COVID-19 Unsympathetic to TSCA Compliance
On March 26, 2020, the U.S. Environmental Protection Agency (EPA) released a memorandum (“Policy”) announcing the temporary exercise of enforcement discretion for non-compliance resulting from the COVID-19 pandemic. The Agency’s exercise of this discretion has been variously criticized as overbroad, and may indeed provide relief for certain violations of the Toxic Substances Control Act (TSCA) (15 U.S.C. § 2601 et seq.), but many requirements of and deadlines for TSCA are unaffected and will continue to be subject to EPA enforcement and substantial monetary penalties.
Terms of COVID-19 Enforcement Discretion Policy
The Policy, retroactive to March 13, 2020, supersedes otherwise applicable EPA enforcement response policies (ERP), and covers non-compliance that occurs during its pendency and that results from the COVID-19 pandemic. EPA plans to notify the regulated community on its website at least seven days prior to terminating the Policy.
To obtain enforcement relief, the Policy indicates that entities should make every effort to meet environmental compliance obligations, but if compliance is not reasonably practicable due to COVID-19, facilities should:
a) Act responsibly to minimize the effects and duration of any noncompliance caused by COVID-19;
b) Identify the specific nature and dates of non-compliance;
c) Identify the causal relationship between COVID-19 and the noncompliance, and the decisions and actions taken in response (this includes best efforts to comply and steps taken to return to compliance at the earliest opportunity);
d) Return to compliance as quickly as possible; and
e) Document the relevant underlying information, action(s), and condition(s)
A company relying on the Policy has the burden of demonstrating to enforcement officials that the violation was caused by the COVID-19 pandemic and that it acted responsibly to avoid non-compliance and risk of harm consistent with these criteria. EPA’s “Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations,” 65 Fed. Reg. 19,618 (Apr. 11, 2000) (“Audit Policy”) remains available, but its reporting and correction deadlines are unaffected by the COVID-19 issue, per se.
Potential COVID-19 Enforcement Discretion for TSCA Violations
TSCA’s regulatory scheme primarily (but not exclusively) imposes reporting requirements on regulated entities. The Policy covers “violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the EPA agrees that COVID-19 was the cause of the noncompliance and the entity provides supporting documentation to the EPA upon request.”(emphasis added). Although the factual bases for TSCA non-compliance vary widely, for many TSCA reporting requirements it may be difficult, if not impossible, to properly take the position that COVID-19 caused the noncompliance.
Section 5 Premanufacture Notices (PMN)
With respect to TSCA section 5 PMN requirements, the Policy likely could not be used to cover commercialization of a targeted well-defined “new chemical substance” undergoing R&D without notifying EPA at least 90 days in advance. Similarly, it would be difficult, if not impossible, to argue that commercial urgency mandated that a new chemical undergoing Agency new chemical review could be commercialized without explicit EPA approval. However, it is possible the Policy would cover the situation, which, in our experience has occurred many times over the years pre-COVID-19, a supply chain issue causes a manufacturer to interchange raw materials incorrectly believed to be fungible for TSCA purposes.
Section 5 Significant New Use Notices, Section 5(e) Orders
With respect to TSCA section 5 significant new use rules (SNUR), many SNURs prohibit (by designating the activity as a “significant new use”) any “predictable or purposeful” release of the SNURed substance from various uses of the substance to the waters of the United States. Some SNURs contain an outright ban on “any” predictable or purposeful release, whereas other SNURs only prohibit those releases that result in a surface water concentration in the receiving water body greater than a specified “[N]” parts per billion. See 40 C.F.R. 721.90.
In this regard the Policy provides that “[i]f a facility suffers from failure of air emission control or wastewater or waste treatment systems or other facility equipment that may result in exceedances of enforceable limitations on emissions to air or discharges to water, or land disposal, or other unauthorized releases, the facility should notify the implementing authority . . . as quickly as possible. The notification also should include information on the pollutants emitted, discharged, discarded, or released; the comparison between the expected emissions or discharges, disposal, or release and any applicable limitation(s); and the expected duration and timing of the exceedance(s) or releases.”
Thus, while EPA may not pursue enforcement under such circumstances, if the water release violation occurred due to “failure” of wastewater treatment systems or other facility equipment, Agency notification could be required. On the other hand, SNUR water release provisions include only exceedances or concentrations based on “purposeful or predictable” releases to water, which phrase has been interpreted by EPA as excluding accidents and spills. It is equally important to note that in the first instance SNUR wastewater calculations generally exclude any removal of the SNURed substance by wastewater treatment.
It is also important to note that TSCA section 5(e) orders (which, in whole or in part, remain in effect after the accompanying SNUR is promulgated) typically do not contain force majeure provisions, and the Policy may require Agency notification and other actions if non-compliance occurs.
Section 13 Import Certifications
The Policy expressly does not apply to imports. Companies should ensure that the appropriate TSCA section 13 import certification (positive or negative) is filed prior to entry. If a product is a pesticide or FDA product, importers must ensure that the labeling makes that explicit. Also, to the extent that an importer is relying on a foreign supplier’s assurance of appropriate TSCA status, additional diligence should be used and documented. During these trying times some foreign suppliers may try to cut corners. If a shipment is put on an EPA hold, it can be very difficult to obtain its release because of skeletal crews at many EPA regional offices.
