Congress making progress on amending TSCA reform bill.

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Congress continues to make progress in addressing concerns about the Chemical Safety Improvement Act (CSIA), with one congressional aide close to the process telling ChemicalWatch last week that “all the concerns and issues are solvable.” However, industry and NGO sources say the remaining issues that need to be dealt with make it unlikely that the TSCA reform bill will pass before the end of this year.

The CSIA is currently before the Senate Environment and Public Works (EPW) Committee, chaired by Barbara Boxer (D-CA). In August, Sen. Boxer dropped her opposition to the CSIA and promoted “fast-tracking” the compromise bill. However, Sen. Boxer has said that the bipartisan bill can move forward only if the Toxic Substances Control Act (TSCA) is amended to incorporate some “basic principles” such as specific protection for vulnerable populations, more definite time frames for EPA action, and holding all responsible parties accountable in cases of harm.  Most importantly, Sen. Boxer wants the bill’s language to ensure that state laws such as California’s Proposition 65 are not preempted.

Staff from the offices of Senators David Vitter (R-LA) and Tom Udall (D-NM), who co-sponsor the CSIA, have been working together on revisions to address concerns raised by Sen. Boxer and NGOs. As we previously reported, Sen. Vitter has said that the CSIA is not intended to eliminate private rights of action under state tort law, or remove the authority of any state to protect their water, air, or citizens.

The Congressional aide that spoke to ChemicalWatch said that whether the bill will be marked up this year depends largely on the EPW Committee’s other agenda items. Both industry and NGO sources do not expect passage of a TSCA reform bill this year, although prospects seem better for passage during the second year of the 113th Congress. Meanwhile, the House Subcommittee on Environment and the Economy, which held three informational hearings on TSCA this year, plans to hold its first hearing on the CSIA on November 13.

SEC defends its rule on conflict minerals, which may implicate catalysts.

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In a recent court filing, the U.S. Securities and Exchange Commission (SEC) defended its decision not to provide a de minimis exception for uses of “conflict minerals” in its rules [PDF] implementing the Conflict Minerals Statutory Provision (Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act). The rules require companies to disclose whether designated “conflict minerals” in their products originated in the Democratic Republic of the Congo or nine adjoining countries, and could potentially affect manufacturers who use conflict minerals as catalysts or in a similar manner in another process.

Business groups which had previously sought a de minimis exception, including the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable, challenged the rule in a lawsuit filed last year in October. The groups argued that the SEC did not fully consider the rule’s economic consequences as required by the Exchange Act, and that a failure to define the term “derivative” could mean that metals in forms that are chemically distinct from the base metals subject to the rule would also subject manufacturers to the rule’s disclosure requirements. When SEC adopted its final version [PDF] of the rule in August 2013, it clarified the definition of conflict mineral—which includes “cassiterite, columbite-tantalite, gold, wolframite, and their derivatives”—to specify that the term “derivatives” are limited to the “3Ts” (tantalum, tin, and tungsten).

In the new version of the rule, the SEC declined to include a de minimis exception. Instead, manufacturers must consider only if the conflict minerals used “are necessary to the functionality or production of a product.” In its guidance, SEC clarified that only conflict minerals contained in the product would be considered “necessary.”  Because they are not typically contained in the final product, the rule does not generally cover conflict minerals used as a catalyst,. However, SEC noted in its guidance that if a catalyst made from conflict minerals is contained in the final product, even if only in de minimis amounts, then the conflict mineral is considered “necessary” to its production and is therefore subject to the final rule.

On October 23, the SEC defended its position in a filing in the U.S. Court of Appeals for the D.C. Circuit, having previously prevailed in the U.S. District Court for the District of Columbia. The SEC stated that “creating a categorical exception for small uses of conflict minerals would thwart” the purposes of the statute.  The SEC noted that conflict minerals are frequently used in small amounts and those uses could have “large cumulative effects.” On October 31, a dozen current and former Democratic members of Congress filed an amicus brief in support of the SEC. The case is pending before the D.C. Circuit; oral arguments have not yet been scheduled.

FTC brings enforcement actions for biodegradability claims.

