Now is the time for businesses to get their ducks in a row before the upcoming Chemical Data Reporting (CDR) requirement deadline on November 30, 2020.
The Toxic Substances Control Act (TSCA) of 1976 provides regulatory authority to the EPA to regulate the distribution and use of chemicals in industry. Section 8 (a) establishes the CDR rule, requiring reports every 4 years.
Complying with CDR reporting requirements requires intensive file reviews. Businesses are advised to conduct reviews with legal counsel in place to preserve privileged communications and ensure they are positioned to respond quickly in the event reporting deficiencies are discovered.
Meeting CDR guidelines requires companies that manufacture or import chemical substances for commercial purposes to report certain information to the EPA if the chemical substances are on the TSCA Inventory list and are produced in quantities of 25,000 pounds or more at any one location during any of the 4 years in the reporting period. For certain chemicals that are considered more toxic, the reporting threshold is reduced to 2,500 pounds.
There are several exemptions to the reporting requirements, including highly technical exemptions from the premarket notification requirements of TSCA Section 5.
Use and exposure information must be based on data for the principal reporting year, which is currently 2019.
What Information Is Required?
The data that must be reported on chemicals on the TSCA Inventory include information that is known or obtainable about:
- Chemical identity and structure
- Manufacturing data
- Health and environmental effects
Occasionally, end users encounter roadblocks such as chemical suppliers claiming confidentiality over the ingredient list of a chemical when the chemical is used to manufacture other substances.
The EPA requires “reasonably ascertainable” information about certain chemicals to be reported, so it is important to understand the EPA’s definition of “reasonably ascertainable.” This is a vague term for which the EPA has provided some guidance.
- Companies must “ascertain details regarding the processing and use of chemical substances that they manufacture through reasonable inquiries within the full scope of their organizations, not just based on the specific knowledge of management and supervisory personnel; however, the standard does not necessarily require that the manufacturer conduct an exhaustive survey of all employees.”
- “Reasonably ascertainable information may include information contained in marketing studies, sales reports, customer surveys, or Safety Data Sheets in the business’ files,” according to pillsburylaw.com.
This type of information is reported on the EPA’s Form U, which requires the use of specific and complex codes. All the chemicals at each facility are reported on one Form U and are submitted electronically through the EPA’s Central Data Exchange (CDX). It is recommended that companies hire contractors with specialized knowledge in this area if they do not have this expertise in-house.
Earlier this year, the EPA amended the CDR rules. These changes include clarifying “the upfront substantiation of Confidential Business Information (CBI), the scope of the byproduct exemption, and the specific information to be provided for different use scenarios,” according to Pillsbury Law. The changes also broadened the definition of a “small manufacturer” and increased the sales threshold from $40 million to $120 million under its first size standard and from $4 million to $12 million under its second size standard. The amended definition classifies a manufacturer as small “if its total annual sales, when combined with those of its parent company (if any), are less than $120 million, and it manufactures/imports under 45,400 kilograms of a chemical,” according to Pillsbury Law. “Furthermore, a manufacturer/importer is considered ‘small’ if its total annual sales, when combined with those of its parent company (if any), are less than $12 million, regardless of the quantity of substances manufactured/imported.”
Some chemicals must now be reported regardless of size, so some manufacturers that have not previously been required to report may now have reporting requirements due to these amendments.
Conduct CDR reviews using in-depth file reviews and systemwide procedures designed as an internal compliance review so that any compliance deficiencies are quickly discovered and corrected. According to Pillsbury Law, some of the common deficiencies generally encountered include:
- “Evidence of non-compliance in CDR reporting from past reporting cycles”;
- “Misapplication of the exemptions from the PMN requirement in connection with the past manufacture or import of chemicals not listed on the TSCA Inventory”;
- “Failure to comply with the terms of Significant New Use Rules or Section 5(e) Consent Orders, for chemicals whose manufacture or import is subject to special restrictions”;
- “Failure to properly complete TSCA Import Certifications”; and
- “General systemic non-compliance with TSCA due [to] corporate governance shortcomings or the unsettled nature of the law.”
When deficiencies are discovered, companies must choose whether to disclose noncompliance issues under the EPA’s Audit Policy, which provides substantial relief from penalties for companies that voluntarily report and correct violations. It is important to note there is only a 21-day window for making violations reports, and companies doing so must have a plan for how to return to compliance and prevent a recurrence.
Certain types of Section 5 TSCA violations have immediate quarantine requirements for some distribution products, which can cause contract violations and supply chain disruptions, possibly leading to third-party litigation.
The penalties for noncompliance with TSCA can be severe—the EPA can seek up to $40,576 per day in civil penalties for each violation and up to $50,000 per day in criminal fines. These penalties are calculated per chemical. Because many products contain multiple chemicals, the fines can quickly escalate.
Learn more about the EPA’s CDR requirements.