On March 25, 2020, the US Environmental Protection Agency (EPA or the Agency) announced immediately effective regulatory relief in response to concerns recently raised by affected industries regarding obligations to defray EPA's costs of conducting certain risk evaluations under the Toxic Substances Control Act (TSCA). The Agency also made clear that later this year it will attempt to formally codify that relief by proposing to exempt three categories of "manufacturers" from the TSCA Fees Rule provision which obligates manufacturers of High-Priority Substances to contribute to EPA's costs of conducting risk evaluations for those chemicals.1 The three manufacturer categories that EPA will propose to exempt from the TSCA Fees Rule are:
- importers of articles containing a High-Priority Substance;
- producers of a High-Priority Substance as a byproduct; and
- producers or importers of a High-Priority Substance as an impurity.
Although EPA expects to issue the proposed exemptions as amendments to the TSCA Fees Rule later this year, the Agency does not expect to be able to finalize the changes it will propose until 2021. As a "bridge" to a final revised rule, EPA also issued a March 24 "no-action assurance" commitment signed by the head of the Agency's enforcement office which made clear EPA will not pursue enforcement actions against companies within the three categories for failures to "self-identify" as manufacturers who would otherwise be subject to the Fees Rule obligations pursuant to 40 C.F.R. § 700.45(b)(5).2
Background on the Requests for Regulatory Relief and the Proposed Exemptions
The regulatory backdrop for EPA's March 25 announcement includes EPA's publication in October 2018 of the TSCA Fees Rule.3 The Fees Rule specifies that manufacturers of chemicals identified by EPA for risk evaluations must help defray EPA's costs by paying a share of a $1.35 million fee for each chemical. The Fees Rule provides that EPA will publish a preliminary list of manufacturers of a chemical upon its designation as a High-Priority Substance and requires that manufacturers, including importers, of a chemical subsequently submit notice to EPA, even if they do not appear on the preliminary lists. Failure to self-identify as a manufacturer constitutes a violation subject to civil penalties.4
In December 2019, EPA finalized its designations of the initial 20 High-Priority Substances,5 and in late January 2020, the Agency published preliminary lists of manufacturers for each of these 20 chemicals.6 The preliminary lists made clear for the first time to importers and certain manufacturers of products that might contain small quantities of the High-Priority Substances that EPA interpreted "manufacturer" broadly to include even companies in the three categories mentioned above.7
EPA Identifies Need to Modify "Overly Broad" Interpretation
EPA's January 27, 2020 Federal Register notice announcing its broad interpretation of "manufacturer" in the context of the Fees Rule came as an unwelcome surprise to many stakeholders. EPA said that after release of the preliminary lists, stakeholders "raised significant concerns about the practicalities of self-identifying under the TSCA Fees Rule given its broad scope."8 A large number of associations representing manufacturers of commercial and industrial use products which contain complex components were among the parties clamoring for relief. EPA initially responded to these concerns by extending the comment period for self-identification notices for two months, to May 27, 2020.9
We now know that on March 18, EPA Assistant Administrator Alexandra Dapolito Dunn sent a request for a "no-action assurance" to Susan Parker Bodine, the Assistant Administrator for Enforcement and Compliance Assurance. Dunn's request asserted that the "overly broad scope" of the term "manufacturer" "creates an undue and unavoidable hardship by imposing burdens on potentially thousands of entities across the country who would be required to collect and report information" and that the broad scope was "wholly unnecessary to properly effectuate the ultimate objective of the TSCA Fees Rule – to defray a portion of EPA's TSCA implementation cost."
In particular, the documents released by EPA described concerns raised about the practicality of self-identification for companies that fall within the three categories proposed for exemption.10 Echoing the language in public comments hastily submitted to EPA, Ms. Dunn's memo to Ms. Bodine cited challenges faced by such companies, including the difficulty, and in some cases impossibility, of conducting testing on thousands of imported articles in the short timeframe allotted, even with the two-month extension. The memo also noted that import of chemicals in articles historically has been exempted in other TSCA regulatory contexts such as the Chemical Data Reporting rule and the new chemicals program, making the self-identification task particularly difficult for companies that were not previously required to know with certainty what chemicals were present in articles they imported.