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Last week, the Federal Trade Commission (FTC) announced enforcement actions against six companies for misleading and unsubstantiated environmental marketing claims. Five of the enforcement actions concern biodegradability claims for plastics, while the sixth relates to a company’s alleged violation of a consent order prohibiting making green claims for its paper plates and bags. These actions follow FTC’s July settlements with three mattress manufacturers regarding unsupported “VOC-free” claims. Together, these cases demonstrate that the FTC highly prioritizes ensuring compliance with its revised Green Guides, the Commission’s guidelines for how companies should properly make environmental claims, and sheds some light on how FTC interprets some of the Green Guides’ provisions.

This marks the first time the FTC has addressed claims for biodegradable plastic. In the plastics matters, FTC has filed complaints and proposed consent orders against four companies that make various plastic products – ranging from golf tees to shopping bags – and a fifth, ECM Biofilms, which sells plastic additives to product manufacturers, including to two of the other companies targeted by the FTC. In addition to various charges of misrepresentation related to the biodegradability claims, ECM Biofilms is also charged with providing customers and distributors with the means to deceive consumers by issuing its own “Certificates of Biodegradability.” Under the proposed consent orders, the companies face no fines but are barred from making biodegradability claims that are unsupported by competent and reliable scientific evidence.

Notably, the consent orders state that ASTM D5511, a test standard commonly used in the industry, cannot be used to substantiate unqualified biodegradability claims or claims beyond the parameters of the test. FTC appears to believe that ASTM D5511 does not simulate the conditions in landfills or other disposal facilities. The consent orders, like the Green Guides, require that unqualified biodegradability claims must be supported by evidence that the product will completely decompose into elements found in nature within one year after customary disposal. Qualified biodegradability claims must include certain appropriate caveats, such as the time period required for a product to completely decompose in a landfill or other disposal environment near where potential consumers live. The consent agreement packages are subject to public comment through November 29, 2013. According to Plastics News, all of the companies have agreed to the settlements except ECM Biofilms, which maintains that tests show that plastics made with its additives will biodegrade in environments mimicking landfills. FTC has scheduled a hearing before an Administrative Law Judge for ECM Biofilms in June.

In the sixth matter, FTC is seeking a $450,000 civil penalty against AJM Packaging Corporation, a manufacturer of paper products including plates, bags and napkins. The FTC’s complaint charges that AJM violated a 1994 consent order by failing to properly substantiate claims that its products were biodegradable, compostable, and/or recyclable.  The settlement with AJM vacates the prior consent order and enters a new one reflecting the updates to the Green Guides and requiring AJM to disclose certain information needed to qualify certain green claims.

OSHA unveils web-based tools to protect workers from toxic chemical exposure.

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Last week, the U.S. Occupational Safety and Health Administration (OSHA) announced two new web-based resources to help employers better protect workers from hazardous chemical exposures, even as the agency said its current mandatory workplace exposure limits are “dangerously out of date.” According to OSHA, hazardous chemicals are estimated to be the cause of more than 190,000 illnesses and 50,000 deaths suffered by workers each year.

The first resource is a toolkit for identifying less-hazardous chemical substitutes. It provides information, methods, tools and guidance to “either eliminate hazardous chemicals or make informed substitution decisions in the workplace by finding a safer chemical, material, product or process.” The second resource includes three annotated Permissible Exposure Limit tables (PELs) that provide side by side comparisons of OSHA PELs with recommended exposure limits from the National Institute of Occupational Safety and Health (NIOSH), the American Conference of Governmental Industrial Hygienists and the required PELs of California’s Division of Occupational Safety and Health.

Most of OSHA’s PELs were adopted in the early 1970s and based on scientific research from the 1940s through 1960s. Since then, OSHA has initiated and finalized just one new PEL [PDF] in 2006 as part of a comprehensive standard for hexavalent chromium exposure. In the meantime, non-governmental organizations have continued to update their own occupational exposure limits (OELs) for chemicals found in the workplace, which many employers implement voluntarily. Dr. David Michaels, assistant secretary of labor for OSHA, said that “the complexity of OSHA’s current rulemaking process makes it extremely difficult for us to update our chemical standards and issue new standards in a reasonable period of time.” However, the agency said it plans to start work on updating [PDF] its PELs with a request for information (RFI). These plans were delayed due to the recent federal government shutdown, but the agency expects the RFI to be published in the next couple of months.

OSHA is working closely with the U.S. Environmental Protection Agency (EPA) to ensure that when the EPA processes applications for new use of chemicals (SNUNs), they consider worker exposure. However, the agency made clear that the contents of the web resources were informational in nature and will not be used by OSHA in the enforcement process.

