Partnering with EPA's Design for Environment at Walmart Sustainable Products Expo.

EPA is a significant partner to companies leading innovation efforts in the arena of safer consumer products, according to Assistant Administrator Jim Jones, of EPA’s Office of Chemical Safety and Pollution Prevention. In a blog post yesterday, Jones describes how EPA’s Design for Environment (DfE) program recently participated in a “Supplier Panel on Sustainable Chemistry” at Walmart’s first ever Sustainable Products Expo, which brought together leaders from EPA, NGOs, and product manufacturers.

As we have previously discussed, EPA’s DfE program – which establishes voluntary sustainability-related standards for consumer products like household cleaners – plays a major role in Walmart’s Sustainable Chemistry Initiative. Jones writes that EPA’s contribution is “providing scientific expertise and understanding of health and environmental impacts throughout the supply chain, educating consumers and companies alike, and bringing people to the table to stimulate dialogue and partnerships.” Jones notes that with “growing consumer recognition” and trust for the DfE’s “Safer Products” label and program criteria, EPA’s partnerships with companies like Walmart and its participating suppliers can promote sustainability, health, and the environment while meeting consumer demand and growing their business.

The Expo also featured announcements from Walmart and its suppliers of various new sustainability commitments and initiatives. One such initiative is the Closed Loop Fund, which will invest $100 million seeded from suppliers including Coca-Cola, Pepsico, and Johnson & Johnson in recycling infrastructure with the goal of “transforming the recycling system in the United States.” Cargill made commitments to increase supply chain transparency in beef and Procter & Gamble pledged to reduce water use for liquid laundry detergent. Together, the suppliers participating across all of these voluntary sustainability efforts account for over $100 billion in sales at Walmart.

D.C. Circuit Court partially strikes down SEC conflict minerals rule.

On Monday, a federal appeals court struck down a rule implementing the Dodd-Frank Act’s requirement that companies disclose whether their products contain conflict materials originating from the Democratic Republic of Congo (DRC), or adjoining countries. A divided (2-1) panel of the U.S. Court of Appeals for the D.C. Circuit ruled [PDF] that the U.S. Securities and Exchange Commission (SEC) rule compelled commercial speech in violation of the First Amendment.

Industry groups challenged the SEC’s final rule on Administrative Procedure Act (APA), Exchange Act, and First Amendment claims. In National Association of Manufacturers v. Securities and Exchange Commission, the industry groups appealed the District Court’s rejection of their claims, but only prevailed with respect to the First Amendment challenge.

The APA claim in part attacked the rule’s lack of a de minimis exception. As we reported in November, because the SEC rule does not contain a de minimis exception, the disclosure requirement – which also calls for due diligence and auditing – could apply to firms that use conflict minerals in very small amounts as catalysts in the manufacturing process. The Court upheld the decision not to include a de minimis exception, finding that the SEC, “relying on text, context, and policy concerns, inferred that Congress wanted the disclosure regime to work even for small uses,” and a de minimis exception would thwart the statute’s goals.

The Exchange Act challenge also failed, as the Court found that the SEC’s cost-benefit analyses as required by the Exchange Act were “reasonable,” even though the rule’s “compelling social benefits” were not quantifiable.

However, the Court sided with the industry groups with regard to the SEC rule’s requirement that companies describe its products as not “DRC conflict free” in reports filed with the Commission and on the companies’ own websites. Writing for the Court (and joined by Judge Sentelle), Judge Randolph found that rational basis review was not appropriate for this type of speech, because it only applies to “purely factual and uncontroversial information,” in cases in which “disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers.” In this case, the SEC did not argue that the rule related to preventing consumer deception. Judge Randolph concluded that requiring the use of the “conflict free” label was found to convey a “moral responsibility for the Congo war,” tantamount to “compelling an issuer to confess blood on its hands” in interference with the First Amendment.

