California's new SCP law may threaten trade secrets.

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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.

California’s Safer Consumer Products program launches.

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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 blog. Writing 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.

CA’s Safer Consumer Products regulations (almost) finalized.

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California’s Safer Consumer Products final regulations were generally approved by the Office of Administrative Law (“OAL”) and filed with the Secretary of State on August 28. As we have previously discussed, the Safer Consumer Products program establishes a statewide system that implements a key element of the California Green Chemistry Initiative: accelerating the use of safer products through a science-based process to evaluate chemicals of concern and identify safer alternatives. To recap, this process consists of four steps:

  1. The regulations establish a starting list of about 1,200 Candidate Chemicals based on the work of other authoritative organizations. DTSC will identify additional Candidate Chemicals.
  2. DTSC will evaluate and prioritize Candidate Chemical/consumer product combinations to develop a list of “Priority Products.”
  3. Manufacturers (or other responsible entities, such as importers or retailers) of Priority Products must notify DTSC when their product is listed as a Priority Product and conduct Alternatives Analyses.
  4. DTSC will identify and implement regulatory responses designed to protect public health and the environment and maximize the use of acceptable and feasible alternatives.

The regulations that will set this process in motion will go into effect starting October 1, 2013.

We discussed the development of these regulations in April and February of this year. DTSC made further revisions based on the April proposal after receiving feedback from the OAL, which are generally minor.

Although most of DTSC’s proposed regulations were approved, the OAL disapproved [PDF] three minor provisions of the regulations for failing to meet standards for clarity. In response, DTSC has proposed revisions which would re-add those provisions with minor drafting changes, and emphasized the necessity for their inclusion in order to maintain flexibility in collecting information and to maximize transparency while protecting validly claimed trade secrets. The first provision specifies that documents submitted to DTSC must be in English and in “an electronic format accessible” to the agency, while the other two provisions specify how DTSC will handle trade secret claims, and how submitting parties can dispute the agency’s trade secrecy determination. DTSC will be accepting comments on these revisions through September 9, 2013; the 15-day notice discussing the revisions is here [PDF] and the revised text is here [PDF].

A Look Back at the Senate’s TSCA Reform Hearing and Reactions.

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Last month, we reported that the U.S. Senate Committee on Environment and Public Works had scheduled a full-committee hearing on various legislative proposals to reform TSCA. The hearing on July 31 consisted of three panels with a total of 19 witnesses including public health advocates, legal and health experts, representatives from state government and the private sector. The hearings and archived webcast are available online.

At the hearing, Committee Chair Barbara Boxer (D-CA) expressed her continued support for the Safe Chemicals Act (S. 696) and criticized the bipartisan Chemical Security Improvement Act (“CSIA,” S. 1009). Sen. Boxer took particular issue with the legislation’s effect on preempting state laws such as California’s Proposition 65, but nevertheless, vowed to continue working on the bill with the hope of enacting TSCA reform as soon as possible. Senator David Vitter (R-LA), a co-author of CSIA, said that he was already at work with Senator Tom Udall (D-NM) on amending his legislation to address the preemption concern.

Since the hearing, Congress has been in recess and there has been little news on how the amendment process is going. In the meantime, the CSIA’s advocates and detractors continue to make their case in the public forum. Last week, Steve Owens, who served as EPA assistant administrator for the Office of Chemical Safety and Pollution Prevention during President Obama’s first term, wrote on RealClearPolicy in support of the bill. Owens played down preemption concerns, arguing that TSCA was originally intended to preempt state efforts and that the CSIA provides for states to apply to EPA for a waiver that would keep state laws in place. He also pointed out that the CSIA’s sponsors had pledged to amend the bill to address other preemption issues. Earlier this month, Alex Formuzis of the Environmental Working Group criticized the CSIA and called on members of the public health and environmental community to rally behind Sen. Boxer’s efforts in shepherding strong TSCA reform legislation to the Senate floor. In California, state legislators introduced a mostly symbolic resolution that calls on Congress and the President to “respect the rights of states to protect the health of their citizens” and not enact the CSIA in its current form.

