EPA plans to limit TSCA CBI protections.

This summer, EPA published a proposal to modify regulations governing significant new uses of chemical substances (SNUR) under the Toxic Substances Control Act (TSCA) that could significantly impact protections for Confidential Business Information (CBI).  The proposed rule would modify the bona fide intent procedures in 40 CFR 721.11 to allow EPA to disclose the confidential significant new use designations to a manufacturer or processor who has established a bona fide intent to manufacture (including import) or process a chemical substance. Specifically, the proposed regulatory language redefines the scope of “confidential business information” to exclude new use designations. Industry groups voiced their concerns with the proposal in comments submitted to the Agency last month. Some comments urged EPA to withdraw the proposal and re-propose it in conformity with the disclosure authorized by the Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act).

Section 14 of the Lautenberg Act prohibits the disclosure of “information that is exempt from disclosure pursuant to subsection (a) of section 552 of title 5, United States Code,” the Public Information Section of the Administrative Procedure Chapter of this Title. The provision explicitly provides that this protection extends to “processes used in the manufacturing or processing of a chemical substance or mixture.” Several commenters stressed that it appears that the proposed regulation goes beyond what the statute allows.

The American Chemistry Council (ACC) noted in its comments that EPA needs only to respond to the bona fide intent requestor with a “yes” or “no” to address whether the proposed use of the SNUR substance is a new use. Therefore, the ACC stressed, the proposed amendment to 40 CFR 721.11 would disclose more confidential information than is necessary to answer the requestor’s question. Other comments, from the American Fuel & Petrochemical Manufacturers, argue that the Agency’s plans to disclose this information would create an anticompetitive environment by giving an advantage to those who submit bona fide intent notices.

In their comments, these industry groups also recommended EPA expand the SNUR CBI provision to impose additional requirements on both the Agency and chemical manufacturers. The ACC asserted that EPA should be required to inform the original PMN submitter when it discloses any confidential information to a requestor similar to the existing provision regarding the Confidential Inventory (40 CFR 720.25(b)(6)). Another set of comments, from the American Petroleum Institute, suggested that the Agency use consent order and SNUR requirements to compel manufacturers to inform downstream customers of all potentially applicable compliance requirements related to a substance.

The proposed amendments to the SNUR CBI provisions could affect EPA’s treatment of CBI under TSCA more generally. The Lautenberg Act requires manufacturers and importers to reassert CBI claims during the Inventory Reset process. The proposal for that process may also attempt to limit CBI protections.

EPA is Removing 72 Inert Ingredients Previously Approved for Use in Pesticide Products

On October 22, 2014, EPA published for comment a proposal to remove from EPA’s list of inert ingredients approved for use in pesticide products 72 chemical substances that are no longer being used as inert ingredients in pesticide products. (79 FR 63120) In response to EPA’s request for comments, no specific information regarding those 72 chemical substances or any products that may include them was provided to EPA, indicating that these chemical substances are not being used in currently approved pesticide product formulations. Therefore, as of December 14, 2016, (81 FR 90356) EPA decided to remove all 72 from the inert ingredient list. A list of the 72 inert ingredients can be found here.

Removal of a chemical substance from the approved inert ingredient listing does not, in and of itself, restrict the use of the chemical substance in a pesticide product, instead it changes the way an application is processed. Once removed, the chemical substance would be considered a “new” inert ingredient. Any inert ingredient that is not on the approved list must be approved by EPA before registration for a formulation containing that chemical substance as an inert ingredient. EPA approval can be obtained by submitting a request, along with relevant data including, among other things, studies to evaluate potential carcinogenicity, adverse reproductive effects, developmental toxicity, genotoxicity, as well as environmental effects associated with any chemical substance that is persistent or bioaccumulative. Further, adding the chemical substance to the list of approved inert ingredients would also require payment of a fee in accordance with FIFRA Section 33, 7 U.S.C. 136w-8.

Litigating the obligation to report substantial risk information and pay penalties under TSCA section 8(e).

(This post is an adaptation of an article published in the December 2016 newsletter of the Pesticides, Chemical Regulation, and Right-to-Know Committee, within the American Bar Association’s Section of Environment, Energy, and Resources. A PDF of the article is available here.)

