The U.S. Environmental Protection Agency (EPA) has taken another step toward regulating perfluoroalkyl substances (PFAS). Specifically, on February 20, 2020, the EPA issued a pre-publication version of a Supplemental Proposed Rule that could affect a host of businesses that traditionally have not had to concern themselves with Toxic Substances Control Act (TSCA) compliance and enforcement. The proposal concerns a subcategory of PFAS known as “Long-Chain Perfluoroalkyl Carboxylates and Perfluoroalkyl Sulfonates” (collectively, LCPFAC) under TSCA. Perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), two of the most problematic PFAS substances, are among the chemicals that would be regulated.
The Supplemental Proposed Rule would limit TSCA’s broad exemption for imported “articles” (generally speaking, manufactured equipment or devices), by subjecting products with LCPFAC-coated surfaces to the Significant New Use Rule (SNUR) provisions of TSCA Section 5.
There is an important carveout in the rule for “ongoing uses,” meaning, in this context, the continuation of an importation activity that has gone on, without interruption, since January 21, 2015, the date on which this SNUR initially was proposed. Businesses engaging in activities subject to a SNUR are required to submit a Significant New Use Notification to the EPA at least 90 days before commencing the activity and to obtain agency approval that the activity does not present an unreasonable risk of injury under specified conditions of use. In practice, this process can take much longer than 90 days.
The proposal is the latest in a growing slate of regulatory actions by the EPA as part of its February 2019 PFAS Action Plan. Potentially affected business would be well advised to consider commenting on the Proposed Rule and/or initiating advance planning on compliance strategies. (Due to Department of Defense concerns about releases of PFAS in aqueous fire-fighting foam at military installations, the National Defense Authorization Act for Fiscal Year 2020 requires the EPA to take final action on the 2015 Proposed Rule, including the February 20, 2020 supplement, by June 22, 2020. However, there are strong doubts about the EPA’s ability to meet this deadline.)
How the Supplemental Proposal Rule Relates to TSCA’s “Article Exemption” and the Domestic and International Phaseout of LCPFAC
Historically, limitations on TSCA’s “article exemption” have been rare, to the point that the authors of the 2016 TSCA Amendments regarded this exemption as a gap in regulatory coverage that they tried to fill with the so-called “article consideration provision” in Section 5(a)(5). To date, carve-outs from the article exemption exist for only a handful of chemical substances and activities, including:
- The manufacture or importation of polychlorinated biphenyls (PCBs);
- The manufacture, importation or processing of asbestos;
- The importation or processing of mercury and benzine-based chemical substances used as part of an article; and
- The importation of LCPFAC as part of a carpet.
The Supplemental Proposed Rule thus indicates that the EPA is increasingly attuned to the potential ecological and human health risks relevant to this subcategory of PFAS. It is also indicative of the EPA’s confidence that businesses worldwide are dedicated to international commitments to phase-out the use of LCPFAC chemicals. The EPA previously worked with industry to phase out the domestic manufacture and processing of LCPFAC chemicals through the 2010/2015 PFOA Stewardship Program, and in a meeting of partners to the Stockholm Convention on Persistent Organic Pollutants just last May, 180 nations, including China, agreed to a global phaseout of the production of PFOA and other LCPFAC chemicals, subject to exemptions of five years and longer.
Practical Challenges of Demonstrating Compliance with the Supplemental Proposed Rule
Notwithstanding the global phaseout, it may take several years before all stocks of LCPFAC surfactants and other coating materials are exhausted or otherwise disposed. As a practical matter, were the Supplemental Proposed Rule to become effective in the interim (i.e., prior to a complete phaseout), potentially affected businesses would likely want to be able to demonstrate compliance. Herein lies a potential challenge, given the reach of the Supplemental Proposed Rule, which touches on a broad range of businesses including:
- Industrial manufacturers of electrical equipment, appliances, and components (NAICS Code 335);
- Merchant wholesalers (NAICS Codes 423, 424); and
- Various commercial retailers of electronics, as well as furniture, clothing and other products that may contain coatings for water- or fire-proofing purposes (NAICS Codes 424-424, 442-444, 448-451).
The EPA has acknowledged that several of these business sectors historically have had little reason to concern themselves with TSCA due to the “article exemption.” For example, unlike manufacturing companies, which are generally subject to broad environmental regulation, commercial retailers, wholesalers, and trading companies that do not routinely deal with bulk chemical shipments may be less familiar with the statute. Such companies also would be less likely to maintain the type of information necessary to substantiate an “ongoing use” or possess the in-house expertise necessary to make (prompt) SNUR applicability determinations and, if necessary, TSCA filings.
The EPA has recommended that businesses potentially subject to the SNUR consider testing samples of articles themselves or seek to obtain information on coating materials from upstream suppliers. This is, of course, much easier said than done. As many companies have learned in connection with other provisions of TSCA and different chemical regulation statutes, such as the Federal Insecticide, Fungicide, and Rodenticide Act and California’s Proposition 65, obtaining detailed chemical composition information from overseas suppliers can be time-consuming and difficult. These difficulties could be accentuated in this case. Because the SNUR deals with articles and not bulk chemicals, immediate overseas suppliers of regulated articles may not have available or be willing to share the chemical composition information of the surface coatings. Consequently, regulated entities may have to go several steps up the supply chain to obtain the necessary information and negotiate non-disclosure or information-sharing agreements, which can be costly and time-consuming. A third option the EPA has proposed is to have importers obtain supplier certifications regarding the presence (or absence) of PFAS in the surface coatings applied to their articles. This would be the most expedient approach from the standpoint of importers.
What Potentially Affected Businesses Can Do to Minimize Business and Enforcement Risks
Potentially affected businesses may consider participation in the rulemaking process to attempt to limit the scope of the EPA’s proposal, so as to minimize the need for potentially burdensome investigations of existing supply chains. Although the EPA has invited comment on all aspects of its proposal, it has specifically highlighted two issues that could minimize the scope of the rulemaking: (1) the incorporation, within the final rule, of a quantitative threshold of LCPFAC content below which the SNUR would not apply and, (2) a safe harbor provision for businesses that would have engaged in the regulated activity as of the final rule’s effective date. The latter would obviate the need for businesses to assess past import activities to determine whether they qualify as an “ongoing use.” At present, the EPA plans to receive public comments until 45 days after publication of the Supplemental Proposed Rule in the Federal Register, which has not yet occurred.
Alternatively, or additionally, potentially affected businesses may wish to initiate advance planning on a compliance strategy. Such a strategy would focus on identifying imported products that may contain LCPFAC and then making determinations about whether to comply with the SNUR once it becomes effective or to alter existing commercial relationships to render the proposed regulatory action inapplicable.
Pillsbury’s Environmental Practice is closely tracking the fast-changing legal landscape. Our attorneys are experienced in representing businesses throughout all phases of the rulemaking process, as well as in developing compliance strategies and internal policies to address chemical importation requirements under TSCA and other chemical regulation statutes.