Chemical Safety Improvement Act May Be Overhauled in Senate Hearing Next Week.

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Since its introduction in late May, the bipartisan Chemical Safety Improvement Act of 2013 (“CSIA,” S. 1009) has already had an eventful history which looks like it will get even more interesting next week when the Senate Environment and Public Works (“EPW”) Committee holds a day-long hearing on reforming federal chemical law. The hearing, scheduled for July 31, will focus on the CSIA but also consider other proposals to reform the 1976 Toxic Substances Control Act (“TSCA”) – the only major environmental statute that hasn’t been updated since its initial passage.

The CSIA, introduced by Senator David Vitter (R-LA) and the late Senator Frank Lautenberg (D-NJ), has already been the subject of two House committee hearings. The bill was introduced just weeks before the death of Sen. Lautenberg, who was known for his dedication to pollution protection and public health, and some have called for its passage as a tribute to his legacy. The CSIA is backed by industry and some environmental groups, but has been criticized by other environmental groups and consumer and health advocates who argue that the bill is critically flawed; for example, if passed, the law might override state consumer safety laws like California’s Proposition 65, which require warnings on products that contain certain chemicals. In California, Attorney General Kamala Harris and the state’s Department of Toxic Substances Control have expressed concern that the bill could not only preempt Prop. 65 but also derail the state’s nascent green chemistry regulations.

Senator Barbara Boxer (D-CA), who chairs the Senate EPW Committee and co-sponsored some of Sen. Lautenberg’s previous TSCA reform proposals, is reportedly planning a major overhaul of the bill “that would amount to starting over.” Sen. Boxer’s goal is to combine parts of the Chemical Safety Improvement Act with parts of the Safe Chemicals Act of 2013 (S. 696). The Safe Chemicals Act was introduced by Sen. Lautenberg in April 2013 without Republican support, and mirrors legislation that passed the Senate EPW committee last year. Details on the hearing, including the witness list, are not yet available.

OEHHA to Hold Public Workshop on Potential Regulation Addressing Proposition 65 Warnings.

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On July 30, 2013, California’s Office of Environmental Health Hazard Assessment (OEHHA) will hold a public pre-regulatory workshop in order to gather input from interested parties on potential rulemaking to modify Proposition 65 warnings. If formally proposed and adopted, the regulation would either supplement or replace existing OEHHA regulations governing Proposition 65 warnings and conform to any statutory changes that may be enacted, such as the legislative reform package currently championed by Governor Brown.

Proposition 65 currently requires businesses to provide a “clear and reasonable” warning before knowingly and intentionally exposing anyone to listed chemicals that are known to cause cancer, birth defects and other reproductive harm. This warning can be given by a variety of means, such as by labeling a consumer product, posting signs at the workplace, distributing notices at a rental housing complex, or publishing notices in a newspaper. However, with more businesses posting blanket warning signs in attempting to comply with Prop. 65, many are concerned that the signs have become meaningless to the public and a source of frivolous litigation. In response to these concerns, Governor Brown announced in May that he was seeking reform of Proposition 65 in order to end frivolous lawsuits and improve warning signs.

According to OEHHA, the potential rulemaking would provide for more informative and meaningful warnings to individuals concerning exposures to carcinogens and reproductive toxicants. The regulation would offer a variety of options for businesses that are required to provide these warnings, and would provide businesses with greater certainty that their warnings comply with Prop. 65.