Dutch survey finds SMEs struggling with awareness, cost of REACH.

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A recent Dutch survey found that the costs of implementing REACH are much higher for Small to Medium Enterprises (SMEs) than previously thought and awareness among SMEs is lower than expected. The survey findings highlight just some of the major issues facing SMEs subject to REACH.

The Dutch survey, which is believed to be the largest national assessment yet of impacts of the Regulation on SMEs, interviewed 1,143 Dutch SMEs by telephone. The companies were selected on the basis of research that indicated they would be affected by REACH. The survey produced the following results:

  • Less than 30% of the companies had knowledge that REACH existed.
  • The cost of complying with the Regulation for SMEs was estimated to be €425m in 2012.  Jan Wijmenga, of the Dutch Ministry of Infrasture and Environment, said that the costs are much higher than originally expected, considering the estimate by the European Commission (“the Commission”) that REACH would cost companies €10 billion to implement in total, until 2018.
  • The cost of access to data is cited as the highest contribution to REACH expenses; however, this element is largely outside the remit of national member states and ECHA.

Although the survey was conducted for the Dutch Ministry of Infrastructure and the Environment, Mr. Wijmenga said that the survey would also be of interest to the Commission and ECHA. The survey highlighted certain priorities for REACH, such as developing simpler, easy-to-read guidance to the Regulation, clear information on how Substance Information Exchange Fora (SIEF) work, digitalization of safety data sheets, and greater consistency between REACH and other EU legislation. These priorities can be added to the list of the issues that have received attention since the end of the REACH registration deadline for tier two pre-registered, phase-in substances (100-1,000 tonnes) on May 31, 2013. Some of the major issues include:

  • The high cost of submitting dossiers, even for low tonnage bands. Much of the cost is due to laboratory studies (although some of this cost can be reduced by participating in SIEFs).
  • The practical problems SMEs face when participating in SIEFs, including the cost of letters of access, transparency, and the powers of lead registrants.
  • The number of companies falsely declaring themselves to be SMEs (which allows them to pay lower registration fees). In 2012, 62% of companies who had registered as SME were unable to demonstrate eligibility; 56% were considered not to be SMEs.
  • The time frame in which SMEs must respond to public consultations on EU chemicals legislation, particularly SMEs’ need for more time to process the information, given their often limited resources.

In particular, the survey findings will help supplement the Commission’s ongoing investigation of the impact of REACH on SMEs. A REACH review addressed the subject in February 2013, and this summer, the Commission’s Directorate-General for Enterprise and Industry (DG ENTR) put out a tender for technical assistance to further assess SMEs “in the context of socio-economic analysis under REACH.” The Commission also plans to hold a workshop on December 10-11, 2013, in Brussels, to further discuss the challenges faced by SMEs under REACH.

Efsa revises draft guidelines for food contact materials, calls for proposals to study implications.

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The European Food Safety Authority’s (Efsa) Panel on Food Contact Materials, Enzymes, Flavourings and Processing Aids (CEF) recently drafted revisions to its guidelines [PDF] for food contact materials (FCMs), incorporating new data requirements that could lead to substance re-evaluations. In response, Efsa’s Food Ingredients Packaging (FIP) unit has launched a call [PDF] for proposals to study the implications of the revisions.

The guidelines specify the data that must be submitted with applications for safety assessments of substances to be used in FCMs prior to authorization by the European Commission. CEF revisited the guidelines in light of recent scientific developments, opinions issued by Efsa, and experience gained from safety evaluations of many different substances. In the revisions, CEF proposes carrying out “an exposure assessment using a harmonised methodology” established by Efsa. The assessment would take into account specific consumption by subgroups of the population, such as infants and toddlers, in contrast to the current approach, which uses a single value. The CEF panel also suggests setting standardized consumption data for a number of food categories.

The exposure-based approach proposed by CEF could result in different requirements for submission of toxicological information and use restrictions for certain substances. Therefore, Efsa “considers it necessary” to assess the implications of the draft revised guidelines and the differences from the current guidelines, as specified in the call for proposals.

The draft revised guidelines are not yet publically available. The CEF panel plans to adopt the revisions at its plenary meeting next week, after which the guidelines will be released for public consultation.

California's Proposition 65 reformed to end "frivolous" lawsuits.

