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The Kelley Green Law blog provides insights and analysis on the latest chemical regulatory developments and trends from Joe Green with the Environmental, Health and Safety practice of Kelley Drye.

A new framework of fees to cover the costs of implementing the provisions of the 2016 amendments to the Toxic Substances Control Act (TSCA) will go into effect October 1st, under a final rule issued yesterday by EPA.  The fees are designed to collect $20 million annually from chemical manufacturers, importers, and processors, or about 25% of the expected agency costs of implementing the new mandates of TSCA, including chemical prioritization and risk evaluation tasks, as well as review of toxicity and exposure data submitted under an EPA test order.

These fees are intended to achieve the goals articulated by Congress by providing a sustainable source of funds for EPA to fulfill its legal obligations to conduct activities such as designating applicable substances as High- and Low-Priority, conducting risk evaluations to determine whether a chemical substance presents an unreasonable risk of injury to health or the environment, requiring testing of chemical substances and mixtures, and evaluating and reviewing new chemical submissions, as required under TSCA sections 4, 5 and 6, as well as and collecting, processing, reviewing, and providing access to and protecting information about chemical substances from
disclosure as appropriate under TSCA section 14.

Examples of some of the fees manufacturers (and sometimes processors) would pay include:

• $1.3 million for agency-initiated chemical risk evaluations;

• $2.5 million for manufacturer-requested risk evaluations for chemicals not on EPA’s 2014 TSCA Work Plan list, and $1.25 million for chemicals on the list;

• Between $9,800 and $22,800 for EPA review of toxicity, exposure, and other information companies submit in response to an EPA order, regulation, or negotiated agreement;

• $16,000 for EPA review of new chemicals (or certain new uses).

The final rule largely adopts the user fee program as proposed in February, with certain modifications to the procedures for identifying manufacturers subject to the fees, the fee calculation for chemical reviews requested by manufacturers (which are substantially higher than the fees for agency-initiated reviews), and the standard for identifying “small businesses” subject to fee reductions of approximately 80%.

The fee rule is the fourth and final of EPA’s “framework rules” for implementing the 2016 TSCA amendments.  The first three rules addressed chemical prioritization for risk assessment; the process for conducting risk evaluation; and update of the TSCA existing chemical inventory.

Further details and background information on the fee rule is available from EPA’s website:  www.epa.gov/tsca-fees.

Live from San Francisco, Kelley Green Law Blog is reporting today from the Prop 65 Clearinghouse 2018 Conference …. the largest annual assemblage dedicated to the cottage industry that is California’s “Proposition 65.”  Uniquely, the Clearinghouse conference brings together the full spectrum:  California regulators, the plaintiff’s bar, defense and corporate in-house counsel, and assorted other ne’er-do-wells. It’s a great opportunity to be reminded, from my usual defense counsel perch, of what motivates “the other side” and to gain insights into the latest trends, current developments, and future direction of the program.  Forthwith are some of those “insights,” observations and other musings from the front lines of Prop 65:

•  There are a lot of people here … more than ever before (a good sized ballroom’s worth) and the first year it is “sold out.” And not just folks from California.  Testament to the broad interest of the newly in force amendments and, generally, the long reach Prop 65 has for companies from all over and anyone whose products may be sold in the state (meaning:  almost everyone).

•  The best and most enlightened of the plaintiff’s bar do have a good story to tell, highlighting true successes of the program over the last three decades (perhaps the greatest of which is focusing attention, and more thoughtful analysis, on the chemicals in the products we use and encounter every day) … even if it is just part of the story and comes at a significant cost in not only economic terms, but in undermining ACCURATE risk communication and management.

•  Quote of the Day 1:  “Keep the blood pressure under control.”

• Prop 65 is entering a new phase with the advent of the amended warning requirements and emerging judicial challenges … some of the chief questions:  How will “private enforcers” react to departures from the new “safe harbor” warning text and mechanisms?  Will defense counsel launch a wave of preemptive challenges in the wake of the glyphosate “compelled false speech” First Amendment case?

•  Internet warnings very much warrant an entire panel session … for good reason as e-commerce expands exponentially.  Private enforcers are active web surfers!

•  Quote of the Day 2:  “how will the bounty hunt- errrr…. private enforcers react ….?”

•  What’s next from OEHHA?  Expanding warning website chemical “fact sheets.”  Increased use of “information request” authority to obtain from companies details on the source, concentration, route, etc. of the exposure for which a warning is being provided.  Guidance or amended regs on the duty to pass information through along the supply chain.

• The “safe use determination” process is seeing a significant uptick in interest.