By Irene Hantman

On December 9, 2016, four major chemical manufacturers filed a motion to dismiss [PDF] the Toxic Substances Control Act (TSCA) section 8(e) claims filed against them by the law firm Kasowitz, Benson, Torres & Friedman LLP (Kasowitz) under the False Claims Act (FCA).  Under the qui tam provision of the FCA, individuals may pursue claims against any person who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  In this case, Kasowitz asserts that BASF, Bayer (Convestro), Dow, and Huntsman failed to pay penalties allegedly owed under the Environmental Protection Agency’s (EPA) TSCA section 8(e) Compliance Audit Program (CAP).  The case was originally filed in the U.S. District Court, Northern District of California in May 2015.  In November 2016 the case was transferred to U.S. District Court for the District of Columbia, and a status hearing was held December 1, 2016.

EPA’s Compliance Audit Program (CAP) and Substantial Risk Information

In the early 1990s, EPA used the CAP to encourage companies to come into compliance with TSCA section 8(e) requirements regarding the immediate reporting of “new information that reasonably supports a conclusion that a chemical substance or mixture presents a substantial risk of injury to health or the environment” (“substantial risk information”).  In the Federal Register notice announcing the program, EPA explained that section 8(e) is very important to the Agency’s ability to obtain information needed to set priorities and perform risk assessments.   More than 100 companies participated in the program.

The CAP invited companies to enter into Agreements with EPA to audit their past compliance with section 8(e).  Companies entering into CAP Agreements were assured that the Agency would pursue only limited penalties and that it would forgo late and/or nonreporting TSCA section 8(e) civil penalties.  This could represent substantial savings to companies; in its Enforcement Response Policy, EPA asserts that a section 8(e) violation is a continuing violation.  That is, the violation continues from the date when the substantial risk information should have been disclosed through every day on which it has not been disclosed.  There is no “Statute of Limitations” for continuing violations.  Although the CAP provided significant protections to participants, EPA reserved its rights to take appropriate enforcement action if the Agency later determined that a company was required to submit a study or report under the CAP but failed to do so.


While pursuing personal injury litigation against the chemical manufacturers over exposure to certain isocyanate chemicals, Kasowitz identified information that led to filing this lawsuit. The isocyanates involved are: methylene diphenyl diisocyanate (MDI), polymeric MDI (PMDI), and toluene diisocyanate (TDI).  Isocyanates are used in the manufacture of polyurethane materials including liquid coatings, paints, and adhesives, flexible and rigid foam, and elastomers.

This complaint [PDF] alleges that the defendants withheld substantial risk information regarding respiratory injury when inhaled at levels below applicable inhalation exposure limits and from de minimis dermal contact.  According to Kasowitz, none of the substantial risk information at issue in the case was published in the scientific literature or otherwise available to EPA.

Arguing that the violations began as early as 1980 and continued up until the complaint was filed,  Kasowitz claims that the defendants owe billions in penalties under section 8(e).  In addition, penalties under the FCA can more than triple.  The qui tam provisions of the FCA grant up to 30 percent of any settlement to the private plaintiff.

Kasowitz has put forth a complex legal argument positing that, while BASF, Bayer, Dow, and Huntsman participated in CAP, they:

  • Had substantial risk information which section 8(e) obligated them to submit to EPA;
  • Were contractually obligated to submit all previously unreported substantial risk information through CAP;
  • Knowingly concealed or knowingly and improperly avoided a contractual obligation to transmit civil penalties for their failure to comply with section 8(e) reporting requirements in violation of the FCA; and
  • Made, used, or caused to be made or used, a false record or statement material to an obligation to pay or transmit money to the United States government in violation of the FCA.

In their motion to dismiss, the defendants argue that Kasowitz has failed to meet the required elements of claim under FCA.  Specifically, they explain that penalties not assessed by EPA do not comprise an “obligation to pay” under the FCA.  Kasowitz’s response to the motion is due on February 7, 2017.


The enrollment period for the CAP expired more than 20 years ago.  Today, companies interested in addressing liability for failing to timely submit substantial risk information to EPA must seek the protection of the Audit Policy, using the Agency’s new eDisclosure system.

If this case is successful, companies defending toxic tort litigation may see discovery expanded in search of similar substantial risk information.

Draft Alternatives Analysis Guide released for California’s Safer Consumer Products program.

On Monday, the California Department of Toxic Substances Control (DTSC) released a draft version of its Alternatives Analysis Guide, a document that will be critical to the implementation of the state’s Safer Consumer Products (SCP) program. Once finalized, the Guide will provide a framework and steps to help responsible entities (the manufacturers, importers, assemblers, and retailers of designated “Priority Products”) conduct an “Alternatives Analysis,” as required by the SCP regulations.

Under the SCP program, each Alternatives Analysis will look at how to best limit or prevent potential harm from the potentially hazardous “Candidate Chemical” in Priority Products. Every Alternatives Analysis must consider important impacts of the product throughout its life cycle and provide for specific actions to make the product safer.

