First Steps in Implementing the Toxic Substances Control Act

Recognizing the pervasive environmental presence of an increasingly large number of chemical substances, Congress passed the Toxic Substances Control Act (TSCA)¹ in late 1976 to impose a federal regulatory scheme over substances that present an unreasonable risk of injury to human health and the environment. This scheme includes the mandatory collection of data on those substances currently being used and the hazards they present, followed by vigorous regulation of the manufacture and use of dangerous substances in order to minimize or eliminate those hazards. Because of the ubiquitous presence of chemical substances, the enormous role they play in everyday life, and the delays that seem to be inherent in beginning a large government regulatory program, the development of regulations to implement TSCA's complex requirements has proved a lengthy process. In addition to difficulties in determining who should be covered by the regulations and what substances should be reported, the unexpectedly controversial issue of how best to maintain the confidentiality of the reported information served to delay the promulgation of TSCA regulations. The Environmental Protection Agency (EPA), however, has recently taken the first significant steps in establishing what will become, along with air and water pollution regulation, one of the major national programs for environmental protection.

Inventory Reporting Regulations

On December 2, 1977, nearly six months behind the schedule established by § 8(a)² of the Act and after circulating and receiving commentary on two sets of proposed rules,³ EPA issued the Inventory Reporting Regulations.⁴ These regulations direct manufacturers and importers of chemical substances to report the identity, amount, and place of origin of each substance manufactured or imported for a commercial purpose. The reporting requirement is designed to obtain the data necessary to develop the inventory of chemical substances mandated by § 8(b)⁵ of the Act. Manufacturers and importers have until May 1, 1978 to comply with the regulations.

The purpose of the Inventory Reporting Rules is to obtain the information necessary to compile an inventory "of each chemical substance which is manufactured or processed in the United States." The main function of this inventory is to distinguish between those substances already being manufactured or processed, for which there presumably already exists some knowledge of potential dangers, and new substances, for which there is none. Thus, substances which are reported pursuantto the Inventory Reporting Rules and included within the § 8(b) inventory may be manufactured by anyone without delay. For new substances, however, i.e., those not listed on the inventory, EPA will require notification and testing, pursuant to § 5⁶ of TSCA, before manufacture may begin in order to screen substances they may be hazardous.

Once a substance is listed on the § 8(b) inventory, it may be manufactured⁷ or processed by persons other than the manufacturer or processor who originally reported its use. Nonetheless, EPA will still require such persons to keep records of significant adverse reactions,⁸ to submit health and safety studies,⁹ and to inform EPA if any substance appears to present at substantial risk of injury to human health or the environment.¹⁰ In addition, EPA may require a firm to test a substance, under § 4,¹¹ if the substance may present an unreasonable risk of injury, if there is or may be significant or substantial human exposure, or if there are insufficient data or experience to determine such effects. If a substance is listed in the § 8(b) inventory, manufacture may continue while such testing is being carried out, although EPA may halt manufacture if it has a "reasonable basis to conclude" that there may be an unreasonable risk of injury¹² or if the substance presents an "imminent hazard."¹³ The importance of the § 8(b) inventory is more pronounced for those substances not listed. The manufacture of substances not listed on the inventory is prohibited unless the manufacturer complies with the requirements of § 5, including notification to EPA 90 days prior to manufacture of the unlisted substance.

[8 ELR 10033]

Premanufacture notice may not be the only requirement, however; any substance subject to § 5 requirements may also be subject to the rigorous and costly requirements of § 4. The triggering mechanism under § 4 is whether in the opinion of EPA the substance may present an unreasonable risk of injury, there is or may be significant human exposure, or there are insufficient data and experience to predict the chemical's effects. Thus, a manufacturer may be required to submit the § 4 test data before the 90-day premanufacture notice.¹⁴ The purpose of such prior submission is to give EPA enough time to analyze the data, but the effect is to delay manufacture of a substance until the testing is completed, a requirement that could significantly affect business planning and investment.

