On June 22, 2016, the President signed the “Frank R. Lautenberg Chemical Safety for the 21st Century Act,” a landmark law containing major reforms to the Toxic Substances Control Act (“TSCA”). As noted in Balch & Bingham’s 2016 Regulatory Forecast, the Lautenberg Act is the culmination of a multi-year effort, not always free from controversy, to overhaul what many considered to be insufficient federal regulatory oversight of the nation’s commercial chemical industry. The reforms in the Lautenberg Act create a broad framework for stronger federal oversight, while leaving many of the details for EPA to work out through future rulemaking, policies, or guidance.
The Lautenberg Act, which is named in honor of former Senator Frank Lautenberg (D-NJ) who passed away soon after championing the original bipartisan TSCA reform bill, is an impressive piece of bipartisan legislation particularly in an era of politically divided government. Lead Republican co-sponsors of the legislation called it “the common-sense, conservative solution, creating unified protections for American families and American businesses while providing new safeguards and oversight requirements.” For EPA’s part, EPA Administrator Gina McCarthy posted an article on the agency’s website heralding the Lautenberg Act for “giv[ing] EPA the authorities we need to protect American families from the health effects of dangerous chemicals.”
As the regulated community unpacks the contents of, perhaps, the most significant environmental legislation enacted in two decades, several major issues are worth considering at the outset, such as: (1) the process for reviewing new chemicals or significant new uses of existing chemicals; (2) the extent of federal preemption of state- based chemical safety laws and regulations; and (3) the range of industries, besides chemical manufacturers, impacted by this new law. Certainly many other questions will be presented as the implementation process unfolds, but these three topics are among those at the forefront of discussion.
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The Act establishes a new chemical and “significant new use” evaluation process. How does this process work?
When the Act goes into effect, a company that wishes to manufacture a new chemical, or proposes a significant new use for an existing chemical, must notify EPA and await the agency’s express approval. The Act gives EPA 90 days to review relevant information to determine whether exposure to the chemical will pose “an unreasonable risk of injury to health or the environment,” including risks to “potentially exposed or susceptible subpopulation[s],” regardless of “cost or other nonrisk factors.” If EPA does not respond within 90 days, the agency has to refund the application fee while continuing to work towards a determination.
If EPA determines that a chemical is not likely to present an unreasonable risk, the manufacturer can proceed to production and distribution without further restrictions once EPA’s finding is published. If EPA determines that a chemical does present an unreasonable risk, EPA can prohibit or otherwise condition the manufacturer’s use of the chemical and then propose a formal rulemaking process to regulate the chemical more broadly. Similarly, where there is insufficient information to make a safety determination, or where a chemical substance “will be produced in substantial quantities, and such substance either enters or may reasonably be anticipated to enter the environment in substantial quantities or there is or may be significant or substantial human exposure to the substance,” EPA must either prohibit or otherwise condition the use of the chemical. It can also seek a court order to enjoin the manufacturer from producing or distributing the substance. An order or injunction may be lifted after sufficient data is submitted and evaluated by EPA.
While the process seems straightforward, the statutory language leaves EPA with significant discretion regarding the precise information it needs to conduct an adequate evaluation and perform a risk determination.
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To what extent does the Act preempt state chemicals laws and regulations?
The TSCA preemption requirements are the product of political compromise. They are complex, preempting some important aspects of state law while leaving others in place. For this reason, it may not be possible to fully assess just how effective these preemption provisions will be until applied in various circumstances.
In general, the Act preempts a State from establishing or continuing to enforce statutes or regulations intended to:
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Require the development of information about a chemical (or category of chemicals), where that same information is likely to be produced pursuant to an existing EPA rule, consent agreement, or order; Prohibit or restrict the manufacture, processing, or distribution of chemicals, where EPA has already made a risk determination or issued a rule; and/or
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Require notification of a use of a chemical where EPA has already designated that use as a “significant new use” requiring notification.
Preemption of state law arises on the effective date of the applicable EPA action.
The Lautenberg Act also prevents States from promulgating new state statutes or regulations that would restrict uses of a “high priority chemical,” while the risks associated with those uses are being evaluated by EPA. If EPA’s evaluation determines that the chemical presents a risk, the State is once again free to regulate, although its regulations may be preempted later by subsequent EPA actions.
On the other hand, the Act contains significant limitations to its preemptive effects. The Act is clear that it does not preempt all state restrictions on chemicals regulated by EPA under TSCA; rather, the scope of preemption is generally limited to specific chemicals, specific uses, and the specific risks considered by EPA in its various actions. Further, the Lautenberg Act does not preempt the right of a State to take actions pursuant to some other federal authority or to implement reporting, monitoring, or other information gathering obligations so long as they are not already required by EPA or some other federal requirement. The Act does not preempt state regulatory actions undertaken pursuant to state water quality, air quality, or waste treatment or disposal laws, unless the state action restricts the production or distribution of a chemical while addressing the same hazards and exposures covered by an EPA risk evaluation. The Act also allows for state regulatory requirements that mirror EPA requirements, so long as associated penalties and sanctions are no more stringent and are not assessed twice. The Act does not preempt common law or statutory causes of action for civil relief or criminal conduct.
The Act also provides a grandfathering provision allowing States to “continue to enforce any action taken or requirement imposed or requirement enacted relating to a specific chemical substance” before April 22, 2016, and/or to pursue future actions “filed pursuant to laws in place” on August 31, 2003 (a date selected to align with California requirements).
Upon request of the State, the Act gives EPA the right to waive TSCA preemption where, among other things, a State requirement was promulgated within 18 months of EPA initiating a prioritization process for a specific chemical. EPA can also waive preemption of a state restriction where: (1) the state requirement would not “unduly burden interstate commerce” in the manufacture, processing, distribution in commerce, or use of a chemical substance; (2) compliance with the proposed state requirement “would not cause a violation of any applicable Federal law, rule, or order,” and (3) the state requirement is grounded in peer-reviewed science.
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Will TSCA reform impact other industries besides chemical manufacturers?
Yes. While most of the explicit regulatory burdens arising from these amendments fall squarely on chemical manufacturers, the Lautenberg Act will also impact other industries. Whether a company makes chemicals into an end product, transports chemicals in commerce, or utilizes chemicals in an industrial process (e.g., natural gas drilling), it should assess the impacts that serious use-restrictions could have on day-to-day operations. Such companies should also consider whether any new litigation or liability risks could emerge if EPA ultimately determines that a chemical important to that industry poses a risk to human health or the environment. This requires understanding how the company has historically handled, used, and disposed of such chemicals. Notably, dozens of industry groups and trade associations supported TSCA modernization including those representing the chemical companies, agriculture, forest and paper products, electric utilities, oil and gas companies, electronics manufacturers, suppliers of aggregate and building materials, and many others.
Moreover, companies will need to consider how to best engage EPA as the agency decides what chemicals to evaluate in its initial and subsequent rounds of risk evaluations. If EPA is considering evaluating a chemical that impacts a particular industry or sector, a company or industry group may need to consider submitting relevant information to EPA to ensure that the agency has accurate information. If EPA has already proposed to designate a chemical as high-priority, the company or industry group should submit any specific information sought by EPA. They should also take advantage of opportunities to comment during EPA’s evaluation process and any subsequent rulemakings, since failure to do so may limit the right to petition EPA’s later actions. It is also worth noting that citizen suits remain a possibility in the TSCA context.
Our team of federal policy lawyers and environmental attorneys is prepared to help clients better understand this TSCA modernization law and the upcoming agency actions that will further determine impacts to industry.