• Overwarning is still a major issue despite the goal of the new amendments to reduce “prophylactic warnings.”  Of course it is – the amendments did nothing to address the main issue with Prop 65 (the determination as to WHEN a warning is required) or change the incentives to provide a warning out of an abundance of caution.

•  The retailer/manufacturer provisions on “clarification” of responsibilities throughout the supply chain is riddled with ambiguities and questions with which the market is struggling.  Who is an “authorized agent” for retailer notifications? What and how many warning materials must the manufacturer provide?  How are distributor instructions/notifications to be handled?  How should retailers respond when they receive a 60 day notice?  How can private enforcers certify that a retailer may or may not be held liable under the new standards?

•  More pointedly, the retailer provisions, by allowing independent agreements on liability allocations, may have the perverse result of sticking responsibilities on the smaller actors with less market power.  Which leads to Quote of the Day 3: “Leave me alone or the little guy gets it!”

• There is no foolproof compliance solution … it is a matter of risk tolerance and minimization.  One important component:  testing!  Some is better than none.  For example,  testing showing “non-detect” levels can provide an affirmative defense if done within the past 12 months …. but make sure you meet the requirements of section 25900(a), such as use of a proper test method and a certified laboratory.  Also, how many samples are enough?  There is no set answer but look to do enough for statistical power (maybe three at least?!) given inherent variability.

And that’s a wrap from the City by the Bay!  All signs suggest that next year’s conference will be at least as well attended.  As always, for the latest on Prop 65 stay tuned to Kelley Green Law Blog.

 

After almost a decade of neglect, EPA is once again actively encouraging facilities to utilize the agency’s Audit Policy to “address noncompliance in an efficient and timely manner.”  Over the last several months, EPA has taken steps to promote use of the “e-Disclosure” system and to remind regulated entities of the benefits of the Audit Policy, which allows for substantial (near 100% in many cases) penalty reductions for violations that are self-disclosed and promptly corrected.

In announcing the launch of the new campaign on May 15th, EPA declared the agency’s “renewed emphasis on encouraging regulated entities to voluntarily discover, promptly disclose, expeditiously correct, and take steps to prevent recurrence of environmental violations.”  This renewed emphasis is consistent with the current EPA’s focus on improving compliance through mechanisms, including voluntary self-correction, that achieve environmental goals more quickly and in a less costly, adversarial and time-consuming manner than traditional enforcement means.

More specifically, in the months since the initiative was launched, EPA has sought to expand use of the Audit Policy by enhancing and promoting:
→ the online “eDisclosure” program;
→ the additional flexibility available to new owners who self-disclose violations (“the New Owner Policy”); and,
→ opportunities to increase compliance through use of existing self-disclosure policies or tailored audit programs.

In its May statement, EPA explicitly aimed to remind the regulated community that the Audit Policy offers significant benefits, including:

(1) elimination of 100% of the gravity-based civil penalty that otherwise might apply (in the vast majority of Audit Policy disclosures, EPA will only seek to recover the “economic benefit”portion of a potential penalty);
(2) waiver of the economic benefit component of a potential penalty where EPA deems it insignificant;
(3) does not require advance notice to EPA of an audit;
(4) does not impose time limits on audit completion; and
(5) can provide clarity by defining allowable violation correction time periods.

To obtain these benefits, an audit should be structured and documented appropriately to help facilitate disclosures that best protect a company from liability and obtain maximum penalty mitigation.  In particular, the scope and conduct of the audit should be well-defined and systematic, including documentation of findings and timely review of conclusions to ensure that violations are promptly disclosed within the 21-day time requirement of the Audit Policy.

The New Owner Policy also provides significant potential benefits and incentives for companies that want to make a ‘‘clean start’’ at newly acquired facilities by addressing environmental noncompliance that began prior to acquisition.  Some of the policy’s key incentives and areas of flexibility include:

(1) the ability of new owners to enter into audit agreements that incorporate disclosure reporting that is appropriate to their unique situation;
(2) the waiver of economic benefit penalties that otherwise might apply to delayed expenditures; and
(3) more generous treatment of violations discovered through already legally mandated monitoring, sampling or reporting that would not normally be considered “voluntarily discovered” (such as testing pursuant to a Title V permit).

Aside from provisions specific to new owners of facilities in the upstream oil and gas industry, none of the recent “announcements” reflect any substantive change to the Audit Policy.  EPA’s decision to issue a public statement of support for the Audit Policy, however, is an encouraging signal to the regulated community.