If EPA decides that the new substance does not appear sufficiently hazardous to justify requiring the manufacturer to undertake the extensive tests specified in § 4, the manufacturer may still be subject tothe less onerous requirement that he submit evidence demonstrating that the substance will "not present an unreasonable risk of injury to health and the environment."¹⁵ Finally, the manufacturer may be exempted altogether from submitting either § 4 test data or his own evidence and need only wait the 90-day notification period before beginning manufacture.¹⁶ It should be noted that notwithstanding the submission of the 90-day notice and test data, EPA retains the authority to limit or prohibit manufacture of a substance if it determines that the available information is insufficient to permit a reasoned evaluation of the health and environmental effects of a given substance.¹⁷

Who Must Report

Section 8(a)(1) broadly defines those to whom it applies at "each person (other than a small manufacturer or processor) who manufactures or processes or proposes to manufacture or process a chemical substance," but subjects this definition to several exemptions. EPA interpreted these exemptions to give it broad discretion as to which persons would be subject to each reporting rule. Thus, EPA excluded processors from the initial industry definition because of the duplication of information that would be provided, though they are required to report for the revised inventory as explained below. The industry is defined by reference to the Standard Industrial Classification Groups: firms listed as in Group 28, the chemical and allied products sector of the manufacturing industry, and Group 2911, the petroleum refining sector, are required to report under the regulations. From the potential pool of 225,000 businesses, EPA expects that, aside from the special treatment accorded processors and small manufacturers, approximately 5,400 separate firms will report. These firms will account, however, for about 95 percent of total domestic chemical production.

The special treatment accorded "small manufacturers"¹⁸ is justified by the need to minimize the economic burden of reporting. Small manufacturers are not exempt from reporting, but they are required only to indicate the identity of the substances manufactured and whether manufacture is restricted to one site. This reporting may be done either by individual firms or through a trade association. Small manufacturers are not required to report production volume and specific site information.

The definition of "small manufacturer" went through dramatic changes during the development of this provision. In the second proposed version of the regulations,¹⁹ the line was drawn at firms with only a single manufacturing site and either total sales in the last fiscal year of less than $100,000 or an annual production of each chemical substance of less than 2,000 pounds. Doubtless under the weight of heavy criticism from the chemical industry for the restrictiveness of this definition and because EPA is more concerned with production of substantial quantities, this definition was revised upward. The single-site standard was dropped, the sales level was increased to $5 million, and the production quantity cutoff was changed to no more than 100,000 pounds of a substance at any one site.

Processors of chemical substances are treated differently from manufacturers under the regulations in that they are not subject to the initial inventory reporting requirements.²⁰ The agency justifies this different treatment on the ground that much of the information to be provided by processors is expected to be merely duplicative of that provided by manufacturers. To assure, however, that all substances used by processors are listed after the initial inventory has been compiled and published, the regulations establish a second round of reporting in which processors are allowed 210 days to report the identity of any substances used and not already listed in the inventory. At the end of this second round, the inventory will be revised and republished.

What Substances Must be Reported

The regulations require that all substances manufactured, imported, or processed "for commercial purposes" be included in the inventory.²¹ This includes "naturally occurring chemical substances" such as raw agricultural products, water, air, natural gas, crude oil, rocks, ores, and minerals. By statutory definition, mixtures,²² pesticides (regulated by the Federal Insecticide, Fungicide and Rodenticide Act²³), tobacco, and substances regulated under the Atomic Energy Act of 1954²⁴ and the Federal Food, Drug, and Cosmetic Act²⁵ are excluded [8 ELR 10034] from the inventory reporting requirements. Also excluded are small quantities used for development and research. This exclusion is likely an attempt to minimize excessive administration costs and is thought justified by the requirement that in order to qualify for exclusion these substances must be under the supervision of a "technically qualified individual." On the other hand, even small quantities of highly toxic substances can represent substantial dangers.

Substances not manufactured, imported, or processed for a commercial purpose since January 1, 1975 are also excluded from the inventory. This exclusion doubtless reflects the view that substances which have been out of the stream of commerce for three years need new analysis to determine whether they present unreasonable risks to health and the environment.

Last April, EPA published a candidate list²⁶ to provide initial guidance in selecting substances for reporting, but additional substances will undoubtedly be listed in response to the recent regulations. In addition, the inventory will be updated periodically to include substances reported pursuant to the § 5 procedures.

Confidentiality

Perhaps the biggest problem in preparing the Inventory ReportingRegulations was the issue of confidentiality of reported information.²⁷ Manufacturers asserted that much of the information they are required to report would be of value to competitors and should be kept confidential as a trade secret. The problem arises from an internal conflict in the Act. Section 8(b) requires listing of substances on the inventory, which is to be made public, and § 5(a) sets up procedures for delaying the manufacture of substances not listed. Section 14,²⁸ on the other hand, provides that information reported under TSCA may be kept confidential if exempt from disclosure under the Freedom of Information Act as a trade secret.²⁹ Thus, in the case of an established substance which would ordinarily by listed on the inventory but is not because of a confidentiality request, a second manufacturer seeking to begin producing that substance for the first time would be required to follow the full § 5 procedures. This situation was viewed as potentially anti-competitive. In addition, the public's right to know what substances are in use and to which it may be exposed would also be impaired.

