Source: https://www.martindale.com/environmental-law/article_Bergeson-Campbell-PC_1331078.htm
Timestamp: 2019-04-19 02:28:42+00:00

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The U.S. Environmental Protection Agency (EPA) released on August 2, 2011, the pre-publication copy of the final Toxic Substances Control Act (TSCA) Chemical Data Reporting (CDR) Rule, previously referred to as the Inventory Update Reporting (IUR) Modifications Rule. The rule was published on August 16, 2011. 76 Fed. Reg. 50816. Bergeson & Campbell, P.C. will host a webinar on the CDR Rule in mid to late September and will provide under separate cover webinar registration details.
EPA states that the CDR Rule is intended to enable EPA to collect and publish information on the manufacturing, processing, and use of commercial chemical substances and mixtures on the TSCA Chemical Substance Inventory (TSCA Inventory). A general discussion of the CDR Rule (e.g., the key components of the CDR Rule, how reporting will change from prior IUR reporting, potential issues with these changes) was discussed in our August 3, 2011, memorandum, available online. This memorandum provides a more in-depth analysis for the most significant, and sometimes controversial, issues presented by the CDR Rule.
As background, it is important to note that the IUR, now CDR Rule, has been through several iterations since it was first introduced in 1986. On January 7, 2003, EPA extensively amended the IUR, including, for example, extending reporting requirements to include inorganic chemicals, commencing collection of processing and use information, raising the reporting threshold from 10,000 to 25,000 pounds manufacture/import per site, and reducing the frequency of reporting from one out of every four to one out of every five years.
On August 13, 2010, EPA proposed TSCA IUR modifications. 75 Fed. Reg. 49656. One year later, after lengthy review at the Office of Management and Budget (OMB), EPA has issued the final, newly-renamed CDR Rule. Some will rejoice in the fact that EPA declined to implement some of the more far-reaching and contentious provisions considered in the proposal, including the reduction of the reporting threshold, additional reporting requirements for processors, retroactive production volume reporting, and Section 5 premanufacture notification (PMN) reporting aspects. EPA's decision to relent on these topics may indicate that compromises were reached with OMB on reporting burdens that allowed the CDR Rule to be issued in its current form.
Under the final CDR Rule, for the 2012 reporting period, manufacturers (including importers) are required to report if the manufacture/import volume of a chemical substance on the TSCA Inventory during the principal reporting year (i.e., 2011) meets or exceeds 25,000 pounds per site during the principal reporting year (i.e., calendar year 2011) and is not otherwise exempt. 40 C.F.R. § 710.48(a) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.8(a)). This is significant in that only one calendar year of information must be reviewed to determine if reporting is required, in contrast to the method for determining reporting obligations for 2016, which requires manufacturers and importers to review production volumes for all calendar years since the last principal reporting year, as discussed below.
[I]t has been the Agency's position since at least 1991 that, in order for byproduct manufacture to qualify for the 40 CFR 720.30(g)(3) exemption, "the component to be extracted must be already existing as a distinct chemical substance in the waste stream." When the chemical substance present in the byproduct and the chemical substance extracted from the byproduct are distinct chemical substances, neither the manufacture of the byproduct nor the manufacture of the extracted chemical substance qualify for the 40 CFR 720.30(g)(3) exemption.
Despite EPA's statements that its rules and guidance have consistently interpreted the reporting requirements of "byproducts," this issue became more complicated after the IUR reporting requirements expanded to inorganic chemical substances and raised questions regarding, for example, the interplay between activities (purification versus extraction) involving inorganic chemical substances and the byproduct exemption for both PMN and CDR purposes. It appears that this issue continues to lack clarity with regard to whether certain byproducts should be listed on the TSCA Inventory and/or subject to CDR reporting and whether EPA has interpreted such terms consistently and in a way countenanced by TSCA.
(2) That other person specifies the identity of the chemical substance and controls the total amount produced and the basic technology for the plant process, then that chemical substance is comanufactured by the producing manufacturer and the person contracting for such production.
Commenters argued that this definition was inconsistent with past definitions, overly-broad, and confusing. EPA states that this new definition is intended to "improve the information submitted through the CDR rule." EPA states that this definition is consistent with other definitions of "manufacture" in prior IUR reporting and includes elements from the definition of "manufacturer" under EPA's PMN regulations (40 C.F.R. § 720.3). To the extent that this definition includes references to extraction, issues similar to those raised for byproducts will be equally applicable here.