The Court further found that the SEC’s rule failed to meet the intermediate standard for commercial speech set out in Central Hudson, which “invalidates regulations for which narrower restrictions on expression would serve the government’s interest as well.” (Quotations omitted.) In this case, the SEC presented no evidence that less restrictive means would be ineffective, and the Court rejected its argument that the rule’s minimal impact was dispositive of the “narrowly tailored” requirement.

Notably, Judge Srinivasan declined to join the Court’s opinion with respect to the First Amendment claim, arguing that the issue should have been held in abeyance and part of the SEC rule stayed until the Circuit’s en banc re-hearing of a related case, American Meat Institute v. United States Department of Agriculture, regarding meat labeling.

Moving forward, the rule’s effective date for compliance is June 2, and the SEC has not yet offered a stay or guidance to companies on how to comply with the partially-invalidated rule. The SEC has also not yet announced whether it will seek to participate in the AMI case; otherwise, the case will be remanded to the D.C. District Court.

Walmart’s sustainable chemicals policy promotes transparency and DfE.

Last month, Walmart released the details of how its sustainable chemicals policy will be implemented, a move that will likely push suppliers to use safer chemicals in reformulating consumer products like cosmetics and cleaners. Walmart’s chemicals policy was first announced in September, and was quickly followed by the announcement of a “Sustainable Product Standard” developed by rival retail chain Target.

Walmart’s Sustainable Chemistry Implementation Guide is aimed at suppliers and provides details, resources, and metrics by which suppliers will be evaluated in their efforts to meet each element of the policy. The policy draws on various preexisting governmental, private sector, and voluntary programs addressing various aspects related to safer chemicals in products, particularly U.S. EPA’s Design for Environment (DfE) program.

The policy identifies “Walmart Priority Chemicals,” which are compiled from a list of authoritative and regulatory lists, including the EU’s endocrine disruptors priority list, various REACH lists, IARC’s and the U.S. NTP’s carcinogens lists, and California’s Proposition 65 developmental and reproductive toxicants list. From that compilation, the company has selected a subset of “approximately ten” “Walmart High Priority Chemicals,” which have not been publicly identified because of “business reasons.” Suppliers will learn whether a product contains a Walmart High Priority Chemical through The Wercs, a company whose WERCSmart platform facilitates the submission of product formulation information and lets retailers access and compile regulatory compliance and hazard communication data. The list of Walmart High Priority Chemicals is described in the Guide as “proprietary to Walmart,” and suppliers who are notified that their product contains a Walmart High Priority Chemical are asked not to disclose or use that information outside the supplier’s organization.

The Implementation Guide organizes the policy’s elements into three categories: (1) transparency; (2) advancing safer formulation of products; and (3) DfE in private brands.

Transparency: Suppliers will be measured based on, for example, the percentage of products (“by number of UPCs and sales”) for which formulation information has been fully disclosed to The Wercs. Walmart expects its suppliers to disclose product ingredients on their own websites, on a product-by-product basis, by January 2015; priority chemicals are to be disclosed on product packaging by January 2018. The Guide refers to EPA’s DfE Standard for Safer Products as well as the Consumer Specialty Products Association’s Ingredient Communication Initiative for guidance on how suppliers should disclose ingredients.

Safer formulation: Suppliers will be asked to complete the Sustainability Index, a questionnaire-based program developed by the Sustainability Consortium, to report progress on chemical disclosure, risk assessment, and hazard avoidance. Walmart has been using the Sustainability Index to assess suppliers and their products since 2009, and has built the resulting scorecards into the way Walmart’s buyers work. Walmart will also evaluate suppliers based on their performance in reducing, restricting, and eliminating priority chemicals and Walmart High Priority Chemicals “using informed substitution principles.” The Guide recommends the tenets of the Commons Principles of Alternatives Assessments, and recommends certain Alternatives Assessment ingredient lists and methodologies. Suppliers’ performance will be quantified based on metrics including: the aggregate weight volume of priority chemicals; number of UPCs and sales volume of products with priority chemicals; and number of products formulated with only DfE-approved ingredients. Progress on the initiatives in this category will be compared to a 2012 baseline.