EPA lacked legislative guidance on how to resolve this problem. Consequently, it had to balance the need for confidentiality with the need to provide enough public information to implement the Act. In addition, the agency wanted to avoid the anti-competitive impacts that would result from requiring new entrants in a market to go through the § 5 premanufacture notification and testing procedures for a substance that would be listed but for a confidentiality request.

Basically, the procedure evolved by EPA allows specific chemical identities to be kept confidential by listing them according to generic name only in a separate appendix to the inventory. Secondly, a manufacturer with a bona fide intent to manufacture a substance not listed in the inventory by specific name but included within one of the generic names on the appendix may find out whether the specific substance is in fact one which has been reported pursuant to the Inventory Reporting Regulations. If so, even though the substance has not been specifically listed on the inventory, the second manufacturer need not follow the § 5 procedures.

Claims of a need for confidentiality must be substantiated at the time information is reported under the regulations, and EPA may also require that the reporting manufacturer supply analytical and test data for later use by the agency in comparing the confidential substance with a substance newly proposed to be manufactured. In order to prevent "fishing expeditions" for information by real or potential competitors, the Agency will require proof of a bona fide intent to manufacture the substance by anyone seeking access to confidential data, including test data of the substance to be manufactured.

While EPA's procedure promises some success in protecting trade secrets while only minimally obstructing market entry, the public may still be left with inadequate information if certain substances are listed only by generic names.

Conclusion

The new regulations represent the first steps in establishing the data collection system envisioned under TSCA, but because of time pressures not all of the necessary information will be obtained in this initial phase. The identification of substances and corresponding site-production data from the inventory will, however, enable EPA to immediately begin monitoring chemical substances and setting priorities for subsequent regulation.

The most crucial next steps in implementing TSCA will be developing strategies not only to obtain more of the information mandated by the Act but to outline EPA's regulatory initiatives. The Agency is currently preparing a strategy document on these points which should be available within two months. The order and timetables this document sets forth for subsequent data reporting regulations will provide an indication of EPA's priorities.³⁰

TSCA requires EPA to prepare several lists of chemical substances that will be important in focusing regulatory attention on particulary hazardous materials. Pursuant [8 ELR 10035] to § 4(e)³¹ EPA has already published a priority list³² of chemical substances that will require testing because they may present unknown or unreasonable risks or because of anticipated significant or substantial human exposure. This list deals primarily with substances suspected of having carcinogenic and mutagenic effects. Under § 5(b)(4)(A),³³ EPA may also compile a lesser priority list of substances the manufacture or use of which presents or may present an unreasonable risk of harm. This list may be used to indicate which of those substances requiring 90-day premanufacture notice will also be subject to the § 4 test data requirements pursuant to § 5(a)(2).

Now that the § 8(b) Inventory Reporting Regulations are in place and the strategy document is nearing completion, EPA should turn to preparing regulations under § 5, which is the key section for substances not listed on the inventory and will become more important after the May 1 deadline for reporting inventory data has passed. These regulations should set out the crucial timetables for submitting test data prior to the 90-day premanufacture notice as well as rules outlining the proof required to show that a manufacturer need not submit test data, pursuant to §§ 4 and 5(b)(2), for a new, unlisted substance.

Data collection is the necessary first step in developing a comprehensive program for regulating toxic substances under TSCA, and development of the inventory is the base from which subsequent regulation will proceed. Extensive interagency cooperation has also begun.³⁴ If the experience under other regulatory mechanisms is a guide, however, court challenges to present and future regulations will inevitably play a part in delaying and shaping the final regulatory program. With respect to the Inventory Reporting Regulations, litigation may arise on the confidentiality issue. The "small manufacturer" and "small quantities" exceptions may also generate further controversy.

The likelihood of litigation, the rigorousness and complexity of the Act's regulatory scheme, and the profusion of as yet untested chemicals suggest that the delays EPA has thus far experienced in implementing the Act will continue and that it may be years before the structure is fully operative.

1. 15 U.S.C. §§ 2601-2629, ELR STAT. & REG. 41335-51.

2. 15 U.S.C. § 2607(a), ELR STAT. & REG. 41343-44.

3. The Inventory Reporting Regulations were first proposed in March, 42 Fed. Reg. 13130 (Mar. 9, 1977), and were reproposed in August, 42 Fed. Reg. 39181 (Aug. 2, 1977). The final regulations reflect substantial public participation in their development.