In addition to changing the definition of "manufacture," EPA has added a paragraph (c) to the regulation at 40 C.F.R. § 711.22 regarding "duplicative reporting" to clarify the reporting relationship between the contracting company and the toll manufacturer. EPA states that the contracting company and the toll manufacturer "should confer with each other to avoid duplicate reporting, and both the contracting company and the toll manufacturer are liable if no report is made." EPA reportedly added this language because it agreed with comments submitted that its proposed language -- that the contracting company is "primarily responsible" but the toll manufacturer must report in the event the contracting company does not report -- was confusing. Given the potential disparity between the revised language regarding reporting obligations and the complex relationships that may exist between contracting companies and toll manufacturers, it is clear that parties will need to agree among themselves on who should submit CDR Rule reports for which sites in particular.
A potentially surprising inclusion in the list of parties required to report are distribution centers that serve portable manufacturing units. EPA has expressed its view that units that engage in chemical reactions via portable manufacturing units are obligated to report under the CDR Rule if they meet the reporting threshold. In the August 2010 proposed rulemaking, EPA provided examples of what may constitute a "portable manufacturing unit." These examples include building or road construction projects that use tanks to produce calcium hydroxide slurry and agricultural units that remotely produce ammonium hydroxide for land use.
What Chemical Substances Are Subject to Reporting?
When the proposed rule was published in August 2010, the expectation was the next reporting cycle would be in 2011, which would include information collected from 2010. That reporting schedule was shifted in the final rule, with reporting on information collected in 2011 to occur in 2012. Presumably, EPA viewed this change as necessary to give industry sufficient time to prepare for reporting. The unfortunate result of this change, however, is that industry has potentially wasted efforts collecting process and use information in 2010 believing that such information would be required for reporting in 2011. It is unclear whether companies anticipated this shift in principal reporting year from 2010 to 2011 and maintained information collection systems for 2011 production, process, and use information.
The 2012 submission period, during which 2011 manufacturing, processing, and use information and 2010 production volume information would be reported, is scheduled to occur February 1, 2012, to June 30, 2012. Subsequent recurring submission periods will be from June 1 to September 30 at four-year intervals, beginning in 2016. 40 C.F.R. § 710.53 (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.20). This means, of course, that EPA has again changed the reporting frequency back to every four years from every five years.
The timing for 2012 reporting instituted by EPA is significant, as EPA has actually shortened the timeframe within which industry must report. Specifically, for the 2012 report, EPA has set the reporting deadline from between February and June 2012. Since the last date of processing and use information to be collected is December 31, 2011, EPA has provided only two to six months between the last day of data collection and the submission deadline. The timeframe originally proposed in EPA's rule, and that which will apply for 2016 and subsequent reporting periods, was from June to September. The end result is that industry has lost three months to prepare these first reports under the new CDR Rule.
What Is the Standard for Reporting Information?
Starting with the 2012 reporting period, EPA is replacing the "readily obtainable" reporting standard used for the reporting of processing and use information with the "known to or reasonably ascertainable by" reporting standard. 40 C.F.R. § 710.52(c)(4) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.15(b)(4)). This change was widely anticipated. The new reporting standard is more rigorous than the previous "readily obtainable" standard, as it is now defined to include "all information in a person's possession or control, plus all information that a reasonable person similarly situated might be expected to possess, control, or know." By contrast, EPA states that the "readily obtainable" standard "does not even cover all the information in a submitter's possession or control."
Under the standard, a submitter would therefore prepare its report about the processing and use of a chemical substance it manufactures (including imports), without confining its inquiry solely to what is known to managerial and supervisory employees, but would also be expected to review information which the manufacturer (including importer) may have in their possession or control, plus all information that a reasonable person similarly situated might be expected to possess, control, or know. The inquiry would be as extensive as a reasonable person, similarly situated, might be expected to perform. The standard does not necessarily require that the manufacturer conduct an exhaustive survey of all employees.
"Known to or reasonably ascertainable" information includes, but is not limited to, information that may be possessed by employees or other agents of the company reporting under the CDR rule, including persons involved in the research, development, manufacturing, or marketing of a chemical substance and includes knowledge gained through discussions, symposia, and technical publications. Examples of types of information that are considered to be in a person's possession or control, or that a reasonable person similarly situated might be expected to posses, control, or know, include files maintained by the submitter, such as marketing studies, sales reports, or customer surveys; information contained in standard references, such as MSDSs, that contain use information or concentrations of chemicals in mixtures; and information from the CASRN and from the D&B number.
A Company would not fulfill its duties under this standard by reporting processing and use information as "not known or reasonably ascertainable" if it did not endeavor to supplement the information it previously knew, by asking its largest customer for process and use information, when that information was the type usually maintained by the Company but was lost due to a computer malfunction.
