Fifth Circuit TSCA Ruling: Established Process Not a “New Use”

A decades-old manufacturing process cannot constitute a significant new use under TSCA, the US Court of Appeals for the Fifth Circuit ruled on March 21, 2024 in the case Inhance Technologies v. EPA.

Inhance Technologies (“Inhance”) has strengthened plastic containers using the same fluorination process since 1983.  Unbeknownst to Inhance and EPA until March 2022, the fluorination process resulted in the creation of multiple PFAS chemicals that were included in a significant new use rule (SNUR) for long-chain perfluoroalkyl carboxylate (LCPFAC) chemical substances, which took effect in September 2020.

When EPA detected PFAS in a container manufactured by Inhance, it issued the Texas-based company a Notice of Violation of the SNUR because Inhance had not filed significant new use notices (SNUNs) for the PFAS created during the fluorination process.  EPA instructed Inhance to stop or change the fluorination process so that it no longer created PFAS.  Inhance filed two SNUNs in December 2022 but continued fluorinating plastic containers using the same process.  Following review of the SNUNs, in December 2023, EPA issued two orders under TSCA sections 5(e) and 5(f) prohibiting Inhance from manufacturing or processing PFAS through their fluorination process.  In response, Inhance successfully petitioned the Fifth Circuit for expedited review and a stay pending appeal, stating that the company would be forced to shut down if the orders were put into effect.

Inhance argued that EPA’s orders were unlawful for three reasons.  First, Inhance argued that its fluorination technology could not be understood as a “new” use under TSCA because it had been ongoing for over thirty years before EPA finalized the SNUR.  Second, Inhance argued that the PFAS created during the fluorination process constituted impurities, which are exempted from the scope of the SNUR.  Finally, Inhance argued that EPA’s interpretation of the SNUR as applying to all industries is a “reinterpretation” for which Inhance had not received fair notice.

In the end, the court did not address Inhance’s second and third points, finding the first argument sufficient to vacate EPA’s orders.  Though the statute does not define “new,” the court found Inhance’s interpretation, “not previously existing,” more compelling than EPA’s interpretation, “not previously known to the EPA,” for multiple reasons.  But ultimately, the court just did not think EPA’s interpretation was sensible, stating that it “defies common sense” and “lacks intuitive force.”  Inhance could not have been expected to submit its fluorination process as an ongoing use during the rulemaking process for the SNUR because it did not know that it created PFAS at that time, the court said.

Writing on behalf of the three-judge panel, Judge Cory T. Wilson concluded by stating that EPA is not powerless to regulate Inhance’s fluorination process.  TSCA section 6 allows for regulation of all chemical substances, unlike section 5, which only applies to new substances and significant new uses.  However, unlike section 5 rulemaking, section 6 requires EPA to conduct a cost-benefit analysis, which takes into account the substance’s benefits and economic considerations.  The court stressed that this requirement indicates that Congress wanted EPA to give more thoughtful consideration to the impact of its regulations on preexisting manufacturing processes.

Judge Wilson was joined by Chief Judge Priscilla Richman and Judge James E. Graves Jr., who concurred in the judgment only.

PEER and CEH Request Court Injunction Against EPA

On February 15, 2024, the Public Employees for Environmental Responsibility (PEER) and the Center for Environmental Health (CEH) filed a lawsuit against EPA in the U.S. District Court for the District of Columbia stating that EPA failed to comply with a Freedom of Information Act (FOIA) request. The two nonprofit environmental groups said in their claim that they had filed a FOIA request on January 5, 2023, for numerous documents regarding Per-and Polyfluoroalkyl Substances (PFAS), specifically long-chain perfluoroalkyl carboxylate (LCPFAC) substances, created during the fluorination of plastic containers by Inhance Technologies LLC. PEER and CEH claim EPA failed to comply with the FOIA request and are now requesting an injunction for the courts to order EPA to disclose all the documents.

In their complaint, the two groups asserted that a document-by-document review by EPA is inefficient and unnecessary and requested that EPA instead adopt a class determination to expedite disclosure. PEER and CEH acknowledge they have received four interim releases but have yet to receive the full release and “unredacted documents have been produced in accordance with the disclosure requirements of section 14 of TSCA”.