The Audit Policy was used extensively during the Bush Administration, but was effectively discontinued during the Obama Administration.  The move is an affirmative sign that this Administration is more amenable to penalty mitigation for voluntarily discovered and disclosed violations, and a tangible manifestation of recent pronouncements out of the Office of Enforcement and Compliance Assurance that the agency is focused chiefly on finding ways to improve compliance and less towards punishment of violators.

More info on the Audit Policy and and the New Owner Policy can be found at: https://www.epa.gov/compliance/epas-audit-policy.

 

 

Today, August 30, 2018 … marks the date that the 2016 amendments to the warning requirements of California Proposition 65 go into full effect.  This brings to a close the two year phase-in period for the new “safe harbor” warning provisions, meaning that those ubiquitous “old” warning signs are no longer considered de facto compliant … what a difference a day makes!  Just yesterday, those very same signs were accepted as “clear and reasonable,” but no more (at least for products manufactured after today).   Further, and perhaps of most importance, the new provisions governing retailer and supply chain liability for providing warnings now go into effect.

For more details, and analysis that attempts to wade through the swamp of Proposition 65, please see my prior blog post.

Out with the Old
In with the New

 

** UPDATE 8/29/2018 ** NTP just released a draft report recommending that “frequent and long term night shift work … that causes circadian disruption is known to be a human carcinogen” based on human studies.  Continue Reading This is Not a Dream … Agencies Actually are Reviewing the Cancer Risks of Night Shift Work (UPDATED)

The European Union (EU) is about to dramatically expand the reach of mandatory chemical disclosure requirements for consumer products.  The European Chemicals Agency (ECHA) announced recently that it is preparing to launch, by the end of 2019, a new database on the presence of hazardous chemicals in articles.  The database will be populated with information submitted by companies  producing, importing or selling articles into the EU that contain REACH Candidate List substances (i.e., Substances of Very High Concern or “SVHC”).  Companies will be required to submit such information by the end of 2020.

The EU action joins and has the potential to greatly expand the burgeoning trend towards the identification and public disclosure of chemicals in consumer products.  More limited and product-specific disclosure requirements have proliferated in recent years, with, for example, numerous U.S. states now requiring disclosure or reporting for chemicals in children’s products and cleaning product disclosure requirements launching in California and New York.  The new amendments to California Proposition 65, as discussed elsewhere in this blog, now require identification of at least one chemical for which a warning is being provided, and also have spurred extensive discussions about the presence of listed chemicals among retailers, manufacturers, distributors, and anyone doing business in the state.  These are just a few of the more prominent examples of the growing interest, among consumers and regulators, in mandating that businesses publicly provide information about the chemicals in their products.

The new ECHA database is an outgrowth of both existing REACH requirements and implementation of a revised directive on waste that entered into force last month, which aims to enhance EU’s “circular economy” policy by “improv[ing] the risk management of chemicals during waste recovery and to promote non-toxic material cycles.”  ECHA explicitly recognizes that the “database aims to help consumers make informed choices for safer products” and “will also increase pressure to substitute substances of concern.”

Currently, REACH §33 provides consumers the right to request, and receive within 45 days, from a manufacturer information about the presence of SVHC ingredients in a product.  Supply chain communication of chemical information is another essential feature of REACH, but does not directly involve public disclosure. The new database, in contrast, compels disclosure of such information in a public forum.

In practice, the new disclosure requirements represent a significant expansion of the compliance obligations for businesses that sell consumer products in the EU.  Exporters of consumer products to the EU should engage with their European importers and distributors regarding compliance with the information submission requirements in preparation for the program coming online next year.  The EU action also underscores the need for every business to know information about the chemicals in their products and what, if any, hazards they may represent.

Historically, the bulk of Prop 65 actions have come from plaintiff attorneys sending waves of people into retail stores in California to purchase and then test products for possible exposures to listed chemicals.  This paradigm is shifting increasingly to a new pattern of plaintiff behavior:  scouring websites for possibly non-compliant products that are sold and shipped to California addresses.  While statistics on the source of alleged Prop 65 violations are not available, it is clear from experience, at least anecdotally, that perhaps a majority of new cases are instigated by on-line sales.

Companies that may not consider themselves to be “selling in California” very often are, at least from a Prop 65 perspective.  Unless your company strictly limits distribution and sale to places outside of California, you may end up in the Prop 65 web.  And internet sales are the easiest way for a Prop 65 plaintiff to track you down.