At this time, OEHHA believes the regulation should include the following:

  • A requirement that a warning inform consumers that they will be exposed to a listed chemical;
  • The minimum information that must be included in all warnings, such as the health effect of exposure, how a person will be exposed, or how to avoid or reduce exposure to a listed chemical
  • Approved warning methods and content regarding exposures to listed chemicals in consumer products and in foods, including those sold at retail establishments and via the Internet;
  • Approved warning methods and content for environmental exposures, including for some common scenarios such as parking lots, hotels, apartments, and other businesses;
  • Requirements and approved methods for providing additional contextual information concerning exposures to listed chemicals. This information would not have to be available to the public before exposure, but must be available on a website or other generally accessible location;
  • Reasonable transition times for businesses to come into compliance with this regulation and recognition of existing warnings that are included in court-approved settlements.

Written comments are due August 30, 2013. The workshop will take place from 10 am to 3:30 pm in the Coastal Hearing Room at the Cal/EPA Headquarters Building, 1001 I Street, Sacramento, CA, and the agenda is now available online [PDF]. The workshop will be webcast at http://calepa.ca.gov/Broadcast. OEHHA notes that if it decides to formally propose a Proposition 65 warning regulation, it will provide additional opportunities for public input.

Prop. 65 Reform on California’s Agenda.

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Last month, California Governor Jerry Brown unveiled his proposed reforms to Proposition 65, the 27-year-old law passed by voter initiative to protect Californians from harmful chemicals. Gov. Brown directed the California Environmental Protection Agency (“Cal/EPA”) to work with the legislature to improve the law and put an end to the proliferation of abusive “shakedown” lawsuits. Prop. 65 is best known for requiring clear warnings about chemicals known to the state to cause cancer or reproductive harm, often seen in retail stores and restaurants and on many consumer products. Like several other landmark environmental laws, Prop. 65 permits private citizens acting in the public interest to enforce the law by suing violators. Under the current law, unscrupulous lawyers are incentivized to bring Prop. 65 lawsuits because they may be able to recover all attorneys’ fees plus damages of up to $2,500 per day, or otherwise extract settlements with little proof of a meritorious claim.

The governor’s reform package includes:

  • capping attorney’s fees;
  • requiring plaintiffs to make a stronger showing of a violation before bringing suit, as well as other disclosures;
  • limiting the amount of money from an enforcement action that can go into settlement funds (as opposed to penalties);
  • authorizing the state to adjust the level at which warnings about reproductive harm are required; and
  • making more useful information available to the public on chemical exposure and protection.

The governor’s announcement adds to growing momentum in the legislature to reform Prop. 65. Assemblyman Mike Gatto introduced legislation this session which would allow business owners to avoid a costly lawsuit or settlement by paying a $500 fine and correcting the violation within 14 days after receiving a notice of violation. The bill, AB 227, has passed the state Assembly and this week was approved by the Senate committee on environmental quality; the Senate judiciary committee will consider it on Tuesday, June 25.

DTSC: Cost of Safer Consumer Products Rules Is Unknowable.

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The agency charged with implementing California’s Safer Consumer Products (“SCP”) regulations has concluded that the program’s costs cannot be determined until the rules are in place.

The Department of Toxic Substances Control (“DTSC”) released its Economic and Fiscal Impact Statement [PDF] for its proposed SCP regulations on May 22. DTSC cited the SCP program’s “number of unknowable factors” in explaining why the agency could not estimate the number of businesses affected or the total costs to the private sector.

The agency characterized the proposed rules as “process regulations” which would not directly affect any products or chemicals, and thus would not have any significant impacts on the private sector.

As we have previously discussed, the proposed SCP regulations create a system for prioritizing and evaluating chemicals in products with the goal of limiting exposure or reducing hazards posed by a chemical of concern.

DTSC noted that an Economic and Fiscal Impact Statement – along with other standard elements of the rulemaking process – would be completed for each product-chemical combination that the agency proposes to list as a Priority Product. Thus, specific costs and benefits would be identified and evaluated in a piecemeal, product-by-product manner.