4. 42 Fed. Reg. 64571 (Dec. 23, 1977). These regulations will be codified at 40 C.F.R. pt. 710.

5. 15 U.S.C. § 2607(b), ELR STAT. & REG. 41344.

6. 15 U.S.C. § 2604, ELR STAT. & REG. 41338-41.

7. Under the regulations, domestic manufacturers and importers are treated similarly.

8. Section 8(c), 15 U.S.C. § 2607(c), ELR STAT. & REG. 41344.

9. Section 8(d), 15 U.S.C. § 2607(d), ELR STAT. & REG. 41344.

10. Section 8(e), 15 U.S.C. § 2607(e), ELR STAT. & REG. 41344.

11. 15 U.S.C. § 2603, ELR STAT. & REG. 41336-38.

12. 15 U.S.C. § 2605, ELR STAT. & REG. 41341-43.

13. 15 U.S.C. § 2606, ELR STAT. & REG. 41343.

14. Section 5(b)(1)(A), 15 U.S.C. § 2604(b)(1)(A), ELR STAT. & REG. 41339.

15. Section 5(b)(2), 15 U.S.C. § 2604(b)(2), ELR STAT. & REG. 41339.

16. Section 5(b)(1)(B), 15 U.S.C. § 2604(b)(1)(B), ELR STAT. & REG. 41339.

17. Section 5(e), 15 U.S.C. § 2604(e), ELR STAT. & REG. 41339.

18. The term "small manufacturer" is defined at 40 C.F.R. § 710.2(x). The reporting requirements for small manufacturers are explained at 40 C.F.R. §§ 710.3(a), 710.5. 42 Fed. Reg. 64576-78.

19. 42 Fed. Reg. 39181 (Aug. 2, 1977).

20. The reporting obligations for processors are found at 40 C.F.R. §§ 710.3(b), 710.5. 42 Fed. Reg. 64577-78.

21. The "commercial purpose" concept is described at 40 C.F.R. §§ 710.2(i) and (j) and parallels the definitions in TSCA, §§ 3(3) and (4).

22. "Mixture" is defined at 40 C.F.R. § 710.2(q).

23. 7 U.S.C. §§ 121-136y, ELR STAT. & REG. 41301-12:1.

24. 42 U.S.C. §§ 2011-2282.

25. 21 U.S.C. §§ 301-02, ELR STAT. & REG. 41313-34.

26. 42 Fed. Reg. 21639 (Apr. 28, 1977).

27. The regulations on confidentiality are found at 40 C.F.R. § 710.7. 42 Fed. Reg. 64579-80. In addition, the issue is discussed in the Appendix of Significant Comments, 42 Fed. Reg. 64590-93, and in the earlier reproposed regulations, 42 Fed. Reg. 39188-90 (Aug. 2, 1977).

28. 15 U.S.C. § 2613, ELR STAT. & REG. 41346.

29. 5 U.S.C. § 552(b)(4).

30. This document is expected to focus on the particulars of information gathering. For example, § 8(a)(2) allows EPA to obtain from manufacturers data on use, byproducts disposal, and worker exposure. This information will be particularly important in subsequent regulation, but EPA has not yet prepared the mechanism for gathering this data. In addition, the strategy document may outline how manufacturers must keep records of significant adverse health and environmental reactions to chemical substances, as required by § 8(c), and define the health and safety studies that must be submitted to EPA pursuant to § 8(d).

31. 15 U.S.C. § 2603(e), ELR STAT. & REG. 41338.

32. 42 Fed. Reg. 55026 (Oct. 12, 1977).

33. 15 U.S.C. § 2604(b)(4)(A), ELR STAT. & REG. 41339.

34. The Interagency Regulatory Liason Group (IRLG) composed of the Consumer Products Safety Commission, EPA, the Food and Drug Administration, and the Occupational Safety and Health Administration, all possessing various degrees of jurisdiction over the regulation of chemical substances, will develop compatible testing procedures, risk assessment approaches, research and development policies, regulations, and compliance procedures. 42 Fed. Reg. 54856 (Oct. 11, 1977). In response to President Carter's instructions in his Environmental Message, 7 ELR 50057, at 50058 (1977), the Council on Environmental Quality formed the Toxic Substances Strategy Committee, composed of a broader membership of federal agencies than the IRLG, to be the principal forum for the development of government-wide toxics strategy and policy. The Strategy Committee is directed to eliminate overlaps and fill gaps in the collection of data on toxic chemicals and to coordinate federal research and regulatory activities. 42 Fed. Reg. 57866 (Nov. 4, 1977).