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On October 5, 2013, California Governor Jerry Brown signed into law A.B. 227, amending Proposition 65. The bill aims to end “frivolous shakedown” lawsuits against businesses based on California’s Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Prop. 65, a voter-initiative-based law which requires businesses to post warnings about chemicals known to the state as causing cancer or reproductive harm. We previously discussed this legislation and Gov. Brown’s Prop. 65 reform package in June.

A.B. 227 amends the law so business owners faced with a private enforcement action may take corrective action, pay a $500 fine and provide notice of the fix – a solution that the bill’s sponsor, Assemblyman Mike Gatto (D-Los Angeles), compared to motorist “fix-it” tickets. The changes went into effect immediately, on October 5.

Under Prop. 65, private citizen enforcers must send a “60-day notice” of the violation to the alleged violator, along with the California’s Office of the Attorney General, before filing suit. Businesses sued for failing to post proper Prop. 65 warnings face steep penalties of $2,500 a day, plus the private enforcer’s attorneys’ fees and costs. Some of these private enforcement actions have led to the development of what some critics, including Gov. Brown, call a “cottage industry” based on “nuisance” suits and shakedowns.

Under A.B. 227, businesses that receive a 60-day notice of violation could avoid costly litigation or settlements by correcting the violation within 14 days. The alleged violator would send to the private enforcer the $500 penalty and a completed proof of compliance form describing the corrective action taken and attaching a copy of the new warning along with a photograph of the warning’s placement on the premises. Of the $500 penalty, 75 percent will be paid to the state’s Safe Drinking Water and Toxic Enforcement Fund and the remaining 25 percent will be paid to the private enforcer. An alleged violator could use this “fix-it ticket” option only once, and the amendments do not prevent the Attorney General or other public prosecutor from taking enforcement action.

The new amendments only apply to certain Prop. 65 actions involving exposure to (1) vehicle exhaust at parking garages; (2) alcohol; (3) second-hand smoke; and (4) certain chemicals in food or beverages that are not intentionally added and occur naturally in preparation processes like grilling or frying, such as a acrylamide or benzene.

Gov. Brown’s broader array of proposed reforms – including capping attorneys’ fees and limiting settlement payments – were not adopted in legislation this year.

U.S. retailer Target introduces sustainable product standard.

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On October 7, 2013, Target announced a new Sustainable Product Standard that it will begin using this month to evaluate the sustainability and environmental impact of products sold in its stores.

Target said that it will ask “vendors representing 7,500 products in household cleaners, personal care and beauty and baby care” to provide product ingredients and information about various environmental attributes so that the company can assess products using GoodGuide’s UL Transparency Platform, a business-to-business screening tool that allows a company to evaluate ingredient information provided by suppliers. The Platform’s assessment tool will compare the product data to hazard trait and regulatory and other environmental criteria lists.

After being evaluated, each product will be assigned up to 100 points based on the sustainability of ingredients, ingredient transparency and overall environmental impact. Target’s announcement explains that the standard was developed “over the last two years in partnership with industry experts, vendors and NGOs.” The standard “will help establish a common language and definition for qualifying what makes a product more sustainable.”

According to Target spokesperson Jessica Stevens, the Sustainable Product Standard “does not have a direct guest-facing, in-store component,” so consumers will not see product assessment scores displayed in stores. Stevens explained that “products that pass a minimum threshold to be set by Target” will have access to special merchandising and marketing support.

Many environmental advocates like the Campaign for Safe Cosmetics and Breast Cancer Fund and Campaign for Safe Cosmetics were enthusiastic about the new standard. However, BizNGO chair and Clean Production Action co-director Mark Rossi expressed concern that the UL Transparency Platform is designed for information sharing between businesses and does not require any public disclosure; the platform’s proprietary nature means consumers and safety advocates have no access to the criteria used in its assessments. Although Target has not released any details on its scoring or standard benchmarks, it is expected to do so in the near future.

Target’s new Sustainable Product Standard follows its competitor Walmart’s announcement of its own “Policy on Sustainable Chemistry in Consumables,” which we discussed last month. Walmart’s policy is based on GreenWERCS, its own proprietary tool that assesses products’ chemical composition and screens for potential adverse human and environmental effects. Both retailers are taking steps to increase transparency and eliminate potentially hazardous chemical ingredients in their supply chains, although Target’s policy focuses on incentivizing safer products through its point-based standard, while Walmart’s approach is to eliminate certain chemical ingredients from products in their stores altogether.

