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.

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.

 

 

“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.

EPA released on June 1 the “problem formulation” documents for the first 10 chemicals for which risk evaluations are being conducted under the amended Toxic Substances Control Act (TSCA).  (See:  https://www.epa.gov/newsreleases/epa-takes-three-important-steps-ensure-chemical-safety-under-lautenberg-act-proposes.)  The documents describe the chemical use and exposure scenarios that the agency expects to examine, as well as the hazards, exposures, conditions of use, and exposed populations (e.g., workers, consumers, bystanders) that will be considered as EPA conducts the risk evaluations.  Companies that manufacture or use products containing these chemicals should review the scoping documents and assess whether the use and exposure scenarios identified by EPA are accurate with respect to the products that they make or utilize in their production processes.  EPA is taking comments for 45 days upon publication in the Federal Register.

For example, the scoping documents rely in part on 2012 and 2016 Chemical Data Reporting to identify potential consumer or commercial exposures for various uses of a chemical that may be outdated or which may have been phased out.  If so, companies may wish to submit comments to EPA clarifying the nature and extent (or lack) of exposure to the chemical of interest.  Such comments could help avoid any inappropriate or misleading associations of risk that could result from the EPA evaluation.

The 10 chemicals, for which risk evaluations must be completed by December 2019, are:  Asbestos, 1-Bromopropane, Carbon Tetrachloride, 1,4-Dioxane, Cyclic Aliphatic Bromide Cluster (HBCD), Methylene Chloride, n-Methylpyrrolidone (NMP), Perchloroethylene, C.I. Pigment Violet 29, and Trichloroethylene (TCE).

 

 

Now that EPA prudently has extended the comment period on its proposal for “Strengthening Transparency in Regulatory Science”, with comments due August 16th and a public hearing scheduled for July 1th, perhaps the additional time will allow for more reasoned evaluation of the eminently worthwhile goal of increasing the transparency of the science upon which the agency relies.

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