After receiving and approving a final Alternatives Analysis report, DTSC will implement Regulatory Responses which favor the safest feasible alternatives. These actions may take the form of enforceable orders or agreements requiring further manufacturer research, additional information to DTSC or consumers, product redesign, end-of-life product stewardship, or sales restrictions or prohibition.

The draft Alternatives Analysis Guide provides information about the general process of conducting an Alternatives Analysis and is meant to be a “resource book” for people preparing Alternatives Analyses. The Guide provides methods, tools, information sources, and “best practice approaches” for conducting an Alternatives Analysis, and is expected to be updated periodically. The Guide is not a “regulatory document” or standard, nor is it meant to be used as a checklist.

In September 2015, DTSC released a Draft Stage 1 Alternatives Analysis Guide and scheduled the release of Stage 2 guidance for 2016. Stage 1 of the Alternatives Analysis process will begin with identifying product requirements and chemicals of concern, alternatives, and factors for comparing alternatives. Then, responsible entities will conduct an initial evaluation and screening of alternative replacement chemicals. Stage 1 culminates in the submission to DTSC of the Preliminary Alternatives Analysis Report, including a Work Plan.

After the preliminary report is approved, Stage 2 begins with executing the Work Plan and conducting an in-depth analysis that includes life cycle and economic effects. After an iterative evaluation and comparison process, the responsible entity will select an alternative, based on the information and conclusions generated through the comparative analysis, and recommends a regulatory response. Finally, the responsible entity must submit a Final Alternatives Analysis Report, including an implementation plan and timeline, if applicable. This final report will be available for public review and comment before DTSC makes any determination about regulatory responses.

The draft Guide released this week covers both stages of the Alternatives Analysis process. New chapters of the draft Alternative Analysis Guide, addressing the steps in Stage 2, are as follows:

  • Exposure
  • Life Cycle Impacts
  • Economic Impacts
  • Informational Needs
  • Selection of Alternatives
  • Self-Evaluation

DTSC is accepting public comments on the draft Alternatives Analysis Guide through January 20, 2017. The agency has also scheduled a public webinar to present and discuss the draft on January 10, 2017.

FTC rules on advertising sunscreen as “all natural.”

The Federal Trade Commission has ruled that California Naturel, Inc. falsely advertised its sunscreen product as “all natural” in violation of the FTC Act. Despite the company’s “all natural claim,” the sunscreen contains 8% dimethicone, a synthetic substance.

Last week, the Commission issued an order [PDF] prohibiting California Naturel from misrepresenting the ingredients or composition of its products, including whether the product is “all natural” or “100% natural” or any environmental or health benefits of the product. The company must have competent and reliable scientific evidence supporting its claims about the content and ingredients in its products. The Order also requires California Naturel to submit a report to the Commission, within 60 days, detailing its compliance with the Order.

In April, we reported that the FTC proposed settlements with four other personal care product manufacturers and issued an administrative complaint to California Naturel for marketing sunscreen as “all natural” even though it contained dimethicone. California Naturel also advertised that it “uses only the purest, most luxurious and effective ingredients found in nature.” The company did not dispute that the product contained 8% dimethicone, nor that dimethicone is a synthetic ingredient.

According to the Commission’s Opinion [PDF], California Naturel added a disclaimer at the bottom of the product webpage in early 2016, after the FTC began its investigation, stating: “The FTC requires us to add the following: ‘Dimethicone, a synthetic ingredient, is 8% of the sunscreen formula, the remaining 92% are natural products.’” However, the Commission found that the net impression created by California Naturel’s advertising conveyed to consumers that the sunscreen was “all natural.”

The Commission (except for Commissioner Ohlhausen, who dissented in part [PDF]) found that the disclaimer was not sufficiently conspicuous to change the overall message that the sunscreen is “all natural.” In particular, the Opinion criticized the disclaimer’s distance from the product’s “all natural” claims, noting that it was “not visible at all without scrolling down” and “well below the website’s ‘Add to Cart’ button so consumers are invited to purchase the product before they would even see the disclaimer.” FTC has previously issued guidance on online disclosures that urged marketers to place disclosures before “order now” or “add to shopping cart” links.

The Commission was also unpersuaded that the website’s disclosure of the product’s dozens of ingredients rendered the marketing “transparent.” The Commission pointed out:

All of the ingredients are in the same font and font size, and nothing on the face of the list identifies dimethicone as a synthetic ingredient. …If the cursor is properly positioned, this webpage identifies dimethicone as a “silicone-based polymer.” [I]t is reasonable for a consumer to rely on express claims, and thus that they should not be required to search for and dig out information that contradicts what an advertisement expressly and prominently conveys. Indeed, we expect consumers to rely on express statements such as the “all natural” representation at issue here, and to interpret such statements as meaning what they say.

