the violation within 14 days. The alleged violator would send to the private enforcer the $500 penalty and a completed proof of compliance form describing the corrective action taken and attaching a copy of the new warning along with a photograph of the warning’s placement on the premises. Of the $500 penalty, 75 percent will be paid to the state’s Safe Drinking Water and Toxic Enforcement Fund and the remaining 25 percent will be paid to the private enforcer. An alleged violator could use this “fix-it ticket” option only once, and the amendments do not prevent the Attorney General or other public prosecutor from taking enforcement action.

The new amendments only apply to certain Prop. 65 actions involving exposure to (1) vehicle exhaust at parking garages; (2) alcohol; (3) second-hand smoke; and (4) certain chemicals in food or beverages that are not intentionally added and occur naturally in preparation processes like grilling or frying, such as a acrylamide or benzene.

Gov. Brown’s broader array of proposed reforms – including capping attorneys’ fees and limiting settlement payments – were not adopted in legislation this year.

U.S. retailer Target introduces sustainable product standard.

On October 7, 2013, Target announced a new Sustainable Product Standard that it will begin using this month to evaluate the sustainability and environmental impact of products sold in its stores.

Target said that it will ask “vendors representing 7,500 products in household cleaners, personal care and beauty and baby care” to provide product ingredients and information about various environmental attributes so that the company can assess products using GoodGuide’s UL Transparency Platform, a business-to-business screening tool that allows a company to evaluate ingredient information provided by suppliers. The Platform’s assessment tool will compare the product data to hazard trait and regulatory and other environmental criteria lists.

After being evaluated, each product will be assigned up to 100 points based on the sustainability of ingredients, ingredient transparency and overall environmental impact. Target’s announcement explains that the standard was developed “over the last two years in partnership with industry experts, vendors and NGOs.” The standard “will help establish a common language and definition for qualifying what makes a product more sustainable.”

According to Target spokesperson Jessica Stevens, the Sustainable Product Standard “does not have a direct guest-facing, in-store component,” so consumers will not see product assessment scores displayed in stores. Stevens explained that “products that pass a minimum threshold to be set by Target” will have access to special merchandising and marketing support.

Many environmental advocates like the Campaign for Safe Cosmetics and Breast Cancer Fund and Campaign for Safe Cosmetics were enthusiastic about the new standard. However, BizNGO chair and Clean Production Action co-director Mark Rossi expressed concern that the UL Transparency Platform is designed for information sharing between businesses and does not require any public disclosure; the platform’s proprietary nature means consumers and safety advocates have no access to the criteria used in its assessments. Although Target has not released any details on its scoring or standard benchmarks, it is expected to do so in the near future.

Target’s new Sustainable Product Standard follows its competitor Walmart’s announcement of its own “Policy on Sustainable Chemistry in Consumables,” which we discussed last month. Walmart’s policy is based on GreenWERCS, its own proprietary tool that assesses products’ chemical composition and screens for potential adverse human and environmental effects. Both retailers are taking steps to increase transparency and eliminate potentially hazardous chemical ingredients in their supply chains, although Target’s policy focuses on incentivizing safer products through its point-based standard, while Walmart’s approach is to eliminate certain chemical ingredients from products in their stores altogether.

EPA agrees to update enforcement guidance for FIFRA and TSCA.

The Environmental Protection Agency (EPA) has agreed to update its enforcement guidance for the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and Toxic Substances Control Act (TSCA) following a report [PDF] from the agency’s Office of Inspector General (OIG) released on September 27, 2013. The report contained findings and recommendations related to FIFRA and TSCA good faith reductions and “ability to pay” penalties, based on the OIG’s review of 23 FIFRA cases and 20 TSCA cases (13 lead disclosure and 7 PCB cases).

The OIG found that EPA regions differed in how they assessed FIFRA and TSCA enforcement penalty reductions; some appeared to justify reductions automatically, without considering the good faith compliance efforts of the violators. Because of the lack of adequate guidance and supporting documentation for determining and justifying good faith penalty reductions, there is a risk that EPA might treat violators inequitably and might be losing opportunities to fully collect all penalties due. Based on the OIG’s findings and recommendations, EPA has agreed to reissue the enforcement policy document GM-88, “Documenting Penalty Calculations and Justifications in EPA Enforcement Actions.”

The OIG also found that EPA’s enforcement response and penalty policy for lead-based paint disclosure rule to address violators who are unable to pay penalties is inadequate. Specifically, no guidance exists for applying non-monetary penalty alternatives (such as public service or delayed payment plans) when violators do not have the cash to pay the penalty. EPA has agreed to evaluate whether additional guidance is needed to clarify whether non-monetary alternatives must meet the agency’s existing Supplemental Environmental Projects policy.