A Company would not fulfill its duties under this standard by reporting processing and use information as "not known or reasonably ascertainable" if it did not review its largest customer's website to fill data gaps in how a chemical substance is processed and used, when that information was never maintained previously by the Company but is typically collected from comparable manufacturers as part of reasonable business practices.
A Company would not fulfill its duties under this standard by reporting processing and use information as "not known or reasonably ascertainable" when the Company had all seasonable marketing data on changes in use pattern but for one season, and could have reconstructed that missing marketing data by contacting its largest customer and requesting such information.
A Company would have fulfilled its duties under this standard by reporting information as "not known or reasonably ascertainable" when the Company has never maintained information on how a chemical substance is processed or used by its customers (even though it is typical for comparable manufacturers to collect such information as part of their reasonable business practices), its major customer is unwilling to supply this information, and the only way for the Company to obtain such information would be to send a survey to its ten minor customers.
EPA clarifies that submitters are not required to conduct a new or additional customer survey to distribute among multiple customers under this standard, so that if "particular information cannot be derived or reasonably estimated from the information available to the company without conducting further customer surveys, it is not 'known to or reasonably ascertainable' to the submitter for purposes of the CDR." EPA's clarification that customer surveys are not needed seems to be at odds with other EPA guidance, which expresses EPA's view that submitters must search for information that would be "available after a reasonable inquiry within the organizations" and that inquiries under this standard "may entail inquiries outside the organization to fill gaps in the submitter's knowledge." EPA also states that the standard for reporting should be an objective one -- the level of diligence that a reasonable person, similarly situated, might expect to undertake.
Despite this guidance, these hypothetical examples and EPA's preamble text present a host of issues that will likely require additional guidance and greater clarity. For example, what EPA means by a company's "largest customer," and what information collections are considered "typical for comparable manufacturers," are important delimiting factors and yet are undefined terms.
If an importer does not know, or can't reasonably ascertain that a particular chemical substance is present in a mixture, it is not required to report the chemical substance. If an MSDS makes no mention of the presence of an ingredient, and the importer does not otherwise know that the ingredient is present, EPA would generally agree that the importer does not know, and cannot reasonably ascertain that it is importing that ingredient. Therefore, no IUR report for that ingredient would be required. In addition, manufacturers (including importers) are not required to report impurities.
What Manufacturing-Related Information Must Be Reported for 2012?
For a domestically manufactured substance, if the volume would have been considered to be site-limited, then the chemical substance is used on site. If the chemical substance is domestically manufactured, temporarily stored, and then packaged for shipment off of the site, that volume would not be considered "used at the reporting site." For an imported substance, any use at the importing site (e.g., consumed in a reaction or cross-linked or cured in an article) would be considered "used at the reporting site."
Volume Directly Exported: Companies must report the volume of the chemical substance directly exported and not domestically processed or used. EPA states that a chemical substance that "is processed in any way (e.g., combined with other chemical substances to form a mixture)" or that is sent to a distributor who then exports it, is not considered "directly exported."
Volume Recycled, Remanufactured, Reprocessed, or Reused: Despite concerns raised that terms like "recycle" are not well defined and will lead to difficulties in determining reporting obligations, EPA will require manufacturers to check a box to indicate whether a chemical substance they manufactured, such as a byproduct, which might otherwise be disposed of as waste, was or is expected to be recycled. EPA disagreed that a precise definition of "recycle" is needed, and asked submitters instead to "indicate, to the extent that they know or can reasonably ascertain, whether the reported volume of the chemical substance that they manufactured, which would otherwise be disposed of as waste, was or is expected to be recycled, remanufactured, reprocessed, or reused, as those terms are understood by the submitter." Because the term "reworked" could be applied too broadly, EPA removed that term from the list of recycling synonyms.
In addition to the 2011 information outlined above, companies must also report production volume for calendar year 2010.
What Processing and Use-Related Information Must Be Reported for 2012?
The new processing and use-related information required to be reported is set forth in 40 C.F.R. § 710.52(c)(4) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.15(b)(4)). For 2012 reporting, processing and use-related information required to be reported includes, for the principal reporting year only (i.e., 2011), processing and use information of all reportable chemical substances manufactured at 100,000 pounds or more per site, unless otherwise exempted. This means that EPA is amending 40 C.F.R. § 710.52(c) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.15(b)) to reduce the reporting threshold for processing and use information from 300,000 to 100,000 pounds per chemical substance for the 2012 reporting period.