DfE in private brands: Starting this year, Walmart and Sam’s Club’s own brand of cleaning products will be reformulated and relabeled to meet the criteria of EPA’s DfE program. This program will be expanded to other product categories in the future, although the Guide did not specify further details. Progress on this initiative will be measured by the percentage of private brand products which are DfE-certified.

Walmart will begin monitoring progress of all the initiatives this year, and aggregate progress will be reported publicly starting in 2016.

Changes for TSCA CBI claims on the horizon.

According to the OMB’s regulatory agenda, EPA is planning to issue a proposed rule on confidential business information (CBI) claims under TSCA.  The proposed rule, which is expected to be released in spring 2014, would require companies making CBI claims to reassert and re-substantiate those claims on a periodic basis. EPA’s intent in proposing the new regulation is to increase transparency and the availability of environmental and health effects information for existing chemicals in the marketplace.

Details about the proposed rule are not yet available, but ChemicalWatch identified two critical issues that will need to be addressed: (1) whether CBI claims will be evaluated immediately and (2) whether individual chemicals must be disclosed. According to ChemicalWatch, stakeholders expect that CBI claims would stand for five years before review and renewal is required.

The future of CBI claims may be further complicated by current legislative efforts to reform TSCA. The Chemical Safety Improvement Act (CSIA), the TSCA modernization bill currently before the Senate Environment and Public Works Committee, contains complex CBI provisions which have been criticized by NGOs as overly burdensome for EPA’s resources.

It is also unclear how the new CBI rule would affect EPA’s voluntary CBI Declassification Challenge. In December, Bloomberg discussed the state of the CBI Declassification Challenge with Jim Jones, EPA’s Assistant Administrator for chemical safety and pollution prevention. Through this initiative, EPA has determined that over half of the 22,000 CBI claims the agency had thought were submitted by chemical companies were in fact never made. The inflated number was due to a newly identified problem in EPA’s tracking system. Of the remaining claims, 909 cases have been declassified, 3,349 claims have been assessed as valid, and EPA is still investigating the last 7,000 claims.

SEC defends its rule on conflict minerals, which may implicate catalysts.

In a recent court filing, the U.S. Securities and Exchange Commission (SEC) defended its decision not to provide a de minimis exception for uses of “conflict minerals” in its rules [PDF] implementing the Conflict Minerals Statutory Provision (Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act). The rules require companies to disclose whether designated “conflict minerals” in their products originated in the Democratic Republic of the Congo or nine adjoining countries, and could potentially affect manufacturers who use conflict minerals as catalysts or in a similar manner in another process.

Business groups which had previously sought a de minimis exception, including the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable, challenged the rule in a lawsuit filed last year in October. The groups argued that the SEC did not fully consider the rule’s economic consequences as required by the Exchange Act, and that a failure to define the term “derivative” could mean that metals in forms that are chemically distinct from the base metals subject to the rule would also subject manufacturers to the rule’s disclosure requirements. When SEC adopted its final version [PDF] of the rule in August 2013, it clarified the definition of conflict mineral—which includes “cassiterite, columbite-tantalite, gold, wolframite, and their derivatives”—to specify that the term “derivatives” are limited to the “3Ts” (tantalum, tin, and tungsten).

In the new version of the rule, the SEC declined to include a de minimis exception. Instead, manufacturers must consider only if the conflict minerals used “are necessary to the functionality or production of a product.” In its guidance, SEC clarified that only conflict minerals contained in the product would be considered “necessary.”  Because they are not typically contained in the final product, the rule does not generally cover conflict minerals used as a catalyst,. However, SEC noted in its guidance that if a catalyst made from conflict minerals is contained in the final product, even if only in de minimis amounts, then the conflict mineral is considered “necessary” to its production and is therefore subject to the final rule.