In addition, the OIG report found that EPA’s “INDIPAY” economic model may be limited in its ability to help teams evaluate individuals’ claims of inability to afford penalties or clean-up costs. According to the OIG, the INDIPAY model does not assess an individual’s assets and should be updated to improve its accuracy. Furthermore, the report found that EPA does not provide adequate guidance or case development training to help regional teams evaluate ability to pay cases. In order to improve the agency’s consistency in handling the growing number of ability to pay cases, EPA has agreed to provide regional staff with updated training for case development of ability to pay claims. EPA also agreed to update its 1986 document “Guidance on Determining a Violator’s Ability to Pay a Civil Penalty” [PDF] to further improve guidance on evaluating ability to pay cases and address the inadequacies of the INDIPAY model.

California's new SCP law may threaten trade secrets.

Under California’s Department of Toxic Substances Control (DTSC) Safer Consumer Products (SCP) program, discussed last week, manufacturers may be required to publicly disclose the ingredients of those products that contain one or more chemicals deemed hazardous by the DTSC.

The regulations require DTSC to evaluate a list of Candidate Chemicals for development of an initial “Priority Products” list. (See overview [PDF]). If manufacturers of products on the Priority Products list choose not to remove the relevant chemicals, they will be required to disclose all product ingredients in an Alternatives Analysis (AA) report. The AA reports will include:

  • the quantities of chemicals of concern used;
  • the function of these chemicals and rationale behind their use;
  • the brand and product names under which a product containing a chemical is sold or used;
  • the identities of both the manufacturer and importer; potential adverse impacts associated with the product;
  • disposal and handling requirements; and
  • possible alternative chemicals the company has considered using.

DTSC will post these reports online and email them to interested parties for public review and comment. The state will also publicly announce notices of ongoing review, compliance, deficiency and disapproval.

The disclosure requirements may present potential hurdles to companies seeking to comply with the SCP regulations. First, companies that may not know the complete chemical make-up of their product ingredients will have to research their suppliers to gather more detailed information on their supply chains. Given the size of California’s economy, its product regulations could greatly affect global supply chains beyond state borders; if companies marketing products in California choose to reformulate their products in response to the SCP program, the impact will likely be felt throughout the country. Second, protecting confidential business information (CBI) might also complicate disclosure because, although some ingredients may be redacted if they are considered trade secrets, DTSC is entitled to deny such claims under certain circumstances.

Companies seeking to comply with the new rules may benefit from reviewing and documenting their strategies to protect trade secrets. Certain documentation is required by DTSC to substantiate trade secret claims. Companies may want to consider seeking patent protection for new products, new formulations of existing products, or new manufacturing methods. There may also be additional limited opportunities to obtain patents for existing products under the Leahy-Smith America Invents Act.

EPA issues SNUR restricting imports of allegedly harmful category of chemicals used in carpets.

The U.S. Environmental Protection Agency (EPA) announced on Monday that it will soon finalize a Significant New Use Rule (SNUR) that will allow the agency to restrict imports of potentially harmful long-chain perfluoralkyl carboxylates (LCPFACs) that could be used in carpets. The regulation will require companies to submit a notification 90 days in advance of manufacturing, importing, or processing LCPFACs that will be used as part of carpets or carpet treatment products. LCPFACs, a sub-category of perfluorinated chemical (PFC), include perfluorooctanoic acid (PFOA, also known as “C8”), other higher homologues, and their salts and precursors.

The final rule [PDF], which is authorized under the Toxic Substances Control Act (TSCA), was originally proposed in August 2012, following the U.S. chemical industry’s voluntary phase-out of these chemicals. In 2006, the eight major U.S. manufacturers of fluoropolymers and telomers committed to the EPA’s voluntary 2010/2015 PFOA Stewardship Program. The companies committed to achieving a 95% reduction in emissions and product content levels of PFOA and related substances by 2010, and elimination of such chemicals by 2015.

While the new final rule makes TSCA’s articles exemption inapplicable to imports of LCPFACs in carpets, other articles containing LCPFACs are not affected. EPA has previously issued three other SNURS addressing perfluoroalkyl sulfonates (PFAS), another sub-category of PFC. The new rule will add new chemicals to the existing PFAS SNUR and amend the SNUR to include ”processing” in the definition of “significant new use” for PFAS chemicals. EPA anticipates proposing another SNUR on additional PFCs in early 2014 as well as SNURs on other chemicals that will include imported products.