The complaint details the timeline of EPA’s response to the FOIA request.  PEER and CEH note that EPA used an “Unusual Circumstances” exception to the standard time allowed for responding to a FOIA with a new estimated competition date of August 3, 2023. A Continuing Unusual Circumstance letter from EPA pushed the response date back further to December 1, 2023. This is an issue of contention for PEER and CEH, as they state that the FOIA statute allows for 20 working days to comply with FOIA requests and only an additional 10 working days for unusual circumstances. 5 U.S.C. § 552(a)(6). Therefore, according to PEER and CEH, the original competition date should have been February 2, 2023, and then adjusted to February 16, 2023 after including 10 working days for unusual circumstances.

Judge Denies Motion to Dismiss in Colgate Toothpaste Greenwashing Case

A suit alleging that the Colgate-Palmolive Company (“Colgate”) misrepresented toothpaste tubes as recyclable will be allowed to proceed, the US District Court for the Northern District of California ruled on February 6, 2024.

The case, Della v. Colgate-Palmolive Company, 2024 WL 457798, concerns recycling claims featured by the company’s Colgate and Tom’s of Maine-branded toothpaste tubes.  Made entirely of plastic, these tubes are theoretically less difficult to recycle than “traditional” toothpaste tubes.  The plaintiffs allege, however, that these claims would mislead a reasonable consumer.  According to the plaintiffs, the tubes are universally rejected by recycling facilities because facilities are unable to distinguish between Colgate’s tubes and traditional tubes and because the tubes cannot be fully emptied of toothpaste, which acts as a contaminant in the recycling process.

Colgate moved to dismiss, arguing that its claims were not misleading because the composition of its toothpaste tubes is compatible with a recycling stream that is available to most Californians.  In other words, the recyclability claims were accurate because the tubes are intrinsically capable of being recycled even if they are not recycled every time they are placed in a recycling bin.  Colgate also pointed to a statement on the packaging inviting consumers to “learn more” on their websites, which provided more comprehensive information about the products’ recyclability.

Magistrate Judge Joseph C. Spero rejected Colgate’s arguments.  Common sense would not lead a consumer to believe that a product labelled as recyclable would not be recyclable anywhere, he said.  He also stated that the invitation for consumers to learn more online would not remedy a misleading statement on the packaging, writing that “courts are generally reluctant to charge a reasonable consumer with the obligation of reviewing product websites or other written product materials before purchasing the product.”

More information on the case can be found in a previous Verdant Law blog post.

EPA Proposes to Revoke Approval of PTFE Use in Pesticide Products

On February 28, 2024, EPA released a proposed rule to remove polytetrafluoroethylene (PTFE; CASRN 9002-84-0) from the list of approved inert ingredients for pesticide products.

PTFE, also known by the brand name Teflon, is a PFAS chemical that is currently approved for use in food and nonfood pesticide products.  No currently registered pesticide products use PTFE.  However, if removed from the approved list, any proposed future use of PTFE would need be supported with data provided to and reviewed by EPA.

The proposed rule comes after an EPA review of approved inert ingredients in search of PFAS chemicals.  EPA previously removed twelve PFAS chemicals from the list of approved inerts in December 2022.

Inert ingredients include emulsifiers, solvents, carriers, and any other substance included in a pesticide besides the active ingredient(s).  Comments on the proposed rule are due on March 29, 2024.

Consent Agreement Reached in Ultium Cells and General Motors TSCA Enforcement Action

The U.S. EPA Environmental Appeals Board ratified a consent agreement for EPA’s TSCA enforcement action against Ultium Cells and General Motors Company on November 20, 2023. In February 2023, Ultium Cells and General Motors Company (collectively referred to as Respondents), voluntarily disclosed potential TSCA violations to the Agency under EPA’s Incentives for Self-Policing: Discover, Disclosure, Correction and Prevention of Violations (Audit Policy).  In their disclosure, the companies reported that they may have imported three substances that were not listed on the TSCA Inventory.

The consent agreement identifies the following TSCA violations:

  • Section 5(a)(1). Failure to submit a PMN at least 90 days before manufacturing (importing) new chemical substances for non-exempt commercial purposes.
  • Section 13(a)(1)(B). Failure to submit proper [import] certifications under section 13 of TSCA prior to importing new chemical substances.
  • Section 15(2). Processing and use of new chemical substances that Respondents knew or had reason to know were manufactured, imported, processed, or distributed in commerce in violation of TSCA Section 5.

Following their disclosure, in March 2023, Respondents filed premanufactures notices (PMNs) on the three substances at issue.