Among the new processing and use information changes are the requirement to report consumer and commercial product categories separately to distinguish between the use types; to report consumer and commercial use information using a revised list of consumer and commercial product category codes; and to report the total number of commercial workers, including "those at sites not under the submitter's control," that are reasonably likely to be exposed while using the reportable chemical substance, with respect to each commercial use. EPA states that it had difficulty evaluating exposures from commercial workers and consumers based on the processing and use data it obtained during the 2006 IUR because that data did not differentiate between these populations. EPA acknowledges, however, that it received comment opposing this requirement because, according to EPA, some companies "were too removed from the consumer and commercial uses to have a clear understanding of the uses at that level of distinction, especially for commodity chemical substances with a large number of uses." EPA has attempted to reduce the reporting burden regarding the number of commercial workers by requiring that this information only be reported in ranges.
EPA's decision to add a reporting requirement for number of workers for commercial uses, even in ranges, is significant and may prove particularly challenging for industry to report. While some of this information may be available, on the Internet for example, there may be many cases where the breadth of the uses of the chemical and the number of potential sites and customers could require submitters to utilize large amounts of time, resources, and energy to collect such information, analyze it, and report it. In addition, it is unclear how EPA may react if companies opt to rely on "worst case" scenario values that may actually distort commercial uses and thus may be viewed by EPA as over-reporting. Indeed, EPA has issued penalties to companies that reported values higher than actual in past IUR reporting. The "not known or reasonably ascertainable" standard discussed above thus will be particularly instructive and important to understand with respect to these reporting elements.
While claims for confidentiality for chemical identity and site identity previously required substantiation, a new requirement starting with the 2012 reporting period is the need to provide upfront substantiation for each processing and use data element claimed as CBI if the submitter has reason to believe that release of the information would reveal trade secrets, or confidential commercial or financial information. 40 C.F.R. § 710.58 (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.30). The substantiation questions for processing and use information (to be codified at 40 C.F.R. § 711.30(d)) have been modified from the proposed rule in one respect in recognition that there are circumstances when the release of information about a particular use could harm the competitive position of the submitter's customer. Thus, the new substantiation questions expressly allow a submitter to identify any harmful effect to a customer's competitive position in addition to the submitter's competitive position when describing competitive harm. To reduce further the potential for "unwarranted" CBI claims, EPA also states that submitters cannot claim as confidential any processing and use information identified as "not known to or reasonably ascertainable by."
EPA also clarifies some CBI substantiation points. For example, EPA states that company name and site identity are separate CBI claims, and in some cases one type of claim may be justified while the other is not. EPA will not "impute the existence of a CBI claim for site identity from a CBI claim for company identity, even if the company name appears within the site identity information."
EPA further states that a submitter must provide separate substantiation for any site identity CBI claims associated with each chemical substance. Thus, "if the submitter is reporting for five chemical substances and wishes to claim its site information confidential for three of the five chemical substances, it must assert the claim and provide separate upfront substantiation three times, once for each of the three chemical substances."
While EPA references 18 U.S.C. § 1001 in other contexts (e.g., persons that file false or misleading "Affirmation of Non-Multinational Status" forms to EPA under FIFRA Section 10(g) can be punishable under 18 U.S.C. § 1001, false or misleading statements with regard to TSCA GLP standard can be punishable under 18 U.S.C. § 1001 (40 C.F.R. § 792.17)), the inclusion of this language in the final rule may telegraph EPA's heightened scrutiny of CBI substantiation claims, perhaps as part of EPA's enhanced chemical transparency campaign.
EPA states that there are three circumstances when EPA will release CDR information claimed as CBI without further notice to the submitter. These include: a CBI claim made for the identity of a chemical substance already listed on the non-confidential portion of the TSCA Chemical Inventory; a submission lacking the certification signed and dated by the authorized official for the submitter (as required under the regulation to be codified at 40 C.F.R. § 711.15(b)(1)); or a claim requiring upfront substantiation that is not accompanied by the requisite substantiation.
What Must Be Reported for 2016?
While the 2012 reporting period is scheduled for February 1, 2012, to June 30, 2012, subsequent recurring reporting periods will be from June 1 to September 30 at four-year intervals, beginning in 2016.
EPA is finalizing this change because of the mounting evidence that many chemical substances, even larger production volume chemical substances, often experience wide fluctuations in production volume from year to year. (See Unit III.D.1. of the proposed rule (Ref. 1).) This can result in the production volume of a chemical substance exceeding the threshold for several years, then falling below the threshold during the CDR principal reporting year. EPA believes that using production volume reporting for all years since the last principal reporting year to determine reporting obligations will yield a much more accurate picture of the chemical substances currently in commerce, ensuring proper review under EPA's risk screening, assessment, and management activities and providing better information to the public.