The Commission concluded that the “all natural” claim was false and misleading because the product contains 8% of a synthetic ingredient. Further, the Commission rejected California Naturel’s proposed defense that there is no regulatory definition specifying the percentage of natural ingredients required to qualify as “natural,” since the company made the express claim that the product is “all natural.”

The Commission’s Opinion is a significant interpretation of the meaning of “all natural” claims, which are not addressed in FTC’s Green Guides guidance on environmental marketing. Here, the Commission cited court cases for the proposition that an “all natural” claim means that the product contains only ingredients found in nature. The Opinion also suggests that a properly qualified “natural,” or “92% natural” claim might have passed muster.

EPA Finalizes Hazardous Waste Improvements Rule

The Resource Conservation and Recovery Act (RCRA) regulates the generation, treatment, storage, and disposal of hazardous waste. The requirements under RCRA and regulations implementing RCRA can apply to companies that generate hazardous waste during the manufacture of certain products, or, can apply to companies and/or retailers that are ultimately discarding unused, expired, recalled, or damaged products that are considered hazardous upon disposal.

Recent developments under RCRA have the potential to affect both product manufacturers as well as retailers. On October 28, 2016, the EPA Administrator signed the final Hazardous Waste Generator Improvements Rule (Rule), and it was published in the Federal Register on November 28, 2016. This Rule attempts to reorganize the RCRA regulations to make them more user-friendly, address gaps in the current regulations, provide greater flexibility for hazardous waste generators to manage their hazardous waste, and provide the regulated community a better understanding of how the hazardous waste generator regulatory program works.

Some changes to the final Rule include:

  • Replacing the phrase “conditionally exempt small quantity generator” with the phrase “very small quantity generator” (VSQG).
  • Allowing VSQGs to send hazardous waste to a large quantity generator (LQG) that is under the control of the same person and consolidate it there before sending it on to management at a RCRA-designated facility, provided certain conditions are met.
  • Allowing a VSQG or a small quantity generator (SQG) to maintain its existing generator category in the case of an episodic event in which the VSQG or SQG generates a quantity of hazardous waste in a calendar month that would otherwise bump the generator into a more stringent generator regulatory category. Under this provision, generators that satisfy the listed conditions do not have to comply with the more stringent generator standards.
  • Requiring periodic re-notification for SQGs every four years starting in 2021.
  • Revising the regulations for labeling and marking of containers and tanks.
  • The regulations were also reorganized and renumbered.

The regulation of hazardous waste generation by the retail sector has historically presented a challenge because retailers are not “traditional” hazardous waste generators. EPA highlighted the new flexibility for episodic generators of hazardous waste and the consolidation of VSQG waste at LQGs facilities as two approaches for addressing a number of issues facing the retail sector in complying with RCRA. Indeed, once the new Rule becomes effective, if a VSQG retailer must recall and discard certain products that are classified as hazardous waste when discarded, the retailer can send the hazardous waste to a LQG facility that is considered the same “person,” i.e., the manufacturing facility that owns and operates the retail facility. This allows the consolidation and decision-making process of how to discard the hazardous waste at one (or a few) centralized facilities instead of at multiple (sometimes hundreds) of retail facilities.

There were specific provisions that EPA chose not to include in its final Rule, based on comments received. Some of these include:

  • EPA is not requiring generators to document all determinations that a waste is not a hazardous waste and maintain that documentation in their records.
  • EPA is not requiring that generators label containers and tanks of hazardous waste with a description of the contents of the container. A generator must include the words “Hazardous Waste,” a description of the hazards of the container, and the date accumulation started.
  • EPA is extending the time frame for an episodic event from the proposed 45 days to 60 days.

The rule will be effective at the federal level six months after promulgation. For those states and territories that are not authorized for the RCRA program (Alaska, Iowa, and the Indian Nations, and the territories Puerto Rico, American Samoa, N. Mariana, and US Virgin Islands), the rule will go into effect on that day. Authorized states will be required to adopt those provisions that are more stringent than the current RCRA generator regulations in order to retain their authorized status. However, these provisions of the rule will not become effective in states authorized for the RCRA program until states have adopted the rule and become authorized for the new provisions. Authorized states will not be required to adopt those provisions of the rule that are less stringent or equal to the current hazardous waste regulations.