Section 8(e) Significant Risk Notification
Section 8(e) generally requires a company to report to EPA within 30 days substantial risk information it obtains concerning a chemical it manufactures, distributes, or processes. A business organization is deemed to have obtained any information which any employee capable of appreciating the significance of that information has obtained and must have procedures to assure expeditious assessment and, where appropriate, risk information reporting. Employees that can appreciate the significance of risk information bear individual responsibility for reporting information they obtain. Most companies establish TSCA risk information review committees to assure timely and appropriate reporting, and to relieve individual employees of reporting obligations. Timely section 8(e) reporting is not likely to be viewed as impracticable due to COVID-19 social distancing where TSCA risk committee procedures can be implemented by telephone and other ordinary telecommunication methods. Likewise, reporting itself can be accomplished electronically through EPA’s Central Data Exchange (CDX). Unavailability of key staff necessary for decision making due to personal illness or other COVID-related causes might be sufficient to justify delayed reporting, but EPA might be expected to question whether the key staff and potential replacements remained unavailable over the full 30-day reporting period, or whether it would have been unreasonable to report prophylactically within the 30-day period.
Section 26(e) Self-Identification (Fee Rule)
Manufacturers and importers of any of the 20 High-priority substances designated in December 2019 for risk evaluation are required to identify themselves to EPA by May 27, 2020. The reporting step can be completed remotely through CDX by any person authorized to speak for a company and should not be significantly affected by COVID-19 social distancing or employee illness. Likewise, to the extent knowledge of the obligation to report or of facts necessary to determine applicability become unavailable due to illness, EPA might be expected to look closely at whether such knowledge remained impracticable to obtain throughout the extended comment period.
Section 6(a) Risk Management Rules for Individual Chemicals
The potential utility of the Policy for addressing non-compliance with chemical-specific risk management rules (e.g., PCBs, asbestos, lead, mercury, formaldehyde, methylene chloride, and certain hexavalent chromium compounds) will depend on the nature of the specific compliance obligation at issue. For example, we would be extremely wary of counting on the Policy to excuse noncompliance with the section 6 rule that prohibits manufacturing, processing, and distribution in commerce of methylene chloride for consumer paint and coating removal (including distribution to and by retailers). On the other hand, there may be situations in which EPA would be willing to exercise enforcement discretion for certain recordkeeping or reporting oversights associated with certain section 6 rules.
Section 8(a) Chemical Data Reporting (CDR)
This year is the next reporting cycle for the Chemical Data Reporting (CDR) Rule. For the 2020 CDR, the reporting period begins on June 1, 2020 and ends on November 30, 2020. Previously, the reporting period was scheduled to end on September 30, 2020, but on March 27 Assistant Administrator Alexandra Dunn signed a final rule extending the reporting period through November.
EPA states that routine reporting and certifications such as annual reporting for the Toxics Release Inventory (TRI) and the Greenhouse Gas (GHG) Reporting Program could fall within the scope of the Policy if compliance is impacted by COVID-19. Although the CDR follows a four-year, rather than an annual, reporting cycle, it is arguably similar to the GHG and TRI reporting expressly mentioned in the COVID-19 Policy. Nevertheless, those programs have earlier due dates of March 31 and June 1, respectively. Thus, GHG and TRI reporting may have been imminently affected by the COVID-19 pandemic. In contrast, companies have nearly eight months to complete reporting for the 2020 CDR. Accordingly, EPA may not be receptive to arguments that 2020 CDR reporting was impacted by the COVID-19 pandemic when companies have a reasonable amount of time to prepare. On the other hand, CDR reporting is an intensive effort and the COVID-19 situation is constantly and rapidly evolving. Companies should begin work on CDR reporting as soon as possible in order to avoid the need to invoke the Policy if events closer to the November 30th deadline affect the availability of information or key employees.
Section 8(b) Notice of Activity (NOA) Forms for Inactive Substances
TSCA Inventory active/inactive “reset” notifications are unlikely to be viewed by EPA as the type of routine monitoring and reporting that is covered by the Policy. Unlike the examples provided by EPA, and discussed above, of TRI and GHG reporting, Inventory reset reporting is not periodic. Rather, the timing of reset reporting is most similar to section 5 PMN requirements. Confirming the active-inactive status of substances is a part of routine compliance activities for any new product that is manufactured, imported, or processed. Further, the submission of Notice of Activity (NOA) Form B’s can be completed electronically through CDX. Thus, it appears unlikely that EPA would accept a company argument that commercial urgency necessitated commercialization before confirming the substance’s active-inactive status and, if necessary, submitting a Form B. However, EPA might accept that a Form B requirement was inadvertently missed due to a supplier changing materials as a result of COVID-19-based supply chain disruption. In such a case, the company would need to document this error, report, and correct the violation by filing a Form B as soon as practicable.
Section 12(b) Export Notices
Section 12(b) requires that any person that exports or intends to export from the U.S. a chemical substance or mixture that is subject to certain rules or orders under TSCA notify EPA of the export in advance. Whether EPA would view the omission of such reporting as constituting routine reporting eligible for relief under the Policy would likely depend on the precise circumstances surrounding the non-reporting (e.g., how COVID-19 caused the noncompliance, the company’s process/system for addressing 12(b) notifications, nature/number of notifications, measures taken to come into compliance, etc.). As with all areas of TSCA, or more broadly, environmental compliance, establishing and maintaining a compliance management system that facilitates continuous compliance, even in the wake of personnel changes, can play an important role.