Reporting Periods February 1 to June 30, 2012 June 1 to September 30, 2016 (and same timeframes in subsequent reporting years, 2020, 2024, etc.) To be codified at 40 C.F.R. § 711.20 EPA determined that reporting every five years is too infrequent and does not provide enough data to sufficiently cover the needs of EPA or the public.
Method to Determine Whether a Manufacturer/ Importer Is Subject to CDR Reporting For 2012, reporting is required if the manufacture/ import volume of a chemical substance meets or exceeds 25,000 pounds per site during the principal reporting year (e.g., 2011). Starting with 2016, reporting is required if the manufacture/ import volume of a chemical substance meets or exceeds 25,000 pounds per site for any calendar year since the last principal reporting year. EPA is amending 40 C.F.R. § 710.48(a) (to be codified in the new 40 CFR Part 711 as 40 C.F.R. § 711.8(a)) EPA believes that using production volume reporting for all years since the last principal reporting year to determine reporting obligations will yield a much more accurate picture of the chemical substances currently in commerce.
Manufacturing Threshold for Chemicals Subject to Certain TSCA Rules/Orders (Sections 5, 6, 7) For 2012, there is a 25,000 pound per site threshold for specific chemical substances that are the subject of particular TSCA rules and/or orders. Starting with 2016, the new reporting threshold for these chemical substances is 2,500 pounds per site. EPA is amending 40 C.F.R. § 710.48(a) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.8(b)) This new reporting threshold is different from the proposed rule, under which reporting would have applied regardless of the production volume. EPA decided to set a de minimis threshold and to delay its implementation for several reasons identified by commenters (e.g., "the expense and burden of collecting the information, and difficulty in knowing whether low-concentration chemical substances are present in formulated mixtures").
Production Volume Reported For 2012, only report production volumes for calendar year 2010. Starting with 2016, report production volumes for each year since the last principal reporting year (i.e., for 2016, report for 2012, 2013, 2014, 2015). EPA is amending 40 C.F.R. § 710.52(c) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.15(b)) The requirement to report volumes for multiple years had been proposed to apply since 2005, but in the final CDR Rule it applies only for 2016 and beyond.
Processing and Use Threshold Lowered for the 2012 reporting period from 300,000 pounds per site to 100,000 pounds per site. Starting with 2016, the reporting threshold for processing and use information will be 25,000 pounds per site. EPA is amending 40 C.F.R. § 710.52(c) (to be codified in the new 40 C.F.R. Part 711 as 40 C.F.R. § 711.15(b)) There will be no separate threshold for the reporting of production and use information after 2012 -- the applicable reporting threshold will be the same as for other types of information (25,000 pounds per site).
How Must Information Be Submitted?
Starting with the 2012 reporting period, EPA will require the use of its electronic reporting tool, e-CDRweb, to submit all CDR information through the Internet. EPA states that "requiring the use of electronic reporting will ensure that data are available in a timely manner and will reduce data entry errors, thereby increasing the usability and reliability of the data for EPA and other Federal agencies. It will also help to fulfill the EPA Administrator's commitment to increase public access to information on chemical substances."
While there has been general support to move toward electronic reporting, there are issues to be addressed, particularly regarding ensuring that information claimed as CBI is protected and the use of electronic signatures. EPA responded to concerns raised during the comment period regarding the need for multiple notarized signatures on the Electronic Signature Agreement (ESA) Form by determining that requiring a notarized signature as part of the ESA Form is no longer necessary.
EPA held an information workshop and webinar on November 30, 2010, to help companies develop a better understanding of the EPA's Central Data Exchange (CDX) registration process and the e-CDRweb electronic reporting tool. A recording of the workshop and a summary of the questions and answers is available on the IUR website (online). EPA also intends to conduct a webinar on September 23, 2011, to demonstrate e-CDRweb. According to EPA, those interested will be able to test the tool during the following week. The test version will not be usable for 2012 submissions. More information is available online.
Given the additional complexity of the information to be reported and the shortened reporting cycle, it is reasonable to expect that the vast majority of impacted entities will wait until the last few weeks in the reporting cycle to submit information. Despite numerous concerns raised by industry in comments, EPA has not offered to our knowledge a contingency plan should the electronic reporting system crash due to a mass rush of submissions or large number of parties trying to sign onto the system. EPA may well have a back-up plan, but we hope using it proves to be unnecessary.

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