EPA assessed civil penalties of more than $650,000.  The companies received Audit Policy credit for the PMN and Import Certification violations, and a substantial portion of the 15(2) counts.  However, penalties were assessed for continued processing and use of the chemical substances during the time after the companies submitted PMNs for the substances, but before the PMNs cleared EPA review.

Under the terms of the consent agreement, the companies were allowed to import, process, use, and distribute the chemical substances at issue while EPA finalizes a TSCA section 5(e) Consent Order for the substances under the condition that they follow the requirements of the Compliance Plan specified by the agreement.  Requirements of the Compliance Plan include no release to water and respiratory protection with an APF of at least 1000.

Summary Judgment Denied in “Krud Kutter” Greenwashing Class Suit

A class action suit alleging that Rust-Oleum Corporation mislabeled products as “non-toxic” and “Earth friendly” can go to trial, the US District Court for the Northern District of California ruled on January 26, 2024.

The case, Bush v. Rust-Oleum Corp, No. 3:20-cv-03268, concerns the environmental claims made on the labels of Rust-Oleum’s “Krud Kutter” cleaning products.  Plaintiff Anthony Bush alleges that the claims would lead a reasonable consumer to believe that the products do not contain ingredients that are harmful to humans, animals, or the environment.  Bush alleges that these claims are misleading because the products contain multiple ingredients that are known to cause toxic effects.

Rust-Oleum moved for summary judgment, pointing to testimony given by the plaintiff and his expert toxicologist in which they acknowledged that risk can never be fully eliminated; even water can be hazardous in excess.  Rust-Oleum argued that this evidence shows that a reasonable consumer would not believe that the products are completely risk-free.  In addition, Rust-Oleum contended that the labels themselves contradicted the plaintiff’s theory of deception: the phrase “Caution: Eye and Skin Irritant” is included next to the words “Non-Toxic,” and the rear of the products’ labels include a definition of the “Earth friendly” claim.

Judge Laurel Beeler rejected Rust-Oleum’s arguments, saying that “[d]eposition testimony of individuals…is at best anecdotal evidence that isn’t dispositive of how a reasonable consumer interprets the challenged claims.”  Beeler also found that genuine disputes of material fact exist regarding the qualifying language included on the products’ label.  The plaintiff’s expert toxicologist alleges toxic effects besides eye and skin irritation and the defendant’s own surveys show that most customers do not read the small font explanation of the “Earth friendly” claim, she said.

Also at issue in the case are the Federal Trade Commission’s Green Guides, which help marketers avoid making misleading environmental claims.  Bush cited the Green Guides’ commentary on the phrase “non-toxic”—“[a] non-toxic claim likely conveys that a product, package, or service is non-toxic both for humans and for the environment generally”—in his complaint, but Beeler agreed with Rust-Oleum that the Green Guides are not decisive under the reasonable-consumer test.

Irene Hantman Presents on EPA’s Audit Policy and TSCA Audits at PSX 2023

Verdant Law is pleased to report that Irene Hantman gave a presentation on EPA’s Audit Policy and Toxic Substances Control Act (TSCA) audits on October 18 in Boston at PSX 2023.  PSX is the Product Stewardship Society’s annual conference, and its website can be found here.  Ms. Hantman serves on the Conference Planning Committee for PSX and looks forward to next year’s conference in Denver.

The presentation covered the incentives for the self-disclosure of violations provided by EPA’s audit policy, the conditions that must be met to qualify for audit policy penalty mitigation, and the benefits and risks of TSCA audits.  Ms. Hantman discussed important considerations for companies conducting audits, such as compliance with the 21-day self-disclosure deadline and understanding the 5-year statute of limitations that applies to most TSCA violations.  Ms. Hantman also highlighted the role of negotiations with EPA during an audit, for example, to avoid triggering penalties for repeat violations.

Particular attention was given to the New Owner Audit Policy, which allows new owners to get a clean baseline following the purchase of a facility.  Ms. Hantman covered the additional benefits to new owners of conducting TSCA audits, which include the opportunity to seek indemnification from the seller for breach of reps and warranties, the opportunity to submit an insurance claim if the new owner purchased deal insurance, and further reduced economic penalties under the New Owner Audit Policy.

Also presenting was Ashish P. Deshmukh, PhD, Principal at Ramboll, who spoke about the particulars of audit processes and how product stewards can prepare for TSCA audits.  The presentation was moderated by Robert DeMott, PhD, Principal Toxicologist at Ramboll.