EPA agrees to update enforcement guidance for FIFRA and TSCA.

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The Environmental Protection Agency (EPA) has agreed to update its enforcement guidance for the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and Toxic Substances Control Act (TSCA) following a report [PDF] from the agency’s Office of Inspector General (OIG) released on September 27, 2013. The report contained findings and recommendations related to FIFRA and TSCA good faith reductions and “ability to pay” penalties, based on the OIG’s review of 23 FIFRA cases and 20 TSCA cases (13 lead disclosure and 7 PCB cases).

The OIG found that EPA regions differed in how they assessed FIFRA and TSCA enforcement penalty reductions; some appeared to justify reductions automatically, without considering the good faith compliance efforts of the violators. Because of the lack of adequate guidance and supporting documentation for determining and justifying good faith penalty reductions, there is a risk that EPA might treat violators inequitably and might be losing opportunities to fully collect all penalties due. Based on the OIG’s findings and recommendations, EPA has agreed to reissue the enforcement policy document GM-88, “Documenting Penalty Calculations and Justifications in EPA Enforcement Actions.”

The OIG also found that EPA’s enforcement response and penalty policy for lead-based paint disclosure rule to address violators who are unable to pay penalties is inadequate. Specifically, no guidance exists for applying non-monetary penalty alternatives (such as public service or delayed payment plans) when violators do not have the cash to pay the penalty. EPA has agreed to evaluate whether additional guidance is needed to clarify whether non-monetary alternatives must meet the agency’s existing Supplemental Environmental Projects policy.

In addition, the OIG report found that EPA’s “INDIPAY” economic model may be limited in its ability to help teams evaluate individuals’ claims of inability to afford penalties or clean-up costs. According to the OIG, the INDIPAY model does not assess an individual’s assets and should be updated to improve its accuracy. Furthermore, the report found that EPA does not provide adequate guidance or case development training to help regional teams evaluate ability to pay cases. In order to improve the agency’s consistency in handling the growing number of ability to pay cases, EPA has agreed to provide regional staff with updated training for case development of ability to pay claims. EPA also agreed to update its 1986 document “Guidance on Determining a Violator’s Ability to Pay a Civil Penalty” [PDF] to further improve guidance on evaluating ability to pay cases and address the inadequacies of the INDIPAY model.

California's new SCP law may threaten trade secrets.

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Under California’s Department of Toxic Substances Control (DTSC) Safer Consumer Products (SCP) program, discussed last week, manufacturers may be required to publicly disclose the ingredients of those products that contain one or more chemicals deemed hazardous by the DTSC.

The regulations require DTSC to evaluate a list of Candidate Chemicals for development of an initial “Priority Products” list. (See overview [PDF]). If manufacturers of products on the Priority Products list choose not to remove the relevant chemicals, they will be required to disclose all product ingredients in an Alternatives Analysis (AA) report. The AA reports will include:

  • the quantities of chemicals of concern used;
  • the function of these chemicals and rationale behind their use;
  • the brand and product names under which a product containing a chemical is sold or used;
  • the identities of both the manufacturer and importer; potential adverse impacts associated with the product;
  • disposal and handling requirements; and
  • possible alternative chemicals the company has considered using.

DTSC will post these reports online and email them to interested parties for public review and comment. The state will also publicly announce notices of ongoing review, compliance, deficiency and disapproval.

The disclosure requirements may present potential hurdles to companies seeking to comply with the SCP regulations. First, companies that may not know the complete chemical make-up of their product ingredients will have to research their suppliers to gather more detailed information on their supply chains. Given the size of California’s economy, its product regulations could greatly affect global supply chains beyond state borders; if companies marketing products in California choose to reformulate their products in response to the SCP program, the impact will likely be felt throughout the country. Second, protecting confidential business information (CBI) might also complicate disclosure because, although some ingredients may be redacted if they are considered trade secrets, DTSC is entitled to deny such claims under certain circumstances.

Companies seeking to comply with the new rules may benefit from reviewing and documenting their strategies to protect trade secrets. Certain documentation is required by DTSC to substantiate trade secret claims. Companies may want to consider seeking patent protection for new products, new formulations of existing products, or new manufacturing methods. There may also be additional limited opportunities to obtain patents for existing products under the Leahy-Smith America Invents Act.