On August 26, 2020, the U.S. Environmental Protection Agency (EPA) released the much-anticipated interim final list of businesses subject to risk evaluation fees for the 20 chemicals designated as “high priority” under the Toxic Substances Control Act (TSCA). Making the interim final list available now gives businesses and other stakeholders an opportunity to review the list for accuracy. It also provides time for businesses to reach out to form consortia to share in fee payments. That is a fancy way of saying the race is on to try to get off the list or find others to share in the not-so-trivial cost of $1.35 million — the EPA’s fee for work on the risk evaluation.
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Background
Congress passed extensive revisions to the TSCA in 2016. One of the most significant changes involved TSCA Section 6 requiring review of active existing chemicals identified as high priority and mitigating the adverse effects of each chemical’s uses and applications determined to pose significant risk to human health and the environment.
Congress recognized this task would take time and money and authorized the EPA to assess fees to recoup a portion of the government’s costs in undertaking TSCA-related actions. The EPA published a notice on January 27, 2020, identifying the “preliminary” lists of manufacturers (including importers) of the 20 high-priority substances for risk evaluation and on which the EPA assesses fees. Manufacturers also were required to self-identify as “manufacturers” of a high-priority substance whether or not they were included on the EPA’s preliminary lists. The agency used this information, along with feedback received during the public comment period, to develop the interim final list.
The EPA intends to publish the final list of businesses subject to fees for the 20 high-priority chemicals concurrently with the release of the final scope documents for these chemicals. Companies on the list have 60 days to notify the EPA of the formation of consortia. The EPA plans to begin invoicing for the fees after those 60 days have passed. Due to the public health emergency, and resulting cash flow issues for many businesses, the EPA is exploring payment options.
Discussion
Now that the list is out, affected businesses are focusing in earnest on what this initiative means. The EPA has published a very public list of businesses presumptively responsible for a portion of the $1,350,000 fee. So, what are the takeaways?
First, it is important to see if your company is on the list. If many manufacturers of the chemical are identified and listed, the financial hit is less consequential. If not, the fee is significant and is due in full early in the process. The fee, of course, is just that, an administrative assessment paid to the EPA. Depending upon the EPA’s determination of what chemical use patterns pose the greatest risk, stakeholders must spend much more on disabusing the EPA of any misinformation on which any such finding is based, and otherwise participating actively in the risk evaluation process. The process is at least three-years long, and manufacturers and brand managers must address issues along the way. The success of any advocacy effort can save product lines; however, failure risks product lines becoming commercial casualties of the process. The court of public opinion has a way of compromising products even without the benefit of a final risk evaluation. In 2018, for example, Lowe’s voluntarily removed 19 products containing methylene chloride before the EPA’s prohibition of methylene chloride in consumer paint strippers. This cautionary tale is unlikely to be an isolated incident.
Second, the fees rule experience demonstrates TSCA’s wide reach. For decades, TSCA was thought of narrowly as an arcane “chemical manufacturer” law with little relevance to the broader value chain. Not anymore. The EPA’s broad grant of authority under TSCA to regulate chemical manufacturers, importers and processors, coupled with its authority to include entities that “manufacture” targeted chemicals as byproducts or impurities and importers of chemicals in finished articles, includes thousands of unsuspecting commercial businesses.
Stakeholders with even tangential chemical interests are wise to know the law, appreciate its broad implications, and anticipate the law’s application to commercial operations. Failure to do less could prove costly.