As part of its long term action plan regarding long-chain PFCs, EPA will also evaluate the effects of such chemicals on children and other sub-populations Although long-chain PFCs have not been found to cause significant adverse effects in the general human population, they have caused reproductive, developmental, and systemic toxic effects on laboratory animals, bioaccumulate in humans and wildlife, and are persistent in the environment. Therefore, EPA anticipates that continued exposure could result in adverse outcomes.

Further information on the new final rule and other actions EPA has taken on perfluorinated chemicals can be found at: http://www.epa.gov/oppt/existingchemicals/pubs/actionplans/pfcs.html#final.

House Subcommittee convenes hearing on role of TSCA preemption.

On September 18, 2013, the House Energy and Commerce Subcommittee on Environment and the Economy held its third in a series of hearings on Toxic Substances Control Act (TSCA) issues. The hearing focused on TSCA’s section 6, which relates to unreasonable risk from existing chemical substances, and section 18, which relates to preemption.

Section 6 has become a focal point for determining TSCA’s effectiveness in regulating hazardous chemicals. During the hearing, members of the subcommittee discussed the concepts of “unreasonable risk” and “least burdensome” alternatives, which have been pivotal in how the EPA approaches restricting or banning chemical use. Other issues raised by members of the subcommittee include whether the section 6 standard should be changed to eliminate cost-benefit analysis when EPA regulates existing chemicals, and the effects of the Corrosion Proof Fittings decision on EPA’s willingness to use its section 6 authority. Members disagreed over which aspect of the decision was more problematic—the court’s interpretation of the “least burdensome” requirement or the deficiencies in EPA rulemakings.

Section 18, which addresses when TSCA can pre-empt state law, has become particularly contentious in discussions about the draft Chemical Safety Improvement Act (CSIA). In the absence of federal action, U.S. states have enacted many local laws regulating certain chemicals, and they are concerned that proposed changes to TSCA might prevent these state laws from working effectively. Specific issues raised regarding TSCA preemption include the need for automobile manufacturers to have one national program for chemical regulation and for states to have access to confidential business information (CBI) in order to protect human health and the environment.

The Subcommittee’s background memorandum and an archived webcast of the September 18, 2013 hearing are available online.

California’s Safer Consumer Products program launches.

As October begins, California’s long-awaited Safer Consumer Products (SCP) program is finally launching as the first step in carrying out the state’s Green Chemistry Initiative. The regulations implementing the program go into effect today, October 1, 2013. The state’s Department of Toxic Substances Control (DTSC) will administer the SCP program, which identifies potentially harmful products and requires manufacturers to evaluate their safety and, if necessary, reformulate with safer alternatives or otherwise decrease risks. In addition, the SCP website has launched with some new features: an informational list of candidate chemicals and a Toxics Information Clearinghouse.

We have discussed the development of the SCP regulations over the past several months on this blogWriting in ChemicalWatch, DTSC Director Debbie Raphael describes the regulations as taking a “preventive approach to keeping dangerous chemicals out of everyday products,” to help keep consumers safe, while providing industry with “a more predictable process for ensuring product safety” and offering a “competitive advantage for innovators who see an opportunity in the growing market for toxic-free or toxic-reduced products.” The SCP program contrasts with the piecemeal, chemical-by-chemical approach which state regulators have previously used, as well as the federal Toxic Substances Control Act (TSCA), which generally does not require safety testing for existing chemicals in consumer products.

The DTSC has made available an initial candidate chemicals informational list, which includes 164 substances. The agency describes this list as a “subset” of Candidate Chemicals that meet the two regulatory criteria (based on hazard traits and exposure potential) for developing the initial list of “Priority Products” which will be evaluated for safety. Those seeking revisions to the Candidate Chemicals list may submit a petition to the agency, which will post proposed revisions online for public review and comment before adopting regulations to enact them; however, the SCP regulations do not allow petitions “to remove an entire chemicals list” until October 2016. The DTSC is required to identify the first Priority Products by April 2014.

The Toxics Information Clearinghouse (TIC) is a decentralized, publicly-accessible system for information on certain chemicals. The TIC is initially using an open approach as a web-based portal to both public and private information sources on chemical hazard traits and environmental and toxicological endpoint data. The TIC was authorized separately from the SCP program by legislation passed in 2008, and represents another of the DTSC’s six policy recommendations for implementing the California Green Chemistry Initiative.