On October 23, the SEC defended its position in a filing in the U.S. Court of Appeals for the D.C. Circuit, having previously prevailed in the U.S. District Court for the District of Columbia. The SEC stated that “creating a categorical exception for small uses of conflict minerals would thwart” the purposes of the statute.  The SEC noted that conflict minerals are frequently used in small amounts and those uses could have “large cumulative effects.” On October 31, a dozen current and former Democratic members of Congress filed an amicus brief in support of the SEC. The case is pending before the D.C. Circuit; oral arguments have not yet been scheduled.

US EPA unveils ChemView, substance information web portal.

The U.S. Environmental Protection Agency (EPA) has launched ChemView, a web portal that will serve as a hub for chemical-specific regulatory information developed by EPA, as well as data collected under the Toxic Substances Control Act (TSCA).

The portal presents key health and safety data in a format that allows users to compare chemicals by their use as well as their health and environmental effects. ChemView will also allow searches by chemical name or Chemical Abstracts Service (CAS) number, use, hazard effect or regulatory action. Users can customize their views of the information on individual chemicals, or compare multiple chemicals by use, hazard effect or other criteria. Links to background documents are also provided for more detail.

At this time, ChemView contains:

  • test rule data for 90 chemicals;
  • hazard characterizations for 1,016 chemicals;
  • Design for the Environment (DfE) Alternatives Assessments for 48 chemicals; and
  • Significant New Use Rules (SNURs) for 349 chemicals that did not go through pre-market EPA review – the so-called existing chemicals.

It also links to other data, including:

  • health and safety studies submitted under TSCA section 8(d) for 140 chemicals;
  • substantial risk reports submitted under TSCA section 8(e) for 261 chemicals;
  • high production volume voluntary submissions for 1,169 chemicals;
  • Integrated Risk Information System (IRIS) assessments for 548 chemicals;
  • DfE list of safer chemical ingredients for 602 chemicals;
  • Chemical Data Reporting information for 7,221 chemicals; and
  • Toxics Release Inventory data for 611 chemicals.

EPA said that in the months ahead, it will be continuously adding additional chemicals, functionality and links. When fully developed, the portal will hold data on thousands of chemicals. The agency stated that increasing health and safety information, as well as identifying safer chemical ingredients, would help manufacturers and retailers better differentiate their products by using safer ingredients.

The agency has considered stakeholder input in the design of the site and is currently seeking comments from the public on its usability.

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

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].

DTSC Requests Public Comment on Another Draft of the Green Chemistry Regulations

California Green Chemistry Regulations:

The saga of California’s nascent Green Chemistry program continues. Last week, the Department of Toxic Substances Control (DTSC) released the revised text (PDF) of its proposed Safer Consumer Product Regulations. The comment period for the revisions started on January 29 and closes on February 28, 2013.

Notably, the revised rules significantly pare down the list of potential Chemicals of Concern (COCs), which are now referred to as “Candidate Chemicals,” from over 3,000 to approximately 1,200. The Candidate Chemicals  are drawn from lists of substances which exhibit one or more hazard trait. The revisions also clarify that the list of Priority Products to be regulated will be developed and updated through the Administrative Procedure Act rulemaking process.

In addition, DTSC modified the applicability of upfront exemptions for certain products, providing an exemption for products already regulated by other laws that provide comparable health and environmental protections. However, products which are manufactured, stored, or transported through California solely for use outside of the state, or used in California solely for the manufacture of non-consumer products will no longer be exempted, although these factors will be considered in the product prioritization process.

Requirements for the certification and accreditation of assessors involved in developing Alternatives Analyses (AA) have been relaxed in favor of a public review and comment process for AA reports, a choice that seems likely to increase the administrative burden and place confidential business information at greater risk. The scope of evaluating economic impacts for AA reports has also been limited to “a monetized comparison of public health and environmental costs, and costs to governmental agencies and nonprofit organizations that manage waste, oversee environmental cleanup and restoration efforts, and/or are charged with protecting natural resources, water quality, and wildlife.”

