The Toxic Substances Control Act (TSCA) authorizes the U.S. Environmental Protection Agency (EPA) to collect fees from chemical manufacturers (including importers) to defray a portion of the costs associated with TSCA implementation efforts. The TSCA fees rule requires payment for eight categories of fee-triggering events under TSCA, including EPA-initiated risk evaluations under TSCA Section 6. The EPA must prepare a preliminary list of manufacturers subject to fee obligations for EPA-initiated Section 6 risk assessments, which it did (see, “Are You on the List?” and “EPA Tells Businesses to Pay Up”). Since then, who pays for what has led to significant controversy. Here is why.
Background
On January 27, 2020, the EPA issued the preliminary lists of manufacturers of the 20 high-priority chemical substances for risk evaluation subject to fee assessment. The notice identifies the circumstances required to self-identify as manufacturers of a high-priority substance.
On March 25, 2020, the EPA announced it would consider issuing a revised rule to include potential exemptions to the fees rule in response to stakeholder concerns. By narrowing the scope of the current requirements, the agency believed it could “significantly” reduce the burden on businesses. The EPA may also propose changes consistent with TSCA’s requirement to reevaluate the fees rule every three years, and stated it would issue proposed amendments later in 2020, but as of press time in December hadn’t done so.
[pullquote]
In the March notice, the EPA also announced a “no action assurance” for three categories of manufacturers: those that import the chemical substance in an article; produce the chemical substance as a byproduct; or produce or import the chemical substance as an impurity. The agency agreed to exercise enforcement discretion regarding the self-identification requirement for these three exemption categories. Businesses erroneously listed on the preliminary lists of fee payers or that fall into one of the exemption categories could certify as such to avoid fee obligations.
On September 4, 2020, the EPA issued the “final” lists of manufacturers subject to fees. It decided not to assess a fee to importers who were importing only small quantities of the 20 high-priority substances just for research and development (R&D) purposes. On November 25, 2020, the EPA updated the interim final list to include additional manufacturers not identified on the final list of companies and does not include manufacturers that self-identified in error or imported the chemical solely for R&D purposes. The EPA added that, due to the public health emergency, it was exploring options for payment flexibilities (certain prospective fee payers advocated for installment payment options).
Payments are due January 2, 2021. This date is 120 days from publication of the final scopes of the risk evaluations for the 20 high-priority chemical substances now undergoing risk evaluation.
Discussion
For anyone in this space, following who pays what and by when has been a challenge. The specific basis for an individual company’s addition to or removal from the lists is not clear in all cases. The EPA already has invoiced certain manufacturers of the 20 high-priority chemical substances for risk evaluation subject to fee payments. In the invoices of which we are aware, the EPA requests one-third of the fee owed, due January 2, 2021 but doesn’t state the due date(s) for the remainder of the fee. Under the fees rule, the entire fee is due by January 2, 2021. While the deferral is a welcome development for most fee payers, greater transparency on how and when the EPA is invoicing for the fees would also be welcome.
In the final rule, entities that fail to self-identify for purposes of fee assessments will be subject to TSCA non-compliance penalties. This penalty is distinct from the fee entities might otherwise been assessed if they had self-identified in compliance with the fees rule (in addition to penalties). Depending on what the penalty might be, some manufacturers may get perverse incentives to take a chance they will evade being caught and subject to a penalty less than the fee itself would be, and decide not to report. Any financial gain obtained by non-compliance should be a substantial factor for the EPA’s consideration in assessing penalties.