If you have questions about the topics of the presentation, please contact Ms. Hantman.

Environmental Group Petitions for Review of EPA’s New Confidential Business Information Rule

Environmental Defense Fund (“EDF”) has filed a petition in the US Court of Appeals for the District of Columbia requesting a review of EPA’s recently finalized rule Confidential Business Information Claims Under the Toxic Substances Control Act (TSCA).  Petitioner’s Statement of Issues was filed in August.  EDF raises the question of whether EPA’s rule was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law because it …

 

  • Would allow confidential business information (“CBI”) claims for types of information TSCA makes categorically ineligible for CBI protection;
  • Would not require substantiation or EPA review of a CBI claim that was asserted before the chemical’s commercialization, for information that identifies the specific chemical identity. once the chemical is commercialized;
  • Unlawfully adopts a regulatory definition of “health and safety study” that is narrower than the TSCA definition, denying TSCA-mandated public access to important information on chemicals;
  • Give the Agency unlawfully broad discretion through its regulations where TSCA imposes a duty upon the Agency; and
  • Reduces the transparency previously required under EPA’s CBI review procedures without adequate justification.

 

EDF has not yet filed a memorandum in support of its petition.

TSCA Enforcement Action Taken Over Failure to Comply with PFAS SNUR

In December 2022, two separate lawsuits were filed against Inhance Technologies USA regarding its alleged production of certain PFAS substances in violation of the Toxic Substances Control Act (“TSCA”). These lawsuits are important as they raise novel questions of TSCA interpretation and enforcement.

The first lawsuit was filed by the U.S. Department of Justice, Environment and Natural Resources Division on behalf of the U.S. Environmental Protection Agency (“EPA”).  The second case is a citizen suit filed by the non-profit organizations Center for Environmental Health (“CEH”) and Public Employees for Environmental Responsibility (“PEER”). U.S. v. Inhance Technologies LLC, U.S. Eastern District of Pennsylvania, Case No. 2:22-cv-05055; Center for Environmental Health v. Inhance Technologies USA, U.S. District Court for the District of Columbia, Case No. 1:22-cv-03819. It is rare that EPA pursues TSCA enforcement actions in federal court. Similarly, the citizen suit provision of TSCA is exercised infrequently.

Defendant Inhance Technologies USA (“Inhance”) is a Texas-based corporation that treats plastic containers, including high-density polyethylene (HDPE), using a fluorination process. Inhance is the principal supplier of post-mold fluorination services in the United States.

According to the Complaints, Inhance has been in violation of the Long-Chain Perfluoroalkyl Carboxylate (“LCPFAC”)  Significant New Use Rule (“SNUR”) that requires manufacturers to file a Significant New Use Notice (“SNUN”) for any manufacturing (including importing) or processing of an LCPFAC for which there were no ongoing uses as of January 21, 2015. See 40 CFR 721.10536. This includes substances that are typically exempt byproducts under TSCA and LCPFACs that are imported as part of articles. Inhance allegedly violated two SNUR requirements.  The complaints assert that Inhance failed to submit a SNUN for LCPFAC substances formed during the fluorination of plastic containers at least 90 days prior to the manufacture of these substances. The second violation charged is the company’s manufacture of these substances before completion of the requisite 90-day SNUN review period.

Inhance received warning of its violation of the LCPFAC Rule by the Plaintiffs of each lawsuit months prior to litigation. The lawsuits follow a March 2022 letter EPA sent to the HDPE industry. EPA issued the letter, first “to remind industry of this issue to help prevent unintended PFAS formation and contamination,” and second, to “emphasize the requirement under TSCA as it related to PFAS and fluorinated polyolefins.” In its letter, EPA reminded the industry of the SNUR, highlighting that while LCPFAC chemical substances are byproducts of the fluorination process from the chemical and commercial standpoint, these substances are not eligible for the byproducts exemption in 40 CFR § 721.45(e). The Agency letter further encouraged the industry to pursue alternative fluorination processes which are less likely to foster unintentional PFAS creation. EPA’s lawsuit is its first enforcement matter against the HDPE industry following the Agency’s warnings.