The "no-action assurance" memorandum reflected EPA's understanding that manufacturers of chemicals as byproducts or impurities faced similar challenges related to "pinpointing and tracking when impurities and byproducts are produced," particularly because even a small amount of a chemical could trigger the self-identification requirement. EPA also indicated that chemical processors who do not typically consider themselves TSCA "manufacturers" might "coincidentally produce" the substances as a byproduct. In fact, Assistant Administrator Dunn's request for the no-action assurance acknowledged that the definition of manufacturer described in EPA's January 27 Federal Register notice arguably could include "every home and business in the United States that combusts natural gas (e.g., every home with a gas stove or water heater)."11
Assistant Administrator Dunn's memorandum also said EPA had realized after designating the first 20 High-Priority Substances that the wide reach of the definition of "manufacturer" and the absence of exemptions meant that "the number of implicated entities has far exceeded the number contemplated during the rulemaking and the calculation of associated burdens in the supporting economic analysis." The memorandum offered that the "overly broad scope" of the fees obligation was "wholly unnecessary" to effectuate the Fees Rule's purpose of defraying EPA's costs since EPA will collect the full fee from other entities that qualify as manufacturers. In addition, the memorandum said the general public would not benefit from compelling companies within the three categories to conduct testing and analysis "merely for the purposes of complying with the TSCA Fees Rule." The memorandum said the exemptions from the Fees Rule ultimately would not affect other TSCA provisions, "deprive EPA of information or resources necessary to carry out the purposes of the TSCA Fees Rule," or "prevent the Agency from considering those activities as part of the risk evaluation."12
The synchronicity of the Agency's announcement and the timing of the memoranda reflect a concerted effort which likely required considerable coordination among senior leaders in several parts of the Agency during a period when most Agency employees are working remotely. On March 24, Assistant Administrator for Enforcement Susan Bodine issued the "no-action assurance," and on March 25, EPA's Press Office and Ms. Dunn's senior staff simultaneously announced the forthcoming proposed exemptions and the exercise of enforcement discretion.
Even Potentially "Exempt" Manufacturers May Still Have Notification Obligations
As a result of EPA's recent actions, many companies that fall within one of the three categories that will be proposed for exemption do not need to self-identify as manufacturers of the initial 20 High-Priority Substances or otherwise submit any notice by EPA's May 27 deadline. However, if EPA identified a company that qualifies for the proposed exemptions as a manufacturer of one of the 20 initial High-Priority Substances in the preliminary lists published in January,13 then the company must nevertheless certify if it falls within one of the three categories. EPA notes that it has modified the Central Data Exchange (CDX) (its electronic reporting portal) to facilitate this type of certification.14 If a company that falls within one of the three categories has already self-identified, it can change its response in CDX before May 27.15 EPA will base the final lists of responsible fee payers on the information it receives during the comment period.
Scope of the Forthcoming Proposed Rule
EPA intends the proposed exemptions to apply not only to the risk evaluations for the initial 20 High-Priority Substances but also to risk evaluations for chemical substances identified as High-Priority in the future. However, the no-action assurance will remain in effect for the affected Fees Rule provision only until the end of September 2021, or the effective date of a final rule addressing the proposed exemptions, whichever occurs earlier. EPA has announced it intends to consider any feedback received from the public recently, and prior to the May 27 "self-identification" deadline, and make further adjustments to fee amounts as well other (unspecified) changes in the eventual proposal. This makes it increasingly important that entities that have a stake in the final Fees Rule outcomes take the time to express their preferences prior to the impending deadline. With the November presidential elections in the offing, and countless other TSCA deadlines looming, the Agency's ability to focus on, and fulfill, its intentions could become increasingly uncertain.
Footnotes
1. News Release, EPA, EPA Announces Plan to Reduce TSCA Fees Burden for Stakeholders (Mar. 25, 2020). We discussed the broad scope of the fees obligation in an advisory earlier this year. See Lawrence E. Culleen, Importer Beware: You Might Be Asked to Pay EPA to Evaluate a Chemical You Don't Manufacture (Jan. 21, 2020).
2. Memorandum from Susan Parker Bodine, Ass't Adm'r for Enforcement & Compliance Assurance, to Alexandra Dapolito Dunn, Ass't Adm'r, Office of Chem. Safety & Pollution Prevention, regarding No Action Assurance Regarding Self-Identification Requirement for Certain "Manufacturers" Subject to the TSCA Fees Rule (Mar. 24, 2020) {hereinafter No-Action Assurance}.
3. 83 Fed. Reg. 52694 (Oct. 17, 2018).
5. 84 Fed. Reg. 71924 (Dec. 30, 2019). The 20 substances are listed on this page 71934 of the Federal Register notice.
6. 85 Fed. Reg. 4661(Jan. 27, 2020).
8. Memorandum from Alexandra Dapolito Dunn, Ass't Adm'r, Office of Chem. Safety & Pollution Prevention, to Susan Parker Bodine, Ass't Adm'r for Enforcement & Compliance Assurance, regarding Request for No Action Assurance Regarding Self-Identification Requirements for Certain "Manufacturers" Subject to the TSCA Fees Rule 2–4 (Mar. 18, 2020) {hereinafter Request for No-Action Assurance}.
9. 85 Fed. Reg. 14677 (Mar. 13, 2020).
10. See No-Action Assurance, supra note 2, at 2–3; Request for No-Action Assurance, supra note 8, at 2–4.
11. Request for No-Action Assurance, supra note 8, at 3.
13. 85 Fed. Reg. 4661(Jan. 27, 2020).
14. See Frequent Questions about TSCA Fees for EPA-Initiated Risk Evaluations, EPA (last updated Mar. 25, 2020).
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