The agency also argued that impacts could not be accurately estimated in part because of the flexibility built into the SCP program, which offers many options to both the regulator and the regulated community. For example, if a certain product is listed as a Priority Product, the manufacturer (or other responsible entity) may choose whether to conduct an Alternatives Assessment, stop using the chemical of concern, replace the product, or remove it entirely from the California market. DTSC will not be able to determine its own regulatory response – with its attendant costs – until after the manufacturer makes its “selection decision.”

The DTSC’s Economic and Fiscal Impact Statement did not provide an estimate for the number or percentage of impacted businesses which constitute small businesses; the agency explained that it had not determined the extent of information it needs to request from companies in order to implement the SCP regulations. Nevertheless, DTSC concluded that only “insignificant” costs would be incurred by those companies which choose to provide information requested by the agency.

Likewise, DTSC claims that no businesses or jobs would be created or eliminated by the proposed rules since they are “process regulations.” DTSC also asserts that the rules will not negatively impact California businesses’ competitiveness because the “process regulations” would not by themselves directly increase the cost of producing any particular product.

The 15-day comment period for the Economic and Fiscal Impact Statement is open through June 6, 2013. The agency’s public notice, containing additional details on commenting, is available online [PDF].

California’s New Revisions to Proposed Safer Consumer Products Regulations Released.

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Last week, California’s Department of Toxic Substances Control (“DTSC”) released the revised proposed regulations implementing the Safer Consumer Products law. The 15-day public comment period for the revised proposed regulations is open through April 25, 2013. The revised text, as well as an underline/strike-out version showing changes from the January 2013 version, is available online.

Notably, the revisions contain several changes affecting Alternatives Analysis. The definition of “Alternatives Analysis Threshold” now means the Practical Quantitation Limit or another applicable concentration limit which DTSC may specify. Under the new provision at §69503.5(c), DTSC may set a threshold concentration in a proposed or final Priority Products list for any Chemical of Concern that is an “intentionally added ingredient.” Under this provision, DTSC may also specify a threshold concentration higher than the Practical Quantitation Limit for any Chemical of Concern that is a contaminant. In addition, the revised regulations move the requirement for identifying factors relevant to comparing a Priority Product and alternatives (such as adverse public health impacts or physical chemical hazards) from the second to the first step of the Alternatives Analysis process. The new § 69505.8 provides that Final Alternatives Analysis Reports will now be subject to a public comment period, instead of the Preliminary Alternatives Analysis Report. The responsible entity will not be required to respond to all public comments, but instead will only have to address issues identified by DTSC upon review of the comments in an “AA Report Addendum.”

The revised proposed regulations change the definitions of several other key terms. The definition of “assemble” was revised to clearly specify repair and maintenance activities, and “manufacturer” now means anyone who “specifies the use of chemicals to be included in the product,” rather than anyone who has the capacity to do so. “Reliable information” has been re-defined to include only information that could be considered “scientific.” The definition also now specifies that the information must meet certain criteria – such as publication in a scientifically peer reviewed report or by a government agency “that implements laws governing chemicals” – which under the previous version were only considered as indicators of a study’s trustworthiness.

In addition, the revisions removed the provision requiring manufacturers to compensate retailers participating in any end-of-life collection program. In its summary of changes [PDF], DTSC states that these costs will instead be addressed by agreements between manufacturers and retailers.

For more information about California’s Safer Consumer Products Regulations, contact Verdant Law.

Verdant Proudly Sponsors Prop.65 Clearinghouse's Green Chemistry Conference

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Green Chemistry:

Verdant is pleased to announce its sponsorship of the Prop.65 Clearinghouse Green Chemistry Annual Conference.  This year’s conference will be held on Tuesday, April 9, 2013, at the The City Club of San Francisco, 155 Sansome Street.

  • Verdant attorney, Philip Moffat, will present on “REACH 2013.”
  • Verdant attorney, Catherine Lin, will present on “Supply Chain Management.”

More information about the conference is available here and an agenda is available here.   A copy of Mr. Moffat’s presentation is available here [PDF].