The recent amendments to the Prop 65 warning regulations provide compliance guideposts for the sale of products on-line that may result in exposure to listed chemicals.   For an internet purchase to qualify for the “safe harbor” warnings prescribed in the new regulations (i.e., for the warning to be presumed compliant), a business must provide either the warning statement or a clearly marked hyperlink using the word “WARNING” on the website product display page, or otherwise prominently display the warning to the purchaser prior to completing the sale.  Guidance from the Prop 65 implementing agency, the Office of Environmental Health Hazard Assessment (OEHHA), earlier this year clarifies that in addition to the website warning, the consumer also must receive the warning through the traditional methods related to sale of consumer products — meaning that a warning must appear on the product label (on the product itself or its immediate packaging/container) as well as be delivered prior to completion of the on-line sale.

In short, if you do any business on-line, your company should be thinking about Prop 65 and the tangled web it weaves for any product that may end up within California.

“Science and the scientific process must inform and guide decisions … The public must be able to trust the science and the scientific process informing public policy decisions.”

Former EPA Administrator Scott Pruitt introducing the 2018 proposal he championed on “Strengthening Transparency in Regulatory Science”?  Nope, this is the opening statement of President Obama’s 2009 memorandum on “Scientific Integrity.”  That Obama-era policy further instructed “[t]o the extent permitted by law, there should be transparency in the preparation, identification, and use of scientific and technological information in policymaking.”  These fundamental transparency issues, which were not particularly controversial when addressed by the prior administration (or in myriad other incarnations over the past 30 years), are at the core of EPA’s present efforts.

Who doesn’t agree with the assertion (this time from the current Science Transparency proposal) that “[e]nhancing the transparency and validity of the scientific information relied upon by EPA strengthens the integrity of EPA’s regulatory actions and its obligation to ensure the Agency is not arbitrary in its conclusions”?  Indeed, this principle is neither controversial nor new.  Under the Administrative Procedure Act, as the D.C. Circuit held in 1973, “it is not consonant with the purpose of a rule-making proceeding to promulgate rules on the basis of inadequate data or data that [in] critical degree, is known only to the agency.” Likewise, a decade later the premier regulatory appellate court in the country stated:

In order to allow for useful criticism, it is especially important for the agency to identify and make available technical studies and data that it has employed in reaching the decisions to propose particular rules.  To allow an agency to play hunt the peanut with technical information, hiding or disguising the information that it employs, is to condone a practice in which the agency treats what should be a genuine interchange as mere bureaucratic sport.

To avoid the “hunt the peanut” game, guidelines adopted by EPA in 2002 to implement the Information Quality Act require that “influential information” be subject to a high degree of transparency, including that findings must be “reproducible” (within a reasonable degree of accuracy) by third parties.  Reproducibility by others is a critical check on the quality of the study process and reported data, as well as on the inherent bias (unintentional as it may be) of researchers to find “significant” results.

Curiously, the current EPA proposal omits discussion of the ample existing legal authority specifically related to the transparency and reproducibility of public health research sponsored by the Federal Government.  As set forth in OMB guidance for financial assistance to non-Federal entities, federal agencies have unfettered legal authority to “[o]btain, reproduce, publish, or otherwise use the data produced under a Federal award,” or to “[a]uthorize others to receive, reproduce, publish, or otherwise use such data for federal purposes.”  In addition, any public health research data (a) produced under a Federal award, and (b) used by the Federal Government in developing agency action that has the force and effect of law, must be released to the public if a request for the data is made pursuant to the Freedom of Information Act (FOIA).  (Of course, anyone who has sought such information under FOIA knows well the exemptions/excuses that often are employed to inhibit release of data to which the public has a fundamental right to access.  For more, see my previous post addressing privacy concerns: https://www.kelleygreenlawblog.com/2018/06/epa-science-transparency-policy-enable-stakeholder-access-study-data/.)

Because the federal government has sponsored a substantial majority of the public health research conducted in the United States over the past 50 years, the EPA and other agencies are well positioned, using existing legal authority, to facilitate release of public health research data if they are inclined to do so as a matter of policy.

In a remarkable and perhaps precedent-setting decision, a California appellate court sided with cereal manufacturers in ruling last week that Proposition 65 cancer warnings for acrylamide were preempted by federal policy encouraging the consumption of more whole grains.  In overturning a lower court ruling finding no preemption, the three-judge panel of the state appeals court gave remarkable deference to Food and Drug Administration policy and guidance which, the court stated, “contained persuasive reasoning why Proposition 65 acrylamide warnings on whole grain cereals would mislead consumers and lead to health detriments.”

Continue Reading Prop 65 Court Win for Cereal Manufacturers Sets the Table for Further Challenges to Warning Requirements