In March 2022, EPA issued a Notice of Violation (NOV), requesting that Inhance provide the Agency with additional information on changes the company may have made to the HDPE fluorination process that would eliminate PFAS production. The NOV stated that if no changes to the manufacturing process had been made, Inhance would need to immediately cease manufacturing PFAS and submit a SNUN to the Agency for review. Agency review of the information submitted by the company confirmed that the company was producing substances that are subject to the LCPFAC Rule.

In September 2022, Inhance notified EPA that it intended to submit a SNUN for its fluorination processes, but that it was unwilling to cease its fluorination processes before or during the EPA SNUN review period. Inhance has consistently maintained that it believes its operations are in full regulatory compliance.

EPA’s lawsuit was filed on December 19, 2022, with the non-profit lawsuit following about a week behind. The Complaints allege a variety of TSCA violations, namely the following:

  • Section 5(a)(1) of TSCA, which states no person may manufacture or process a chemical substance for a significant new use unless (1) that person submits a Significant New Use Notice (“New Use Notice”) to the EPA; (2) the EPA reviews that notice; and (3) the EPA makes a determination on that use under Section 5(a)(3) of TSCA, 15 U.S.C. § 2604(a)(3). 15 U.S.C. § 2604(a)(1).
  • Title 40 C.F.R. § 721.25 prescribes similar requirements for any person seeking to engage in a significant new use of a chemical substance.
  • Section 15 of TSCA, which states that it is a prohibited act to fail or refuse to comply with any requirement of TSCA or any rule promulgated under TSCA. 15 U.S.C. § 2614.
  • Under 40 C.F.R. § 721.35, it is a violation of Section 15 of TSCA to fail to comply with any provision of Title 40, Part 721 of the regulations implementing TSCA.

Plaintiffs in both cases are seeking declaratory and injunctive relief under Section 15(a) of TSCA (15 U.S.C. § 2616(a)) and the Declaratory Judgment Act (28 U.S.C. § 2201) for Inhance to cease production of all products using the PFAS forming fluorination process. To resume production, Inhance must demonstrate to EPA that it has altered its production process to eliminate PFAS production.

Case Update

In April 2023, the U.S. District Court of the District of Columbia dismissed the lawsuit brought by CEH and PEER. Shortly after CEH and PEER filed their lawsuit, Inhance filed a motion to dismiss the case arguing that the lawsuit was inappropriate under TSCA’s diligent prosecution bar. DOJ filed an amicus brief supporting Inhance’s motion to dismiss. For the CEH and PEER lawsuit to proceed, the organizations would have needed to demonstrate that DOJ was not diligently prosecuting the case. The court granted Inhance’s motion stating that “[n]othing in the eight days between when DOJ filed its lawsuit and when the Plaintiffs filed theirs suggests that [DOJ] was not diligently prosecuting the case.”

On June 13, the court presiding over the DOJ lawsuit scheduled oral arguments for August 23, 2023.

EPA’s First PFAS Clean Water Act Enforcement

On April 26, 2023, EPA announced that the Agency has taken the first federal Clean Water Act enforcement action for PFAS discharges.  The Agency ordered Chemours Company to follow corrective measures relating to exceedances of the limits set for per and polyfluoroalkyl substances (PFAS) in stormwater and wastewater discharges from the Washington Works facility in Parkersburg, WV.  The PFAS limits were set by in the company’s National Pollution Discharge Elimination System (NPDES) permits.

EPA issued an administrative order on consent (AOC) for the facility for exceeding permit limits on PFOA and HFPO Dimer Acid on more than 20 dates from September 2018 to March 2023.  The exceedances were documented in the discharge monitoring reports submitted by the company to the West Virginia Department of Environmental Protection – a permit requirement.  EPA also stated that Chemours was in violation of requirements for properly operating and maintaining all facilities and systems for permit compliance.  The AOC requires that Chemours take the following actions:

1) Implement a sampling plan to analyze PFAS and conduct analysis on the presence of PFAS in the stormwater and wastewater discharges.  The plan must be submitted to EPA for approval.

2) Submit and implement a PFAS treatment plan or minimizing plan to EPA for compliance with the permit limits.

3) Submit its existing Standard Operating Procedures for their management of wastewater for various systems and their revised Storm Water Pollution Prevention Plan.

In its press release, EPA noted that “Administrator Regan has directed EPA staff to use every enforcement tool at our disposal to compel manufacturers of PFAS to characterize, control, and clean up ongoing and past PFAS contamination,”

The AOC can be accessed here.