Finally, DTSC’s ability to make regulatory responses has been further refined and clarified. For example, the revised proposal requires DTSC to provide notice (with accompanying public comment period) of its proposed regulatory response determination no later than 90 days after it issues a notice of compliance or disapproval for a submitted AA report. The revised proposal also limits the agency’s ability to impose certain regulatory responses on manufacturers only, and not on retailers or importers.

More details on the revised proposed regulations, including how to submit comments and a comprehensive summary of changes from the agency’s last proposal, are available on the DTSC’s website.

EPA Announces Proposed Revisions to FIFRA Minimum Risk Exemption

FIFRA:

In a December 31, 2012 Federal Register notice, (77 Fed. Reg. 76,979) EPA announced a new proposed rule that would revise the labeling requirements for minimum risk pesticide products. The proposed rule affects section 25(b) of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) by changing how minimum risk pesticides are identified on product labels as well as the way ingredient lists are organized in the implementing regulations. In addition, producer contact information will be required on product labels.

Under FIFRA’s § 25(b) minimum risk exemption, pesticides with active and inert ingredients which are demonstrably safe do not need to be registered with EPA. These permitted ingredients are listed in 40 CFR 152.25(f), but because of ambiguities across the various ingredient lists, confusion remains as to which ingredients are covered and how they should be labeled, leading to increased regulatory burden and inefficiencies for state regulators. Many chemicals may be known by producers, regulators, and consumers by different names; for example, soybean oil may be described on a product label as “Glycine Soja Oil.”

EPA’s new proposed rule is intended to make clear which active ingredients are permitted in exempted pesticide products, and does not add or remove any ingredients from the list. Instead, EPA will identify permitted active ingredients by re-organizing them in tables including the chemical’s “Label Display Name” (e.g., “Citric Acid”), “Chemical Name” as determined by the Chemical Abstract Services (“CAS”) (e.g., “2-Hydroxypropane-1,2,3-tricarboxylic acid”) and “CAS Registry Number,” a unique identifier which is easy to use for consumers and widely accepted by industry and regulators alike. In addition, the table will include a “Specifications” column which will be empty for most ingredients, but will indicate the United States Pharmacopeia (“USP”) standard for “approximately 20 of the active ingredients.”

Inactive ingredients will also be re-organized into a table similar to the one proposed for active ingredients. This table will codify “List 4A,” the list of chemicals currently maintained on EPA’s website. In addition, EPA proposes to incorporate references to other CFR sections which describe which chemicals may be used as inert ingredients for the purpose of the minimum risk exemption. In the case of pesticides that may come in contact with foods, for which there are no federal tolerance levels or tolerance exemptions, EPA proposes to amend the text of the exemption to direct users to an EPA website for more information on which of the listed chemicals may be used in food-use pesticide products.

Finally, EPA proposes that exempted product labels must use the “label display name” in the product’s ingredient listing. The proposed rule also requires that producers of minimum risk pesticide products must include their company’s contact information (address and telephone number) on the product label. In the case of a product label which includes the name of a company that is not the producer, EPA proposes that the label text should clarify that the product was “packed for,” “distributed by,” or “sold by” the non-producer company.

EPA is requesting comments on various topics related to this proposal, including: the format and information to be included in the new tables; whether reference to an online resource with more information on food-use pesticide tolerance requirements would provide clarity for stakeholders; impacts on state and local agencies; and whether products would need to be reformulated as a result of the changes. The comment period for this proposed rule ends on April 1, 2013.

New EPCRA TRI Website

EPCRA Toxics Release Inventory (TRI):

On November 19, 2012, EPA rolled out a new website to provide information on how industrial facilities are preventing releases of chemicals. The site shows how industry is making progress in reducing releases reported under Section 313 of the Emergency Planning and Community Right-to-Know Act (ECPCRA).  The site and additional information about the TRI program is available  here